Minnesota Wholesale Drug Distributor Tax Return

Wholesale Drug Distributor Tax Return
MinnesotaCare Return Instructions (Wholesale Drug Distributor Tax)
MinnesotaCare Tax

2018 Wholesale Drug Distributor Tax

Information and instructions for filing your MinnesotaCare tax return (Minnesota Statutes Chapter 295)
For wholesale drug distributors and nonresident pharmacies

Information and
Assistance
Website/e-Services
www.revenue.state.mn.us
Email
[email protected]
Phone
651-282-5533
(Weekdays, 8 a.m. - 4:30 p.m.)
Fax
651-556-5233
Business Registration

Email:
	[email protected]
Phone:
	 651-282-5225 or 1-800-657-3605

Contents

What’s New  . . . . . . . . . . . . . . . . . . . .  1
Registering for a Minnesota Tax ID . . . 1
General Information . . . . . . . . . . . . . 2-3
	 Who Must File
	 Definition of Legend Drugs
	 Tax Passthrough
	 Electronic Filing and Payments
	 Filing Due Date
	 Estimated Tax Requirements
	 Reporting Business Changes
	Recordkeeping
	 Statute of Limitations
	 Electronic Payment Options
How to File Your Annual Return  . . . 3-4
How to Amend Your Return . . . . . . . . . 4
Managing Your Account Profile
in e-Services . . . . . . . . . . . . . . . . . . . . . 5
This information is available in alternate
formats.

Your 2018 Annual Return is Due March 15, 2019
File your return electronically starting January 22, 2019.
Go to our website and log in to e-Services to file or pay.

What’s New
Coming Soon:
A Better Revenue Website

We are redesigning the Minnesota Department of Revenue website to make it easier
for you to find and use the information you
rely on to meet your state tax obligations.
Watch for a beta (preview) version of our
new website in early 2019!
Visit www.revenue.state.mn.us for more
information and to get the latest tax news
and updates.

Sign Up to Receive Email Updates

Stay informed about MinnesotaCare taxes!
Sign up to receive email updates about:
•	 filing and payment due date reminders
•	 new or updated publications
•	 educational tax seminars
To sign up, go to our website at
www.revenue.state.mn.us and subscribe
for email updates. Enter your email address
and select MinnesotaCare Tax Updates
from the list.

Voluntary Disclosure Program

Have you been in business but were unaware of your MinnesotaCare tax obligations? Did you recently learn you were
subject to tax? If so, you may qualify for
our Voluntary Disclosure Program.
Benefits of the program include:
•	 immediate compliance with
MinnesotaCare taxes
•	 look-back period of generally three years
•	 possible waiver of penalties
For information on how to apply, see the
department’s new Voluntary Disclosure
Program web page and online application.
Go to our website at www.revenue.state.
mn.us and type Voluntary Disclosure into
the Search box.

Registering for a Minnesota Tax ID
Before you can file a MinnesotaCare
tax return and/or make estimated tax
payments, you must have a Minnesota Tax
ID Number. This is a seven-digit number
assigned to you when you register with the
department.

If your business currently has a Minnesota
Tax ID Number for other Minnesota taxes,
you can add a MinnesotaCare tax account
to your number. To update your business
information, go to our website and log in to
e-Services or contact Business Registration.

If you do not have a Minnesota Tax ID
Number, you must apply for one. You can
apply online at www.revenue.state.mn.us
or by contacting Business Registration (see
Information and Assistance on this page).

1

General Information
Who Must File

Wholesale drug distributors and nonresident pharmacies that sell or distribute
legend drugs in Minnesota are required to
file a MinnesotaCare tax return.
The following situations are common
examples of when you would be subject to
the tax:
•	 You are a business that sells legend drugs
at wholesale in Minnesota (including, but
not limited to, manufacturers, distributors, and repackagers)
•	 You are a business that sells or distributes
legend drugs to a related corporate entity
in Minnesota
•	 You are a pharmacy located outside Minnesota that sells legend drugs at retail to
consumers in Minnesota (including by
mail order)

Definition of Legend Drugs

Legend drugs are drugs or gases that are
classified by the FDA as a drug, not a
device, and are required by federal law to
be sold or dispensed in a container labeled
with one of the following statements:
•	 “Caution: Federal law prohibits dispensing without prescription”
•	 “Rx only”
Blood, blood components, and blood
derivatives. Blood and blood components
are not considered legend drugs under Minnesota law and are not subject to Wholesale
Drug Distributor Tax.
Blood derivatives, however, which are derived from blood, plasma, or serum through
a chemical manufacturing process, are
considered legend drugs and are taxable.

Tax Passthrough

A pharmacy may transfer the additional
expense generated by the Wholesale Drug
Distributor Tax to a pharmacy benefits
manager. The law requires the pharmacy
benefits manager to pay the transferred
expense (M.S. 295.582, subd. 1).

Electronic Filing and
Payments
Annual Returns

You must file your annual return electronically using our e‑Services system (see
page 3).

Payments

You are required to pay electronically if
your tax liability was more than $10,000

for any one Minnesota business tax during
the previous fiscal year (July 1–June 30).
If you are required to pay any Minnesota
business tax electronically for one year, you
must pay all Minnesota business taxes electronically for all future years. We will send
you a notice the first year you are required
to pay electronically.
A 5 percent penalty will be assessed on any
non-electronic payments if you fail to pay
electronically when required.

Filing Due Date
Annual Tax Return

The regular due date to file your annual
MinnesotaCare tax return and pay any additional tax due for the previous calendar
year is March 15.
The return must be filed even if there is
no additional tax due. If March 15 falls on
a weekend or holiday, returns filed on the
next business day are considered timely.

Extension of Time to File

If you cannot file your return by the regular
due date, you may request a 60-day filing
extension. To request an extension for your
2018 return, call 651-282-5533 no later
than March 15, 2019.
A filing extension does not extend the time
you have to pay your tax. You must pay
any tax you owe by the regular due date or
you will be assessed penalties and interest.
For 2018 returns, the regular due date is
March 15, 2019. To pay electronically, go
to our website and log in to e-Services.

Estimated Tax Requirements

You’re required to make estimated tax payments during the year if your total annual
MinnesotaCare tax will be more than $500.
If your total annual tax will be $500 or less,
you may pay your tax when you file your
annual tax return and are not required to
make estimated payments during the year.
Due Dates. Estimated tax payments are due
quarterly by the 15th day of April, July, and
October of the current year and January 15
of the following year.
If the due date falls on a weekend or
holiday, payments electronically made or
postmarked the next business day are considered timely.
Each estimated tax payment must be at least
the lesser of one of the following:
•	 90 percent of one-fourth of your actual
tax for the current year

•	 one-fourth of your actual tax for the
previous year if you were in business for
the entire year and you had a tax liability
To determine your estimated tax payments,
see the MinnesotaCare Estimated Tax
Instructions for Wholesale Drug Distributor
Tax available on our website.
Additional Charge for Underpayment of
Estimated Tax. If any payment is less than
the required amount or is paid late, an additional tax charge (ATC) for underpaying
the estimated tax will be assessed.
When you file your annual tax return, our
e‑Services system will calculate the ATC, if
any, for you.

Reporting Business Changes

Be sure to update your business information
if you do any of the following:
•	 change the name, address, owner/officers,
or ownership of your business
•	 make any other changes (such as email
address, phone number, or contact person)
•	 need to add or delete a tax type
•	 close your business
•	 are no longer required to file and pay
MinnesotaCare tax
To update, go to our website and log in to
e-Services. For additional information, see
Managing Your Account Profile in
e‑Services on page 5.

Recordkeeping

You should keep all internal accounting
records and external third-party documentation that support the amounts reported on
your MinnesotaCare tax return.
This includes any paper records and any
records you receive or store electronically.
Some examples of paper and electronic
records include:
•	 legend drug sales invoices
•	 audited and compiled financial statements
•	 all other summary and detail reports,
schedules, ledgers, and journals
All documentation should be made available on request for the department to
review. If you are audited, you will be
asked to provide between 4 and 6 years of
records. Exemptions may be denied if your
documentation is incomplete.

Continued

2

General Information (continued)
Statute of Limitations

The department may audit your return
within 3½ years from the due date of the
return or the date you filed the return,
whichever is later. If there is an error in
the amount of tax you reported, and the
difference between the original amount and
the correct amount is 25 percent or more,
we have 6½ years to audit the return. There
is no time limit if we find you have filed a
false or fraudulent return, or if you have not
filed a return.

Electronic Payment Options
e-Services

You can make payments online using our
e-Services system. If you pay through eServices, you will be able to view a record
of your payments online once they are
processed.

Go to our website at www.revenue.state.
mn.us and log in to e-Services. You will
need your bank’s routing number and your
account number. To be timely, you must
submit your payment and receive a confirmation number on or before the payment
due date. When paying electronically, you
may not use an account associated with a
foreign bank.

ACH Credit

Credit or Debit Card

You can authorize a direct transfer from
your bank account to the Minnesota Department of Revenue. For information on how
to make a bank wire transfer, call us at
651-556-3003 or 1-800-657-3909.

For a fee, you may charge your payments to
your Visa, MasterCard, American Express,
or Discover credit or debit card. To do so,
have your card ready and go to
www.paystatetax.com/mn or call
1-855-947-2966.

ACH credit payments are initiated by you
through your bank. You authorize your
bank to transfer funds to the state’s bank
account. The bank must use ACH file formats, which are available on our website.
Your bank may charge you a fee for these
payments.

Bank Wire

How to File Your Annual Return
Your 2018 MinnesotaCare tax
return is due March 15, 2019. File
your return using our e-Services
system starting January 22, 2019.

Information You Will Need
to File Your Return

To File Online

Include in gross receipts any amounts
received as charges associated with the sale
or use of the legend drugs, including:

You will need Internet access with a browser that supports 128-bit encryption, such as
Internet Explorer 8.0 to 11.0, Firefox 3.0 or
higher, Google Chrome, or Safari 5.X.

•	 MinnesotaCare tax expense charges
•	 rental charges
•	 shipping/handling charges
•	 up charges
Do not include in gross receipts:
•	 amounts received from the sale or distribution of legend drugs in Minnesota
to a wholesale drug distributor who sells
legend drugs exclusively at wholesale
•	 refunds paid to buyers in Minnesota for
legend drugs returned during the year
For the definition of legend drugs, see
page 2.

Go to our website at www.revenue.state.
mn.us and log in to e-Services.

You must file your MinnesotaCare tax
return electronically using our online
e-Services system. Before you can file your
return, you will need the following:

Line-By-Line Instructions

•	 your username and password
•	 dates and amounts of any MinnesotaCare
estimated tax payments you made for the
year

Gross Receipts from the Sale of
Legend Drugs

•	 the amounts you are reporting on your
return (see the Line-By-Line Instructions
on this page for help calculating these
amounts)
•	 if you are making a payment with your
return, your bank’s nine-digit routing
number and bank account number
You must be registered for MinnesotaCare Wholesale Drug Distributor Tax
to file a return. To register or update your
business information, log in to e-Services or
contact Business Registration (see page 1).

Use this information when you
electronically file your return.

Enter the total amount you received during
the year from the wholesale sale of legend
drugs in Minnesota.
Some common examples of wholesale sales
include sales to:
•	 health care providers, hospitals, surgical
centers, and pharmacies in Minnesota
who use the drugs in treating patients
•	 buyers in Minnesota who sell the drugs at
retail
•	 buyers in Minnesota who sell some of the
drugs at wholesale and some of the drugs
at retail

Sales or Distribution to Related Entities.
If you sell or distribute legend drugs to a
related corporate entity in Minnesota (such
as to pharmacies you own in Minnesota),
enter the total price you paid for the legend
drugs.

Continued

3

How to File Your Annual Return (continued)
Out-of-State Pharmacies
Selling in Minnesota

If you’re a pharmacy located outside Minnesota that sells legend drugs at retail to
consumers in Minnesota (including by mail
order), enter the total price you paid for the
legend drugs.

Exemption for Sales to Veterinarians
Of your gross receipts, enter the amount
received from the wholesale sale of legend
drugs to veterinarians.

Tax

Our e-Services system will calculate your
tax. The tax rate is 2 percent (0.02).

Estimated Payments

Any estimated payments you made for the
year will be applied to your return. You
will be asked to review the payments in
e-Services when filing your return. If there
are discrepancies between the payments in eServices and your records, please contact us.

Penalties and Interest

Late Payment. A late payment penalty is
assessed on any tax not paid by March 15.
The penalty is 5 percent of the unpaid tax
for every 30-day period (or part of a 30-day
period) that your return payment is late, up
to 15 percent.
Late Filing. There is also a penalty for filing your return after the due date. The late
filing penalty is 5 percent of any unpaid tax.
Extended Delinquency. If the department
sends a written demand to file a tax return
and the return is not filed within 30 days, an
extended delinquency penalty of 5 percent
of the unpaid tax or $100, whichever is
greater, will be assessed. This penalty is
in addition to any late filing penalty that
may be assessed and applies to all unfiled
returns, even if you paid the correct amount
of tax on time, or do not have a tax liability.

Interest. You must pay interest on the
unpaid tax and penalty from the regular due
date until the total is paid. The interest rate
is determined each year.
The interest rate for 2018 is 4 percent.

Paying the Balance Due

If you owe additional tax, you can use
e-Services to pay at the same time you file
your return. You’ll need your bank’s routing
number and your account number.
If you pay through e-Services, you will
be able to view a record of your payments
online once they are processed.
If you choose to pay electronically another
way, see the additional payment options on
page 3.

Payment Method. If you are required to
make your tax payments electronically and
do not, a 5 percent penalty will be assessed
on any non-electronic payments (such as
paper checks or money orders).

How to Amend Your Return
To adjust your return, you must file an
amended return electronically using our
online e-Services system.
To claim a refund, you must file your
amended return within 3½ years of the regular due date for the year you are amending.
Keep all supporting documentation for any
amended return you file. All documentation
should be made available on request for the
department to review. All amended returns
are subject to audit.

Filing Instructions

To amend a return, go to our website at
www.revenue.state.mn.us and log in to
e-Services. Choose your Wholesale Drug
Distributor Tax account and select “View
Return” next to the period you want to
amend. Then, select “Change” on the return
screen and enter the corrected amounts that
should have been reported on your original
return. You’ll also need to enter the reason
you are amending your return.

You will receive a confirmation number if
your return is filed successfully.
If you need help or have questions about
amending a return, please contact us.

4

Managing Your Account Profile in e-Services
“Manage my profile” in e-Services allows
you to:
•	 update your login information
•	 store your email address, phone number,
and banking information
•	 create access to your and other people’s
accounts
•	 add additional users with varying security, as well as request and approve thirdparty access

Set Up and Manage Users

There are two types of users in e-Services:
e‑Services Master and Account Manager.
An e-Services Master can manage other
users as well as view, file, and/or pay for
specific account types. An Account Manager can view, file, and/or pay for specific
account types depending on the access an
e-Services Master has set up for the user.
e-Services has the following access level
options:
•	 All Access—allows user total access to
update the account, file, and pay
•	 File—allows user to view all information
and file returns
•	 Pay—allows user to view all information
and make payments
•	 View—allows user to only view all information
For instructions on how to create
additional logons for users, see Help in
e‑Services.

(12/18)

Third-Party Access

Third-party access is for accountants and
other non-employees who file returns and/
or make payments on behalf of another
business. In order to receive third-party access, the non-employee must request access
from the taxpayer. The taxpayer must then
grant the access and manage the login of
the non-employee before the request can
become active.
Both parties must be active in e-Services
to request third-party access. For detailed
instructions on how to request third-party
access, go to our website.

5