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What is the effect of the
Wayfair decision?
The effect of the United States Supreme Court's decision in
South Dakota v. Wayfair, Inc., on June 21, 2018, is that an out-of-state seller with no physical presence in Wisconsin (i.e., remote seller) is required to collect and remit Wisconsin sales or use tax on taxable sales in Wisconsin. More details are below.
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Who is a remote seller?
A remote seller is an out-of-state seller that has no physical presence or activities in Wisconsin other than making sales.
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Are all remote sellers required to register in Wisconsin?
All remote sellers are required to be registered to collect and remit Wisconsin sales or use tax beginning on October 1, 2018. Standards for administering sales tax laws for remote sellers were originally developed by rule, consistent with
South Dakota v. Wayfair, Inc. The rule provided for a small seller exception for remote 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. Effective December 16, 2018, Wisconsin sales and use tax statutes were amended (2017 Wis. Act 368) to provide the small seller exception by law, consistent with the Court's decision in
Wayfair and the rule.
Effective February 20, 2021, the small seller exception was amended (2021 Wis. Act 1) to eliminate the 200-transaction threshold and also require remote sellers to use a calendar year to determine if it has economic nexus in the previous or current year. As a result, 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.
Important: The small seller exception does not apply to:
- Sellers with a physical presence in Wisconsin.
- Persons that hold a wine direct shipper's permit under sec. 125.535, Wis. Stats. Permitted wine direct shippers must pay Wisconsin sales/use and excise taxes on the sale of wine that is shipped directly to Wisconsin consumers (sec. 139.035, Wis. Stats.).
See the answer to
Question #5 for information on registering in Wisconsin and the answer to
Question #6 for information on the small seller exception.
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What is the date a remote seller is required to register with Wisconsin?
Wisconsin requires remote sellers to begin collecting sales or use tax on October 1, 2018. The article titled
Registration and Collection Dates for Remote Sellers provides examples of when a remote seller qualifies for the small seller exception, along with the date it will need to register and collect Wisconsin sales or use tax if it does not qualify for the small seller exception.
See the answer to
Question #5 for information on registering in Wisconsin.
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How do remote sellers register in Wisconsin?
Remote sellers can register to begin collecting and remitting Wisconsin's sales or use taxes through either of the following methods:
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Register directly with Wisconsin – To register only for Wisconsin, use
Wisconsin's online registration system. See the department's Common Questions for
Sales and Use Tax Permits for additional information.
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Register through Streamlined Sales Tax – To register for multiple states, including Wisconsin, submit a single application through the
Streamlined Sales Tax Registration System. There is no fee to complete and submit this online registration. Upon completion of the registration, the remote seller will be registered to collect and remit sales and use tax in all 24 Streamlined member states. Additional information is provided on the Streamlined Sales Tax Registration webpage and in the Streamlined Sales Tax Registration System FAQs.
A remote seller may use a Certified Service Provider (CSP) to perform its sales or use tax responsibilities when registering through the Streamlined Sales Tax Registration System. CSPs are certified under the Streamlined Sales and Use Tax Agreement to perform all the remote seller's sales and use tax functions, other than the remote seller's obligation to remit tax on its own purchases. A CSP is designed to allow a business to outsource most of its sales tax administration responsibilities. If a remote seller registers through the
Streamlined Sales Tax Registration System and contracts with a CSP to perform its sales and use tax functions (i.e., CSP Services), the CSP will file monthly sales and use tax returns on behalf of the remote seller. See the
CSP FAQs for more information.
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How is the small seller exception determined?
Effective February 20, 2021, the small seller exception was amended (2021 Wis. Act 1) to eliminate the 200-transacton threshold. As a result, the small seller exception is provided for remote sellers that have $100,000 or less in annual gross sales in Wisconsin in both the previous and current calendar year. A remote seller that qualifies for the small seller exception is not required to register and collect Wisconsin sales or use tax.
The annual gross sales amount includes both taxable and nontaxable sales into Wisconsin. In addition, the annual amount includes sales into Wisconsin by the remote seller on behalf of other sellers and sales made by another seller on the remote seller's behalf.
Under prior law, the small seller exception was provided if the remote seller had less than 200 separate sales transactions and $100,000 or less in annual gross sales in Wisconsin in both the previous year and current year. The current and previous year was based on the remote seller's taxable year for federal income tax purposes.
The article titled
Registration and Collection Dates for Remote Sellers provides examples of when a remote seller qualifies for the small seller exception, along with the date it will need to register and collect Wisconsin sales or use tax if it does not qualify for the small seller exception.
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What is considered a "separate sale transaction" for determining the small seller exception?
Important: Effective February 20, 2021, the small seller exception was amended (2021 Wis. Act 1) to eliminate the 200-transaction threshold.
Under prior law, each invoice was considered a "separate sale transaction" for determining the small seller exception. For example, an invoice that had multiple products was considered one separate sale transaction. For leases and licenses, each required periodic payment was a separate sale transaction. A deposit made in advance of a sale was not a sale transaction.
See the answer to
Question #6 for additional information about the small seller exception.
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Is a Wisconsin retailer required to collect tax on sales made into all states if it exceeds Wisconsin's small seller exception sales threshold?
Wisconsin's small seller exception only determines whether a remote seller is required to collect tax on sales that it makes into Wisconsin. A Wisconsin retailer's collection requirement in another state is not based on its sales into Wisconsin. However, a Wisconsin retailer should contact each state it makes sales into to determine if the Wisconsin retailer is required to collect that state's tax. Each state's laws and rules are different and applying the U.S. Supreme Court's decision in
South Dakota v. Wayfair, Inc., will vary by state. In addition, the implementation dates may be different for states requiring remote sellers to collect their sales or use tax.
The article titled "Wayfair Decision - Information for Wisconsin Businesses" provides information on other states, including links to state websites, customer service contact information, registration pages, sales and use tax rates, and taxable/exempt information for each state.
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Is a remote seller required to register if it does not make any taxable sales in Wisconsin?
A remote seller that does not qualify for the small seller exception but only makes nontaxable sales in Wisconsin is not required to register for Wisconsin sales or use tax. For example, a remote seller that is a wholesaler and only sells products for resale, is not required to register for sales or use tax. However, if that wholesaler makes taxable sales to end users (i.e., not for resale), the wholesaler is required to register and collect sales or use tax on such sales, unless an exemption applies (e.g., occasional sales exemption).
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Is a marketplace seller that is a remote seller required to register if all of its sales are made through a marketplace provider?
Effective January 1, 2020 (2019 Wis. Act 10), marketplace providers are required to collect and remit sales or use tax for all taxable sales in Wisconsin that the marketplace provider facilitates on behalf of a marketplace seller.
A marketplace seller that is a remote seller is not liable for Wisconsin sales or use tax for sales in Wisconsin that are facilitated by a marketplace provider. However, the marketplace seller is required to register for and collect Wisconsin sales or use tax on its taxable sales in Wisconsin that are not made through a marketplace provider, unless the marketplace seller qualifies for the small seller exception.
See the department's web page for
Marketplace Providers and Sellers for more information.
Caution: In determining if the marketplace seller that is a remote seller qualifies for the small seller exception, the annual sales amount includes sales into Wisconsin made by the marketplace seller, as well as sales made on its behalf by a marketplace provider. See the answer to
Question #6 for additional information about the small seller exception and
Question #11 for a marketplace provider's registration requirement.
Under prior law, a third-party remote seller that did not qualify for the small seller exception was not required to register for Wisconsin sales or use tax if all of the third-party seller's taxable sales were made through a marketplace and the marketplace was collecting and remitting tax on such sales. However, the third-party remote seller was required to register for and collect Wisconsin sales or use tax on its taxable sales in Wisconsin that were not made through a marketplace, as well as taxable sales made through another marketplace that was not collecting and remitting the tax.
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Is a marketplace provider required to register if it only makes sales on behalf of marketplace sellers?
Effective January 1, 2020,
2019 Wis. Act 10 clarified that marketplace providers are required to collect and remit sales or use tax for all taxable sales the marketplace provider facilitates on behalf of a marketplace seller, unless the marketplace provider qualifies for the small seller exception.
The marketplace provider is required to collect and remit tax on facilitated sales, regardless of whether the marketplace seller is a remote seller that qualifies for the small seller exception.
See the department's web page for
Marketplace Providers and Sellers for more information.
Under prior law, the marketplace was liable for tax on Wisconsin sales made on behalf of third-party sellers because the marketplace was considered a retailer, as provided in sec. 77.51(13)(c), Wis. Stats.
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How are remote sellers that are already registered in Wisconsin affected by the
Wayfair decision?
Remote sellers that were registered in Wisconsin prior to the U.S. Supreme Court's decision in
South Dakota v. Wayfair, Inc., are not impacted by this decision and may continue to collect and remit sales and use tax.
If the remote seller qualifies for the small seller exception, it may inactivate its use tax registration certificate. However, the remote seller must continue to collect and remit sales or use tax if it does not inactivate its use tax registration.
See the answer to
Question #6 for additional information about the small seller exception
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Are remote sellers liable for tax on all sales into Wisconsin?
Remote sellers are required to collect and remit sales or use tax on all sales of taxable products and services into Wisconsin, unless an exemption applies (e.g., resale). See the department's Common Questions for
What is taxable? and
What is exempt? for additional information.
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Is a remote seller liable for tax if it only makes sales of taxable services or taxable digital goods into Wisconsin?
A remote seller is required to collect and remit Wisconsin sales or use tax on all sales of taxable products and services in Wisconsin if it does not qualify for the small seller exception. Wisconsin sales and use tax is imposed on sales of the following products in Wisconsin:
Example: Remote Seller only makes sales of digital goods into Wisconsin. Remote Seller does not qualify for the small seller exception because its gross sales in the previous year were more than $100,000. Remote Seller sells a video game that is transferred electronically (i.e., taxable additional digital good) to a purchaser in Wisconsin. Remote Seller is liable for Wisconsin sales or use tax on its sale of the video game into Wisconsin.
See the answer to
Question #6 for additional information about the small seller exception.
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Are remote sellers liable for tax on sales into Wisconsin prior to the
Wayfair decision?
If a remote seller is required to register based solely on the U.S. Supreme Court's decision in
South Dakota v. Wayfair, Inc., the remote seller is not required to collect and remit sales or use tax on sales that occurred prior to October 1, 2018. A remote seller may voluntarily register and collect sales and use tax at any time prior to October 1, 2018.
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Are remote sellers required to collect sales tax on sales made via the internet?
Remote sellers are required to collect and remit tax on all taxable sales into Wisconsin, including sales made online. The Internet Tax Freedom Act prohibits Wisconsin from imposing a sales tax on Internet access services but does not prohibit Wisconsin from taxing sales made via the internet.
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How often are remote sellers required to file sales and use tax returns?
A remote seller's filing frequency (e.g., monthly, quarterly, annually) is based on the information provided with registration. Remote sellers will be notified by the department of their filing frequency based on the annual dollar amount of their taxable sales. The department may review a remote seller's filing frequency on an annual basis and change the filing frequency based on the remote seller's filing history. If the department changes the filing frequency, the remote seller will be notified of the change.
Note: If a remote seller registers through the
Streamlined Sales Tax Registration System and contracts with a
Certified Service Provider (CSP) to perform its sales and use tax functions (i.e., CSP Services), the CSP will file monthly sales and use tax returns on behalf of the remote seller.
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How do remote sellers file sales and use tax returns?
Remote sellers may electronically file Wisconsin sales and use tax returns using
My Tax Account, the department's online filing and payment system. Remote sellers must register for a username and password prior to filing returns. See the department's
Using My Tax Account – Business Users user guide for additional information.
Note: If a remote seller registers through the
Streamlined Sales Tax Registration System and contracts with a
Certified Service Provider (CSP) to perform its sales and use tax functions (i.e., CSP Services), the CSP will file monthly sales and use tax returns on behalf of the remote seller.
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Are remote sellers required to collect county and city sales and use taxes and premier resort area taxes?
Remote sellers registered for Wisconsin sales or use taxes must collect and remit the applicable county and city sales and use tax. See Wisconsin's
Sales Tax Rate Chart.
Premier resort area taxes - Remote sellers classified under one of the Standard Industrial Classification (SIC) codes in
Publication 403,
Premier Resort Area Tax, must also collect and remit premier resort area tax if the remote seller makes taxable sales into a premier resort area. The department's common questions for
Premier Resort Area Tax provides additional SIC code descriptions.
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Are remote sellers subject to audits by the department?
Remote sellers may be subject to an audit, like any other sellers.
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What is the effect of the
Wayfair decision on Wisconsin purchasers?
Purchasers in Wisconsin may see an increased number of remote sellers that are charging sales and use tax.
As before, if a remote seller does not charge sales tax on a taxable item in Wisconsin, the purchaser should report use tax on the purchase price. An individual may report the use tax on his or her individual income tax return.
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Are purchasers required to pay use tax if the remote seller qualifies for the small seller exception?
The purchaser is responsible for reporting use tax on its purchase price of a taxable item if the remote seller does not charge tax. A remote seller that qualifies for the small seller exception is not required to register and collect Wisconsin sales or use tax on its taxable sales. However, the purchaser is liable for use tax on its purchase of taxable items.
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Are there sales and use tax resources available for new registrants?
The following resources are available on the department's website:
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Where can remote sellers find information for other states?
The Streamlined Sales Tax Governing Board has developed the following resources for both Streamlined Sales Tax member states and non-member states:
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State Website and Contact Information – The web page includes links to state websites, customer service contact information, registration pages, sales and use tax rates, and taxable/exempt information for each state.
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Remote Seller Guidance by State – Chart – The chart provides state specific guidance, including links to state websites, remote seller compliance dates, remote seller thresholds, and links to each state's remote seller guidance web page.