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SF3332 (Legislative Session 94 (2025-2026))

Sales and use tax exemptions elimination, gross receipts tax on various services imposition

AI Generated Summary

Purpose of the Bill

The bill aims to modify taxation in Minnesota by repealing certain sales and use tax exemptions and introducing a new gross receipts tax on various services. It intends to widen the state's tax base and generate additional revenue for the general fund.

Main Provisions

  • Gross Receipts Tax Introduction: The bill proposes a 2% gross receipts tax on the sale of certain services between business entities. This is meant for services such as legal, accounting, architectural, engineering, research and development, computer services, management consulting, and various repair and maintenance services.

  • Tax Collection and Liability: Business entities providing these taxable services can collect the new tax from purchasers if it is separately stated on their invoices. Entities receiving taxable services in Minnesota, from out-of-state providers who do not pay the Minnesota tax, must pay the 2% use tax rate.

  • Credits for Taxes Paid Elsewhere: If taxes on the same transaction have been paid in another state or its subdivision, a credit is granted for the tax paid, up to the amount that Minnesota would charge on the identical transaction.

  • Administration Details: The bill outlines requirements for filing tax returns, payment schedules similar to other state taxes, and mandates the inclusion of these revenues in the general fund. It specifies that taxes, along with any penalties or interest, become a personal debt to the individual or entity responsible for filing, irrespective of payment due times.

Significant Changes to Existing Law

  • Repealing Tax Exemptions: It removes existing sales and use tax exemptions listed under sections 297A.67 and 297A.68 of the Minnesota Statutes.

  • Sourcing and Compliance: The bill ensures compliance by utilizing existing administrative provisions from Minnesota tax code for the enforcement and collection of these new tax measures.

Relevant Terms

gross receipts tax, taxable services, sales and use tax exemptions, business-to-business services, tax credits, Minnesota general fund, tax collection, administrative provisions

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
April 06, 2025SenateFloorActionIntroduction and first reading
April 06, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification of taxable services for specific types of business entities."
      ],
      "removed": [
        ""
      ],
      "summary": "Defines 'retail sale' within the context of taxable services for business-to-business transactions.",
      "modified": [
        "Amendments in the transaction clauses for clarity on tax applications."
      ]
    },
    "citation": "297A.61",
    "subdivision": "subdivision 3"
  },
  {
    "analysis": {
      "added": [
        "New definitions for better comprehension."
      ],
      "removed": [
        ""
      ],
      "summary": "Modifies the definition of 'gross receipts' for taxable services to exclude consumer taxes.",
      "modified": [
        "Precisions added to pre-existing definitions."
      ]
    },
    "citation": "297A.61",
    "subdivision": "subdivision 4"
  },
  {
    "analysis": {
      "added": [
        "Clarification on the alignment with sourcing rules."
      ],
      "removed": [
        ""
      ],
      "summary": "Applies the sourcing rules of sales for the taxable services discussed in the new section.",
      "modified": [
        "Integration applied to extend the existing rules to new tax sections."
      ]
    },
    "citation": "297A.668",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        ""
      ],
      "removed": [
        ""
      ],
      "summary": "Relates to the return filing cycle and due dates aligned with tax reporting requirements.",
      "modified": [
        "Used to structure the new tax filing requirements along existing timelines."
      ]
    },
    "citation": "289A.20",
    "subdivision": "subdivision 4"
  }
]

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