Wayfair Decision & Sales Tax Update

On June 21, 2018, the U.S. Supreme court ruled that physical presence is not required for sellers to be responsible for sales tax collection. Previously, businesses were only required to collect sales tax in states where they operate physically. Each state determines their own threshold and transaction amounts at which a collection requirement applies.

Beginning October 1^st (monthly and quarterly filers) or January 1, 2019 (annual filers) Minnesota will require all Minnesota sellers, regardless of their location, to collect local sales taxes based on the location of their customer.  Local sales taxes must be collected on all sales made in a local taxing area that are subject to Minnesota state sales tax. Sellers should charge sales tax to customers when:

• They pick up items in a local area, even if the items are taken out of the local area
• They perform taxable services in a local area
• They ship taxable items into a local area

Beginning October 1^st, Minnesota will require remote sellers to register and collect sales tax unless they meet a small seller exemption.

• 100 or more retail sales shipped to Minnesota
• 10 or more retail sales shipped to Minnesota that total more than $100,000

Generally, a remote seller is a business that sells its products to customers in a state using the internet, mail order or telephone without having a physical presence in the state.

Beginning October 1^st, Minnesota will require Marketplace Providers to register and begin collecting Minnesota sales tax on behalf of remote sellers using their marketplace.

Generally, a Marketplace Provider is any person, other than the seller, who facilitates a retail sale by:

• Listing or advertising the seller’s products; and
• Processing the payments from the customer, either directly or indirectly through a third party, regardless of whether the Marketplace Provider receives compensation or other consideration in exchange for its services.

Minnesota businesses that remotely sell into other states may need to start collecting sales tax in those states. Registration requirements and small seller exceptions vary by state.

If you have any questions about your sales tax requirements post Wayfair, contact Christianson today!