Understanding the Minnesota Delivery Fee

Beginning July 1, 2024, Minnesota imposed a Retail Delivery Fee (RDF) of $0.50 on certain retail transactions involving deliveries within the state. To understand when the fee applies, how TaxCloud helps you manage it, and what actions you need to take to stay compliant, read this guide.

What is the Minnesota Retail Delivery Fee?

The Minnesota Retail Delivery Fee is a flat $0.50 charge imposed on retail deliveries of $100 or more made to Minnesota addresses. This applies to both in-state and out-of-state sellers.

The RDF is not a sales tax, rather a state-imposed delivery surcharge. While retailers may choose to collect it from customers, they are ultimately responsible for remitting it to the Minnesota Department of Revenue.

If you choose to collect the RDF from the purchaser, the fee must be separately stated on the invoice. A separately stated RDF is not subject to Minnesota sales tax. Retailers may also choose to absorb the RDF and remit it directly to the state without collecting it from the customer.

Who is required to collect the MN Retail Delivery Fee?

Retailers and marketplace providers are required to collect the RDF once the thresholds below are met, and for most qualifying deliveries to Minnesota thereafter. The thresholds are explained below:

Sales thresholds

The RDF requirement applies if:

• Your business made $1,000,000 or more in retail sales (not for resale) during the previous calendar year.
• You are a marketplace provider facilitating sales for a retailer that made $100,000 or more in the previous calendar year.

Once these thresholds are exceeded, you must begin collecting the RDF on most qualifying deliveries into Minnesota. This must start no later than 60 days after crossing the threshold, on the first day of the following calendar month.

Order total

The RDF applies to transactions where the total sale amount is $100 or more, not including:

• The RDF itself
• Sales tax
• Exempt items (see next section)

For example, if you sell two taxable items at $45 each and charge $15 for shipping, the total sale is $105. This transaction qualifies for the RDF.

Are any products or customers exempt?

Yes. Even if your business exceeds the sales threshold and the order total is over $100, certain items and purchasers are excluded from RDF collection.

The RDF does not apply to:

• Sales to tax-exempt purchasers
• Food and food ingredients, including prepared food
• Deliveries made by or on behalf of food and beverage service establishments
• Drugs and medical devices, accessories, and supplies
• Specified baby products, including cloth and disposable diapers

If the entire order consists of exempt items or qualifies based on these exclusions, no RDF should be charged, even if the thresholds are met.

How does TaxCloud support the Minnesota Retail Delivery Fee?

TaxCloud supports the MN RDF through the use of a dedicated Taxability Information Code (TIC).

However, TaxCloud does not automatically determine when the RDF applies. We do not calculate thresholds, apply the fee dynamically, or validate RDF applicability. Instead, it is merchant-controlled. It is up to the retailer or platform to:

1. Determine if the fee should be charged on a given order.
2. Include the RDF as a separate line item in the order sent to TaxCloud.
3. Use the correct TIC (11097) for the MN RDF.

How do I include the RDF in my TaxCloud integration?

To add the MN Retail Delivery Fee to an order, you must include a dedicated line item when sending the order to TaxCloud.

Key details to note:

• Use TIC 11097 for the MN RDF.
• Make sure the RDF line item is separately stated on the customer's invoice to ensure it’s excluded from sales tax.
• TaxCloud will not validate whether the RDF should be charged. This is your responsibility as the merchant.

Does TaxCloud track RDF thresholds or enforce RDF rules?

No. TaxCloud currently does not:

• Monitor or track whether your business has crossed the $1M or $100K threshold.
• Evaluate whether a specific order qualifies based on exempt items or delivery methods.
• Automatically add or exclude the RDF in transactions.

Merchants and platform providers must assess RDF applicability independently and configure their systems to include the RDF when appropriate.

How is the RDF reported to Minnesota?

For merchants filing Minnesota sales tax returns through TaxCloud:

• The RDF is reported on the standard Minnesota Sales and Use Tax return; no separate filing is required.
• For Streamlined Sales Tax (SST) merchants, the RDF is filed via the Simplified Electronic Return (SER).
• TaxCloud uses jurisdiction code 80010 to correctly report RDF amounts.

So long as the RDF is submitted as a line item using TIC 11097, it will be properly reported to the state as part of your return.

Where can I learn more?

For full details, examples, and official state guidance, visit the Minnesota Department of Revenue’s RDF page:

Minnesota Retail Delivery Fee – Official Guidance

You can also view our article on the Colorado Retail Delivery Fee here to understand how similar fees are handled across other states.

Need help?

If you’re unsure how to implement RDFs in your TaxCloud integration or have additional questions, contact our support team — we’re happy to assist.