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Minnesota Legislature

Taxing online sales

Published (3/6/2009)
By Sonja Hegman
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Companies selling merchandise online could be subject to the state’s sales tax.

HF401, sponsored by Rep. Loren Solberg (DFL-Grand Rapids), would establish a duty to collect sales tax on out-of-state Internet businesses.

Solberg said the bill is based on a law recently enacted in New York, and would apply to businesses like, who enter into contracts with bloggers to put links from their sites to the company’s Web site. Contract payment is often based on the number of referrals or the sales generated through these links. Amazon unsuccessfully challenged the New York law in a state court as violating the interstate commerce clause.

Joel Michael, with the nonpartisan House Research Department, said a sales tax applies only when a business has a physical presence in the state. Under the bill, if the business has a solicitor in Minnesota that would be enough for the sales tax to apply.

According to the Department of Revenue, the requirement would apply only if the total gross receipts from sales to Minnesota customers who were referred to the retailer by residents with this type of agreement with the retailer are at least $10,000 in the previous 12-month period before the calendar quarter in which the sale is made.

The bill was laid over for possible omnibus bill inclusion. A companion, SF282, sponsored by Sen. Tom Bakk (DFL-Cook), awaits action by the Senate Taxes Committee.

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