The United States Supreme Court recently ruled in South Dakota v. Wayfair, Inc., that a state can require out-of-state sellers without a physical presence in that state (i.e., remote sellers) to collect and remit sales or use tax on sales delivered into that state.

Beginning October 1, 2018, Wisconsin requires remote sellers to collect and remit sales or use tax on sales of taxable products and services in Wisconsin. New standards for administering sales tax laws on remote sellers have been developed by rule. The rule is consistent with the Court's decision in Wayfair, which approved a small seller exception for sellers who do not have annual sales of products and services into the state of (1) more than $100,000, or (2) 200 or more separate transactions. Effective December 16, 2018, Wisconsin sales and use tax statutes were amended (2017 Wis. Act 368) to provide the small seller exception by law, consistent with the Court's decision in Wayfair and the rule.

Effective February 20, 2021, the small seller exception was amended (2021 Wis. Act 1) to eliminate the 200-transaction threshold and also require remote sellers to use a calendar year to determine if it has economic nexus in the previous or current year. As a result, a remote seller is only required to collect and remit sales or use tax if its gross sales into Wisconsin exceed $100,000 in the previous or current calendar year.

Note: The small seller exception does not apply to sellers with a physical presence in Wisconsin.