Wisconsin Enacts Economic Nexus Law

Wisconsin enacted an economic nexus law requiring remote sellers to collect sales and use tax. The law includes thresholds consistent with the Department of Revenue’s economic nexus rule that became effective October 1, 2018.

Nexus Thresholds for Out-of-State Sellers

Remote retailers must register and collect Wisconsin sales or use tax if, in the previous or current year, their:

  • annual gross sales into Wisconsin exceed $100,000; or
  • annual number of separate sales transactions into Wisconsin is 200 or more.

“Year” means the retailer’s taxable year for federal income tax purposes.

The thresholds are compatible with the U.S. Supreme Court’s Wayfair decision.

Small Seller Exception

Remote sellers not meeting the nexus thresholds are considered small sellers. They do not have to register or collect Wisconsin sales or use tax.

Annual Amounts

The annual amounts include both taxable and taxable sales. In addition, an out-of-state retailer’s annual amounts include all sales into Wisconsin by:

  • the retailer on behalf of other persons; and
  • another person on the retailer’s behalf.

Periodic Lease or License Payments

Each required periodic payment of a lease or license is a separate sale transaction.

Advance Deposits

Deposits made in advance of a sale are not sale transactions.

Registration and Collection Dates

Wisconsin previously announced registration and collection dates for remote sellers that have sales and use tax duties beginning October 1, 2018.

Wayfair Guidance

As previously reported, Wisconsin provides guidance for remote sellers regarding the U.S. Supreme Court’s Wayfair decision. This guidance has recently been updated to answer questions regarding registration requirements for:

  • third-party remote sellers making sales through a marketplace; and
  • marketplaces making sales on behalf of third-party sellers.

Act 368 (S.B. 883), Laws 2018, effective December 16, 2018; Remote Sellers – Wayfair Decision, Wisconsin Department of Revenue, December 2018

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All stories by: CCHTaxGroup