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Digital Download Tax in Wisconsin

Wisconsin recently added a digital download tax. In an attempt to level the playing field between brick and mortar stores and Internet retailers. Wisconsin now requires sales tax to be collected on downloads of music, books and ring tones. If you are a merchant and currently include these products check with your accountant to make sure you are in compliance.

All merchants, regardless of products sold,  are urged to contact a sales and use tax attorney to ensure they are in compliance with all of the current sales and use tax laws. As we have seen over the past several months, it is becoming more common for states to question the activities of out of state merchants. While the emphasis is sometimes on pending legislation, all states with a sales and use tax have current laws merchants must comply with.  The current nexus definition in Wisconsin may impact many merchants as it includes solicitors and other representatives.

In addition to the digital download sales tax, Wisconsin passed other legislation that took effect October 1, resulting in many changes to sales and use tax laws.  As a result of some of these changes, Wisconsin is  the newest member of the Streamlined Sales and Use Tax Project.

Like many states, Wisconsin is facing severe financial challenges. Wisconsin has a budget deficit of nearly $6 billion.  With a deficit that large, it seems logical to assume they will be seeking revenue from many sources – including sales and use tax. Legislators have estimated that the digital download tax will bring in $6-11 million in additional revenue.

Wisconsin Department of Revenue

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