Wisconsin Enacts Back-to-School Sales Tax Holiday

Wisconsin has enacted a back-to-school sales tax holiday that will run from August 1 through August 5, 2018. The provision does not apply in 2019 or in any subsequent years. During the sales tax holiday, sales of the following items are not subject to tax:

• clothing with a sales price of up to $75 per item
• a computer purchased for the consumer’s personal use with a sales price of up to $750
• school computer supplies purchased for the consumer’s personal use with a sales price of up to $250 per item
• school supplies with a sales price of up to $75 per item

A sale of eligible property under a layaway sale qualifies for exemption if either of the following applies:

• Final payment on a layaway order is made by, and the property is given to, the purchaser during the exemption period.
• The purchaser selects the property and the retailer accepts the order for the item during the exemption period, for immediate delivery upon full payment, even if delivery is made after the exemption period.

A discount by the seller reduces the sales price of the property and the discounted sales price determines whether the sales price is within the price threshold. A coupon that reduces the sales price is treated as a discount if the seller is not reimbursed for the coupon amount by a third party. If a discount applies to the total amount paid by a purchaser rather than to the sales price of a particular item and the purchaser has purchased both eligible property and taxable property, the seller shall allocate the discount based on the total sales prices of the taxable property compared to the total sales prices of all property sold in that same transaction.

Eligible property that is purchased during the exemption period with the use of a rain check qualifies for the exemption regardless of when the rain check was issued. Items purchased after the exemption period with the use of a rain check are not eligible even if the rain check was issued during the exemption period.

If a purchaser purchases an item of eligible property during the exemption period but returns the item after the exemption period and receives credit on the purchase of a different item, the appropriate sales tax is due on the sale of the different item. If a purchaser purchases an item of eligible property before the exemption period but returns the item during the exemption period and receives credit on the purchase of a different item of eligible property, no sales tax is due on the sale of the new item if the new item is purchased during the exemption period.

Delivery charges, including shipping, handling, and service charges, are part of the sales price of eligible property.

For additional guidance on what items do and don’t qualify for the sales tax holiday, visit the Wisconsin DOR’s web page. (S.B. 798, Laws 2018, Veto Message, Wisconsin Gov. Scott Walker, April 17, 2018).