Wisconsin Sales Tax Change: Enhanced Retailer’s Discount to Benefit Businesses

Wisconsin Sales Tax Change 2023 Enhanced Retailer's Discount

Written by Curt Bach

September 19, 2023

Effective October 1, 2023, a significant change is set to take place in Wisconsin’s sales tax landscape, thanks to the 2023 Wisconsin Act 19. This legislative amendment, which modifies section 77.61(4)(c) of the Wisconsin Statutes, introduces a revised retailer’s discount structure. In this article, we will delve into the specifics of this change and its potential impact on businesses and tax reporting.

Understanding the Retailer’s Discount

For businesses involved in the reporting and collection of sales taxes, one critical aspect to consider is the retailer’s discount. This discount allows retailers to deduct a portion of the sales tax they have collected and reported on a timely sales and use tax return. This serves as an incentive for businesses to comply with tax regulations while providing them with some relief on their tax liabilities.

The Enhanced Retailer’s Discount

Under the provisions of the 2023 Wisconsin Act 19, the retailer’s discount is set to undergo a transformation. Prior to this change, businesses could deduct 0.5 percent of the total sales tax amount reported on their returns. However, the new legislation increases this discount rate to 0.75 percent. This adjustment will have a direct impact on the amount of relief that businesses can expect to receive when fulfilling their tax obligations.

The legislation also raises the cap on the retailer’s discount that can be claimed. Previously, businesses were limited to a maximum deduction of $1,000 on their sales and use tax returns. Now, with the revised rules in place, this cap is elevated to an impressive $8,000. This means that businesses can potentially save a substantial amount on their tax liabilities through this enhanced discount.

How the Retailer’s Discount is Calculated

To gain a better understanding of how this retailer’s discount works, it’s important to examine the calculation method. The discount is computed based on the total sales tax amount reported. The specifics of the calculation are as follows:

  • For sales tax amounts ranging from $0 to $10, businesses are entitled to a discount equivalent to the total sales tax collected during that reporting period.
  • If the total sales tax falls within the range of $10 to $1,333, a fixed discount of $10 is applied.
  • For sales tax amounts exceeding $1,333, businesses can calculate their discount by multiplying the total sales tax amount by 0.0075. However, it’s crucial to note that this discount cannot surpass the newly established cap of $8,000 per reporting period.

Implications for Businesses

The enhancements made to Wisconsin’s retailer’s discount bring several advantages for businesses. First and foremost, the increased discount rate of 0.75 percent provides businesses with greater tax relief, potentially reducing their tax burden significantly. Additionally, the higher cap of $8,000 means that larger retailers with substantial sales volumes can benefit substantially from this change.

The 2023 Wisconsin Act 19 introduces a favorable alteration to the retailer’s discount structure, benefiting businesses across the state. By raising the discount rate to 0.75 percent and increasing the maximum cap to $8,000, Wisconsin aims to support businesses in their tax compliance efforts while easing their tax liabilities. Come October 1, 2023, businesses should take full advantage of these changes to optimize their tax reporting and collections strategies.

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Curt Bach
I joined Hawkins Ash CPAs in August 2010, and am currently a manager in the firm’s Medford office. I provide a variety of tax services, including trust and estate tax preparation and planning. I have more than nine years of experience providing audit and tax services to nonprofit organizations, governmental entities and small businesses. I am a member of our firm’s tax committee and not-for-profit service group.

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