SF3332 (Legislative Session 94 (2025-2026))
Sales and use tax exemptions elimination, gross receipts tax on various services imposition
AI Generated Summary
Purpose of the Bill
The purpose of this bill is to change certain tax laws in Minnesota, primarily by imposing a new tax on business-to-business services and repealing various existing sales and use tax exemptions.
Main Provisions
Business-to-Business Services Tax: The bill introduces a two percent gross receipts tax on specific services when sold from one business to another. This tax applies to services such as legal, accounting, architectural, computer, and consulting services, among others. Businesses can optionally collect this tax from their clients by providing a separate statement on invoices or receipts.
Repealing Tax Exemptions: The bill repeals multiple sales and use tax exemptions as previously outlined in Minnesota Statutes sections 297A.67 and 297A.68, removing certain exemptions that businesses may have relied upon.
Tax Collection and Sourcing: Businesses with a physical presence ('nexus') in Minnesota are obligated to collect this tax on services provided, if applicable, and remit it to the commissioner of revenue in a manner consistent with current sales tax procedures.
Tax Credits: Businesses taxed on the same services in another state are eligible for a credit against the Minnesota tax, limited to the lower of either the tax paid elsewhere or the tax that Minnesota would impose.
Significant Changes to Existing Law
Imposition of New Gross Receipts Tax: This bill introduces a new category of taxation targeting the gross receipts from the sale of business-to-business services, which was not previously subjected to this tax structure.
Elimination of Certain Tax Exemptions: By repealing specific exemptions, organizations that previously qualified for exemptions might now face new tax liabilities.
Administrative Changes: The bill specifies compliance for filing tax returns and how refunds and tax payments should be managed, aligning with existing tax administration rules.
Relevant Terms
- Gross receipts tax
- Business-to-business services
- Sales and use tax exemptions
- Tax credits
- Nexus
- Minnesota Statutes sections 297A.61, 297A.67, 297A.68, chapter 295
Bill text versions
- Introduction PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| April 06, 2025 | Senate | Floor | Action | Introduction and first reading | |
| April 06, 2025 | Senate | Floor | Action | Referred to | Taxes |
Citations
[
{
"analysis": {
"added": [
"Expanded definition of 'gross receipts' under taxable services."
],
"removed": [
""
],
"summary": "This section of the bill modifies the definition of taxable services under section 297A.61, subdivision 4.",
"modified": [
"Clarified the scope of taxable services."
]
},
"citation": "297A.61",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
"New provision for accounting of tax exemptions."
],
"removed": [
"Elimination of some specific exemptions, exact details unspecified."
],
"summary": "This section amends sales tax exemptions provisions under section 297A.75, subdivisions 1, 2, and 3.",
"modified": [
"Adjustment of exemption reporting requirements."
]
},
"citation": "297A.75",
"subdivision": "subdivisions 1, 2, 3"
},
{
"analysis": {
"added": [
"Implication of gross receipts on vehicle service sales."
],
"removed": [
""
],
"summary": "This section introduces changes to the taxation on vehicle sales under section 297A.82, subdivision 4.",
"modified": [
"Changes the tax implications for retailers."
]
},
"citation": "297A.82",
"subdivision": "subdivision 4"
},
{
"analysis": {
"added": [
""
],
"removed": [
"Specific exemptions are repealed."
],
"summary": "This bill repeals certain sales and use tax exemptions under section 297A.67, subdivisions 34, 35, and 38.",
"modified": [
""
]
},
"citation": "297A.67",
"subdivision": "subdivisions 34, 35, 38"
},
{
"analysis": {
"added": [
""
],
"removed": [
"Repeals specific exemptions."
],
"summary": "Repeal of additional sales tax exemptions under section 297A.68, subdivisions 17, 30, 42, and 46.",
"modified": [
""
]
},
"citation": "297A.68",
"subdivision": "subdivisions 17, 30, 42, 46"
}
]