Minnesota Tax Changes - November 2024
Week Of 11.04.2024
The Minnesota Supreme Court has ruled that rebate amounts paid to customers by a wholesale drug distributor are not included in the distributor's "gross revenues" for the purposes of the Wholesale Drug Distributor Tax.
The court determined that the plain meaning of "gross revenues" is the total amount a taxpayer receives, either in money or through non-monetary benefits and goods. The court also found that for an amount to be included in a taxpayer's "gross revenues," the taxpayer must have come into possession of the amount from a third party. In this case, the taxpayer was contractually obligated to pay the rebate amounts to customers, and therefore could not reasonably be considered to have come into possession of the rebate amounts.
Week Of 11.04.2024
Minnesota Cigarette, Alcohol & Miscellaneous Taxes—Minnesota court finds rebates not gross receipts under wholesale drug distributor tax.
The Michigan Supreme Court has held that amounts that were invoiced to a wholesales drug distributor's customers for the purchase of wholesale legend drugs—but were either credited to the customer's account or returned via check pursuant to a rebate agreement—are not included in its "gross revenues" for purposes of the Wholesale Drug Distributor Tax. The court held that the plain meaning of "gross revenues," defined as "total amounts received in money or otherwise," is the entire amount that a taxpayer comes into possession of either through money or non-monetary benefits and goods. Furthermore, for something to be included in a taxpayer's "gross revenues," the taxpayer must have come into possession of an amount from a third-party. In this case, the taxpayer does not have discretion in paying the rebate amounts to customers once earned, and so the taxpayer cannot reasonably come into possession of or get from some outside source the rebate amounts that it is contractually obligated to pay out to customers. Therefore the rebate amounts that the taxpayer is contractually obligated to pay cannot constitute part of the "total amounts received in money or otherwise." (Dakota Drug, Inc. v. Commissioner of Revenue, Minn. S. Ct., Dkt. No. A23-1973, 11/06/2024.)
Week Of 11.04.2024
Minnesota Cigarette, Alcohol & Miscellaneous Taxes—Minnesota court finds rebates not gross receipts under wholesale drug distributor tax.
The Michigan Supreme Court has held that amounts that were invoiced to a wholesales drug distributor's customers for the purchase of wholesale legend drugs—but were either credited to the customer's account or returned via check pursuant to a rebate agreement—are not included in its "gross revenues" for purposes of the Wholesale Drug Distributor Tax. The court held that the plain meaning of "gross revenues," defined as "total amounts received in money or otherwise," is the entire amount that a taxpayer comes into possession of either through money or non-monetary benefits and goods. Furthermore, for something to be included in a taxpayer's "gross revenues," the taxpayer must have come into possession of an amount from a third-party. In this case, the taxpayer does not have discretion in paying the rebate amounts to customers once earned, and so the taxpayer cannot reasonably come into possession of or get from some outside source the rebate amounts that it is contractually obligated to pay out to customers. Therefore the rebate amounts that the taxpayer is contractually obligated to pay cannot constitute part of the "total amounts received in money or otherwise." (Dakota Drug, Inc. v. Commissioner of Revenue, Minn. S. Ct., Dkt. No. A23-1973, 11/06/2024.)