Minnesota, Like Colorado, Adopts a Retail Delivery Fee
Minnesota is the second state to adopt a delivery fee, following Colorado in 2022. The fee imposes a retail delivery fee (RDF) on certain deliveries of tangible personal property effective July 1, 2024.
This new rule imposes a fee of 50 cents on each transaction equal to or exceeding a threshold amount involving retail delivery in Minnesota. A “retail delivery” is a delivery to a person located in Minnesota of the following items as part of a retail sale: taxable tangible personal property and clothing (certain exceptions apply). The "threshold amount" is $100, before application of state and local sales and use taxes, as well as excluding items exempt from the RDF. When calculating whether a transaction meets or exceeds the $100 threshold, a transaction includes all charges that are part of the sale, not including the RDF.
Retailers liable for the Minnesota RDF have two options:
- Collect the fee from customers, and separately state it on the customer invoice or receipt as a “Road Improvement and Food Delivery Fee.”
- Elect to pay the fee on behalf of customers without separately stating the fee on the invoice or receipt.
The RDF:
- Is not subject to sales tax if separately stated on the receipt or invoice
- Applies once per transaction, regardless of the number of shipments made
- Is shown as a separate line item on the receipt as “Road Improvement and Food Delivery Fee”
Retailer exclusions:
A retailer is not liable for the RDF if it is one of the following:
- A retailer, who for the previous calendar year, had Minnesota retail sales that totaled less than $1,000,000
- A marketplace provider facilitating a sale for a retailer, who during the previous calendar year, made Minnesota retail sales through the marketplace that totaled less than $100,000
In calculating the threshold for the retailer exclusion, include all taxable and nontaxable retail sales. Sales where the purchaser is buying for resale are not included. The purchaser must provide an exemption certificate.
Charges for the following items are not included when determining if the transaction meets or exceeds the $100 threshold:
- Drugs
- Medical devices, accessories, and supplies
- Food, food ingredients, or prepared food
- Certain baby products
- Sales made to retailers for the purpose of resale
- Utilities, such as natural gas and electricity
- Items delivered electronically (e.g., computer software)
The RDF does not apply to:
- Deliveries to a purchaser that is exempt from sales tax
- Deliveries by motor vehicles with permits issued under Minnesota Statutes, Chapter 169 or 221
- Deliveries by a food and beverage service establishment, whether made by a third-party delivery service or the actual establishment
- Purchases picked up at the retailer’s business location, including curbside delivery
- Deliveries to locations outside of Minnesota
The Retail Delivery Fee is not refundable if any or all items purchased are returned to a retailer or if the retailer provides a refund or credit in the amount equal to or less than the purchase price.
If the retail delivery is canceled by the purchaser, retailer, or delivery provider, the Retail Delivery Fee must be refunded to the purchaser.
The seller is responsible for remitting the Retail Delivery Fee.
Herbein’s highly experienced professionals are ready to help with your questions concerning this new Minnesota Retail Delivery Fee, as well as any other State and Local Tax needs.
Article contributed by Lou Palladino
