Wisconsin Requires Remote Sellers to Collect Sales Tax

Effective Date: October 1, 2018

Threshold: Annual sales into the state of more than $100,000 (Wisconsin eliminated its 200 transaction threshold, effective February 20, 2021)

Measurement Date: Previous or current calendar year

Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers – but if all sales are made through a marketplace that is collecting, the individual seller is not required to register

When You Need to Register Once You Exceed the Threshold: Next transaction

In response to the Supreme Court’s South Dakota v. Wayfair decision, Wisconsin will begin requiring online and other remote sellers to collect and remit applicable sales and use tax on sales into the state, as there is no physical presence requirement. Effective October 1, 2018, Wisconsin will require remote sellers to collect and remit sales or use tax on sales of taxable products and services in Wisconsin, consistent with existing Wisconsin statutes. The specific provision that Wisconsin is basing its authority to impose a collection requirement on remote sellers is: Statute Section 77.51(13g)(c):

“Any retailer selling tangible personal property, or items, property, or goods under Section 77.52(1)(b), (c), or (d), or taxable services for storage, use, or other consumption in this state, unless otherwise limited by federal law.”

It is their interpretation that the decision in South Dakota v. Wayfair now authorizes them to impose a collection requirement on all remote sellers subject to the standards found to be acceptable in the case.

New standards for administering sales tax laws on online and remote sellers will be developed by administrative rule. The rule will be consistent with the Wayfair decision, which approved a small seller exception for sellers who do not have annual sales of products and services into the state of (1) more than $100,000, or (2) 200 or more separate transactions. Any small seller exception Wisconsin adopts will not apply to sellers with a physical presence in Wisconsin.

Wisconsin has established that a remote seller is engaged in business in the state if the remote seller’s gross sales into Wisconsin exceed $100,000 in the previous or current calendar year.

The state recommends that remote sellers complete registrations at least three weeks prior to October 1, 2018 to ensure registrations are properly processed by October 1. If a remote seller is required to register with the state solely because of the Wayfair decision, the remote seller is not required to collect and remit sales or use tax on sales that occurred prior to October 1, 2018.

Additional information for remote sellers can be found on the Wisconsin Department of Revenue’s remote seller page.

(Wisconsin Department of Revenue News, Wayfair – Online Sales Tax, July 5, 2018)

To learn more about the the South Dakota v. Wayfair decision, read our news update on the case. To find more information for remote sellers following the Wayfair decision, visit our Remote Seller Resources page.

UPDATE: On September 10, 2018, The Wisconsin Department of Revenue announced that it is soliciting comments for a proposed administrative rule that would repeal and recreate Tax 11.97 relating to sales and use tax provisions for out-of-state retailers. The Department is continuing to evaluate and interpret the provisions of sales and use tax statutes currently enforced by the Department and will codify the Department’s position to better define what retailers are subject to tax, consistent with the limits set forth in South Dakota v. Wayfair. The objective of recreating the rule is to amend guidance for out-of-state retailers without a physical presence in Wisconsin that make sales into Wisconsin. The new guidance will be consistent with limits expressed in the Wayfair decision. Wisconsin will still begin its enforcement on October 1, 2018.

UPDATE: Wisconsin has enacted a new law (A.B. 2/Act 1, 2021) that eliminates the state’s 200 transaction economic threshold for remote sellers. Effective February 20, 2021, a remote seller is only required to collect and remit sales or use tax if its gross sales into Wisconsin exceed $100,000 in the previous or current calendar year. A remote seller may inactivate its use tax registration certificate effective February 20, 2021 if it no longer has economic nexus in Wisconsin because of the elimination of the 200 transaction threshold (assuming its gross sales are less than $100,000).

Posted on February 25, 2021