Today, Saturday April 25, the House of Representatives voted to pass the Omnibus Tax Bill, HF2323. The vote was 68-65. This bill includes the Minnesota version of the Internet tax. The Omnibus Tax Bill will now move to the Senate. The proposed law closely mimics the NY Internet version with a similar threshold and the ability to rebut the presumption of nexus. Since it is a different state they might have different requirements on how to rebut but I would urge affiliates to begin to find counsel to see if the NY solution will work. At the very least, the documents and work done by our NY sales tax attorney will serve as a good starting point.
It is critical to be proactive. As we saw last year with NY, it is up to affiliates to push the issue. Although there is more attention on the issue this year, do not forget what happened to NY Affiliates last year. Think back to even a couple of weeks ago when Connecticut affiliates were removed from some programs before the law passed (it still hasn’t been signed).
Affiliates are the ones with the most to lose but everyone stands to lose if actions are taken without full understanding of the law.
Sec. 27. Minnesota Statutes 2008, section 297A.66, is amended by adding a subdivision to read:
Subd. 4a. Solicitor. (a) “Solicitor,” for purposes of subdivision 1, paragraph (a), means a person, whether an independent contractor or other representative, who directly or indirectly solicits business for the retailer.
(b) A retailer is presumed to have a solicitor in this state if it enters into an agreement with a resident under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet Web site, or otherwise, to the seller. This paragraph only applies if the total gross receipts from sales to customers located in the state who were referred to the retailer by all residents with this type of agreement with the retailer is at least $10,000 in 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.
c) The presumption under paragraph (b) may be rebutted by proof that the resident with whom the seller has an agreement did not engage in any solicitation in the state on behalf of the retailer that would satisfy the nexus requirement of the United States Constitution during the 12-month period in question. Nothing in this section shall be construed to narrow the scope of the terms affiliate, agent, salesperson, canvasser, or other representative for purposes of subdivision 1, paragraph (a).
(d) For purposes of this paragraph, “resident” includes an individual who is a resident of this state, as defined in section 290.01, or a business that owns tangible personal property located in this state or has one or more employees providing services for it in this state.
EFFECTIVE DATE.This section is effective for sales and purchases made after June 30, 2009.
I will continue to follow as it now moves to Senate.