Gov. Scott Walker’s administration plans to expand collection of taxes for online purchases by Oct. 1 as permitted by a recent U.S. Supreme Court ruling.
How it will do so — and whether small retailers might be exempt from having to collect and remit taxes for online sales — remains unclear, because the administration isn’t addressing those details yet.
Walker spokeswoman Amy Hasenberg said “we plan to start collections on Oct. 1” but referred other questions to the Department of Revenue, which oversees tax collections.
DOR spokeswoman Patty Mayers said only that “I will have more to share on this on Thursday.”
The Supreme Court ruling last month, upholding a South Dakota online sales tax law, changed the landscape for states to tax online sales. Until now, the court had held that states could only require retailers to collect tax for online sales if they also had a physical presence in the state, such as a store or distribution center.
In Wisconsin, that includes retailers such as Amazon, which has a distribution center in Kenosha County, as well as brick-and-mortar retailers who now are doing an increasing share of their sales online. But many retailers without a physical presence in the state have not been required to collect sales tax for goods sold to Wisconsin buyers, and have not been doing so.
Wisconsin residents are required to pay a use tax on online purchases that aren’t subject to sales tax, but few do.
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Last month’s Supreme Court ruling permits states to require retailers to collect sales tax for online purchases even if they have no physical presence in the state in which the product is being sold.
One of the biggest unanswered questions is whether small retailers will be exempt from the task of collecting tax for online sales in Wisconsin. The South Dakota law upheld by the Supreme Court applies only to retailers who have more than 200 transactions per year or have annual sales in excess of $100,000 per year.
Wisconsin law doesn’t currently address this, so the Legislature may have to change the law or the Department of Revenue may have to write new administrative rules, according to a recent memo by the nonpartisan Legislative Fiscal Bureau.
The fiscal bureau found the state could collect about $120 million a year in new sales-tax revenue in the wake of the ruling. Walker and lawmakers already are grappling with what to do with those extra dollars.
A 2013 law requires the state to cut income tax rates if it reaps new sales tax revenue resulting from “any federal law” change. It’s not clear if a Supreme Court decision triggers that income tax rate cut, though the fiscal bureau memo says it’s possible.
If the additional revenue is applied to income tax cuts, the average taxpayer could get a $52 tax cut, the fiscal bureau estimated.
The administration’s plan to expand sales tax collections starting in October was first reported by Wispolitics.com.