While most of the attention seems centered on the pending legislation on California, Minnesota is also addressing Internet sales tax. The Minnesota Affiliate Sales Tax bill in the Senate is SF 282 and it is modeled after the NY law. I mentioned a while ago about several states with pending legislation. I want to make it clear that Minnesota Affiliates need to get ready as the next hearing date on their pending legislation is to be held on Thursday, March 26, 2009 at 08:30 AM in Room 15 Capitol.
Much like the affiliate tax legislation in other states, this bill is authored by the Committee Chairman. The Committee Chairman for the Tax Committee is Thomas M Bakk. A companion bill (HF401) in the House of Representatives has been laid over for possible inclusion in the omnibus tax bill. Opinion on that action is that it is an indication passage is likely, one way or the other.
If the bill passes, it will take effect with sales after June 30, 2009.
As I read through the analysis provided to the Committee it appears that Minnesota estimates increased revenue of around $22 million. That increased revenue plus their observations of the impact of the NY nexus ($60 million in revenue?) leads me to believe that Minnesota will pass this bill.
I have no idea how many affiliates live in Minnesota but I believe that the Minnesota bill is probably as critical as the legislation pending in many other states. Minnesota is further ahead in the legislative process than California. As we have been saying for almost a year, states will follow NY. If the legislation passes in Minnesota, passage in California and other states becomes even more likely.
Looks like the playing field for all affiliates is going to level out, at least from a nexus perspective.
I would much prefer the Streamlined Sales Tax. It would make more sense for everyone. Sales tax collection for merchants would be simplified, affiliates would not have to be concerned with the threat of losing their business when their state enacts new nexus definition, consumers would only have to think about sales tax as opposed to use tax and sales tax, and the government would get the revenue they need. While some may think collecting Internet sales tax is a new tax it is important to understand that the tax is currently due as a use tax.
I will keep you informed on the status of SF 282. In the meanwhile if you are an affiliate from Minnesota or are a merchant with affiliates in Minnesota, you need to prepare for the possibility of a Minnesota Internet tax.
Link to Minnesota Bill https://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=S0282.0.html&session=ls86