Minnesota Passes Amazon Tax Law
- May 28, 2013 | Will Frei
Minnesota is the latest state to pass an Amazon Tax law requiring out-of-state businesses to collect state sales tax based on their affiliate relationships. States with Amazon Tax laws define affiliate relationships differently [learn more]. In the case of Minnesota, the law—part of omnibus tax bill H677—centers on affiliate relationships where an in-state business gains new customers via an affiliate out-of-state website.
If your business enters into an agreement with a Minnesota resident in which the resident refers potential customers to you in exchange for "a commission or other substantially consideration," then you have an obligation to collect and remit Minnesota sales tax. There are, however, some qualifications.
The devil and the details:
A "resident" in this case refers either an individual resident or a business that has property or personnel in the state. Furthermore, the law only applies to your business if you gross at least $10,000 in sales made to customers referred to you from any such agreement in the state. Your gross receipts are calculated based on the 12-month period ending "on the last day of the most recent calendar quarter before the calendar quarter in which the sale is made."
The law goes into effect for sales and purchases made after June 30, 2013.
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