Retailers seek allowance for being ‘state’s sales tax partner’

Deborah Everson co-owns Everson’s Hardware Hank in Waconia. Along with most other retailers, she collects sales tax on customer purchases and then remits that amount to the state. Happy to partner in the tax collection, she’d like to be compensated for the time and effort that it takes to do bookwork on the state’s behalf.

“Shouldering the burden of collecting tax money … it eats into our time, and our ability to reinvest in our community. There are costs associated with being the state’s sales tax partner,” she told the House Taxes Committee Thursday.

Everson supports HF186 that would provide a vendor allowance to help retailers recoup costs associated with collecting and paying the tax. Sponsored by Rep. Jim Nash (R-Waconia), the bill was amended and held over for possible omnibus bill inclusion.

Its companion, SF237, sponsored by Sen. Scott Jensen (R-Chaska), has been referred to the Senate Taxes Committee. 

WATCH Full video of Thursday's House Taxes Committee hearing

Twenty-eight states allow retailers a vendor allowance for collecting and remitting sales and use tax, according to the material from the Minnesota Grocers Association.

According to the Department of Revenue analysis of the bill, the change would affect approximately 160,000 businesses and cost the state about $62 million a year, beginning with sales taxes collected after June 30, 2017.

For retailers with a fiscal year sales tax liability of less than $60,000, the allowance would be 2 percent of eligible taxes collected. For retailers with a tax liability between $60,000 and $600,000, the allowance would be 1 percent, and a 0.75 percent allowance is provided for a business whose annual sales tax liability is greater than $600,000.