Beginning October 1, Amazon and Etsy will charge a sales tax for items shipped to Minnesota. The new law is both a blessing and a curse for small business owners in Minnesota.
Amazon announced Sept. 18 to it sellers that the site would begin “calculating, collecting, and remitting sales tax for all orders shipped to customers in Minnesota on October 1, 2018,” according to eCommerce Bytes. Etsy gave a similar announcement back in July in a blog post listing Washington, Pennsylvania, and Oklahoma as other states the site collects sales tax in.
On one hand charging a sales tax on items shipped to Minnesota helps level the playing field for small business owners who have to compete with out-of-state vendors, but at the same time local businesses that might order equipment via these platforms will have an added charge.
These changes come as a result of the U.S. Supreme Court’s June 21, 2018, decision in South Dakota v. Wayfair, which made it easier for states to collect sales tax from out-of-state companies selling a product to in-state customers.
Although the new sales tax won’t affect brick-and-mortar retailers that have a presence in Minnesota, all small business owners should be wary of what the future holds for them in terms of shipping to customers out of state. After the Supreme Court’s decision, more and more states are beginning to adopt similar sales tax laws, with those most affected being businesses that rely primarily on online sales.