Should you collect sales tax in Wisconsin?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting tangible property. However, you will collect the sales tax if you determine the nexus in Wisconsin. Nexus is the presence that may come physically or economically.
Physical nexus is typically created when your business has a store, warehouse, or office location in Wisconsin. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Wisconsin.
A physical nexus is integrated when your business is engaged in the following in Wisconsin:
- Selling tangible personal property in Wisconsin.
- Maintaining, occupying, or using a place of business or an office in Wisconsin.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Wisconsin.
Is it constituting an Economic nexus in Wisconsin?
You must comply and register under sales tax rules if you are a remote seller (i.e., don’t have a physical presence in the state) or a marketplace seller. Business sales in Wisconsin exceed $100,000 during the current or previous calendar year.
Click here for more detailed guidance.
How can you Register for Sales tax in Wisconsin?
You need to apply online on the Wisconsin online portal to get the sales tax permit in Wisconsin. The state imposes a $20 to get the sales tax permit.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Wisconsin.
- Contact information.
- Estimated taxable sales.
- Nature of business.
Once you apply for the sales tax permit in Wisconsin, you will receive a confirmation number and other registration details.
Is your product or services liable to Sales tax in Wisconsin?
Tangible Property: Sales tax in Wisconsin is imposed primarily on the retail sale of tangible personal property, e.g., furniture, giftware, toys, etc.
Services: Many services in Wisconsin are subject to sales tax , such as communication services, fabrication, utilities, etc. Click here to know more.
Digital Product: Wisconsin charges sales tax on digital products. So, you must collect sales tax if you sell digital products such as software, streaming services, e-books, etc. Here is what Wisconsin says about digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. This is non-taxable in Wisconsin. Review the Wisconsin Revenue Department advisory.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, manufacturing equipment, etc. Please click here to see what exemptions are covered.
You can also visit the Wisconsin Department of Revenue website for more concise information about taxability in Wisconsin.
How should you collect and calculate state taxes in Wisconsin?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not Wisconsin-based, as the sales tax is destination-based in Wisconsin, which means you must collect taxes on tangible property sold to buyers based in Wisconsin.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden and you can focus on other important business aspects.
Wisconsin has a base sales tax rate of 5%, followed by the local tax rates, which can be up to 2.9% based on the cities and municipalities. Click here for the city-wise sales tax rates (including local rates).
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (5% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of items sold. There will be no tax applicability if shipping charges are separately stated on the invoice. However, if they are not stated separately, you need to collect the tax on the total sales price, including shipping charges. Here is the link for official guidance on the delivery charges.
How should you file sales tax in Wisconsin?
E-file: You can e-file your return using the e-filing portal.
Paper filing: You can complete the form and file / pay through mail. This form is issued by the department when asked.
Let us manage all your tax compliances. We will handle all the calculations, payments, remittances, and filings.
Filing frequencies and due dates
You need to file the monthly sales tax due on the last day of the following month. However, when your annual taxable sales are $4,000 to $20,000, you will get the quarterly filing status. In that case, file your sales tax by the last day of the month from the end of the relevant quarter.
Additionally, you can file annually if your total annual sales are less than $4,000. Then, please file your sales tax by 31st January of the following year.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official Wisconsin government advisory, where you can see what the state says about sales tax filing due dates.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of 5% of sales tax if you file or pay after the due date with interest of 1.5% per month for unpaid tax. The maximum penalty levied can go up to 25% of the tax due with a minimum of $25.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines the Wisconsin Revenue Department issued for penalties and interest.