Wisconsin Legislature: 001 - EmR1819 Rule Text

SECTION 1. Tax 11.97 is repealed and recreated to read:

Tax 11.97 Out-of-state retailers. (1) General. An out-of-state retailer that sells taxable products or services into Wisconsin is engaged in business in this state and shall register and collect Wisconsin sales or use tax if the retailer is subject to the state's jurisdiction, as limited by federal law. The United States Supreme Court has said that it will sustain a state tax if it applies to an activity with a substantial nexus with the taxing state, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services the state provides. Physical presence in the state is not necessary to create a substantial nexus.

Note: Retailers with sales and use tax nexus in Wisconsin may also have nexus in Wisconsin for franchise or income tax purposes. Refer to s. Tax 2.82 for income and franchise nexus standards.

(2) Activities which in themselves create Wisconsin “nexus." An out-of-state retailer shall register and collect Wisconsin sales or use tax if the retailer has activities described in s. 77.51 (13g), Stats., subject to the thresholds in sub. (4) if only s. 77.51 (13g) (c), Stats., applies.

Example: An out-of-state retailer sells taxable products into Wisconsin, and delivers them using its own truck. The retailer is required to register and collect Wisconsin sales or use tax, since delivering products into Wisconsin using its own truck is an activity described in s. 77.51 (13g) (f), Stats. The nexus thresholds for small, out-of-state retailers in sub. (4) do not apply.

(3) Activities which in themselves do not create Wisconsin “nexus." A retailer is not required to register and collect Wisconsin sales or use tax if its activities are described in s. 77.51 (13h), Stats.

(4) Nexus thresholds for small out-of-state retailers. (a) An out-of-state retailer that sells taxable products or services into Wisconsin, but has no other activities described in s. 77.51 (13g), Stats., shall register and collect Wisconsin sales or use tax if the retailer meets either of the following criteria in the previous year or current year:

1. The retailer’s annual gross sales into Wisconsin exceed $100,000.

2. The retailer’s annual number of separate sales transactions into Wisconsin is 200 or more.

(b) For purposes of this subdivision, all of the following apply:

1. "Year" means the retailer’s taxable year for federal income tax purposes.

2. The annual amounts include both taxable and nontaxable sales.

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

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

5. An out-of-state retailer's annual amounts include all sales into Wisconsin by:

a. The retailer on behalf of other persons.

b. Another person on the retailer's behalf.

(c) If an out-of-state retailer's annual gross sales into Wisconsin exceeds $100,000 in the previous year, or if the retailer's annual number of separate sales transactions into Wisconsin is 200 or more in the previous year, the retailer is required to register and collect Wisconsin sales or use tax for the entire current year.

Example: An out-of-state retailer has $300,000 annual gross sales into Wisconsin and 175 sale transactions into Wisconsin in 2018. Since it exceeded the annual gross sales threshold in 2018, the retailer is required to be registered and collect Wisconsin sales or use tax on Wisconsin sales in 2019.

(d) If an out-of-state retailer's annual gross sales into Wisconsin are $100,000 or less in the previous year and the annual number of separate sales transactions into Wisconsin is less than 200 in the previous year, the retailer is not required to register and collect Wisconsin sales or use tax until its sales or transactions meet the criteria in par. (a) for the current year. A retailer is required to collect Wisconsin sales or use tax for the remainder of the year.

Example: An out-of-state retailer has $90,000 annual gross sales into Wisconsin and 175 sales transactions into Wisconsin in 2018. The retailer is not required to register and collect Wisconsin sales or use tax in 2018, because it is below the thresholds for small, out-of-state retailers. From January 1, 2019 through June 29, 2019, the retailer's gross sales into Wisconsin are $100,000. On June 30, 2019, the retailer has a $3,000 Wisconsin sale, which brings its annual gross sales into Wisconsin for 2019 to $103,000. The retailer is required to register and collect Wisconsin sales or use tax beginning with its next sales transaction in 2019. The retailer is also required to be registered and collect Wisconsin sales or use tax for 2020.

(5) Registration. Every out-of-state retailer engaged in business in this state and not required to hold a seller's permit, who makes sales for storage, use, or other consumption in this state, except as provided in sub. (3), shall apply for a use tax registration certificate.

Note: Refer to s. Tax 11.002 for registration information.

(6) Voluntary collection. Out-of-state retailers who are not required to collect Wisconsin sales or use tax, but who elect to collect use tax for the convenience of their Wisconsin customers, may apply for a use tax registration certificate with the department as described in sub. (5). Holders of the use tax registration certificate shall collect the use tax from Wisconsin customers, give receipts, and report and pay the use tax to the Wisconsin department of revenue in the same manner as retailers that are required to collect Wisconsin sales tax.

(7) County and special district taxes. Retailers that are registered or required to register to collect, report, and remit Wisconsin state sales or use taxes are also required to collect, report, and remit the applicable county and stadium district sales or use taxes, as provided in s. 77.73 (3), Stats.

Note: Section Tax 11.97 interprets ss. 77.51 (13), (13g), (13h) and (14) (j), 77.52 (1), (1b), and (2), 77.53 (3), (5), (7), (9) and (9m) and 77.73, Stats.

Note: Section Tax 11.97 was recreated to be consistent with the June 21, 2018 U.S. Supreme Court decision in South Dakota v. Wayfair, Inc.

SECTION 2. Effective Date. This rule shall take effect on October 1, 2018.