User Friendly - Do You Owe Wisconsin Use Tax?

Lynn Keller, Tax Senior Manager   email
March 2010

Often times when purchasing out-of-state items from the Internet or catalogs, sales tax is not charged. While those purchases may be 5 to 6 percent less expensive than an in-store purchase, in actuality you are not getting a deal. Items that would be subject to sales tax if purchased in Wisconsin are subject to Wisconsin use tax when purchased from out-of-state vendors and used in Wisconsin. Out-of-state vendors usually do not charge sales tax on these purchases, nor in many cases are they obligated to. When this happens, you as the consumer or user of these goods owe a Wisconsin use tax, which is self-assessed by the taxpayer. Use tax is set up, in effect, to protect in-state businesses from being placed at a competitive disadvantage by out-of-state businesses. Use tax applies to both businesses and individuals. Most other states employ a use tax system; however, Wisconsin targets individual use tax more than other states.

If you have not filed use tax returns in the past, the statute of limitations for Wisconsin use tax has not begun. This means there is no limit on the amount of years the Wisconsin Department of Revenue (WDR) may go back to assess use tax. In addition, the WDR uses an 18 percent interest rate for non-filers, while if you previously filed Wisconsin use tax returns, a 12 percent rate is assessed. Further, if a use tax return was not filed, penalties of up to 50 percent may be imposed.

For further information, businesses should refer to WDR Publications 201, 212 and 214, and individuals should look to Publications 205 and 213. If you have any questions on Wisconsin's use tax, please contact Lynn Keller.