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Wisconsin Use Tax Fact Sheet 2104 revenue.wi.gov
Do I owe use tax?
Use tax is the counterpart of sales tax. Use tax applies when Wisconsin sales tax (state, county, or stadium) is not charged and no exemption applies. If you make purchases from retailers who do not collect Wisconsin sales tax or bring taxable items into Wisconsin from other states or from foreign countries, you owe use tax.
What is the use tax rate?
The state use tax rate is 5.0%, and if the item purchased is used, stored or consumed in a county that imposes county and/or stadium tax, you must also pay an additional 0.5% and/or 0.1%.
State 5.0%
County 0.5%
Baseball stadium district tax 0.1%
The baseball stadium district is comprised of Milwaukee, Ozaukee, Racine, Washington, and Waukesha Counties.
Note - The 0.5% Brown County football stadium tax ended 09/30/15.
See the total sales and use tax rate for each county and more information on the county and stadium sales and use taxes at revenue.wi.gov (enter "tax rate" in search box).
Special rules for county and stadium district use taxes
If an item is purchased in a county that has not adopted the county tax and is later brought to a taxable county where it is used, stored, or consumed, the item is not subject to the county use tax.
Exceptions: Construction materials, titled items and certain purchases by nonresidents:
• Construction materials purchased in a county that has not adopted the county tax and later used to improve real property in a county that has adopted the county tax are subject to county use tax.
• Purchases of motor vehicles, boats, recreational vehicles, and aircraft are taxed, for county and stadium sales tax purposes, based on the county in which the item is customarily kept.
• Purchases of snowmobiles, trailers, semi-trailers and all-terrain vehicles are taxed, for county and stadium sales tax purposes, based on where the buyer receives possession of the items.
• Purchases of motor vehicles, aircraft and truck bodies (including semitrailers) by nonresidents who do not use the property other than to remove it from Wisconsin are exempt from Wisconsin sales and use tax.
Credit for tax paid in another state
Wisconsin state, county, and/or stadium use tax due may be offset by tax properly paid in another state. See Credit for Sales and Use Taxes Paid to Other States and Their Local Units of Government in Wisconsin Tax Bulletin # 157 for more information. Foreign taxes and customs duty charges are not eligible for this credit.
Why is there a use tax?
Use tax protects in-state businesses from unfair competition. When sales or use tax is not collected on taxable purchases used in your community, local businesses are operating at a competitive disadvantage.
Why don't all out-of-state businesses collect use tax?
If an out-of-state retail business has a physical presence (such as a store or warehouse) in Wisconsin, it is required by law to register and collect Wisconsin tax. However, mail order and Internet companies and others who advertise in Wisconsin, but do not have a physical presence in Wisconsin, may not be required to register and collect Wisconsin tax.
What is taxable?
Sales, licenses, leases, and rentals of the following products are subject to Wisconsin state, county, and stadium district sales taxes:
• Tangible personal property
• Coins or stamps of the United States that are sold, licensed, leased, rented, or traded as collector’s items above their face value
• Certain leased property affixed to real property
• Certain digital goods. Digital goods are transferred electronically to the purchaser. Examples include greeting cards, finished artwork, periodicals, video or electronic games, and newspapers or other news or information products. See Publication 240 for more information.
In addition, certain services are subject to Wisconsin sales and use taxes. For a listing of taxable products and services visit revenue.wi.gov (enter "what is taxable" in search box).
Following are examples of purchases which frequently result in a use tax liability.
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• Mail order and Internet purchases. Businesses and individuals owe Wisconsin use tax if the business or individual buys taxable products such as cigarettes, computers, digital music or videos, electronic games, furniture, prewritten computer software, office supplies by placing a mail order or using the Internet, from a vendor who is not registered to collect Wisconsin tax.
Example: An accounting firm located in Milwaukee County, which has a county and baseball stadium tax, purchases computers, stationery, and reference books using the Internet, from out-of-state vendors who do not collect sales or use tax. These purchases, totaling $20,000, are stored or used in Milwaukee County. The accounting firm owes Wisconsin use tax of $1,120 ($20,000 x 5.6%).
• Out-of-state and out-of-country purchases. Businesses and individuals owe Wisconsin use tax if the business or individual purchases taxable products or services in another state or outside the United States, and subsequently brings the product, or the property on which a taxable service was performed, into Wisconsin. Businesses and individuals also owe Wisconsin use tax on orders placed with a vendor in another state or outside the United States, for delivery to a location in Wisconsin.
Example: A Wisconsin resident living in Marathon County purchases a digital camera for $700 at a store in the State of Oregon while on vacation. Oregon does not impose a sales and use tax. The Wisconsin resident brings the camera home to Marathon County, Wisconsin. The individual owes Wisconsin use tax of $38.50 ($700 X 5.5%).
Example: A Wisconsin resident living in Bayfield County is vacationing in Canada. While in Canada, the individual purchases a painting. The seller is shipping the painting to the individual's home in Bayfield County. The seller charges the individual $2,500 U.S., including shipping and handling. The individual owes $137.50 Wisconsin use tax of ($2,500 X 5.5%).
• Inventory. If a business buys inventory items without tax for resale, and then uses these items, the business owes use tax.
Example: A retailer of office furniture buys a desk and places it in its inventory. Rather than selling the desk, the retailer uses the desk in its office. The retailer owes use tax based on its purchase price of the desk.
• Give-aways. Generally, if a business purchases items without tax and then gives them away in Wisconsin, the business owes use tax.
Example: To advertise its business, an insurance agency gives pens and calendars to its Wisconsin customers. The agency's purchases of these items are subject to tax.
Use tax applies to the total purchase price you pay to the seller for taxable items, including shipping and handling charges.
How do I keep track of my purchases?
The Department of Revenue has developed a free Use Tax Calculator (in an Excel spreadsheet) to help individuals and businesses track and calculate use tax owed to Wisconsin. The spreadsheet can be used by persons who have some type of spreadsheet software on their computer (e.g., Excel,
QuatroPro). If you do not have Microsoft Excel software, you can download a free viewer at http://office.microsoft.com.
How do I pay use tax?
• A business registered to collect Wisconsin sales or use taxes must report tax due on its Wisconsin sales and use tax return.
• A business not registered to collect Wisconsin sales or use taxes has two options to report its tax:
o If you regularly make purchases subject to use tax, apply for a Wisconsin tax number at tap.revenue.wi.gov/btr and use your Wisconsin sales and use tax return to report use tax, or
o If you do not make purchases subject to use tax on a regular basis, report your use tax quarterly on Form UT-5, Consumer Use Tax Return.
• Individuals have two options:
o Pay use tax on your Wisconsin income tax return (Form 1, 1A, WI-Z, or 1NPR). A special line titled “Sales and use tax due on Internet, mail order, or other out-of-state purchases” is on Wisconsin income tax returns to allow you to report your annual use tax liability, or
o Report and pay use tax quarterly on the Wisconsin Form UT-5, Consumer Use Tax Return.
What if I don't pay the use tax owed?
Failure to timely pay use tax is very costly. If you don't timely pay the use tax you owe, not only will you owe the tax, but in addition, you may be subject to: late filing fees, interest, penalties of up to 50% of the tax owed, delinquent collection fees, and collection actions.
The department obtains information about purchases that are subject to use tax through audits of businesses and agreements with other states. The department uses this information when auditing businesses and individuals to ensure that use tax owed on out-of-state purchases is paid to the department.
Questions?
If you are unable to find an answer to your question about sales and use taxes, visit our website at revenue.wi.gov or contact us:
[emailprotected]
Wisconsin Department of Revenue P.O. Box 8949, Mail Stop 5-77 Madison, WI 53708-8949
Phone: (608) 266-2776
Fax: (608) 267-1030
Last updated October 5, 2015
