Last week the Wisconsin Department of Revenue (WDOR) announced in a notice published on their website that they would adopt the Wayfair Rule and require out of state companies that anticipate more than $100,000 in annual sales to Wisconsin customers (or have more than 200 transactions with Wisconsin customers annually) to register with Wisconsin by October 1, 2018 and begin collecting sales tax on sales to Wisconsin customers.
It is anticipated that most of the other states will also adopt the Wayfair Rule with similar thresholds and effective dates and many already have.
For a more detailed discussion of the Wayfair decision, see our Tax Alert titled "Supreme Court Opens Door to Taxation of Online Sales."
The Wisconsin notice was accompanied by a Question and Answer Sheet which contains links to the Streamlined Sales Governing Board website. Wisconsin, along with 23 other states, are members of the Streamlined Sales and Use Tax Agreement. The Q&A encourages remote sellers to register through the Streamlined Sales Tax Registration System and use the services of a Certified Service Provider (CSP) who is registered with the streamlined compact to prepare monthly sales tax returns on the behalf of the remote seller. The services of the CSP are potentially free of charge but only for members of the 23 states and only if the seller contracts with a CSP and voluntarily registers and is not otherwise required to register with the State. The Q&A encourages remote sellers to contact a CSP prior to registration to discuss the services rendered and potential fees. Registration through the site allows for registration in multiple states at the same time. The Streamlined website contains a list of the member states and a list of CSP(s) with contact information.
The CSP(s) registered with Streamlined are not the only service providers who can provide sales tax compliance services. The WDOR website also contains a link to the Streamlined website which provides contact information and website links for other states that are not members of Streamlined.
What you need to do:
In light of the quick Wisconsin action to adopt the Wayfair thresholds and the likelihood that other states will also adopt similar thresholds and effective dates, taxpayers should:
- In order to prepare for sales tax filings in other states, begin to investigate in which other states you will potentially exceed these thresholds
- Monitor state tax department websites for current developments related to Wayfair
- Begin to investigate changes to your billing software to capture sales by state and charge and collect the appropriate sales tax on your invoices.
- If you sell only to Wisconsin customers, you can expect that out of state vendors will begin to charge you sales tax on your purchases. You may need to watch your purchases and provide exemption certificates if applicable.
Your SVA professional and our State and Local Tax team (SALT) can provide invaluable service in assisting you in getting prepared for this new law and can assist in advising you on which states have already adopted the Wayfair thresholds or other thresholds and their effective dates.