Wisconsin Enacts Legislation to Codify Emergency Economic Nexus Rule

Wisconsin has enacted Act 368, which codifies Emergency Rule 1819 put in place by the Wisconsin Department of Revenue after the South Dakota v. Wayfair decision. The economic nexus requirements of Rule 1819 became effective on October 1, 2018. The permanent legislation, Act 368, became effective on December 16, 2018.

The Act expands the definition of “retailer engaged in business in the state,” for use tax purposes, to include retailers that in the previous or current calendar year have either annual gross sales into Wisconsin that exceed $100,000 or 200 or more separate sales transactions. Out-of-state retailers that exceed either of these thresholds must register with the Department of Revenue and collect taxes administered under s. 77.52 or 77.53 on sales sourced to the state under s. 77.522 of Wisconsin statutes for the entire current year.

The legislation also provides some clarifying points for this requirement:

• “Year,” according to the law, means the retailer’s taxable year for federal income tax purposes.
• The annual sales amounts included towards the thresholds include both taxable and nontaxable sales.
• Each required periodic payment of a lease or license is a separate sales transaction.
• Deposits made in advance of a sale are not sales transactions.
• An out-of-state retailer’s annual amounts include all sales into Wisconsin by the retailer on behalf of other persons and all sales into the state by another person on the retailer’s behalf.

For our previous coverage of Wisconsin’s economic nexus rules for remote sellers, visit our news item: Wisconsin Requires Remote Sellers to Collect Sales Tax.

(Act 368 (S.B. 883), Laws 2018, effective December 16, 2018)