Sales Tax Guide for Wisconsin

What Is Taxable in Wisconsin?

In Wisconsin, most tangible personal property and certain services are subject to sales tax. However, certain items such as prescription drugs, specific groceries, medical equipment, certain farm machinery, and some manufacturing equipment are exempt.

If your business sells taxable goods or services, it is important to collect and remit sales tax accordingly. Businesses must also be mindful of use taxes for products brought into Wisconsin from outside the state.

Who Needs to Collect Sales Tax?

Businesses required to collect sales tax include:

• Retailers with a physical presence in Wisconsin
• Online sellers that meet the state’s economic nexus criteria
• Certain service providers depending on the service offered

Wisconsin enforces an economic nexus threshold of $100,000 in sales or 200 transactions per year. Businesses meeting this threshold must register to collect and remit sales tax, even without a physical presence in the state. Failing to do so can result in penalties and back taxes, that’s why doola’s Bookkeeping service is essential for staying on top of regulations and avoiding compliance issues. 

How to Register for a Sales Tax Permit in Wisconsin

Getting a sales tax permit in Wisconsin involves:

1. Gathering required documents: EIN, business license, and other relevant business details.
2. Visiting the Wisconsin Department of Revenue website.
3. Completing the online application process.
4. Receiving your Sales Tax Permit and beginning to collect sales tax.

Without a proper sales tax permit, collecting sales tax is illegal. Make sure to register before starting taxable sales. doola’s expert bookkeeping team can assist you with the registration process to ensure it goes smoothly, freeing you up to focus on growing your business. 

How to Calculate Sales Tax in Wisconsin

To calculate sales tax correctly, follow these steps:

Step 1:
Identify the correct sales tax rate based on your business’s location and the buyer’s location.

Step 2:
Collect this amount at the point of sale.

Step 3:
Maintain accurate records of all transactions.

Wisconsin requires businesses to file sales tax returns monthly, quarterly, or annually, based on their sales volume. Ensure you meet the filing deadlines to avoid penalties.

Additionally, be aware of varying local tax rates across different counties or municipalities, which need to be included in your tax calculations.

Common Sales Tax Exemptions in Wisconsin

Some exemptions in Wisconsin include:

• Purchases for resale (with a resale certificate)
• Sales to qualifying nonprofit organizations
• Certain agricultural and manufacturing purchases

To claim an exemption, proper exemption certificates are necessary, and businesses should keep detailed records. Incorrect use of certificates could result in audits and penalties.

Remote Seller and Marketplace Sales Tax Rules in Wisconsin

Remote sellers and marketplace platforms such as Amazon, eBay, Shopify, and Etsy are subject to specific sales tax rules in Wisconsin.

With an economic nexus threshold set at $100,000 in sales or 200 transactions, businesses surpassing these amounts must adhere to Wisconsin’s sales tax regulations for remote sellers.

What Triggers a Sales Tax Audit

The Wisconsin Department of Revenue may audit businesses due to reasons like incomplete or inaccurate sales tax filings, repeated late payments, mismatches between reported sales and actual receipts, and misuse of exemption certificates.

To reduce the risk of audit, maintain comprehensive records of sales, exemptions, and tax payments. Conducting regular internal audits can also ensure that your filings are correct.

FAQs About Sales Tax in Wisconsin

Here are some common questions regarding Wisconsin sales tax:

Are digital goods taxed in Wisconsin? 

Yes, certain digital goods are taxable in Wisconsin.

Must out-of-state businesses collect Wisconsin sales tax? 

Yes, if they exceed the economic nexus threshold of $100,000 in sales or 200 transactions per year.

What if I accidentally overcharge or undercharge sales tax? 

You might have to refund customers or pay the difference to the state. Keeping precise records helps avoid these issues.

Are services taxable in Wisconsin? 

Some services are taxable. Be sure to check state guidelines for specifications.

Stay Compliant With doola

Sales tax compliance does not need to be stressful. By staying informed and using the right resources, you can avoid penalties and keep your business running smoothly.

doola offers tools and guidance to ensure compliance, supporting businesses with financial management, tax guidance, and bookkeeping solutions.