On May 24, 2023, Minnesota Governor Tim Walz signed into law H.F. 2887, which enacted a new fee known as the “retail delivery fee,” effective July 1, 2024.
Under the newly enacted law (Minn. Stat. § 168E.03), the fee will be imposed on retailers involved in retail deliveries of tangible personal property and clothing, excluding cloth and disposable diapers. Retail deliveries do not include pickup at the retailer’s place of business, including curbside delivery.
Retailers have the option to collect the fee from the purchaser. If collected:
- The fee must be charged separately from other delivery fees and shown as a distinct item on the purchaser's invoice.
- It is excluded from the sales price for sales/use tax purposes.
- The retailer must state the retail delivery fee as “road improvement and food delivery fee” on the invoice.
The fee is nonrefundable if any or all items are returned to the purchaser, or if the retailer provides a refund or credit equal to or less than the purchase price. However, the fee must be refunded to the purchaser if the retail delivery is canceled by the purchaser, retailer or delivery provider.
How much is the retail delivery fee?
The 50 cents retail delivery fee is imposed on each retailer for transactions involving retail delivery to a person in Minnesota that equals or exceeds the threshold amount of $100, before applications of sales taxes. It excludes revenue from deliveries exempt from sales tax.
The term transaction refers to the retail sale itself. Therefore, a single fee would apply even for retail sales in which multiple items are purchased, or the delivery of the items requires multiple shipments.
What kind of deliveries are exempt?
The following retail deliveries are exempt:
- Deliveries to purchasers exempt from sales tax under chapter 297A
- Retail deliveries of qualifying motor vehicles requiring permits
- Retail deliveries of food and food ingredients, prepared food, and sales by food and beverage service establishments
- Retail deliveries of drugs and medical devices, accessories and supplies, and baby products
Additionally, small businesses meeting the following criteria are exempt from the fee:
- A retailer that made retail sales totaling less than $1,000,000 in the previous calendar year
- A marketplace provider, when facilitating the sale of a retailer that made retail sales totaling less than $100,000 in the previous calendar year through the marketplace provider
How Wipfli can help
Keeping pace with ever-changing tax laws can be challenging.
Wipfli’s knowledgeable tax team is here to help you navigate all your state and local tax needs, including the requirements for the retail delivery fee. We offer guidance for evaluating whether to directly pay the fee or to collect it from purchasers, calculating fees and preparing monthly returns to the state.
Contact us to learn more about our tax solutions.
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