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SF3197 (Legislative Session 94 (2025-2026))

Certain social media businesses excise tax establishment provision

AI Generated Summary

Purpose of the Bill

The purpose of this bill is to establish an excise tax on social media platform businesses based on their collection of consumer data from Minnesota residents. The goal is to generate revenue from large social media companies that gather data from users in the state.

Main Provisions

  • Imposition of Tax: The bill imposes a monthly tax on social media companies that collect data from Minnesota residents. The tax rates are tiered based on the number of Minnesota users:

    • No tax for platforms with 100,000 or fewer Minnesota users.
    • $0.10 per user for platforms with over 100,000 but not more than 500,000 Minnesota users.
    • $40,000 plus $0.25 per user for platforms with over 500,000 but not more than 1,000,000 Minnesota users.
    • $165,000 plus $0.50 per user for platforms with over 1,000,000 Minnesota users.

  • Definitions: Key terms are defined within the bill, such as what constitutes a "consumer," "consumer data," "Minnesota consumer," and a "social media platform business."

  • Presumption and Proof of Residency: Social media companies are presumed to classify users as Minnesota residents if they have Minnesota addresses or IPs associated with Minnesota. The burden of proof to contest this classification lies with the platform.

  • Recordkeeping and Administration: Social media platforms are required to keep records as specified by the commissioner of revenue. The administration, including audits and appeals, aligns with existing tax chapters.

  • credit for taxes paid elsewhere: Platforms can claim credits for similar taxes paid in other states.

  • Reporting and Payment: Companies must report and remit taxes in the manner prescribed by the commissioner.

  • Revenue Allocation: All tax revenue, including penalties and interest, will be deposited into the general fund.

Significant Changes to Existing Law

This bill introduces a new tax category specific to the digital and social media space, targeting their revenue model based on user data collection. It also sets a precedent for handling tax liabilities and compliance within this sector.

Relevant Terms

excise tax, social media platform, consumer data, Minnesota residents, tax rates, data collection, revenue, tax credits, IP address, commissioner of revenue

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 31, 2025SenateFloorActionIntroduction and first reading
March 31, 2025SenateFloorActionReferred toTaxes
April 01, 2025SenateFloorActionAuthors added
April 01, 2025SenateFloorActionAuthors added

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarifies the definition of a Minnesota resident for tax purposes."
      ],
      "removed": [],
      "summary": "Defines the term 'Resident' as it applies to the taxation statutes.",
      "modified": []
    },
    "citation": "290.01",
    "subdivision": "subdivision 7"
  },
  {
    "analysis": {
      "added": [
        "Includes precise criteria for what constitutes a social media platform."
      ],
      "removed": [],
      "summary": "Provides the definition of 'Social media platform' used in the context of this bill.",
      "modified": []
    },
    "citation": "325M.31",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "Applies rules of controlled group tax treatment to social media platforms."
      ],
      "removed": [],
      "summary": "References the section of the Internal Revenue Code that defines controlled groups of corporations.",
      "modified": []
    },
    "citation": "1563(a)",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [
        "Requires social media platforms to follow existing tax filing procedures."
      ],
      "removed": [],
      "summary": "Cites the procedures for tax filing cycles and due dates.",
      "modified": []
    },
    "citation": "289A.20",
    "subdivision": "subdivision 4"
  }
]

Sponsors