Wisconsin Sales Tax Rates Penalties and Exemptions

Navigating Wisconsin’s sales tax landscape can be complex due to varying rates across cities and counties. Whether you are a small business owner or an online seller, understanding the correct sales tax rate for each location is essential for compliance.

In this guide, we’ll walk you through the Wisconsin sales tax rates for key cities, helping you ensure your business collects the right amount of tax.

What Is the Sales Tax Rate in Wisconsin?

In Wisconsin, the state imposes a sales tax on retail sales, leases, and rentals of tangible personal property and certain services. The tax applies to businesses making sales within the state.

As a business owner, you must collect the applicable sales tax from customers and remit it to the Wisconsin Department of Revenue (DOR).

• State Sales Tax Rate: Wisconsin’s state sales tax rate is 5.00%.
• Local Sales Tax Rate: Localities may impose additional sales tax, which can increase the total rate to as high as 5.6% in some regions.

Wisconsin Sales and Use Tax Overview

As a business owner in Wisconsin, it is crucial to understand the state’s sales tax and use tax rules to stay compliant. The Wisconsin Department of Revenue (DOR) oversees the collection and enforcement of these taxes.

Key Features of Wisconsin Sales Tax

• Sales Tax: Sales tax is a tax applied to the sale of tangible personal property and certain services.
• Use Tax: Use tax is complementary to sales tax. It is imposed on goods purchased outside of Wisconsin, but used, stored, or otherwise consumed within the state.

Taxable and Exempt Items

Wisconsin sales tax applies to:

• Tangible personal property, including items like electronics, clothing, furniture, and certain equipment.
• Certain services, such as repair services, installation, and rental services.

Sales tax exemptions in Wisconsin apply to certain goods and services, including:

• Groceries: Most food items purchased for human consumption are exempt.
• Prescription Drugs: Prescription medications and certain medical devices are exempt from sales tax.
• Farm Equipment: Agricultural equipment used in farming activities may be exempt.
• Resale: Goods purchased for resale are exempt from sales tax when a valid resale certificate is provided.

For a comprehensive list of taxable and exempt items, Commenda recommends businesses refer to the Wisconsin Department of Revenue’s guidelines and resources.

When Do Businesses Need to Collect Sales Tax in Wisconsin?

In Wisconsin, businesses are required to collect sales tax under certain circumstances. Understanding when and how to collect the tax is essential for compliance with state laws.

Here are the key situations when businesses must collect Wisconsin sales tax:

1. Wisconsin Physical Nexus

If your business has a physical presence in Wisconsin, such as a store, office, warehouse, or employees working in the state, you must collect sales tax on all taxable sales made within the state. This includes both in-person sales and online sales where delivery is made to Wisconsin.

2. Wisconsin Economic Nexus

Even if you don’t have a physical presence in Wisconsin, you may still need to collect sales tax if your business meets Wisconsin economic nexus thresholds:

• $100,000 or more in sales to Wisconsin customers in the previous or current calendar year

If you meet either of these thresholds, you are required to register with the Wisconsin Department of Revenue and collect sales tax on sales made to Wisconsin residents.

For more information, click here.

Failure to Collect Wisconsin Sales Tax

Failure to collect Wisconsin sales tax can lead to significant penalties and interest. It is essential for businesses to comply with sales tax regulations to avoid these consequences. Here’s what can happen if you don’t collect or remit the correct sales tax:

Penalties for Late Filing and Payment

1. Late Filing Penalty:
   • The penalty for late filing is typically 5% per month for returns filed late, up to a maximum of 25% of the tax due.
   • If a return is filed more than 60 days after the due date, an additional $50 late filing penalty applies, even if no tax is owed.
2. Late Payment Penalty: For late payments, the penalty is 5% of the amount due, plus 1% per month of the unpaid tax, with a maximum penalty of 25% of the tax owed.
3. Interest: Interest is charged on any unpaid sales tax at a rate set annually by the Wisconsin Department of Revenue. The interest accrues from the due date of the payment until it is paid in full.

Also read: U.S. Sales Tax Penalties: What Are the Penalties for Filing Late[Not Paying]?

Wisconsin Sales Tax for Out-of-State and Amazon FBA Program Sellers

Out-of-state businesses selling to Wisconsin residents must comply with economic nexus rules. Remote sellers, including those using the Fulfillment by Amazon (FBA) program, should know if their inventory is stored in Wisconsin.

FBA remote sellers can access the Inventory Event Detail Report from Amazon Seller Central to check if their inventory is based in Wisconsin. If you have inventory stored in the state, you have likely triggered Wisconson economic nexus and are required to collect Wisconsin sales tax.

In case of queries, it’s advisable to consult a tax expert to ensure compliance with Wisconsin sales tax laws.

Registering for a Wisconsin Seller’s Permit

To collect Wisconsin sales tax, businesses must first register for a Transaction Privilege Tax (TPT) permit with the Wisconsin Department of Revenue (DOR). Here’s how to register:

1. Obtain an Employer Identification Number (EIN): You must have an EIN to register your business with the state. If you don’t already have one, apply online through the IRS website.
2. Create an Account with the Wisconsin DOR: Visit the Wisconsin Department of Revenue (DOR) website and create an account to register for the TPT permit.
3. Fill Out the Application: Complete the application for the TPT permit online, providing your business details, including your business name, address, type, and ownership structure.
4. Wait for Approval: After submitting your application, the DOR will review it and issue your TPT permit, allowing you to collect Wisconsin sales tax legally.

Important: You are required to register for a sales tax permit before making your first taxable sale in Wisconsin.

How to Collect Sales Tax in Wisconsin

Collecting Wisconsin sales tax begins with registration. The state imposes a 5.00% sales tax rate, with localities adding additional rates up to 5.6%. As a business, you must apply the correct sales tax rate based on the customer’s location.

Use the Wisconsin Department of Revenue’s Tax Rate Lookup Tool to confirm the correct rate for each sale. Once registered, you must collect sales tax on taxable goods and services and itemize the tax clearly on receipts. This ensures transparency for your customers.

Stay compliant and track your tax obligations with ease. Tools like Commenda can automate sales tax calculations and filings, saving you time and minimizing the risk of errors.

Tax-Exempt Customers

Certain organizations and customers in Wisconsin are exempt from paying sales tax. These include:

• Sales made to nonprofit organizations recognized by the state are exempt from sales tax.
• Sales to federal, state, or local government entities are generally exempt from sales tax.
• If a business purchases items for resale, they can be exempt from paying sales tax at the time of purchase, provided a resale certificate is presented.
• Sales of most food items for human consumption and prescription drugs are exempt from sales tax.

Tip: To qualify for sales tax exemptions in Wisconsin, businesses must obtain exemption certificates from tax-exempt customers and maintain proper documentation for audit purposes.

Filing Sales Tax Returns in Wisconsin

Here’s information on filing sales tax returns in Wisconsin:

Filing Steps

1. Gather Your Sales Data: Review your sales records, including the total sales and the Wisconsin sales tax collected from customers. Make sure all records are accurate and up-to-date.
2. Log in to the Wisconsin DOR: Access the Wisconsin Department of Revenue (DOR) website and log in to your account through the My Tax Account portal.
3. Complete the Sales Tax Return Form: Select the sales tax return form based on your filing frequency (monthly, quarterly, or annually). Enter the details, including gross sales, taxable sales, and the sales tax collected.
4. Review and Submit: Double-check all figures to ensure accuracy. Once confirmed, submit your return electronically through the DOR website.
5. File on Time: Ensure that you file by the due date assigned to your business. Late filing may result in penalties and interest charges.

Also read: State Sales Tax Filing: Due Date and Process

How to Pay Your Wisconsin Sales Tax

There are several payment methods available to remit the sales tax you owe:

• Electronic Funds Transfer (EFT): The most common and efficient method is to make payments using EFT, which directly debits your business bank account.
• Credit Card: Businesses can pay their sales tax using credit cards via the Wisconsin DOR’s online payment portal. Be aware of processing fees when using this method.
• Check: You can mail a check along with your sales tax return if you prefer not to pay electronically. Ensure you include the correct payment amount and business information.
• ACH Debit: Wisconsin businesses can also use ACH Debit for electronic payments. This method requires you to set up ACH Debit through your My Tax Account portal.

Using Sales Tax Automation Tools

Sales tax automation tools like Commenda can simplify your Wisconsin sales tax calculation and filing with built-in reporting, remittance, and expert accounting support. With features such as nexus tracking, exemption certificate management, and automated sales tax filing, Commenda helps businesses save time and reduce errors associated with manual processes.

Trusted by over 250 businesses across borders, Commenda not only handles multi-state sales tax compliance but also ensures that you remain informed about changing tax laws. This allows you to focus on growing your business while the software manages your sales tax obligations seamlessly.

Click here to see how Commenda can streamline your sales tax needs and enhance your operational efficiency.

Wisconsin Sales Tax Compliance Checklist

To ensure compliance with Wisconsin sales tax laws, businesses should follow this checklist:

1. Determine Nexus:
   • Assess if your business has physical or economic nexus in Wisconsin.
   • Physical nexus includes having a location, employees, or inventory in the state.
   • Economic nexus applies if your sales exceed $100,000 in Wisconsin.
2. Register for a Seller’s Permit:
   • Obtain a Wisconsin seller’s permit through the Wisconsin Department of Revenue’s online portal.
   • Gather necessary information such as your FEIN, business start date, and NAICS code.
3. Collect Sales Tax:
   • Charge the correct Wisconsin sales tax rate based on the buyer’s location, which includes the state rate of 5% plus any applicable local rates.
   • Use tools like the Wisconsin Department of Revenue’s Tax Rate Lookup Tool to determine specific rates.
4. File Sales Tax Returns:
   • File returns by the last day of the month following the reporting period (monthly, quarterly, or annually based on sales volume).
   • Ensure that all taxable sales, exemptions, and deductions are accurately reported.
5. Remit Collected Taxes:
   • Submit payment for the sales tax collected at the same time you file your return.
   • Keep track of deadlines to avoid late fees and penalties.
6. Maintain Accurate Records:
   • Keep detailed records of all sales transactions, exemption certificates, and tax calculations for at least seven years.
   • Ensure records are easily accessible for potential audits.
7. Stay Informed About Changes: Regularly check for updates regarding sales tax laws and rates in Wisconsin to remain compliant.

How Should I Prepare for Wisconsin Sales Tax Audits and Appeals?

Being prepared for a Wisconsin sales tax audit can help your business avoid unnecessary penalties, save time, and streamline the process. Here are the key steps you should take to prepare for audits and how to handle appeals if needed:

1. Understanding the Audit Process

The New Mexico Taxation and Revenue Department (TRD) conducts audits to ensure businesses are correctly reporting and remitting sales tax. An audit typically focuses on:

• Reviewing Gross Receipts Tax Returns: Verifying that gross receipts tax was collected and remitted accurately for all taxable sales.
• Inspecting business records: Ensuring all taxable sales and exemptions are properly documented.
• Assessing tax liability: Determining if the correct amount of  gross receipts ttax has been paid.

The audit aims to identify any discrepancies and ensure compliance with New Mexico’s tax laws.

Also read: Sales Tax Audits: Common Triggers, Risks, and How to Prepare

2. Steps to Prepare for an Audit

Preparing for a sales tax audit in Wisconsin involves ensuring all your records are up-to-date and easily accessible. Here are some steps to help you prepare:

1. Review Your Sales Tax Returns: Double-check your sales tax returns to make sure all figures are accurate, including taxable sales, exemptions, and sales tax collected.
2. Organize Your Records: Ensure that all relevant sales records, including invoices, receipts, exemption certificates, and purchase orders, are organized and available for review.
3. Verify Exemption Documentation: If you have sales that are exempt from sales tax, ensure you have valid exemption certificates to support these transactions.
4. Prepare Your Accounting Records: Make sure your accounting systems are up to date and that sales tax accounts are clearly separated from other accounts.
5. Audit Trail: Keep a clear audit trail of your sales tax filings, payments, and any communication with the DOR regarding sales tax issues.

3. During the Audit

When the audit begins, here are some best practices to follow:

• Cooperate with the Auditor: Be polite, transparent, and cooperative during the audit. Provide the auditor with the requested records in a timely manner.
• Keep Records of Everything: Document all communications and provide the auditor with any information they request, including your sales and exemption records.
• Understand the Auditor’s Requests: Ask for clarification if any part of the audit request is unclear. Ensuring full understanding will help you provide the correct documentation.

Wisconsin Sales Tax Rates by City

Here’s a breakdown of sales tax rates by city to help you stay compliant with local tax laws:

Don’t let your business slow down because of sales tax complexities. Have Commenda on your side. Schedule a free call with our sales tax experts now!

‍

‍

FAQs

What is the current sales tax rate in Wisconsin?

What are the penalties for not paying Wisconsin sales tax?

Do I need a seller’s permit if I only sell temporarily in Wisconsin?

What is nexus, and how does it affect my obligation to collect sales tax?

How do I register for a seller’s permit in Wisconsin?

What should I do if I didn’t collect any sales tax during a reporting period?

Can I amend my Wisconsin sales tax return?

How can I stay informed about changes in Wisconsin sales tax laws?