Milwaukee, Wisconsin introduces new sales tax collection requirements
New sales and use taxes will be in effect in the city of Milwaukee and increase in Milwaukee County as of January 1, 2024.
Authorized by the 2023 Wisconsin Act 12, the new rates will assist the city and county of Milwaukee with current financial challenges to avoid bankruptcy, maintain jobs for first responders and fund crucial services for residents.
This is the first city-level sales and use tax to be imposed in Wisconsin.
The new sales tax rates are as follows:
Sales within the city of Milwaukee
|
Sales tax jurisdiction |
Prior to |
Effective |
|
Wisconsin |
5.0% |
5.0% |
|
Milwaukee County |
0.5% |
0.9% |
|
City of Milwaukee |
0.0% |
2.0% |
|
Total percentage |
5.5% |
7.9% |
Sales within Milwaukee County (outside of the city of Milwaukee)
|
Sales tax jurisdiction |
Prior to |
Effective |
|
Wisconsin |
5.0% |
5.0% |
|
Milwaukee County |
0.5% |
0.9% |
|
City of Milwaukee |
N/A |
N/A |
|
Total percentage |
5.5% |
5.9% |
As the new city tax and tax rates come into effect January 1, 2024, businesses will need to adjust their POS or similar systems to collect the additional taxes both from the increased rates as well as the new city tax.
To remit tax collected for the new Milwaukee city tax, businesses should be sure their Wisconsin My Tax Account (MTA) online account system is updated to include an additional section for sales made in the city of Milwaukee.
Businesses preferring to paper file their Wisconsin sales and use tax returns must also be sure they have a new section for Milwaukee city sales.
Retailer discounts
For sales tax payables on or after the effective date of October 1, 2023, the Wisconsin Department of Revenue has revised its retailer’s discount through the enactment of the 2023 Wisconsin Act 19, which was signed into law on July 5, 2023. The retailer’s discount is a mechanism that allows retailers to retain a portion of the sales tax they collect from customers.
This deduction is designed to offset the administrative costs associated with collecting and reporting sales and use tax. By encouraging timely compliance, the state aims to streamline tax administration and support local businesses.
The legislation increases the discount rate from 0.5% to 0.75%, along with increasing the maximum deduction of the retailer’s discount from $1,000 to $8,000 per reporting period. In other words, companies with monthly or quarterly filing requirements could benefit from the maximum $8,000 deduction multiple times throughout the year if their returns are filed by the due date.
For businesses that file their sales tax returns on time prior to 4 p.m. CT of the due date listed, their return will be considered “filed timely” and they will be eligible for the retailer’s discount. This discount should incentivize businesses to file on time.
The table below shows how this discount is calculated. If a business fails to submit its return by the date due, it will be disqualified from taking the discount and subject to a late filing fee.
The computation is based on the retailer’s discount as of October 1, 2023.
|
Total sales tax amounts per reporting period |
Retailer discount applied |
|
$0-$10 |
Equal to the total sales tax amount |
|
$10-$1,333 |
Fixed $10 |
|
Over $1,333 |
0.75% of the total sales tax amount, maximum accumulation of $8,000 |
The discount is not allowed under certain circumstances, including delinquent tax payments, additional amounts owed after the return due date, use tax reporting and situations involving certified service providers.
How Wipfli can help
Wipfli’s state and local tax (SALT) team offers sales tax compliance services that help businesses feel confident that they have met the appropriate requirements. We can also help you better understand your full state and local tax exposure and understand the ramifications of any updates or legislative changes.
Contact us today and discover how we can help you minimize your tax exposure.
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