Update to MN Policy - Retail Delivery Fee

On 7/1/24 MN will put into effect a retail delivery fee with an exemption for small businesses under $1,000,000. We currently believe the $1 million is total sales and not just sales into MN, but we are in the process of confirming with the state. Among other things, retailers (including out-of-state retailers and marketplace providers) are subject to a $0.50 fee on each transaction that is $100 or more and involves a retail delivery in Minnesota. The fee applies once per transaction, regardless of the number of shipments needed to deliver the purchased items. The threshold for marketplaces is $100,000.

The retailer will have the option of collecting the retail delivery fee from the customer or paying out of its own pocket. This retail delivery fee must be separately stated from any shipping or other delivery fees as well as the sales price in order for it to be excluded from the taxable amount. A fee is only charged once per transaction, even if the transaction results in multiple deliveries. The fee is non-refundable if items are returned.

The following retail deliveries are exempt from the fee imposed by this chapter: 

1) a retail delivery to a purchaser who is exempt from tax under chapter 297A; 

(2) a retail delivery on a motor vehicle for which a permit issued by the commissioner of transportation or a road authority is required under chapter 169 or 221 and the retailer has maintained books and records through reasonable and verifiable standards that the retail delivery was on a qualifying vehicle; 

(3) a retail delivery resulting from a retail sale of food and food ingredients or prepared food; 

(4) a retail delivery resulting from a retail sale by a food and beverage service establishment, regardless of whether the retail delivery is made by a third party other than the food and beverage service establishment; and 

(5) a retail delivery resulting from a retail sale of drugs and medical devices, accessories and supplies, or baby products.

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MN will be releasing more information and we will update this page accordingly. 

https://www.senate.mn/journals/2023-2024/20230521076.pdf#page=545

Sec. 9. [168E.03] FEE IMPOSED. Subdivision 1. Retail delivery fee imposed. (a) A fee is imposed on each retailer equal to 50 cents on each transaction that equals or exceeds the threshold amount involving retail delivery in Minnesota. The retailer may, but is not required to, collect the fee from the purchaser. If separately stated on the invoice, bill of sale, or similar document given to the purchaser, the fee is excluded from the sales price for purposes of the tax imposed under chapter 297A. (b) If the retailer collects the fee from the purchaser: (1) the retail delivery fee must be charged in addition to any other delivery fee; and (2) the retailer must show the total of the retail delivery fee and other delivery fees as separate items and distinct from the sales price and any other taxes or fees imposed on the retail delivery on the purchaser's receipt, invoice, or other bill of sale. The receipt, invoice, or other bill of sale must state the retail delivery fee as "road improvement and food delivery fee.

Subd. 2. Multiple items or shipments. The fee imposed under subdivision 1 is imposed once per transaction regardless of the number of shipments necessary to deliver the items of tangible personal property purchased or of the number of items of tangible personal property purchased. Subd. 3. Returns and cancellations. The fee imposed under subdivision 1 is nonrefundable if any or all items purchased are returned to a retailer or if the retailer provides a refund or credit in the amount equal to or less than the purchase price. The fee must be refunded to the purchaser if the retail delivery is canceled by the purchaser, retailer, or delivery provider. EFFECTIVE DATE. This section is effective July 1, 2024. Sec. 10. [168E.05] EXEMPTIONS. Subdivision 1. Transactions. The following retail deliveries are exempt from the fee imposed by this chapter: (1) a retail delivery to a purchaser who is exempt from tax under chapter 297A; (2) a retail delivery on a motor vehicle for which a permit issued by the commissioner of transportation or a road authority isrequired under chapter 169 or 221 and the retailer has maintained books and records through reasonable and verifiable standards that the retail delivery was on a qualifying vehicle; (3) a retail delivery resulting from a retail sale of food and food ingredients or prepared food; (4) a retail delivery resulting from a retail sale by a food and beverage service establishment, regardless of whether the retail delivery is made by a third party other than the food and beverage service establishment; and (5) a retail delivery resulting from a retail sale of drugs and medical devices, accessories and supplies, or baby products.

Subd. 2. Small businesses. (a) The fee imposed by this chapter and the requirements of this chapter do not apply to: (1) a retailer that made retail sales totaling less than $1,000,000 in the previous calendar year; and (2) 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. (b) A retailer or marketplace provider must begin collecting and remitting the delivery fee to the commissioner on the first day of a calendar month occurring no later than 60 days after the retailer or marketplace provider exceeds a retail sales threshold in paragraph (a). EFFECTIVE DATE. This section is effective July 1, 2024