Sales Tax for Out of State Shipping and Local MN Sales Tax Changes

SD v. Wayfair 

There has been much discussion in recent weeks regarding some changes in sales tax laws due to the decision of South Dakota v. Wayfair Supreme Court Ruling.  The basis of this decision is that remote sellers may be required to collect sales taxes in states where they do not have a physical presence.  Meaning that sales tax for items shipped out of state would be calculated based on the buyer's location and submitted to the applicable state.  

Most states have minimum requirements of $100,000 in sales or 200 transactions within the previous year (or a 365 day rolling period) before you would be required to collect and submit this sales tax in these situations.   As of 10/3/18, we are aware of these states that have a minimum requirement:  

Remote Seller - Sales Tax Collection Requirements
(as of 10/3/18)
		Small Seller
		Exemption
State	Effective Date	(Annually)
Alabama	10/1/2018	$250k
Georgia	10/1/2018	$250k/200 sales
Indiana	10/1/2018	$100k/200 sales
Iowa	1/1/2019	$100k/200 sales
Kansas	Unclear	Unclear
Kentucky	7/1/2018	$100k/200 sales
Michigan	9/30/2018	$100k/200 sales
Minnesota	10/1/2018	$100k/100 sales
Nebraska	1/1/2019	$100k/200 sales
Nevada	Not in effect	$100k/200 sales
New Jersey	11/1/2018	$100k/200 sales
North Carolina	11/1/2018	$100k/200 sales
North Dakota	10/1/2018	$100k/200 sales
Ohio	Not in effect	In Court
Oklahoma	7/1/2018	$10k
Rhode Island	8/1/2017	options
South Dakota	10/1/2018	$100k/200 sales
Tennessee	Not in effect	Undetermined
Utah	1/1/2019	$100k/200 sales
Vermont	7/1/2018	$100k/200 sales
Washington	10/1/2018	$100k/200 sales
West Virginia	Unclear	Unclear
Wisconsin	10/1/2018	$100k/200 sales
Wyoming	10/1/2018	$100k/200 sales
Streamlined Sales & Use Tax Agreement
http://www.streamlinedsalestax.org

For more information regarding minimum sales requirements and SD: https://taxfoundation.org/post-wayfair-options-for-states/ 

Impact on MN businesses and the Wayfair ruling: 

http://www.revenue.state.mn.us/businesses/sut/Pages/Remote-Sellers.aspx 

MN Sales Tax Changes

As of 10/1/2018, the state of MN is requiring that sellers collect local tax when you ship taxable items into a local area, including all sales made using the internet, mail order, or telephone.  

This means that for items shipped within the state, the sales tax is based on the location of the buyer and not the auction location.   

What is K-BID doing to address these changes?

There is not the ability to adjust the sales tax rate an individual invoice basis at this time.  Sales tax is entered on the Edit Auction page and assigned to all taxable items within the auction.  

We are working on some features and reports to address both the Wayfair v. SD Ruling and local MN sales tax changes.  Including:

• Requiring bidders to select if they wish to have an item shipped. 
• Requiring bidders to enter a shipping address with 9 digit zip code. 
• Automatically calculating (where possible) what the local sales tax rate would be based on the shipping address. 
• Advanced sales tax reporting.   

For the time being, affiliates will have to manually calculate, charge, and track the correct sales tax rate for items shipped.  Remember, for items shipped out of state, most states have minimum requirements that must be met before you would have to adhere to these new rule changes.   

A more pressing issue would be for affiliates based in MN and shipping in-state.  At this point, you will need to start charging and collecting sales tax based on the buyers shipping address as of 10/1/2018 

How do I calculate local sales taxes in MN?

The state of MN offers resources to help you determine the total tax rate (state and local) on our website. You can:

• Use the online Sales Tax Rate Calculator. If you have a street address, it will identify the nine-digit ZIP code for you. Best for use when you have one or two addresses at a time.
• Download the Sales Tax Rate Spreadsheet to use at your desk. You must know the nine-digit ZIP code. Best for use when you have multiple nine-digit ZIP Codes to look up at one time.
• Download the Sales Tax Rates and Boundaries Table to program rates into your point of sale system.
• Use the USPS zip code lookup to find the 9 digit zip code. 

K-BID will update affiliates as new features are introduced and any changes that we are made aware of.  Please be aware that you are ultimately responsible for knowing and understanding and sales tax laws for states in which you do business.