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A lot of companies online will tout tax-free shopping, and many of our shoppers may see shopping using these sites as a way to help the organization of their choice while also avoiding taxes. On line 34 of Wisconsin’s 2007 tax form 1, however, you are asked to report out-of-state purchases. You are responsible for reporting any purchases you make from out-of-state merchants.
While the only things in life that are certain are death and income tax, apparently sales tax has become a bit less certain. In fact, the state currently has no way of tracking all (if any) online purchases. So, while you are responsible for reporting your purchases and paying the taxes, it is more a question of honor, duty, ethics, or maybe morals. Regardless, it’s your choice what you do about taxes, except when you buy from some of the biggest online retailers, which do charge tax for each state. They have to if they have a physical store in the state. Keep in mind that you could also purchase an item to be shipped to an out-of-state address as a gift—my wife and I do this all the time to save on shipping fees. Well, technically you owe local sales tax on anything you will use in your state, so that means if you’re buying a gift for someone in another state, that person owes a use tax on your gift, or maybe you do, but it’s to that state. It gets even weirder: let’s say I travel to Montana to visit my aunt, and while there I buy an ax at a local retailer in order to feel more manly. When I get home to Wisconsin, I owe local sales tax on that ax. However, had I bought the ax in South Dakota, I’d only owe the difference between their 4% sales tax and Wisconsin’s higher tax. And, yes, there are people who are assigned to capture those of us who “cheat” on sales tax, but these state employees are generally trying to catch the guy who buys a car in Canada when the dollar is strong, not someone who buys a digital camera to take snapshots of the kids. At least that’s what I assume. My advice is to go with your gut. I have paid this tax before and it made me feel a little empty inside. It was like pulling myself over for speeding on the freeway and flagging down a state trooper. And my friends were astonished at my honesty, or maybe what they saw as my stupidity. Anyhow, if you want to see what Wisconsin has to say about paying the taxes you owe, check out the info from the state DOR Publication 205 below: (by the way, I looked for the UT-5 Form they mention, but did not find it for ya.) “How do you pay use tax?As an individual consumer, you have two options forpaying Wisconsin use tax.1. You can pay use tax on your Wisconsin incometax return (Form 1, 1A, WI-Z, or 1NPR). A specialline titled “Sales and use tax due on out-of-statepurchases” is on Wisconsin income tax returns toallow you to report your annual use tax liability, or2. You can report and pay use tax quarterly on theWisconsin Form UT-5, Consumer Use Tax Return,which is a part of this publication. Note to Businesses: If you have (or are required to have) a Wisconsin Seller’s Permit or Use Tax Certificate,you should report your use tax obligations inaccordance with the instructions for the sales and usetax returns you file with the Department of Revenue.Publication 201, Wisconsin Sales and Use Tax Information,contains more information for businesses.What if you don’t pay the use tax you owe?If you don’t pay the use tax you owe, you may be subjectto interest and penalties in addition to the use tax.The department, through audits of businesses andagreements with other states, makes an effort to ensurethat use tax owed by individuals on out-of-statepurchases is remitted to the department.” |
