Authors: Attorney John C. Mitby & Attorney Elizabeth L. Spencer
Phone: 608-575-4077, 608-257-0945
Email: jmitby@hurleyburish.com, espencer@hurleyburish.com
Effective October 1, 2018, the Wisconsin Department of Revenue (DOR) now requires remote sellers to collect and remit Wisconsin sales or use taxes but only if their annual sales or transactions exceed a certain amount. The DOR issued this rule after the recent United States Supreme Court decision in South Dakota v. Wayfair, Inc., 138 S.Ct. 2080 (2018).
Prior to Wayfair, consumers were responsible for paying the use tax at the same rate as the sales tax in that state for purchasers from remote sellers. The consumer would do this when filing their tax returns. However, such reporting rates were low. In Wayfair, previous decisions that said a state could not require an out-of-state seller to collect and remit state sales taxes on goods shipped to consumers unless the seller had a physical presence in that state was overruled. Now, remote sellers can be required to collect and remits state sales and use taxes.
A remote seller is an out-of-state seller that has no physical presence or activities in Wisconsin other than making sales thus, these remote sellers are commonly internet or online sellers. Under the emergency rule, if a remote seller’s annual gross sales into Wisconsin exceeds $100,000 in the previous year, or if the annual number of separate sales transactions into Wisconsin is 200 or more in the previous year, the retailer is required to register and collect Wisconsin sales or use tax for the entire current year. If the gross sales are less than $100,000 or the annual number of separate sales is less than 200, the emergency rule does not apply to a remote seller. The emergency rule also notes that remote sellers with substantial nexus for sales and use tax applying the Wayfair thresholds may also have substantial nexus for imposing Wisconsin franchise and income tax.
The announcement by the DOR provided little time for implementation of practices by businesses to comply with the rule. While the DOR recommended that remote sellers should have registered at least three weeks prior to the effective date it is likely that many have not. To register, remote sellers may register directly with Wisconsin through its online registration system or through the Streamlined Sales Tax System which allows registration for multiple states through a single application.
For more information from the DOR on the emergency rule and Wayfair decision visit: https://www.revenue.wi.gov/Pages/Businesses/remote-sellers.aspx
