by Senator Howard Marklein
July 26, 2019
Leveling the Sales Tax Playing Field for Retailers
New law requires online retailers to collect WI Sales Tax just like your neighborhood store.
2019 Wisconsin Act 10 – also known as the Marketplace or “Wayfair” bill - will collect approximately $164,000 per day or $67.1 million annually in sales tax revenue for Wisconsin. This legislation was passed in tandem with the State Budget and the projected revenue was utilized to fund the Middle Class Tax Cut for every Wisconsin taxpayer.
Beyond the additional revenue and tax relief provided by this legislation, it also leveled the sales tax playing field for retailers. Act 10 clarified current law to require online retailers and online travel intermediaries like Amazon and Orbitz to collect tax on taxable sales facilitated on behalf of third-party sellers and travel-related businesses.
For example, the Amazon Marketplace section of Amazon allows a retailer to sell to Amazon customers alongside Amazon’s regular offerings. In the Marketplace, Amazon acts as an intermediary. Prior to Act 10, Amazon did not collect state sales tax on these sales. This law requires them to do so.
For travel intermediaries, Act 10 requires these companies to collect tax on the sales price paid by the customer, rather than the contracted rate between the hotel, airline or car rental negotiated between the company and the intermediary.
Act 10 levels the playing field between brick-and-mortar retailers in our communities with all online retailers. Local shops and service providers have been required to collect Wisconsin sales tax while many online retailers have not. Savvy consumers have used this loophole to “get a deal” online even though, technically, they are supposed to report unpaid sales tax on their annual income tax filing.
Unfortunately, there was a small delay in signing this bill that will cost us $15.8 million this year. The legislature passed the bill on June 26, 2019 and Governor Tony Evers requested the bill on June 28, 2019. However, the Governor did not sign the bill until July 3, 2019.
Delaying enactment until after June 30, 2019 resulted in a delay for the law to go into effect that is costing us $15.8 million in missed collections. The difference of three days forced the law to go into effect on January 1, 2020 rather than October 1, 2019 as we originally planned. According to the non-partisan Legislative Fiscal Bureau (LFB), the three-month delay in collections will impact the Middle Class Income Tax Cut.
Despite the impact of the delay, this tax reform is a good policy for Wisconsin. The leveled playing field for local retailers is good for our local businesses and the families who contribute to our communities. I was proud to lead this legislation with my colleagues and will continue to seek ways to reform and modernize tax laws for the benefit of every taxpayer.
For more information and to connect with me, visit my website http://legis.wisconsin.gov/senate/17/marklein and subscribe to my weekly E-Update by sending an email to Sen.Marklein@legis.wisconsin.gov. Do not hesitate to call 800-978-8008 if you have any questions or need assistance with any state-related matters.
Marklein represents the 17th Senate District, which includes all or parts Grant, Green, Iowa, Juneau, Lafayette, Monroe, Richland, Sauk and Vernon counties. Marklein serves on the legislature’s budget-writing Joint Finance Committee and is Chair of the Senate Committee on Agriculture, Revenue & Financial Institutions.