Good news for marketplace sellers! The state of Wisconsin now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Walmart or Amazon.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Wisconsin buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to eCommerce sales tax.
This post will explain what online sellers need to know about the Wisconsin marketplace facilitator law, and answer your frequently asked questions.
Overview of the Wisconsin Marketplace Facilitator Law
Wisconsin is now requiring Marketplaces to collect and remit sales tax on sales facilitated in Wisconsin through the marketplace if the economic nexus threshold of $100,000 or 200 transactions is triggered.
Quick Facts about the Wisconsin Marketplace Facilitator Law
- Effective date: January 1, 2020
- Threshold: Wisconsin is now requiring Marketplaces to collect and remit sales tax on sales facilitated in Wisconsin through the marketplace if the economic nexus threshold of $100,000 or 200 transactions is triggered.
- State law information: Read the full text of the Wisconsin Marketplace Facilitator Law
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Wisconsin?
Wisconsin law defines marketplace facilitators as a means “any person who facilitates a retail sale by a seller by listing or advertising for sale by the seller, in any manner, tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or a service specified under s. 77.52 (2) (a) and, who directly or indirectly, through agreements or arrangements with 3rd parties, processes the payment from the purchaser for the retail sale, regardless of whether the person receives compensation or other consideration in exchange for the services provided by the person.”
Online sales platforms like Etsy and eBay are considered marketplace facilitators under Wisconsin law.
A software like WooCommerce or Magento that allows online sellers to build and manage their own stores would not be considered a marketplace facilitator.
Does this mean I can stop collecting Wisconsin sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Wisconsin.
Example #1: You only make sales on online marketplaces.
In this example, you only sell on Amazon and Etsy. Because Amazon and Etsy are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, you may still be required to file periodic sales tax returns. See “Does this mean I can cancel my Wisconsin sales tax permit?” below.)
Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.
In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your BigCommerce or Shopify store). And you would still be required to collect sales tax from your brick and mortar customers.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Wisconsin sales tax permit?
Wisconsin’s marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. So if you live or otherwise have sales tax nexus (such as economic nexus) in Wisconsin, then you are still required to hold a Wisconsin sales tax permit. This also means you are still required to file sales tax returns on due dates set for you by the state.
Further, if you are already registered for a Wisconsin sales tax permit, Wisconsin requires that you keep your sales tax permit active. If you only sell on marketplaces, this may mean filing zero returns, where no sales tax is due.
Do I still need to file a Wisconsin sales tax return?
If you are registered to collect sales tax in Wisconsin (i.e. you have an active Wisconsin sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)
What do I do with any Wisconsin sales tax I have already collected?
If you have already collected Wisconsin sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Let’s say you sell on eBay and Wisconsin requires you to file and remit sales tax quarterly. Though eBay began collecting sales tax on your behalf on January 1, if you have any sales tax in your bank account that you collected from Q4 2019, you will still need to remit that to the Wisconsin Department of Revenue or face a penalty.
Does TaxJar handle this for me?
TaxJar AutoFile handles Wisconsin sales tax automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Wisconsin wants it filed. For example, many states, Wisconsin included, want sellers to break down their sales tax collected interstate (sales originating in Wisconsin sent to another state) and intrastate (sales made from Wisconsin to Wisconsin.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Wisconsin sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports give you all the info you need to file manually
If you prefer to file manually, your TaxJar Reports also reflect what the Wisconsin Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Wisconsin sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Wisconsin Sales Tax Guide for Businesses
Do you have questions or something to say about the Wisconsin marketplace facilitator law? Start the conversation in the comments!