Wisconsin’s blend of vibrant cities, picturesque farmland, and thriving businesses makes it a unique place to live and work. But whether you’re making a purchase or running a business, knowing how sales tax in Wisconsin applies can help you navigate costs and avoid unexpected fees.
This guide breaks down everything you need to know about Wisconsin’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Wisconsin’s sales tax with confidence and ease.
Sales Tax Nexus in Wisconsin
When a business creates either a physical or economic nexus, it is required to collect sales tax in Wisconsin.Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require collecting and paying sales tax. The factors that determine a physical nexus in Wisconsin include:- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus: A retailer has a nexus in Wisconsin if a related affiliate helps advertise, promote, or facilitate sales or provides services like handling returns or customer complaints. Nexus also applies if the retailer operates a business location in Wisconsin, either permanently or temporarily, through a subsidiary.
- Presence at Trade Show: Participation in trade shows where sales are made can establish a nexus. If sales exceed $1,000 within a 12-month period, you may be required to collect and remit Wisconsin sales tax.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus. Beginning February 20, 2021, the threshold for economic nexus in Wisconsin is $100,000 in gross revenue in the previous or current calendar year’s sales. While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for economic sales tax nexus requirements in Wisconsin.
Wisconsin Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Wisconsin.Tangible Products
Almost all goods are taxable in Wisconsin, including:- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
- Personal Hygiene – products such as soap, shampoo, combs, deodorant, shaving cream, and razors are taxable.
- Grocery Food – Sales of food and food ingredients are exempt.
- Diapers
- Feminine Hygiene Products
- Prescription Medications
- Medical Devices
Services
In Wisconsin, the majority of service-based transactions, such as advertising, employment services, and transportation, are not subject to sales tax. However, there are specific situations where certain services are taxable. For instance, taxable services are:- Laundry and dry cleaning services
- Telecommunications – prepaid calling services, intrastate, interstate, and international telecommunications services.
- Animal care
- Landscaping and lawn maintenance
- Towing services
- Lodging
Software as a Service (SaaS)/Digital Products
SaaS is generally not taxable in Wisconsin because it does not involve the transfer of tangible personal property or prewritten software; instead, it’s considered a service, which is typically exempt unless specified otherwise. Digital products (i.e., ebooks, downloadable video content, mobile apps) are taxable. Sales tax applies to the sale, storage, use, or other consumption of specified digital goods, additional digital goods, and digital codes.Shipping/Handling
Shipping and handling charges in the state of Wisconsin are taxable. Delivery charges for direct mail are not subject to sales tax. If a shipment contains both taxable and exempt items, the seller must allocate the delivery charge based on sales price or weight and apply tax only to the portion related to taxable items.Sales Tax Permits and Licenses in Wisconsin
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Wisconsin, the next important step is getting your Wisconsin Seller’s Permit, also known as a sales tax permit.Seller’s Permit
You can register for a seller’s permit online through the State of Wisconsin Department of Revenue or follow our detailed step-by-step guide for assistance. Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale, or the expected date to start dates)
- NAICS Code
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale. In Wisconsin, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items. You can fill out the Form S-211 provided by Wisconsin after you receive your sales tax permit. You can also fill out the Streamlined Sales and Use Tax Certificate of Exemption if you would like to get sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. Wisconsin is a party to this program, meaning it follows the uniform rules and definitions established by SST but has its own sales tax regulations. Check with the Wisconsin Department of Revenue for the most current information on Wisconsin’s participation in the Streamlined Sales Tax initiative.Calculating and Collecting Sales Tax in Wisconsin
Sales Tax Computation
In Wisconsin, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Wisconsin and sells to a customer in Milwaukee, WI, with a ZIP code of 53202. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
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Origin-based vs. Destination-Based
When making in-state sales, it is important to determine if you are located in an origin-based state or destination-based state to figure out what rate to charge for sales tax. Wisconsin is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a Wisconsin-based seller, sales tax is generally based on the location of the buyer when selling within the state. For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Alabama to a customer in Madison, Wisconsin, where you have nexus, you’d apply Madison’s sales tax rate to that sale. To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.Filing and Remitting Sales Tax Returns in Wisconsin
The next step after collection is filing and remitting your Wisconsin sales tax returns. Filing and remittance can vary in frequency, typically monthly and annually.- Monthly Filing: If a retailer’s quarterly tax exceeds $1,200, the Department of Revenue may require monthly payments and filings by the end of the following month. If the tax exceeds $3,600, payments and returns may be required by the 20th of the following month.
- Quarterly Filing: Must inform the Department of Revenue.
- Annual Filing: Retailers with sales and use tax liability of $600 or less in the previous year.
Due Dates
In Wisconsin, the due date falls on the last day of the following month or the 20th of the following month for early monthly filers. For instance, sales tax collected in February is due by March 31 for standard monthly filers, while early monthly filers must submit by March 20. However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 31st deadline falls on a holiday or weekend, you’ll have until June 1, the following business day, to submit.Filing Sales Tax Returns
To file your sales tax return for Wisconsin, a few options are available:- File online through the Wisconsin My Tax Account.
- File by calling (608) 261-5340 or (414) 227-3895 if you don’t have access to a computer.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. In Wisconsin, a retailer’s discount is allowed on timely reported sales tax if it’s paid by the due date or within an approved extension. Mailed returns are considered timely if they meet postage, postmark, and delivery requirements. However, the discount is not available for delinquent payments, additional taxes owed after the due date, use tax, or returns filed by compensated certified service providers.Sales Tax Holiday
Currently, for 2024-2025, there are no planned sales tax holidays in Wisconsin.Sales Tax Penalties in Wisconsin
Like in most states, sales tax is a big part of how Wisconsin generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state. Here are the specific penalties for non-compliance with sales tax regulations in Wisconsin:- Civil penalties amounting from 5% to 50% of the total sales tax due
- If a required tax return is not filed by the due date, including any extensions, a sales tax penalty applies. The penalty is 5% of the unpaid tax for the first month, with an additional 5% for each following month or part of a month, up to a maximum of 25%. The tax amount used to calculate this penalty is reduced by any payments made by the due date and any applicable tax credits claimed on the return.
- On the criminal side, offenses can be classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
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