Wisconsin Sales Tax Guide
Chapter 8: Understanding Wisconsin sales tax rules for shipping & handling
Do you have customers in the Badger State? Let’s hope you are charging sales tax on shipping and handling.
Is Shipping Taxable in Wisconsin?
In Wisconsin, it does not matter whether the delivery is made by your vehicle, a common, non-common or contract carrier, or the United States Postal Service, you must collect sales tax on shipping charges.
Essentially, you tax the total charge, including any transportation or service charges. You must apply the statewide Wisconsin sales tax rate, and your county may also tack on an additional tax. The rates vary, so check with the Wisconsin Department of Revenue to learn the local rates.
It’s important to understand that you are responsible for collecting a tax rate on the amount you charge customers for shipment and delivery — not the actual cost you paid to send the product. So if something takes you $10 to deliver, but your charge the customer $100, you must tax the $100 delivery charge.
Exceptions to the Rule
In Wisconsin, you should not apply a sales tax rate on shipping for tax-exempt items. However, when you ship both taxable and nontaxable items together, you must allocate which portion of the shipping charge applies to the taxable items and calculate the sales tax based on that. You don’t tax shipping on the nontaxable items.
If you don’t make an allocation, you must apply the sales tax to the entire shipping charge.
Wisconsin Sales Tax Mistakes
While sales tax on shipping and handling are pretty straightforward in Wisconsin, you face an uphill battle when it comes to tracking the fluctuating sales rates of each county in that state as well as all the others states. Turning to a sales tax software solution, like Avalara TrustFile, takes the pain out of the process.