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Amazon Finds Loophole in MN Internet Sales Tax

Posted at: 07/01/2013 9:41 PM
Updated at: 07/02/2013 7:50 AM
By: Jay Kolls

Minnesota's new Internet Sales Tax has started, and that means you will pay more for online purchases with companies that have ties to Minnesota.

The new law requires online companies with a "physical presence" here to collect a sales tax of nearly 7 percent for almost any purchase other than food and clothing.

Individuals are still required to pay the sales tax quarterly on any online purchase, even if it is made with a company outside Minnesota.

One online company has already used the law's loophole.

Amazon severed all its ties with Minnesota affiliates, and that means it does not have to charge consumers the sales tax at the time of purchase.

That gives Amazon an advantage over local companies such as Target and Best Buy. Those two Minnesota-based companies have to impose the sales tax when consumers use their online services.

But, Congress is expected to soon pass a federal law that would require all online companies, regardless of where they are located, to collect a sales tax directly from consumers.