The Minnesota District Court doesn’t think so. Although this Summary Judgment order is from 1995, I believe it still has application today. In the original controversy a hospital based in North Dakota was challenging the constitutionality of a gross receipts tax imposed on non-resident hospitals (themselves). The court ordered that ". . . the gross receipts tax was in fact unconstitutional under the Due Process and Commerce Clauses to the extent that it was imposed on the non-resident hospital’s gross receipts earned from health care services provided to Minnesota residents who were physically outside of Minnesota at the time those services were rendered." The court wrote ". . . to satisfy the substantial nexus test of Complete Auto and Quill, the taxpayer and the taxed activity must have some real relationship to the taxing state. The mere fact that a hospital’s patients are from Minnesota does not mean that the hospital, or its services, have substantial nexus to Minnesota. Nexus is not contagious. It is not communicable. Hospitals and hospital services do not develop nexus through patient contact." Meritcare Hospital, Plaintiff v. Commissioner of Revenue, Defendant C2-94-12818, 09/07/1995. Although this case is specific to nexus for Gross Receipts tax purposes, the same reasoning can be applied to nexus for sales and use tax purposes.
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