The New Guidelines Surrounding the Minnesota Warehouse Sales Tax

Published On: 27th January 2014

The new Minnesota warehouse sales tax guidelines are adding to the desire of some to repeal the tax.

In 2013, lawmakers passed the new tax, applying it to any business needing to buy storage or warehouse services from a warehouse storage provider. The tax would not apply to companies using their own warehouses.

The Department of Revenue has now issued the tax guidelines, which is expected to generate more than $95 million over the current budget cycle. The storage services that this warehouse sales tax applies to include the storage of coal, documents, liquor, lumber, and hazardous waste. So if a company needs to secure warehouse space in Minneapolis, they will have to pay sales tax on what the storage provider charges for the service.

There is a campaign in place to repeal this tax during the 2014 legislative session that begins in late February.

Many opponents of the tax have stated that businesses will take their business to an area where there is no warehouse tax.

The State Revenue Commissioner said that the specifics of the tax were developed with the help of farmers and businesses. It is stated that the goal is to provide as much detail and guidance to businesses and individuals as possible. It has been stated that the desire of taxpayers is to know what the new rules are and to be given the guidance they need to ensure they are in compliance with the tax.

However, some warehouse owners fear for their businesses in that they have had some clients threaten to take their business elsewhere if the tax is allowed to go into effect on April 1.

While some business owners have been asking for guidance, others have been fighting the tax since its proposal. This is because the tax involves nearly every aspect of Minnesota’s warehouse industry. Some even say that the exemptions are disappointing in that the storage of raw products, such as feed corn, wheat and vegetables will not be taxed. However, cheese, sugar, flour, and other modified products will.

Some officials in the state believe that the warehouse tax goes too far and that a repeal is needed before April 1. Some say they have heard that companies have had to make decisions regarding some of its customers. Some companies have decided to go ahead and expand outside of the state rather than inside the state in anticipation that the tax will go into effect.

This tax comes before two more taxes on equipment repair and telecommunications go into effect in July. Governor Mark Dayton says he wants to eliminate the taxes as long as the economic forecast shows in February that the budget surplus is sufficient.

Nonetheless, the Senate Tax Committee Chair said he is not ready to make the same commitment. He says the matter will be discussed during the next legislative session as to what is the best way to go. The governor will be able to have his say on the final outcome since it is his decision of whether or not to sign the bill.