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Minnesota Warehouse Tax Repealed

April 7, 2014
The proposed service tax was slated to take effect April 1.

Minnesota Gov. Mark Dayton signed a $616 million tax relief bill that repeals three business-to-business taxes—one of which was a 6.5-percent services tax on warehouses. It also allocates a third of the $1.2 billion state budget surplus for providing tax cuts. The warehousing services tax, originally slated to take effect April 1, 2014, would have assessed a sales tax on all aspects of public warehousing.

When the tax was proposed last year the International Warehouse Logistics Association (IWLA) commissioned KPMG to examine U.S. warehouse taxes at the state level. The study revealed only five states with a service/sales tax on the warehouse-based distribution industry, four of which taxed all business-to-business services and one only targeted warehousing services but excluded goods in interstate commerce. The study concluded that the service tax on Minnesota warehouses was unique and detrimental to the state's business climate and thus harmful to the state's overall tax revenue.

"It was determined that the warehouse sales tax isolated the logistics industry and in turn, would create long-term damage to the Minnesota economy from companies opting to take businesses to neighboring states," said IWLA President & CEO Steve DeHaan. "It was the right decision to support businesses that bring jobs and pump revenue back into the economy. We will not be a target for legislatures who attempt to burden our industry with unjust taxes."

In other IWLA news, the Association awarded its first Jock Menzies IWLA Distinguished Service & Leadership Award to former IWLA President & CEO Joel D. Anderson, who led early efforts to defeat state taxes on warehousing services. Anderson received the award during the association's annual business meeting March 25, 2014, in Phoenix, Ariz. The award recognizes outstanding leadership and service to the warehouse-based third-party logistics industry and to IWLA.

"In seven years of service to IWLA, Joel Anderson dedicated himself to making IWLA a powerful force in Washington and the organization a leader in providing education and resources to the warehouse logistics industry,” said IWLA Chairman of the Board Tom Herche, president of United Warehouses, based in Seattle, Wash. “Joel built an influential network of business professionals."

"My experience at IWLA was a rewarding one that gave me an overwhelming sense of professional accomplishment as well as personal gratitude to the members who I look to as friends. I will cherish this moment of recognition as a reminder of my final and most rewarding career experience," Anderson said.

The award, first bestowed in 1996, was dedicated in 2014 to T. "Jock" Menzies III, co-founder and former president of the American Logistics Aid Network (ALAN), who passed away in 2013. The 2014 IWLA Jock Menzies Distinguished Service & Leadership Award pays tribute to this visionary humanitarian whose achievements ensured logistics networks and warehousing were key components in natural disaster relief. Menzies turned his 40 years of logistical knowledge into a humanitarian effort after witnessing the aftermath of 2005's Hurricane Katrina.

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