Minnesota 2025-2026 Regular Session

Minnesota Senate Bill SF3397 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; imposing a gross receipts tax on various services; proposing
3	3	1.3 coding for new law in Minnesota Statutes, chapter 295.
4	4	1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
5	5	1.5 Section 1. [295.90] BUSINESS-TO-BUSINESS SERVICES GROSS RECEIPTS TAX.
6	6	1.6 Subdivision 1.Definitions.(a) For purposes of this section, the definitions in this
7	7	1.7subdivision have the meanings given.
8	8	1.8 (b) "Commissioner" means the commissioner of revenue.
9	9	1.9 (c) "Gross receipts" means the total amount received in money or by barter or exchange
10	10	1.10for taxable services as measured by the sales price, but does not include any taxes imposed
11	11	1.11directly on the consumer that are separately stated on the invoice, bill of sale, or similar
12	12	1.12document given to the purchaser.
13	13	1.13 (d) "Retail sale" means any sale of a taxable service for any purpose other than resale
14	14	1.14by the purchaser in the normal course of business as defined in section 297A.61, subdivision
15	15	1.1521.
16	16	1.16 (e) "Taxable services" means the sale of the following services by a trade or business
17	17	1.17entity to another trade or business entity:
18	18	1.18 (1) legal;
19	19	1.19 (2) accounting and bookkeeping;
20	20	1.20 (3) architectural and engineering;
21	21	1.21 (4) research and development;
22	22	1Section 1.
23	23	25-05439 as introduced04/07/25 REVISOR EAP/EN
24	24	SENATE
25	25	STATE OF MINNESOTA
26	26	S.F. No. 3397NINETY-FOURTH SESSION
27	27	(SENATE AUTHORS: MAYE QUADE)
28	28	OFFICIAL STATUSD-PGDATE
29	29	Introduction and first reading04/22/2025
30	30	Referred to Taxes 2.1 (5) specialized design;
31	31	2.2 (6) computer;
32	32	2.3 (7) management consulting;
33	33	2.4 (8) other consulting and development;
34	34	2.5 (9) office administrative;
35	35	2.6 (10) facilities support;
36	36	2.7 (11) employment;
37	37	2.8 (12) business support;
38	38	2.9 (13) professional and technical;
39	39	2.10 (14) automotive repair and maintenance;
40	40	2.11 (15) electronic equipment repair and maintenance;
41	41	2.12 (16) commercial machinery repair and maintenance;
42	42	2.13 (17) repair and maintenance of personal property; and
43	43	2.14 (18) any service enumerated in section 297A.61, subdivision 3, paragraph (g), clauses
44	44	2.15(3), (5), and (6), items (i), (iii), (iv), and (vi).
45	45	2.16 (f) "Trade or business" means activity carried on for the production of income from
46	46	2.17selling goods or performing services.
47	47	2.18 (g) "Trade or business entity" means an entity that engages in a trade or business.
48	48	2.19 Subd. 2.Gross receipts tax imposed.(a) A tax equal to two percent of gross receipts
49	49	2.20from retail sales in Minnesota of taxable services is imposed on any trade or business entity
50	50	2.21that provides taxable services to another trade or business entity. A trade or business entity
51	51	2.22may but is not required to collect the tax imposed by this section from the purchaser as long
52	52	2.23as the tax is separately stated on the receipt, invoice, bill of sale, or similar document given
53	53	2.24to the purchaser.
54	54	2.25 (b) The tax imposed under this section is in addition to any other tax imposed on the
55	55	2.26retail sale of services under chapter 297A or income received for services provided under
56	56	2.27chapter 290.
57	57	2.28 Subd. 3.Use tax imposed; credit for taxes paid.(a) A person who receives taxable
58	58	2.29services for use in Minnesota, other than from a trade or business entity that paid the tax
59	59	2.30under subdivision 2, is subject to tax at the rate imposed under subdivision 2. Liability for
60	60	2Section 1.
61	61	25-05439 as introduced04/07/25 REVISOR EAP/EN 3.1the tax is incurred when the person has received the taxable services to completion in
62	62	3.2Minnesota. The tax must be remitted to the commissioner in the same manner prescribed
63	63	3.3for taxes imposed under chapter 297A.
64	64	3.4 (b) A trade or business entity that has paid taxes to another state or any subdivision
65	65	3.5thereof on the same transaction and is subject to tax under this section is entitled to a credit
66	66	3.6for the tax legally due and paid to another state or subdivision thereof to the extent of the
67	67	3.7lesser of (1) the tax actually paid to the other state or subdivision thereof, or (2) the amount
68	68	3.8of tax imposed by Minnesota on the transaction subject to tax in the other state or subdivision
69	69	3.9thereof.
70	70	3.10 Subd. 4.Tax collection required.A trade or business entity with nexus in Minnesota
71	71	3.11that is not subject to tax under subdivision 2 is required to collect the tax imposed under
72	72	3.12subdivision 3 from the purchaser of the taxable services and give the purchaser a receipt
73	73	3.13for the tax paid. The tax collected must be remitted to the commissioner in the same manner
74	74	3.14prescribed for the taxes imposed under chapter 297A.
75	75	3.15 Subd. 5.Taxes paid to another state or any subdivision thereof; credit.A trade or
76	76	3.16business entity that has paid taxes to another state or any subdivision thereof measured by
77	77	3.17gross receipts and is subject to tax under this section on the same gross receipts is entitled
78	78	3.18to a credit for the tax legally due and paid to another state or any subdivision thereof to the
79	79	3.19extent of the lesser of (1) the tax actually paid to the other state or any subdivision thereof,
80	80	3.20or (2) the amount of tax imposed by Minnesota on the gross receipts subject to tax in the
81	81	3.21other taxing state or any subdivision thereof.
82	82	3.22 Subd. 6.Sourcing of sales.Section 297A.668 applies to the taxes imposed by this
83	83	3.23section.
84	84	3.24 Subd. 7.Administration.Unless specifically provided otherwise, the audit, assessment,
85	85	3.25refund, penalty, interest, enforcement, collection remedies, appeal, and administrative
86	86	3.26provisions of chapters 270C and 289A that are applicable to taxes imposed under chapter
87	87	3.27297A apply to taxes imposed under this section.
88	88	3.28 Subd. 8.Returns; payment of tax.(a) A trade or business entity must report the tax on
89	89	3.29a return prescribed by the commissioner and must remit the tax in a form and manner
90	90	3.30prescribed by the commissioner. The return must be filed and the tax must be paid using
91	91	3.31the filing cycle and due dates provided for taxes imposed under section 289A.20, subdivision
92	92	3.324, and chapter 297A.
93	93	3.33 (b) Interest must be paid on an overpayment refunded or credited to the taxpayer from
94	94	3.34the date of payment of the tax until the date the refund is paid or credited. For purposes of
95	95	3Section 1.
96	96	25-05439 as introduced04/07/25 REVISOR EAP/EN 4.1this subdivision, the date of payment is the due date of the return or the date of actual
97	97	4.2payment of the tax, whichever is later.
98	98	4.3 Subd. 9.Deposit of revenues.The commissioner must deposit the revenues, including
99	99	4.4penalties and interest, derived from the tax imposed by this section to the general fund.
100	100	4.5 Subd. 10.Personal debt.The tax imposed by this section, and interest and penalties
101	101	4.6imposed with respect to the tax, are a personal debt of the person required to file a return
102	102	4.7from the time that the liability for it arises, irrespective of when the time for payment of the
103	103	4.8liability occurs. The debt must, in the case of the executor or administrator of the estate of
104	104	4.9a decedent and in the case of a fiduciary, be that of the person in the person's official or
105	105	4.10fiduciary capacity only, unless the person has voluntarily distributed the assets held in that
106	106	4.11capacity without reserving sufficient assets to pay the tax, interest, and penalties, in which
107	107	4.12event the person is personally liable for any deficiency.
108	108	4.13 EFFECTIVE DATE.This section is effective for taxable services received after
109	109	4.14December 31, 2025.
110	110	4Section 1.
111	111	25-05439 as introduced04/07/25 REVISOR EAP/EN