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Minnesota Sales Tax ?

 
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JefferysJunction



Posts: 477

PostPosted: Thu Dec 05, 2019 8:37 am    Post subject: Minnesota Sales Tax ? Reply with quote

To my understanding, in Minnesota, as of Oct 1, 2019 we were suppose to start charging sales tax on internet transactions. And I now see the taxable question on my edit item pages. So what amount do I add? The MN State tax is 6.875% but the combined State and St. Paul City tax is 7.875%.

Also, how is the tax paid? Does Paypal and Stripe handle it?


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Jeffery's Junction - Vintage Collectibles & LP Records
www.jefferysjunction.ecrater.com


Last edited by JefferysJunction on Mon Dec 16, 2019 3:43 pm; edited 1 time in total
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SheilaDeesPostcards



Posts: 4026

PostPosted: Thu Dec 05, 2019 8:52 am    Post subject: Reply with quote

I believe you are located in Minnesota, so your sales tax question would be related to your internet sales to buyers located in Minnesota. I'm in Florida and I've had to collect Florida sales tax on all sales that are delivered into the state of Florida since I moved to Florida in the late 1990s. You can probably find your answers on the Minnesota State website, or a phone call to the Minnesota Sales Tax office.

The taxable question on the item pages has been there since I started on eCRATER. Assuming you are in MN, the question is asking if the item is a taxable item. In FL, there are some items I may sale that are not covered by FL sales tax.

I believe 30+ states have now passed laws that sellers have to collect and remit their sales tax for customer located in their state rather than the state where the seller is located. Most states only apply this rule when a seller makes more than a dollar amount and/or more than a set number of sales before they are required to register with that state sales tax office. The most common laws state a seller must sell more than $200,000 OR 200 sales into their state before they have to register to collect sales tax. HOWEVER, this is different from the laws of your own state regarding the legal responsibility of sellers in that state to collect sales tax from buyers within the state.
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MoonwishesStore



Posts: 16117

PostPosted: Fri Dec 06, 2019 9:18 am    Post subject: Reply with quote

If you have eCRATER collect the sales tax for MN for you (assuming you live there) then it is collected and the money flows through PP/Stripe. Then you have to report the amount collected and you need to remit it to MN. Unless you are making gobs of sales, you most likely do not have to collect or pay sales taxes for any state but your own.

Amazon, however, collects from every stat which I think currently is up to 30 now. Except for my home state, I am not legally required to collect and pay sales tax to those states. But they collect it anyhow. I am shy 90 orders in CA to be eligible to collect sales tax there but they do anyhow. Ca brings in more sales for me than any other state. Except for a few cents in fees from PP/Stripe, on my state sales tax here, this is all paid by the buyers. Some sellers seem to think that they have to somehow be paying part/all of the cost and are very upset with Amazon that shows what the collected for sales tax and then what they remitted and it doesn't really touch the seller.
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pickychicky



Posts: 977

PostPosted: Tue Dec 10, 2019 5:36 pm    Post subject: Reply with quote

You would charge the full tax rate, which is the state tax PLUS local taxes. In your case, your state's tax rate is 6.875%%, while your local taxes amount to 1%. So, 7.875% is the rate you would charge.

You need to set up the sales tax within your eCrater settings (not PayPal or Stripe) at the 7.875% rate so the customers in your state will be charged. You will need to set that extra money aside for when it's time to pay the state. As for filing dates, you will need to check with your state's sales tax site where you can also get the forms. You also need to make sure what you're supposed to be charging the tax on...just the item price or both the price and shipping (some states charge it on the shipping and some don't).

You also need to check your state's site to see what their threshold is, which is the minimum amount (often $100-200K) or number of sales (often 200) within a year. If you're not meeting either of those requirements, then you do not need to collect sales tax.

Actually, I've done some of the legwork for you, only because I'm bored (LOL). This is the type of research you should be doing yourself as a business owner, which, whether we like it or not, requires a LOT of reading. So, just do it (no offense, but we can't be lazy as business owners):

Minnesota: Sales Tax Handbook: https://www.salestaxhandbook.com/minnesota/sales-tax-exemptions

According to this site, you do charge tax on the shipping if the item being shipped is taxable.

Minnesota Department of Revenue: https://www.revenue.state.mn.us/sales-and-use-tax

Who Needs to Register? https://www.revenue.state.mn.us/guide/who-needs-register

According to this site, their threshold for businesses, as part of their Small Seller Exception, is $100K or 200 transactions within a year. Multiple item orders are considered a single transaction. If you meet these requirements, you should be receiving a 1099 from either PayPal/Stripe or the marketplace.

I'm not sure how they're handling it now with the Marketplace Facilitator Law, but I'm assuming it's up to the marketplace for those transactions. If you have your own website, then PayPal/Stripe would probably be sending one. The only problem with this is that each site only accounts for the transactions processed through them, so if you don't meet the threshold on any one site, then you won't receive a 1099. So, you'd be responsible for tallying up your total sales to determine whether or not you're required to collect and file sales tax.

Filing Frequency: https://www.revenue.state.mn.us/guide/filing-information

Due Dates: https://www.revenue.state.mn.us/sales-tax-return-filing-due-dates
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JefferysJunction



Posts: 477

PostPosted: Tue Dec 10, 2019 9:10 pm    Post subject: Reply with quote

Thank you every one for your comments. I think I have it figured out.
Extra thanks to purpleiris for taking extra time and effort to post the details.



-----------------------------------
Jeffery's Junction - Vintage Collectibles & LP Records
www.jefferysjunction.ecrater.com


Last edited by JefferysJunction on Mon Dec 16, 2019 3:44 pm; edited 1 time in total
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pickychicky



Posts: 977

PostPosted: Tue Dec 10, 2019 10:19 pm    Post subject: Reply with quote

No problemo! I just happened to have the time and nothing else to do. LOL I should add that if you collect sales tax even when you weren't required to, you would still be responsible for remitting what you collected.

Another thing I have learned the hard way is that you don't need to register if you're not required to collect. I wasn't required to collect and didn't have any Texas sales, so my tax liability was zero. I had registered only because I wanted to be tax-exempt on wholesale items, which I quit selling prior to that year. I waited until the last minute to file (was used to the due date being five days later when living in another state) and the site crashed just as I was about to hit the submit button. Being the forgetful person I am, I didn't go back and do it all again later and it ended up costing me over $400 in penalties for a ZERO tax liability. So, unless you need a sales tax permit to get wholesale prices on parts or inventory, do NOT register if you're not required to collect!
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SheilaDeesPostcards



Posts: 4026

PostPosted: Wed Dec 11, 2019 7:30 am    Post subject: Re: Minnesota Sales Tax ? Reply with quote

purpleiris wrote:
You also need to check your state's site to see what their threshold is, which is the minimum amount (often $100-200K) or number of sales (often 200) within a year. If you're not meeting either of those requirements, then you do not need to collect sales tax.
Caution to the OP and all other sellers reading this, check your own state's rules and requirements regarding sales tax collection.

During the last 40+ years I've operated retail/mail order sales from within 4 different states. I have NEVER seen a state have a minimum amount you had to reach before you were required to have a sales tax permit, collect, and remit state sales tax for the state in which you were located. During the late 1990s my family operated on the week-ends at a local flea market and I had to have my sales tax permit with me. There were reps from the tax office checking permits of the vendors and there were tickets written for folks who didn't have either temporary or permanent sales tax certificates. Also, in the late 1990s I attended a national trade show in the Dallas, TX. Most of the vendors were set up to make sales for shipment and for sales on the spot. When I bought something "on the spot" I was asked by each vendor if it was inventory for my business or for personal use. If inventory, I had to provide a copy of my current business license and if for personal use I had to pay Texas sales tax. Every vendor was required to have a temporary vendor sales tax permit, collect, and remit Texas sales tax.

The thresholds related to sales tax requirements that I've seen in the last 2 years were related to requirements for remote sellers when a state passed laws requiring remote sellers to collect the sales tax. These thresholds did not apply to sales by a retailer to people who lived within their own state.

MoonwishesStore wrote:
Amazon, however, collects from every stat which I think currently is up to 30 now. Except for my home state, I am not legally required to collect and pay sales tax to those states. But they collect it anyhow. I am shy 90 orders in CA to be eligible to collect sales tax there but they do anyhow.
After the WayFair Supreme Court ruling, many states passed rules to require remote sellers to collect sales tax on residents of their state. For example, PA has long required sellers who were located within PA to collect sales tax on sales that were shipped into PA. After Wayfair, I think PA (like many states) passed a remote seller law that required sellers NOT located in PA to collect sales tax on orders shipped into PA, but provided a "threshold" limit a seller must exceed before they were required to register, collect and remit tax to PA. Next states started passing Marketplace laws where the responsibility for collecting the sales tax shifted from the seller to the marketplace. In the case of Amazon, eBay, and Etsy, they collect the money from the customer for the seller so the states made them responsible for the sales tax collection. (I know eBay is a little different where some sellers still use PayPal, but eBay still has a relationship with PayPal.) If you sell on a Marketplace that collects the sales tax, as a seller you will have no responsibility to collect sales tax as a remote seller or for your own state if it is collected by the marketplace.

JefferysJunction wrote:
To my understanding, in Minnesota, as of Oct 1, 2019 we were suppose to start charging sales tax on internet transactions.
The Minnesota law is a remote seller law which includes a small seller exception of 200 sales OR $100,000. So, since I'm in Florida, I don't have to register, collect and remit MN sales tax until I met one of these thresholds. It is extremely unlikely I would live long enough to met either threshold with MN sales in my lifetime, let alone within one year.
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MoonwishesStore



Posts: 16117

PostPosted: Wed Dec 11, 2019 7:33 am    Post subject: Reply with quote

Quote:
do NOT register if you're not required to collect!


Amazing on the Amazon forum how many people seem to think that even with Amazon collecting and remitting for them, they think they need to register in all these different states. I know in PA I have to collect PA Sales Tax and have been registered to do so since I started selling online, so almost 18 years.

According to the new rules that many states have come up with, I do not hit the parameters for any state to collect sales tax other than for PA. I have a chart of my shipping amounts to each state and I know I have made $100,000 or even $10,000 in any state. So I don't register. Amazon collects and then remits. No skin off my back so to speak. But if they collected it and gave it to use to remit, that would be a huge problem!

It seems to me, at least here on this forum, we have a bunch of sellers that are all a bit more sensible, a bit smarter, and with a bit more common sense than the Amazon forum. Some of the VERY small sellers have gone and registered for all these different states or have hired something called Tax Jar to help them with the tax accounting. Most sellers that are big enough to independently pay sales tax to the different states, it seems should be big enough to have an accountant working for them.
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cosmicray



Posts: 6839

PostPosted: Wed Dec 11, 2019 9:10 am    Post subject: Reply with quote

@SheilaDeesPostcards

Where this gets rather vague, is what sales count towards the 200 (or similar number) for a given state ? I sell on three different venues. One of those venues, eBay, is collecting for those states (e.g. MN) where the marketplace is required to collect. So, from one perspective, those sales are covered. Then I may have sales on the other two venues, which are not covered.

Do they all count towards the threshold, or do only the ones not being covered count ? I honestly do not know the answer.

I am currently counting sales by state. Thus far, with 3 weeks remaining, the two that concern me are California (42) and Texas (23). None of the other states have cracked 20 yet, and I see 10 states with no sales.

Color me perplexed.
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MoonwishesStore



Posts: 16117

PostPosted: Wed Dec 11, 2019 9:21 am    Post subject: Reply with quote

I think most of the states have a 200 order threshold before there is a problem. The dollar amount is different and many choose $100K, but it could be less. I think the amount is the total sold to each state no matter is a venue is collecting for you or not. So far I am up to 112 California orders and I highly doubt that I will get another 88 orders from there in the next 20 days! So I don't worry about it.
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SheilaDeesPostcards



Posts: 4026

PostPosted: Wed Dec 11, 2019 10:21 am    Post subject: Reply with quote

@Moon, I believe CA is one of the states that has NO transaction number. I just check again and it appears remote sellers only have to register if they have over $500,000 in sales shipped into CA. If you're doing that $ volume to CA, please share your secret.

@cosmicray, I haven't found anything that says you omit the sales volume or transaction number from sales made on a marketplace. However, a quick scan of the information provided on avalara.com for the 30+ states that have a remote seller rule, I didn't see any that have a transaction number lower than 200 except NY which has a 100 transaction. However, NY states $500,000 and 100 transactions, so as long as your sales are under $500.000 there is no problem.

The question as to whether you count the transactions & $ amount on marketplaces that collect sales tax was one I haven't found an answer. I also have a question regarding whether you should count the transactions and/or dollar volume for those sales that are not taxable in that state. We know many states have excluded items from sales tax and I haven't seen anyone address if we count those orders.
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MoonwishesStore



Posts: 16117

PostPosted: Wed Dec 11, 2019 11:35 am    Post subject: Reply with quote

Sheila going backward on your post. When I first started selling sewing patterns I checked the sales tax rules. At that point patterns to make normal everyday clothing, coats, pajamas, etc. were not taxable and things like Halloween costumes, wedding gowns, stuffed toys, etc. were. Then when the redid the list and someone got lazy and the only thing they expressly said was not taxable was lady's dress patterns. People flock from NY, OH, and Canada to come to our malls to shop for tax-free items. But every garment that is already made and is non-taxable, the pattern for the garment should be as well. I've written the state sales tax folks and of course, no one wants to give a straight answer. But in essence, they did agree that I was correct. However, that doesn't mean Amazon will take my word for it and continue to collect PA sales tax on PA sales tax-exempt items. At that point, I gave up.

I wasn't aware that CA had no number of orders, which really doesn't make sense. If someone has 200 $5 sales in some states even though others that sell much more expensive things don't have to pay since they didn't hit 200, but did hit $95,000 in orders. The whole thing is screwy.

@Sheila, I have no secret for making $500,000 from one state alone plus all the other states as well. I would love to know the secret to make that kind of money. I am doing good this year, however, but not to the point of having that kind of money coming in. The last year we made sales better than this one is 2011.
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pickychicky



Posts: 977

PostPosted: Wed Dec 11, 2019 3:56 pm    Post subject: Reply with quote

@Sheila, I've done sales tax in two different states. I'm not aware of there being a minimum sales requirement for Kansas, but there has always been one for Texas since I've been doing taxes. Last I checked, before all this mess began, it was $400 in sales to Texans. Considering how Kansas taxes their people to death, I wouldn't be surprised if they didn't have a minimum. That's often the kind of information you have to dig deep for because, of course, a state would love for you to collect even if you don't have to. I know it took me a while to find it on the Texas site.

Every state is different and that is why I always tell people to check their own state's sales tax site and READ. It's much too important not to, especially considering all the changes.
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MoonwishesStore



Posts: 16117

PostPosted: Wed Dec 11, 2019 4:26 pm    Post subject: Reply with quote

That is what I try to do, and it has been interesting over the years to see who does and does not charge PA sales tax on patterns. If the fabrics, zipper, thread and embroidery (as long as it isn't a formal) why would the pattern be taxed if a dress pattern isn't? Just a foul up that sometimes no one notices, but I sure did.

Everyone needs to check their on state. This is something else that is interesting and I see it a lot on Amazon is the newbie sellers coming on asking multiple questions, all things that they should have looked into and been aware of before they ever signed up anywhere to sell. And then in January the questions that they ask when suddenly faced with the thought that they may owe taxes on what they have sold. I have never been able to fathom why people think that if they sold it online how could they possibly owe sales tax and income tax!
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