Minnesota Senate Bill SF3397

Minnesota 2025-2026 Regular Session

• Introduced: 4/22/25
• Refer: 4/22/25

Caption

Gross receipts tax enforcement on various services

Impact

If implemented, SF3397 would result in changes to existing tax regulations under Minnesota Statutes. It would necessitate that businesses selling these specified services report and remit taxes similarly to current regulations under chapters 270C and 297A. The revenues generated from this tax are to be deposited into the general fund, potentially providing a new financial resource for state-funded programs and services. Additionally, any business entity liable for this tax would need to ensure compliance with the reporting and payment processes outlined in the bill.

Summary

SF3397 proposes the introduction of a gross receipts tax in Minnesota, specifically targeting various business-to-business services. The bill establishes a two percent tax on the gross receipts of taxable services when sold from one trade or business entity to another. Services subjected to this tax include legal, accounting, engineering, consulting, and several others. This initiative is aimed at generating revenue for the state while simplifying taxation on service industries that operate primarily between businesses.

Contention

The proposed legislation has raised notable points of contention among stakeholders. Supporters argue that the bill could provide essential revenue for public services without unduly burdening consumers directly. Opponents, however, express concerns regarding the impact on the cost of services, suggesting that the additional tax could lead to increased prices for businesses dependent on these services, thereby affecting their competitive edge. Some critics also fear that this new tax could complicate the existing tax landscape for businesses operating in Minnesota.

Additional_notes

The bill also includes provisions for businesses to claim credits for taxes paid to other states, ensuring that Minnesota businesses are not penalized for taxes imposed elsewhere. This measure aims to maintain fairness in taxation across interstate business services, which is a critical consideration for many stakeholders involved in multi-state operations.