Minnesota – Taxability of Accommodation Intermediary Services

SALT Report 1572 – The Minnesota Department of Revenue issued guidance regarding accommodations intermediaries that sale or facilitates the sale of lodgings in Minnesota.  Under Minnesota Statutes, section 297A.83 anyone “who facilitates the sale of lodging in Minnesota is required to register as a retailer and collect, report, and remit sales tax, regardless of the location of the intermediary or the customer.”
Accommodations intermediaries include vacation rental home operators, travel consolidators, tour operators and anyone that facilitates the sale of lodgings or charges for the rental of a room.
Commissions
If a travel agent or other person receives a commission from an accommodations provider for facilitating room reservations, the commission received by the agent is not consideration for lodging and is not subject to sales tax.  However, the accommodations provider is required to collect and remit the tax on the total amount charged to the customer.
Exemption Certificates
If an accommodation provider receives an exemption certificate from an accommodations intermediary, the provider is not required to collect tax from the intermediary. However, the intermediary will be required to collect tax from the customer on the total amount charged and report and remit all taxes collected to the Department. The amount of tax charged should be separately stated on the invoice provided to the customer.
When an Exemption Certificate is not Provided
If an accommodations intermediary does not provide an exemption certificate, the accommodations provider must collect tax from the intermediary and report and remit tax on the discounted amount charged. The intermediary must then collect tax from the customer on the total amount charged, which includes any additional amounts the intermediary charges the customer, such as fees for service.
In the case of additional fees, the accommodations intermediary must report and remit the tax collected on the additional amount and should separately state the amount of tax charged on the invoice or document provided to the customer.
Local Taxes
The information in the Notice applies to all local sales and lodging taxes administered by the Department.  Accommodation intermediaries are required to collect, report, and remit local taxes in the same manner that they collect, report, and remit state sales taxes.
Travel Packages
For travel packages, such as accommodations bundled with air transportation or car rentals sold for a single retail price, the accommodations intermediaries should allocate the amount attributed to the taxable room charges.
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