Beginning October 1, 2018, Wisconsin requires out-of-state retailers (i.e., remote sellers) to collect and remit sales or use tax on sales of taxable products and services in Wisconsin. A remote seller that has no activities in Wisconsin other than making sales is not required to register and collect Wisconsin sales or use tax if it qualifies for the small seller exception. The small seller exception is provided by rule and applies to remote sellers that have $100,000 or less in annual gross sales and less than 200 separate sales transactions in Wisconsin in both the previous year and current year. 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.
The following examples (not all-inclusive) illustrate when a remote seller is required to register and collect Wisconsin sales or use tax. The first six examples relate to when Wisconsin began requiring remote sellers to register and collect sales or use tax on October 1, 2018. Examples 7 through 9 were added due to the law change on February 20, 2021 that eliminated the 200-transaction threshold and also requires the remote seller to use a calendar year to determine if it has economic nexus.
Index of examples
Example 1 – Remote Seller exceeds annual gross sales threshold in 2017
Example 2 – Remote Seller does not meet or exceed either threshold in 2017 and 2018
Example 3 – Remote Seller exceeds separate sales transactions threshold prior to October 1, 2018
Example 4 – Remote Seller exceeds annual gross sales threshold in 2018 after October 1, 2018
Example 5 – Remote Seller reaches 200th separate sales transaction after October 1, 2018
Example 6 – Remote Seller exceeds threshold in 2017 but not in 2018
Example 7 – Remote Seller reaches separate sales transactions threshold in 2020
Example 8 – Remote Seller exceeds annual gross sales threshold in fiscal year but not in calendar year 2020
Example 9 – Remote Seller exceeds annual gross sales threshold in fiscal year and in calendar year 2020
Example 1: Remote Seller had $300,000 annual gross sales and 175 separate sales transactions into Wisconsin in 2017. Since Remote Seller exceeded the annual gross sales threshold in 2017, it is required to register and collect Wisconsin sales or use tax beginning on October 1, 2018.
Example 2: Remote Seller has $45,000 annual gross sales and 95 separate sales transactions into Wisconsin in 2017. From January 1, 2018 through September 30, 2018, Remote Seller has $65,000 gross sales and 120 separate sales transactions into Wisconsin. Remote seller is not required to register and collect Wisconsin sales or use tax on October 1, 2018. From October 1, 2018 through December 31, 2018, Remote Seller had an additional $10,000 gross sales and 10 separate sales transactions into Wisconsin, bringing the total in 2018 to $75,000 gross sales and 130 separate sales transactions. Since Remote Seller qualifies for the small seller exception, it is not required to register and collect Wisconsin sales or use tax until it meets or exceeds one of the thresholds in 2019.
Example 3: Remote Seller has $90,000 annual gross sales and 155 separate sales transactions into Wisconsin in 2017. From January 1, 2018 through September 30, 2018, Remote seller has $75,000 gross sales and 220 separate sales transactions into Wisconsin. Since Remote Seller exceeded the separate sales transactions threshold during 2018, Remote Seller is required to register and collect Wisconsin sales or use tax beginning on October 1, 2018. In addition, Remote Seller is required to collect Wisconsin sales or use tax in 2019 because it exceeded the threshold in 2018.
Example 4: Same as
Example 3, except from January 1, 2018 through September 30, 2018, Remote Seller has $95,000 gross sales and 185 separate sales transactions into Wisconsin. On October 19, 2018, Remote Seller has a $6,000 Wisconsin sale, which brings its annual gross sales in 2018 to $101,000. Remote Seller is required to register and collect Wisconsin sales or use tax beginning with its next sales transaction in 2018. In addition, Remote Seller is required to collect Wisconsin sales or use tax in 2019 because it exceeded the threshold in 2018.
Example 5: Same as
Example 3, except from January 1, 2018 through September 30, 2018, Remote Seller has $65,000 gross sales and 199 separate sales transactions into Wisconsin. On October 15, 2018, remote seller has a $1,000 Wisconsin sale, which brings its number of separate sales transactions in 2018 to 200. Remote Seller is required to register and collect Wisconsin sales or use tax beginning with the $1,000 sale on October 15, 2018. Remote Seller is also required to collect Wisconsin sales or use tax in 2019 because it met or exceeded the sales transaction threshold in 2018.
Example 6: Remote Seller has $140,000 annual gross sales and 245 separate sales transactions into Wisconsin in 2017. Remote Seller is required to register and collect Wisconsin sales and use tax beginning on October 1, 2018. During 2018, Remote Seller has annual gross sales of $68,000 and 160 separate sales transactions into Wisconsin. Remote Seller is not required to collect Wisconsin sales or use tax in 2019, unless it meets or exceeds one of the thresholds in 2019. Since Remote Seller qualifies for the small seller exception, it may inactivate its use tax registration certificate effective January 1, 2019. Remote Seller is required to collect Wisconsin sales and use tax in 2019 if it does not inactivate its use tax registration certificate.
Example 7: Remote Seller is a calendar year filer for federal income tax purposes and did not meet either threshold in 2019. On September 1, 2020, Remote Seller hit 200 separate sales transactions into Wisconsin and began collecting Wisconsin sales or use tax. Since Remote Seller exceeded the separate sales transaction threshold in 2020, Remote Seller is also required to collect Wisconsin sales or use tax for 2021 (based on the law in effect prior to February 20, 2021). Remote Seller only had $95,000 in gross sales during the entire 2020 calendar year. Due to the 200-transaction threshold being eliminated on February 20, 2021, Remote Seller qualifies for the small seller exception because it did not exceed $100,000 in gross sales during 2020. Remote Seller is required to collect tax from January 1, 2021 through February 19, 2021. Remote Seller may inactivate its use tax registration certificate effective February 20, 2021. Remote Seller is required to collect Wisconsin sales and use tax if it does not inactivate its use tax registration or at the time it exceeds $100,000 in gross sales during 2021.
Example 8: Remote Seller's fiscal year ends September 30 for federal income tax purposes. During October 1, 2019 through September 30, 2020, Remote Seller exceeded the $100,000 gross sales threshold and registered to collect Wisconsin sales and use tax. Since Remote Seller exceeded the gross sales threshold in its previous fiscal year, it is also required to collect tax from October 1, 2020 through September 30, 2021. However, the small seller exception was amended on February 20, 2021 and Remote Seller must use the previous calendar year, instead of its fiscal year end, to determine if it qualifies for the small seller exception. Remote Seller determines that its gross sales from the previous calendar year (2020) are $90,000 so it qualifies for the small seller exception. Remote Seller is required to collect tax from October 1, 2020 through February 19, 2021. Remote Seller may inactivate its use tax registration certificate effective February 20, 2021. Remote Seller is required to collect Wisconsin sales and use tax if it does not inactivate its use tax registration or at the time it exceeds $100,000 in gross sales during calendar year 2021.
Example 9: Same as
Example 8, except Remote Seller determines its gross sales in calendar year 2020 are $110,000. Remote Seller is required to collect Wisconsin sales and use tax for all of calendar year 2021 because it exceeded the gross sales threshold in calendar year 2020.
Applicable Laws and Rules
This document provides statements or interpretations of the following laws and regulations enacted as of February 24, 2021: Sections 77.51, 77.52, 77.53, and 77.58,
Wis. Stats., sec. Tax 11.002,
Wis. Adm. Code.
Laws enacted and in effect after February 24, 2021, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to February 24, 2021, that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.
The department welcomes your input on our guidance.
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Guidance Document Number: 100279
February 24, 2021