Minnesotans who buy online soon will pay sales taxPublished 5:15am Friday, May 24, 2013
ST. PAUL — Minnesotans who go online to shop will soon have to pay the same state sales tax they pay at brick-and-mortar retailers.
The change takes effect July 1, and it’s being cheered by retailers who have complained about unfair competition.
It’s technically not a new tax. Online shoppers already were supposed to report and pay the sales tax themselves, but almost nobody did.
But soon Minnesotans won’t have a choice — at least not at big online retail sites.
Minnesota’s brick-and-mortar retailers have long complained of being at a competitive disadvantage because they must charge sales taxes while their online rivals do not — a requirement that raises their prices.
Bruce Nustad, president of the Minnesota Retailers Association, said Wednesday that his group has long contended that “a sale is a sale, whether it occurs online or in a brick-and-mortar retailer.”
“For Minnesota’s retailing community, this is a good law. We give it the thumbs up,” Nustad said.
But that doesn’t make it popular online. Internet message boards are filled with irate comments. By one estimate, uncollected sales taxes amounted to $235 million a year in Minnesota.
The sales tax provision was included in a tax package that cleared the Legislature late Monday and was signed by Gov. Mark Dayton Thursday.
The online tax-free opening is not completely closed by the new law. Smaller e-commerce sites are still not covered, nor are online retailers that don’t have affiliated partners or physical stores in Minnesota. An affiliated partner would be a third-party seller that a retail site such as Amazon connects with an online buyer.
Other major e-commerce sites such as eBay and iTunes also will be covered, Nustad said. Big national retailers with active websites, including Target.com and BestBuy.com, already collect state sales taxes.
More and more states are taking steps similar to Minnesota, passing what are often nicknamed “Amazon laws.” And so is Congress. This month the U.S. Senate voted 69-27 for a broad national requirement that online sellers collect state sales taxes. A House panel is expected to debate the matter soon.