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Wisconsin has conformed its laws to the Streamlined Sales and Use Tax (“SST”) Agreement with the enactment of Act 2 (S.B. 62), Laws 2009, effective October 1, 2009. Therefore, On February 26, 2009, Wisconsin petitioned for membership in the Streamlined Sales and Use Tax (“SST”) Agreement and has asked that its petition be considered at the May 2009 meeting of the SST Governing Board. The petition for membership requests that Wisconsin be approved as an associate member effective July 1, 2009, through September 30, 2009, and approved as a full member effective October 1, 2009. (Streamlined Sales and Use Tax Agreement Petition for Membership, Wisconsin Department of Revenue, February 26, 2009)


On February 19, 2009, Wisconsin Governor, Jim Doyle, signed a budget repair and economic stimulus bill that enacts provisions conforming Wisconsin sales and use tax laws to the Streamlined Sales and Use Tax (“SST”) Agreement, effective October 1, 2009. The bill imposes sales and use taxes on digital products and considerably modified computer software that was previously ruled exempt. Furthermore, the bill modifies the taxability of drop shipments; updates sourcing regulations, and provides an amnesty provision. With the enactment of this bill, Wisconsin may petition to become a full member of the Agreement. Additional rules and regulations apply. (S.B. 62, Laws 2009, effective as noted; Analysis of Budget Adjustment Legislation, Wisconsin Legislative Fiscal Bureau)


The Wisconsin Supreme Court ruled that an application software system purchased by a taxpayer fit the requirements to qualify as custom software and, therefore, was exempt from sales and use tax. The basic modules purchased contained a business and accounting system that had to be customized to fit their specific operations. Under audit, the Wisconsin Department of Revenue declared that the software sold by SAP was noncustom and subject to Wisconsin’s sales tax. The taxpayer petitioned and the Commission ruled in their favor. The Commission concluded that the system was a custom program because of the significant investment in presale consultation and analysis, testing, training, enhancement, and maintenance support, and because it was not a prewritten program. The distinction between the custom and prewritten programs hinges on the amount of effort necessary to get the software operational for the particular customer’s needs. The Wisconsin Supreme Court found that the Commission’s overall conclusions regarding the several circumstances that determine whether a program is a custom program were reasonable. (Wisconsin Department of Revenue v. Menasha Corp., Wisconsin Supreme Court, No. 2004AP3239, July 11, 2008)


A Wisconsin Circuit Court remanded to the Wisconsin Tax Appeals Commission a case of whether a nonprofit’s symphony tickets are subject to the state’s sales tax on admissions. The court determined that the Commission incorrectly interpreted the taxing statute by relying on an administrative rule that was not supported by the statute, to create, in effect, an unsupported exemption for educational events. Furthermore, the Commission has inconsistently interpreted and applied the provision in other cases. The court remanded the case to allow the Commission to develop a standard based on the taxing statute and related exemptions, which would be applied to determine whether an event is considered entertainment. The Commission may maintain its previous conclusion that the symphony concerts are taxable entertainment events, as long as the determination is supported by the statutorily-based standard. (Milwaukee Symphony Orchestra, Inc. v. Wisconsin Department of Revenue, Wisconsin Circuit Court for Dane County, Branch 2, April 23, 2008, No. 401-100).


Silviculture, defined as the business of raising trees for timber, lumber and other wood products, including the logging of timber when it is performed, now qualifies for tax exemption because of a new expanded definition of farming. Tractors, machines, other equipment, directly used in the business of farming would be tax exempt. This exemption became effective July 1, 2007. (Tax Release, Wisconsin Department of Revenue, July 2007)



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