Minnesota Tax Nexus

Businesses with nexus in Minnesota are required to register with the Minnesota Department of Revenue and to charge, collect, and remit the appropriate tax.

Generally, a business has nexus in Minnesota when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.

Minnesota nexus for out-of-state sellers

Affiliate nexus

If you have ties to businesses in Minnesota, including affiliates, you may have nexus under the state’s affiliate nexus provision. According to the Minnesota Department of Revenue, “An entity is considered to be an affiliate of a Minnesota business if the related entity promotes the affiliate’s business or provides services to the out-of-state entity and the retailer and entity are related parties.”

The retailer and the entity are considered related parties if at least one of the following is true:

  • One of the parties owns directly or indirectly at least 50 percent of the other party’s outstanding stock

  • One of the parties is a partnership estate or trust which owns directly or indirectly at least 50 percent of the capital, stock, or value of the other party

  • An individual stockholder or the stockholder’s family owns directly or indirectly at least 50 percent of the value of outstanding stock of both entities

Click-through nexus

Referrals from in-state entities may also trigger nexus for out-of-state vendors. Since July 1, 2013, out-of-state sellers are presumed to maintain a place of business in Minnesota if all of the following are true:

  • They enter into an agreement with a Minnesota resident for commission or other substantially similar consideration

  • The resident representative directly or indirectly solicits business from Minnesota customers on behalf of the retailer, by link on an internet website, or otherwise

  • The out-of-state retailer has gross receipts of at least $10,000 in Minnesota during the preceding four quarters

See  M.S. 297A.66 and the Minnesota Department of Revenue: Solicitor Nexus; Minnesota Sales and Use Tax Instruction Booklet; and Basic Sales and Use Tax Manual.