- Retail sales of tangible personal property delivered into Minnesota
- Both taxable and exempt retail sales count toward the threshold
- Marketplace-facilitated sales count toward a seller's own threshold calculation
- Sales made through a registered marketplace facilitator collecting and remitting Minnesota tax on the business's behalf
- Wholesale sales for resale with a valid exemption certificate
Affiliate nexus
Minnesota recognizes two distinct mechanisms for affiliate and referral-based nexus under Minn. Stat. § 297A.66, subd. 1, each operating independently of whether economic nexus thresholds have been met.
The first is affiliate nexus, which arises when an out-of-state seller has an affiliate that is a Minnesota retailer and that affiliate promotes or provides services to the out-of-state seller. No minimum sales volume or transaction count is required for this trigger to apply.
The second is click-through nexus, which arises when an out-of-state seller enters into an agreement with a Minnesota resident who, for a commission, directly or indirectly refers potential buyers to the seller through website links or any other means. Both affiliate and click-through nexus triggers apply regardless of the level of sales activity generated through those relationships.
Physical nexus
Physical nexus in Minnesota is governed by Minn. Stat. § 297A.66, subd. 1, which took effect October 1, 2019.
A seller establishes physical nexus by conducting business activity in Minnesota for 4 or more days in any 12-month period. Maintaining a physical location such as an office, warehouse, distribution center, or sales room creates nexus, as does having an employee, representative, agent, or independent contractor operating in the state. Storing inventory at a Minnesota fulfillment center also creates nexus, including inventory held at Amazon FBA warehouses located in Minnesota.
Under Revenue Notice #19-03, attending trade shows or conventions in Minnesota to promote or conduct business counts toward the 4-day threshold. Setup and teardown days do not count toward that threshold. A seller attending fewer than 4 days must still collect tax on taxable sales made while physically present in the state. Attending a trade show or convention solely as a conference participant, without selling or soliciting business, does not create nexus.
Trailing nexus
Minnesota has explicit trailing nexus rules for both economic nexus and physical nexus.
For economic nexus, once the collection obligation begins, a seller must continue collecting for at least through the last day of the 12th calendar month from the date collection was first required. To exit the collection obligation, the seller must notify the Commissioner and demonstrate that the thresholds were not met during the 12 months following the initial requirement date.
For physical nexus, under Revenue Notice #19-03, once the 4-day threshold is reached, the collection obligation begins on the 4th day of activity and continues through the following 11 calendar months.
