The Wisconsin Court of Appeals has ruled in the case StubHub, Inc. v. Wisconsin Department of Revenue (DOR). Both parties appealed at various times in the lawsuit and made arguments about what constitutes a “seller” in Wisconsin. StubHub and the DOR were appealing over mixed rulings in lower courts related to the Department assessing StubHub for $8,495,937.50 in back taxes, plus another $8,567,136.15 in interest, penalties, and fees on sales between 2008 and 2013. The amount includes a 25% penalty for negligence because StubHub ignored tax guidance in tax bulletins issued by the Wisconsin DOR advising StubHub was responsible for paying sales tax. After hearing the arguments, the Court of Appeals ruled that StubHub was a seller under Wisconsin laws and that they owed the full amount assessed for sales tax as well as penalties and interest, including the negligence penalty the DOR calculated.
The Court first considered StubHub’s business model and how ticket buyers and sellers interact with the platform. Under the StubHub model, both ticket sellers and buyers must register for accounts with the service to interact with the other parties. After following the steps and listing a ticket on StubHub’s marketplace, a ticket remains available unless either payment was received for the ticket or the ticketholder withdrew the ticket. Though StubHub did not generally restrict a ticketholder’s option to sell the ticket elsewhere, those who signed up using the Instant Download option were required to exclusively list and sell their ticket(s) through the platform. Ticketholders who utilized StubHub were often individuals, though some were businesses. StubHub did not buy any tickets on its own behalf. Ticket buyers were charged the listing price plus StubHub fees, which included a percentage of the sale plus a varying logistics fee. StubHub collected payment, removed its own fees, and disbursed payment to the ticket seller, only disclosing the identity of the ticket sellers and holders under limited circumstances. StubHub also offered a guarantee to ticket buyers that if the tickets received were late, invalid, or incorrect, replacement tickets or a refund would be given to the buyer.
The Court was not persuaded by StubHub’s arguments either that it was a passive facilitator instead of a seller and or by StubHub’s interpretation of the ramifications of Wisconsin’s 2019 Marketplace provider law on this case. StubHub claimed they were more like an auctioneer than a seller. However, the Court was unpersuaded by this argument, noting that StubHub is not a passive facilitator based on many factors of their business model. The Court found that StubHub is often the only party ticket buyers encounter and that StubHub conducted the transactions in exchange for payment including processing transactions, charging the buyer’s payment method, deducting fees, and transferring the remaining balance to the original ticket seller. Since the sales at issue in this case happened between 2008 to 2013, StubHub also argued that the Marketplace Provider Law passed in Wisconsin in 2019 indicates that they would not be subject to sales tax during the period in question. StubHub did not dispute that under the Marketplace Provider Law they are subject to tax, but they did argue that since it was not passed until 2019, and since the act was a substantial change in the law, StubHub only became subject to sales tax after its passage. However, the DOR contended and the Court agreed that the Marketplace Provider Law was not a substantial change but rather a clarification. Further, the Court found that StubHub was covered as a seller under the state’s definition which applied before the Marketplace Provider Law.
Since the Court found that StubHub was subject to the tax, they then considered the penalty the DOR assessed for negligence. The DOR must show the taxpayer acted with “willful neglect” in order to assess a 25% penalty. In this case, the DOR relied on guidance published in the Wisconsin Tax Bulletin which should have made it clear to StubHub that they were subject to sales tax. Since StubHub disregarded this clear guidance, the Court of Appeals found they were properly assessed the 25% penalty.
Taxpayers should note the impact of many issues in this case—the definition of a “seller”, the impact of new legislation, and the importance of receiving, reading, and understanding all DOR provided tax guidance. Though StubHub was never the owner of the tickets sold for Wisconsin events, they took enough of an active role in the sales they made to meet the definition of seller. Other taxpayers should assess how much control they have over a sale and how that impacts how a state would consider their activities. Taxpayers also need to be aware of new litigation and impacts of that litigation. Determining how substantial the change in law is may have substantial impact on sales tax and taxpayers’ requirements under that law. Finally, taxpayers should note the importance of the Tax Bulletins in this case. DORs send out notices which taxpayers are expected to read and understand. It is critical that taxpayers ensure they receive and read all state tax guidance to ensure they will not be subject to negligence penalties for noncompliance. (Decision dated and filed January 13,2026, before White, C.J., Colon, P.J., and Geenen, J., StubHub, Inc. v. Wisconsin Department of Revenue, Appeal Number 2024AP455, Circuit Court Number 2023CV665 2024AP455)