Wisconsin Enacts Back-to-School Sales Tax Holiday, Rebate

Wisconsin will have a back-to-school sales tax holiday from August 1 through 5, 2018.

In addition, taxpayers may qualify for a one-time sales and use tax rebate for individuals raising a child or children.

The Wisconsin Legislature passed a sales tax holiday that would take place on August 4 through 5, 2018. However, the governor line-item vetoed this provision so that the holiday will take place on August 1 through 5, 2018.

Other sales tax holiday provisions and, except as noted, the rebate provisions reported here are based on the text of the enrolled bill, since the text of the enacted bill was not available at press time.

Sales Tax Holiday

During the sales tax holiday weekend, retail sales of the following items are not subject to tax:

  • clothing with a sales price of up to $75 per item;
  • a computer purchased for the consumer’s personal use with a sales price of up to $750;
  • school computer supplies purchased for the consumer’s personal use with a sales price of up to $250 per item; and
  • school supplies with a sales price of up to $75 per item.

These items are not subject to tax during the sales tax holiday exemption period if:

  • they are delivered to and paid for by the customer during the exemption period; or
  • the purchaser orders and pays for the item, and the seller accepts the order during the exemption period for immediate shipment. In this case, the item qualifies even if it is delivered after the exemption period.

Retailers do not have to collect exemption certificates for items that qualify for the sales tax holiday.

Items that do not qualify for the sales tax holiday

The sales tax holiday does not apply to certain back-to-school items, including:

  • protective equipment (unless suitable for general use);
  • sports and recreational equipment;
  • clothing accessories or equipment;
  • phones;
  • school art supplies;
  • school instructional materials;
  • belt buckles, costume masks, patches, and emblems sold separately; and
  • sewing equipment and supplies.

Definitions in the bill provide details regarding items that qualify and do not qualify for the tax holiday.

Discounts and coupons

A seller’s discount reduces the sales price of the property. The discounted sales price determines whether the sales price is within the price threshold.

A coupon that reduces the sales price is treated as a discount if the seller is not reimbursed by a third party.

Sellers must allocate a discount applicable to the total amount of a sale of both qualifying and nonqualifying items. The allocation is based on the total sales prices of the nonqualifying items compared to the total sales prices of all items sold in the same transaction.

Layaway sales

During the tax holiday, a layaway sale is not subject to tax if:

  • the purchaser makes the final payment and receives the property during the exemption period; or
  • the purchaser selects the property and the retailer accepts the order during the exemption period for immediate delivery upon full payment.

Delivery can be made after the exemption period.

For the tax holiday, “layaway sale” means property is set aside for future delivery to a customer who:

  • makes a deposit;
  • agrees to pay the balance of the sales price over time; and
  • receives the property at the end of the payment period.

A seller accepts an order for layaway when the seller:

  • removes the property from inventory, or
  • clearly identifies the property as sold to the purchaser.

Rain checks

Qualifying items purchased with a rain check during the exemption period are exempt during the holiday, regardless of when the rain check was issued. However, items purchased with a rain check after the exemption period are not eligible even if the rain check was issued during the exemption period.

Exchanges

A qualifying item that is purchased during the exemption period and later exchanged for a similar qualifying item is not subject to additional tax. Furthermore, a purchaser who returns a qualifying item and gets credit towards the purchase of a different item after the exemption period is subject to tax on the different item. Also, when a purchaser buys a qualifying item before the holiday and returns it and receives credit to purchase a different qualifying item during the holiday, the different item is not subject to tax.

Delivery charges

Delivery charges, including shipping, handling, and service charges, are part of the sales price of qualifying items. The bill includes instructions for allocating these charges when a shipment includes both qualifying and nonqualifying items.

Sales Tax Rebate for Qualified Children

Individuals raising a child or children can claim a rebate of nonbusiness Wisconsin sales or use tax paid in 2017. The amount of the rebate is $100 per qualified child.

A qualified child is an individual who:

  • is under age 18 for the entire year of 2017;
  • is the claimant’s dependent;
  • is a United States citizen; and
  • was a Wisconsin resident on December 31, 2017.

The Legislature passed a rebate provision requiring that a qualified child must be the claimant’s child and dependent.  However, the governor line-item vetoed this provision to require that a qualified child must only be the claimant’s dependent to allow other relatives besides a parent to claim the rebate.

Only one claimant may claim a qualified child for the rebate.

Application procedure and due date

Taxpayers must claim the rebate by June 30, 2018. Taxpayers can claim the rebate by filing an online application with the Department of Revenue.

Nonresidents and part-year residents

Nonresidents and certain part-year residents have to verify their nonbusiness Wisconsin sales or use tax paid in 2017. The verified amount must be at least $100 for each qualified child.

Administration of the rebate

In general, administrative provisions of Wisconsin income tax laws apply for purposes of the rebate. These include provisions regarding crediting overpayments, assessments, refunds, appeals, collection, interest, and penalties.

Sunset date

In general, the rebate provision sunsets and does not apply after December 31, 2018.

The bill text is available on the Legislature’s website at https://docs.legis.wisconsin.gov/2017/proposals/reg/sen/bill/sb798.

The governor’s veto message is available on his website at https://walker.wi.gov/sites/default/files/Sales_Tax_Holiday_Veto_Message.pdf.

S.B. 798, Laws 2018, applicable as noted; Veto Message, Wisconsin Gov. Scott Walker, April 17, 2018
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