Senate tax bill does not include digital downloads

Thanks to a blog reader for catching an error in my post on the Senate omnibus tax bill – the Senate omnibus tax bill does not include a tax on digital downloads of music, videos, etc (itunes).  The House omnibus tax bill does include this provision.

The Senate omnibus tax bill does include a provision to expand the definition of business nexus to enable sales tax collection on purchases made on the internet – though it would require sales tax collection only for those out-of-state businesses that contract with a Minnesota person or company to advertise/solicit business in Minnesota. This is difficult to explain in a pithy way, but the Department of Revenue offers a useful example in their fiscal note:

“An example would be where company A, a Minnesota vendor, offered a link on its website to company X’s website. Company X is an out-of-state vendor. If a customer accessing company A’s site clicks on the link to company X and makes an online purchase from company X, and company A received a commission from company X on the sale, then company A is a solicitor for company X and company X would be required to collect and remit Minnesota sales tax.”  (This would apply only if gross receipts from sales were over $10,000 – in order to exempt occasional sellers.)

The original blog post has been corrected.

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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