By Ashley Vitug

 

Starting July 1, 2024, Minnesota will introduce a new Retail Delivery Fee of 50 cents on certain transactions. Here’s a breakdown to help your business stay compliant:

What is the Retail Delivery Fee?

The Retail Delivery Fee applies to retail sales of tangible personal property subject to sales tax and clothing, provided the transaction total is $100 or more. This fee is aimed at generating additional revenue for state infrastructure projects and other public services.

Key Exemptions

Not all transactions are subject to this fee. The following items are exempt:

  • Prescription drugs
  • Durable medical equipment
  • Food items
  • Certain Baby Items, including bottles, wipes, car seats, strollers, and swings
  • Sales from retailers with annual Minnesota gross revenue under $1 million
  • Sales from marketplace providers with under $100,000 in annual sales

Compliance Requirements

Retailers must show this fee separately on customer receipts. The fee follows Minnesota’s sales tax sourcing rules, which determine how and where sales are taxed based on the delivery location.

Impact on Small Businesses

Small businesses, especially those with annual sales under $1 million, will benefit from the exemption, reducing their compliance burden. However, businesses close to this threshold should carefully monitor their sales to avoid unexpected liabilities.

Preparing Your Business

  1. Update Systems: Ensure your POS systems and accounting software can handle the new fee and display it correctly on receipts.
  2. Educate Staff: Train your team to understand when and how the fee applies to ensure accurate customer communication.
  3. Review Sales: Regularly review your annual sales to determine if you fall under the exemption thresholds.

For further details, visit the Minnesota Department of Revenue website.

This new fee represents an important regulatory change for Minnesota businesses. Staying informed and prepared will help ensure compliance and minimize any disruption to your operations. If you have any questions or need assistance with integrating this change into your accounting practices, our team is here to help. Contact us for more information and support.