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Taxes / State tax rules / Minnesota

Selling on eBay, Poshmark or Etsy from Minnesota: sales tax and 1099-K rules

Under Minn. Stat. § 297A.66, a marketplace provider collects and remits Minnesota state and local sales tax on the retail sales it facilitates (out-of-state providers since October 1, 2019, at 200 sales or more than $100,000 shipped to Minnesota in 12 months), unless the seller gives it a copy of its Minnesota registration and they agree the seller will collect. For Form 1099-K, the Department of Revenue's 1099 fact sheet asks for Forms 1099 that report Minnesota withholding and sets no 1099-K threshold; the federal test is over $20,000 in more than 200 transactions.

General information, not tax advice. Check with a tax professional about your own situation.

Checked against the official pages listed below on .

Minnesota in short

General sales tax:
Yes
Marketplace facilitator law:
Yes: Minn. Stat. § 297A.66, subd. 2(b); § 297A.77, since Oct 1, 2019
When a marketplace must collect:
for a provider without a place of business in Minnesota, 200 or more retail sales, or more than $100,000 in retail sales, shipped to Minnesota in the prior 12-month period, counting facilitated sales; a provider with a place of business in Minnesota collects without a threshold
Form 1099-K:
No state rule stated on the pages checked

Who collects the tax on a marketplace sale

A marketplace provider, with or without a place of business in Minnesota, collects and remits sales and use taxes on the retail sales it facilitates in or to Minnesota (§ 297A.66, subd. 2(b)). An out-of-state provider that meets a threshold registers and starts collecting on the first day of a calendar month no later than 60 days after meeting it, and keeps collecting for at least 12 months.

If you sell only through marketplaces

The exception is written into the statute: the provider doesn't have to collect if the retailer gives it a copy of its Minnesota sales tax registration and they agree the retailer will collect and remit on the marketplace sales. Otherwise, the department's remote seller FAQ says, if a marketplace provider collects and remits sales tax on your behalf, you don't need to collect sales tax on those taxable sales. The pages checked here don't say whether a Minnesota seller with only marketplace sales must register.

Registration, resale certificates and what changes when you also sell direct have their own page: Minnesota: seller's permit and resale certificate rules.

The law: Minn. Stat. § 297A.66, subd. 2(b); § 297A.77, effective .

"the retailer provides a copy of the retailer's registration to collect sales and use taxes in this state to the marketplace provider"
Minnesota Office of the Revisor of Statutes, Minn. Stat. § 297A.66, Collection and Remittance Requirements, subd. 2(b)(1) (exception to the provider's duty)
"If a Marketplace provider collects and remits sales tax on your behalf you do not need to collect sales tax on those taxable sales."
Minnesota Department of Revenue, Sales Tax FAQs for Remote Sellers

Sources: Minn. Stat. § 297A.66, Collection and Remittance Requirements; Sales Tax for Marketplace Providers; Sales Tax FAQs for Remote Sellers.

Minnesota's sales tax

Minnesota has state and local sales taxes, administered by the Minnesota Department of Revenue. Marketplace providers collect both on the sales they facilitate.

Sources: Sales Tax for Marketplace Providers.

Form 1099-K: Minnesota and the federal test

The department's withholding fact sheet on submitting Form 1099 information says payers must send any Form 1099 information reporting Minnesota withholding by January 31, even in the combined federal/state program; it doesn't address Form 1099-K or a separate threshold, so no Minnesota 1099-K rule is stated here.

"You must send us any Form 1099 information reporting Minnesota withholding by January 31 each year."
Minnesota Department of Revenue, Submitting Form 1099 Information (Withholding Fact Sheet 2a), Filing Requirements

The federal test, for comparison: the IRS says a payment app or online marketplace must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, and adds: "However, they may send you a Form 1099-K with lower amounts and/or transactions." (Understanding your Form 1099-K, reviewed ). The Instructions for Form 1099-K count both parts for the calendar year, through each platform separately, and say the box 1a gross amount is figured without adjustments for credits, discounts, fees, refunds or shipping, so a 1099-K figure is not the same as profit. More on the federal rule in Form 1099-K for resellers.

Sources: Submitting Form 1099 Information (Withholding Fact Sheet 2a).

Worked examples

When an out-of-state marketplace must start

A provider with no Minnesota place of business that reaches its 200th retail sale shipped to Minnesota in a 12-month period on March 10 registers and starts collecting on the first day of a calendar month no later than 60 days later, so by May 1 at the latest, and keeps collecting through at least the 12th calendar month after that.

A seller who wants to collect Minnesota tax itself

A seller registered in Minnesota can give a marketplace a copy of its registration and agree to collect and remit on its marketplace sales; the provider is then excused under § 297A.66, subd. 2(b). Without that agreement, the provider collects and the seller doesn't.

Edge cases and details

  • To get relief for tax it failed to collect, a provider must show the seller gave incorrect or insufficient information, and that it had a system requiring accurate information and made a reasonable effort to get it, the department says.
  • When counting toward the thresholds, sales to buyers purchasing for resale (with an exemption certificate) are left out, according to the department's marketplace provider page.
  • A seller who sells through several channels counts total retail sales into Minnesota from all sources for the remote seller test, and collects on its own website and other sales that no marketplace collects on.
  • A provider can stop collecting only after notifying the commissioner that it stopped soliciting Minnesota customers and confirming it didn't meet the thresholds for the following 12 months.

What to do

  1. Keep each marketplace's sales report showing the Minnesota tax it collected on your sales.
  2. If you're registered in Minnesota and a marketplace asks whether you will collect tax yourself, read § 297A.66, subd. 2(b), before agreeing.
  3. If you also sell directly to Minnesota buyers, read the department's Sales Tax FAQs for Remote Sellers, and check with a tax professional about registering.

Common questions

Can a marketplace make me collect Minnesota sales tax myself?

Only by agreement: § 297A.66, subd. 2(b) excuses the provider when the retailer gives it a copy of its Minnesota registration and they agree the retailer will collect and remit. Otherwise the provider collects.

Do I collect Minnesota tax on sales a marketplace already collects on?

No. The Minnesota Department of Revenue says that if a marketplace provider collects and remits sales tax on your behalf, you do not need to collect sales tax on those taxable sales.

Related

General information, not tax advice

This page summarizes Minnesota's own published pages and statutes as read on , and the IRS's 1099-K pages. It doesn't say what you should file, register for or pay. Rules depend on your situation and change: check with a tax professional, or with the state's revenue department.

Sources

Official pages this page is built from, with the day each was read.

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