Content by Dimitrios Lalos (Minneapolis) and Nathan Hagerman (Indianapolis)

Effective July 1st, Minnesota instituted new Retail Delivery Fee obligations for sellers of product delivered into Minnesota to raise revenue for infrastructure and road improvements. Sellers with $1 million or more in retail sales must collect and remit to the Minnesota Department of Revenue, or pay themselves, a new Retail Delivery Fee of fifty cents per transaction that equals or exceeds $100 (before application of sales and use taxes) of taxable products delivered to Minnesota customers.

Taxable items include tangible personal property sales subject to Minnesota sales tax, including clothing, but excluding certain listed exempt items.  Exempt items include drugs; medical devices, accessories, and supplies; food, food ingredients, or prepared food; and specific baby care products. Exempt transactions include sales by sellers with retail sales totaling less than $1 million, sales to purchasers exempt for general Minnesota sales and use tax purposes; deliveries in qualifying motor vehicles with a permit issued by the Minnesota Commissioner of Transportation.

The Retail Delivery Fee is imposed once per transaction no matter how many shipments necessary to deliver the items or of the number of items bought. It does not apply to customer pickups at the retailer’s place of business – including curbside deliveries. Special considerations may apply to items delivered into Minnesota via drop shipment and items sold by construction contractors.

Retailers electing to charge the Retail Delivery Fee to customers must separately state the charge as a separate line item on the receipt labeled “Road Improvement and Food Delivery Fee.” Retailers that do not charge the Retail Delivery Fee to customers must report and remit the fee themselves. The Retail Delivery Fee is reported on seller’s Minnesota periodic sales tax returns. 

Bottom Line: Retailers selling products to Minnesota customers should analyze their Minnesota sales transactions for new Retail Delivery Fee obligations.

“When things are going sweetly and peacefully, please pause a moment, and then say out loud, ‘If this isn’t nice, what is?’”— Kurt Vonnegut