Minnesota – House Passes Bill with Click-Through Nexus and Sales Tax Provisions

SALT Report 2424 – The Minnesota House of Representatives passed an omnibus tax bill that includes the following sales and use tax and click-through nexus provisions.

Click-Through Nexus

A retailer would be presumed to have a solicitor in Minnesota if it enters into an agreement with a resident in which the resident, for a commission or other consideration, directly or indirectly refers potential customers, by a link on an Internet website or otherwise, to the seller. This provision applies only if the total gross receipts from sales to customers in Minnesota who were referred to the retailer by residents with this type of agreement are at least $10,000 in the preceding 12-month period.

“Solicitor” is defined as a person, whether an independent contractor or other representative, who directly or indirectly solicits business for the retailer.

These presumptions may be rebutted if the resident with whom the seller has an agreement provides proof that it did not engage in any solicitation in Minnesota on behalf of the retailer during the 12-month period in question.

Exemptions

The exemptions available for drugs and medical devices would be expanded to include purchases covered by Medicare and Medicaid. The exemption would apply to all accessories and supplies required for durable medical equipment, including items that are for single patient use, as well as any accessories or supplies necessary to use prosthetic devices.

Sales to licensed nonprofit nursing homes and nonprofit boarding care homes certified as nursing facilities would be exempt, provided that certain conditions are satisfied. However, this exemption would not apply to certain construction materials, prepared foods, candy, soft drinks, alcoholic beverages, and motor vehicle leases.

An exemption for materials, supplies, and capital equipment would be added for the construction, improvement, or expansion of an industrial measurement manufacturing and controls facility until December 31, 2015.

An exemption for materials, supplies, and capital equipment would be added for the construction, improvement, or expansion of a biopharmaceutical manufacturing facility. This exemption is retroactive and would apply to sales and purchases made after December 31, 2012, and before July 1, 2019.

The definition of “retail sale” would be amended as follows:

Sales of coin-operated amusement and entertainment devices are sales for resale,

For rent-to-own or lease-to-own used vehicles in which the lessee can purchase or return the vehicle at any time without penalty, a retail sale occurs each time a payment is made,

A sale of motor vehicle repair paint and materials by a motor vehicle repair or body shop business is a retail sale, and

A payment made to a cooperative electric association or public utility as a contribution in aid of construction is a contract for improvement to real property and is not a retail sale.

A Senate hearing and vote is scheduled for May 1, 2013.

For Further Information

Minnesota House of Representatives – House Finance 677