Wisconsin Issues Guidance on Tax Treatment of Non-Fungible Tokens

Wisconsin has issued guidance on the taxability of non-fungible tokens (NFTs) in its most recent monthly tax bulletin. Per the bulletin, the sale or purchase of an NFT may be taxable if the underlying product, good, or service is taxable in Wisconsin. The bulletin provides three illustrative examples:

• If the NFT entitles a purchaser to download music or movies, the sale of the NFT is a taxable specified digital good.
• If the NFT entitles a purchaser an admission to a sporting event, the sales of the NFT is a taxable admission.
• IF the NFT entitles a purchaser to a tangible piece of artwork, the sale of the NFT is taxable tangible personal property.

Wisconsin’s guidance follows guidance from several other states. We expect to see guidance from additional states on this emerging technology and will keep you updated. (Wisconsin Tax Bulletin, October 2022 – Number 219)