Wisconsin sales tax guide

All you need to know about sales tax in the Badger State

Learn more about sales tax

Introducing our Sales Tax Automation 101 series. The first installment covers the basics of sales tax automation: what it is and how it can help your business.
 

Read Chapter 1

Sales tax 101

Sales tax is a tax paid to a governing body (state or local) on the sale of certain goods and services. Wisconsin first adopted a general state sales tax in 1961, and since that time, the rate has risen to 5 percent. On top of the state sales tax, there may be one or more local sales taxes, as well as one or more special district taxes, each of which can range between 0 percent and 0.6 percent. Currently, combined sales tax rates in Wisconsin range from 5 percent to 5.6 percent, depending on the location of the sale.

As a business owner selling taxable goods or services, you act as an agent of the state of Wisconsin by collecting tax from purchasers and passing it along to the appropriate tax authority. Sales and use tax in Wisconsin is administered by the Wisconsin Department of Revenue (DOR). 

Any sales tax collected from customers belongs to the state of Wisconsin, not you. It’s your responsibility to manage the taxes you collect to remain in compliance with state and local laws. Failure to do so can lead to penalties and interest charges.

 

When you need to collect Wisconsin sales tax

In Wisconsin, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. The seller acts as a de facto collector.

To help you determine whether you need to collect sales tax in Wisconsin, start by answering these three questions:

  1. Do you have nexus in Wisconsin?
  2. Are you selling taxable goods or services to Wisconsin residents?
  3. Are your buyers required to pay sales tax?

If the answer to all three questions is yes, you’re required to register with the state tax authority, collect the correct amount of sales tax per sale, file returns, and remit to the state.

Failure to collect Wisconsin sales tax

If you meet the criteria for collecting sales tax and choose not to, you’ll be held responsible for the tax due, plus applicable penalties and interest.

It’s extremely important to set up tax collection at the point of sale — it’s near impossible to collect sales tax from customers after a transaction is complete.


Sales tax nexus

The need to collect sales tax in Wisconsin is predicated on having a significant connection with the state. This is a concept known as nexus. Nexus is a Latin word that means "to bind or tie," and it’s the deciding factor for whether the state has the legal authority to require your business to collect, file, and remit sales tax.

Nexus triggers

Sales tax nexus in all states used to be limited to physical presence: A state could require a business to register and collect and remit sales tax only if it had a physical presence in the state, such as employees or an office, retail store, or warehouse.

In June 2018, the Supreme Court of the United States overruled the physical presence rule with its decision in South Dakota v. Wayfair, Inc. States are now free to tax businesses based on their economic and virtual connections to the state, or economic nexus.

While physical presence still triggers a sales tax collection obligation in Wisconsin, it’s now possible for out-of-state sellers to have sales tax nexus with Wisconsin.

Out-of-state sellers

Out-of-state sellers with no physical presence in a state may establish sales tax nexus in the following ways:

Affiliate nexus: Having ties to businesses or affiliates in Wisconsin. This includes, but isn’t limited to, the design and development of tangible personal property (goods) sold by the remote retailer, or solicitation of sales of goods on behalf of the retailer.

Click-through nexus: Having an agreement to reward a person(s) in the state for directly or indirectly referring potential purchasers of goods through an internet link, website, or otherwise. At this time, Wisconsin has not enacted a click-through nexus law.

Economic nexus: Having a certain amount of economic activity in the state. For sales made on and after October 1, 2018, a remote seller must register with the state then collect and remit Wisconsin sales tax if the remote seller meets either of the following criteria (the economic thresholds):

  • More than $100,000 in sales of taxable or exempt products or services in Wisconsin; or
  • 200 or more separate sales transactions of taxable or exempt products or services in Wisconsin

Inventory in the state: Storing property for sale in the state. This includes merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in Wisconsin in a warehouse owned or operated by Amazon.

Marketplace sales: Making sales through a marketplace. Effective October 1, 2019, marketplace facilitators with nexus in the state will be responsible for collecting and remitting sales tax on behalf of marketplace sellers in Wisconsin. 

Trade shows: Attending conventions or trade shows in Wisconsin. Generally, sellers making $2,000 or more in taxable sales in Wisconsin during a calendar year are required to have a seller’s permit and collect and remit tax. This is true even for sellers engaged in a “one-time” event. 

An organization is deemed to be engaged in a trade or business if its sales of taxable products and services and its events occur on more than 75 days during the year. However, if its sales for taxable products and services don’t exceed $50,000 for the calendar year, it isn’t considered to be engaged in a trade or business even if its sales and/or events exceed 75 days. 

If you have sales tax nexus in Wisconsin, you’re required to register with the Wisconsin DOR and to charge, collect, and remit the appropriate tax to the state. Once nexus is established, sellers are liable for Wisconsin sales or use tax on all Wisconsin sales through the end of the seller’s tax year.

For more information, see “Engaged in Business” in Wisconsin, Wisconsin Temporary Events FAQ, and the Wisconsin Department of Revenue Sales and Use Tax Information.

Trailing nexus

Sales tax nexus can linger even after a retailer ceases the activities that caused it to be “engaged in business” in the state. This is known as trailing nexus. As of July 2019, Wisconsin does not have an explicitly defined trailing nexus policy. 

Fulfillment by Amazon (FBA)

If you’re an active Amazon seller and you use Fulfillment by Amazon (FBA), you need to know where your inventory is stored and if its presence in a state will trigger nexus. Avalara TrustFile includes an FBA inventory report to help demystify FBA shipping and storage patterns. FBA sellers can also download an Inventory Event Detail Report from Amazon Seller Central to identify inventory stored in Wisconsin.

If you sell taxable goods to Wisconsin residents and have inventory stored in the state, you likely have nexus and an obligation to collect and remit tax. To begin to understand your unique nexus obligations, check out our free economic nexus tool or consult with a trusted tax advisor.

Sourcing sales tax in Wisconsin: which rate to collect

In some states, sales tax rates, rules, and regulations are based on the location of the seller and the origin of the sale (origin-based sourcing). In others, sales tax is based on the location of the buyer and the destination of the sale (destination-based sourcing). 

Wisconsin is a destination-based state. This means you’re responsible for applying the sales tax rate determined by the ship-to address on all taxable sales.


Getting registered

After determining you have sales tax nexus in Wisconsin, you need to register with the proper state authority and collect, file, and remit sales tax to the state. We get a lot of questions about this and recognize it may be the most difficult hurdle for businesses to overcome. Avalara Licensing can help you obtain your Wisconsin business license and sales tax registration.

How to register for a Wisconsin seller's permit

You can register for a Wisconsin seller’s permit online through the Wisconsin DOR. To apply, you’ll need to provide the Wisconsin DOR with certain information about your business, including but not limited to:

  • Business name, address, and contact information
  • Federal EIN number
  • Date business activities began or will begin
  • Projected monthly sales
  • Projected monthly taxable sales
  • Products to be sold

Cost of registering for a Wisconsin seller's permit

The cost to register for a seller’s permit in Wisconsin is $20. There's no charge for additional tax permits, and no charge for a consumer's use tax certificate. 

Acquiring a registered business

You must register with the Wisconsin Department of Revenue if you acquire an existing business in Wisconsin. The state requires all registered businesses to have the current business owner’s name and contact information on file.

Streamlined Sales Tax (SST)

The Streamlined Sales and Use Tax Agreement (SSUTA), or Streamlined Sales Tax (SST), is an effort by multiple states to simplify the administration and cost of sales and use tax for remote sellers. Remote sellers can register in multiple states at the same time through the Streamlined Sales Tax Registration System (SSTRS).

Wisconsin became a full member of the SST on October 1, 2009.


Collecting sales tax

Once you've successfully registered to collect Wisconsin sales tax, you'll need to apply the correct rate to all taxable sales, remit sales tax, file timely returns with the Wisconsin Department of Revenue, and keep excellent records. Here’s what you need to know to keep everything organized and in check.

How you collect Wisconsin sales tax is influenced by how you sell your goods:

Brick-and-mortar store: Have a physical store? Brick-and-mortar point-of-sale solutions allow users to set the sales tax rate associated with the store location. New tax groups can then be created to allow for specific product tax rules.

Hosted store: Hosted store solutions like Shopify and Squarespace offer integrated sales tax rate determination and collection. Hosted stores offer sellers a dashboard environment where Wisconsin sales tax collection can be managed.

Marketplace: Marketplaces like Amazon and Etsy offer integrated sales tax rate determination and collection, usually for a fee. As with hosted stores, you can set things up from your seller dashboard and let your marketplace provider do most of the heavy lifting.

Mobile point of sale: Mobile point-of-sale systems like Square rely on GPS to determine sale location. The appropriate tax rate is then determined and applied to the order. Specific tax rules can be set within the system to allow for specific product tax rules.

Wisconsin sales tax collection can be automated to make your life much easier. Avalara AvaTax seamlessly integrates with the business systems you already use to deliver sales and use tax calculations in real time.

Tax-exempt goods

Some goods are exempt from sales tax under Wisconsin law. Examples include most non-prepared food items, prescription drugs, and medical supplies.

We recommend businesses review the laws and rules put forth by the Wisconsin Department of Revenue to stay up to date on which goods are taxable and which are exempt, and under what conditions.

Tax-exempt customers

Some customers are exempt from paying sales tax under Wisconsin law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale.

Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.

Misplacing a sales tax exemption/resale certificate

Wisconsin sales tax exemption and resale certificates are worth far more than the paper they’re written on. If you’re audited and cannot validate an exempt transaction, the Wisconsin Department of Revenue may hold you responsible for the uncollected sales tax. In some cases, late fees and interest will be applied and can result in large, unexpected bills.

Sales tax holidays

Sales tax holidays exempt specific products from sales and use tax for a limited period, usually a weekend or a week. Approximately 17 states offer sales tax holidays every year. 

As of July 2019, however, there are no scheduled sales tax holidays in Wisconsin.


Filing and remittance

You're registered with the Wisconsin Department of Revenue and you've begun collecting sales tax. Remember, those tax dollars don't belong to you. As an agent of the state of Wisconsin, your role is that of intermediary to transfer tax dollars from consumers to the tax authorities.

How to file

Once you’ve collected sales tax, you’re required to remit it to the Wisconsin Department of Revenue by a certain date. The Wisconsin Department of Revenue will then distribute it appropriately.

Filing a Wisconsin sales tax return is a two-step process comprised of submitting the required sales data (filing a return) and remitting the collected tax dollars (if any) to the Wisconsin DOR. The filing process forces you to detail your total sales in the state, the amount of sales tax collected, and the location of each sale.

Online filing is required in Wisconsin.

Filing frequency

The Wisconsin Department of Revenue will assign you a filing frequency. Typically, this is determined by the size or sales volume of your business. State governments generally ask larger businesses to file more frequently. See the filing due dates section for more information.

Wisconsin sales tax returns and payments must be remitted at the same time; both have the same due date.

Online filing

You may file directly with the Wisconsin DOR by visiting their site and entering your transaction data manually. This is a free service, but preparing Wisconsin sales tax returns can be time-consuming — especially for larger sellers.

Using a third party to file returns

To save time and avoid costly errors, many businesses outsource their sales and use tax filing to an accountant, bookkeeper, or sales tax automation company like Avalara. This is a normal business practice that can save business owners time and help them steer clear of costly mistakes due to inexperience and a lack of deep knowledge about Wisconsin sales tax code.

Avalara TrustFile provides a quick and easy way to prepare and efile sales tax returns. Users can sign up and use the service to prepare returns for free for a limited time.

Filing when there are no sales

Once you have a Wisconsin seller's permit, you’re required to file returns at the completion of each assigned collection period regardless of whether any sales tax was collected. When no sales tax was collected, you must file a "zero return.”

Failure to submit a zero return can result in penalties and interest charges.

Closing a business

The Wisconsin DOR requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.

Timely filing discount

Many states encourage the timely or early filing of sales and use tax returns with a timely filing discount.

As of July 2019, the Wisconsin DOR offers a timely filing discount based on the tax amount due:

  • For $0 to $10, the discount is equal to the total sales tax
  • For $10 to $2,000, the discount is $10
  • For amounts greater than $2,000, the discount is 0.5 percent but cannot exceed $1,000 per reporting period

Filing due dates

It's important to know the due dates associated with the filing frequency assigned to your business by the Wisconsin Department of Revenue. This way you'll be prepared and can plan accordingly. Failure to file by the assigned date can lead to late fines and interest charges.

The Wisconsin DOR requires all sales tax filing to be completed by 4:00 p.m. CT on the due date. Generally, returns are due on the last day of the month following the reporting period. However, early monthly sales tax filing is due on the 20th day of the month following the reporting period. Below, we've grouped Wisconsin sales tax filing due dates by filing frequency for your convenience. Due dates falling on a weekend or holiday are adjusted to the following business day.

Wisconsin 2019 early monthly filing due dates

Reporting period Filing deadline
January February 20, 2019
February March 20, 2019
March April 22, 2019
April May 20, 2019
May June 20, 2019
June July 22, 2019
July  August 20, 2019
August September 20, 2019
September October 21, 2019
October November 20, 2019
November December 20, 2019
December January 21, 2020

Wisconsin 2019 monthly filing due dates

Reporting period Filing deadline
January February 28, 2019
February April 1, 2019
March April 30, 2019
April May 31, 2019
May July 1, 2019
June July 31, 2019
July  September 3, 2019
August September 30, 2019
September October 31, 2019
October December 2, 2019
November January 2, 2019
December January 31, 2020

Wisconsin 2019 quarterly filing due dates

Reporting period Filing deadline
Q1 (January 1–March 31) April 30, 2019
Q2 (April 1–June 30) July 31, 2019
Q3 (July 1–September 30) October 31, 2019
Q4 (October 1–December 31) January 31, 2020

Wisconsin 2020 annual filing due date

Reporting period Filing deadline
January 1–December 31 January 31, 2020

Late filing

Filing a Wisconsin sales tax return late may result in a late filing penalty as well as interest on any outstanding tax due. For more information, refer to our section on penalties and interest.

In the event a Wisconsin sales tax filing deadline was missed due to circumstances beyond your control (e.g., weather, accident), the Wisconsin DOR may grant you an extension. However, you may be asked to provide evidence supporting your claim.


Penalties and interest

Hopefully you don't need to worry about this section because you're filing and remitting Wisconsin sales tax on time and without incident. However, in the real world, mistakes happen.

If you miss a sales tax filing deadline, follow the saying, “better late than never,” and file your return as soon as possible. Failure to file returns and remit collected tax on time may result in penalties and interest charges, and the longer you wait to file, the greater the penalty and the greater the interest.

If you’re in the process of acquiring a business, it’s strongly recommended that you contact the Wisconsin DOR and inquire about the current status of the potential acquisition. Once you've purchased the business, you’ll be held responsible for all outstanding Wisconsin sales and use tax liability.


Shipping and handling

If you’re collecting sales tax from Wisconsin residents, you’ll need to consider how to handle taxes on shipping and handling charges.

Taxable and exempt shipping charges

Wisconsin sales tax may apply to charges for shipping, handling, delivery, freight, and postage. Generally, if the sale is taxable, these charges are taxable; if the sale is tax-exempt, the shipping and handling charges are most likely exempt as well.

If a shipment includes both taxable and exempt property, tax applies to the percentage of the delivery charge allocated to the taxable property; if no allocation is made, the entire shipment is taxable. Separately stated charges for direct mail are generally exempt.

There are exceptions to almost every rule with sales tax, and the same is true for shipping and handling charges. Specific questions on shipping in Wisconsin and sales tax should be taken directly to a tax professional familiar with Wisconsin tax laws.

For additional information, see Wisconsin Sales and Use Tax Information.