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Internet Seller Overcharges Sales Tax

  • Nov 13, 2015 | Gail Cole

 Some businesses are slow to implement rate change information.

A sales tax rate change took effect in Brown County, Wisconsin, on October 1, 2015, when a temporary sales tax expired. The current rate is 5%; prior to the decrease, the rate was 5.5%.

The rate change was widely reported beginning in June of this year (including here). Yet it seems the news has not reached all retailers doing business in Brown County. A few days after the rate change took effect, consumers reported being overcharged sales tax by 0.5%.

The Wisconsin Department of Revenue encouraged consumers to keep receipts and request refunds from retailers that overcharged. They initially attributed the noncompliance to the challenges of changing point of sale systems. Now, however, there is news that certain Internet sellers are unaware of the rate change.

Noncompliant Internet seller

According to WBAY.com, Tim Nass of Allouez was charged 5.5% on a recent purchase of jeans from an online seller. When he called the national clothing chain and told them of the October 1, 2015, rate decrease, “they told him they didn’t know it had changed.”

To date, the Wisconsin Department of Revenue has received 8 official complaints of sales tax being over charged in Brown County. Department spokesperson Stephanie Marquis says that any over-collected tax received by the department will go to the stadium (the expired 0.5% tax was a Special Football Stadium District Sales Tax).

Seller’s responsibility

Wisconsin expanded its definition of nexus, effective July 14, 2015. As a result, more sellers not based in Wisconsin have an obligation to collect and remit sales tax. No matter where they’re based, sellers are required to keep informed of sales tax rate changes (and reporting changes, etc.) and respond accordingly.

With more than 11,000 tax jurisdictions in the United States, it’s no wonder mistakes happen. Sellers doing business nationwide need to account for hundreds of rate changes (and reporting changes, and boundary changes…) every year. State departments of revenue understand this can be challenging, but that doesn’t relieve sellers of their obligations. In fact, the Wisconsin Department of Revenue is in the midst of hiring more than 100 new auditors; many of the new hires will focus on businesses based in other states that have nexus in Wisconsin.

The most effective way for sellers to manage sales tax is to implement an automated solution. See how sales tax software works.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.