Is Shipping Taxable in Wisconsin? Wisconsin Sales Tax Rules for Delivery Charges

Is Shipping Taxable in Wisconsin?

In Wisconsin, when a retailer sells taxable products or taxable services and charges the purchaser for delivery, the retailer’s total charge, including the delivery charge, is taxable.

This applies whether delivery is made by the seller’s vehicle, a common or contract carrier, or the United States Postal Service.

Source: Wisconsin Department of Revenue, Is it taxable? FAQ https://www.revenue.wi.gov/Pages/FAQS/ise-taxable.aspx

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General Rule: Delivery Charges Are Taxable for Taxable Sales

Wisconsin generally taxes delivery charges when the retailer sells taxable products or services and charges the purchaser for delivery.

For example:

Product price: USD 100 Delivery charge: USD 8 Taxable total charge: USD 108

If the product is taxable, Wisconsin sales tax generally applies to the full USD 108 amount.

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Delivery Method Does Not Change the Rule

Wisconsin states that this rule applies whether delivery is made by:

• the seller’s vehicle;
• a common carrier;
• a contract carrier;
• the United States Postal Service.

For example:

Product price: USD 100 USPS delivery charge: USD 8 Taxable total charge: USD 108

If the product is taxable and the retailer charges the purchaser for delivery, the delivery charge is generally taxable even if USPS makes the delivery.

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Does Separately Stating Shipping Make It Non-Taxable?

Generally, no. Wisconsin’s general rule focuses on whether the retailer sells taxable products or services and charges the purchaser for delivery.

For example:

Product price: USD 100 Shipping charge: USD 8 Total: USD 108

If the product is taxable, the separately stated shipping charge is generally taxable when charged by the retailer.

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Mixed Packages: Taxable and Nontaxable Items

If a package includes both taxable and nontaxable items, only the shipping charges related to taxable items are subject to sales tax.

For example:

Taxable item price: USD 60 Nontaxable item price: USD 40 Total product price: USD 100 Shipping charge: USD 10

If the seller allocates shipping by price, taxable items represent 60% of the order. The taxable shipping portion may be USD 6.

Sellers should retain allocation records showing how the taxable and nontaxable shipping portions were calculated.

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Exception: Direct Mail

Wisconsin provides an exception for direct mail. The sales price of direct mail does not include separately stated delivery charges.

For example:

Direct mail charge: USD 100 Separately stated delivery charge: USD 8 Total: USD 108

If the charge qualifies as a separately stated delivery charge for direct mail, it may be excluded from the sales price.

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Exception: Purchaser Pays Independent Carrier Directly

Wisconsin also provides an exception for transportation or delivery charges paid by the Wisconsin purchaser to a carrier that is independent of the seller.

For example:

Product price paid to retailer: USD 100 Delivery charge paid directly to independent carrier: USD 8

If the purchaser pays the independent carrier directly, the charge is generally not treated as a taxable delivery charge imposed by the retailer.

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Common Compliance Issues for Ecommerce Sellers

Assuming USPS or common carrier delivery is exempt

Wisconsin’s rule applies even when delivery is made by USPS, a common carrier, or a contract carrier.

Assuming separately stated shipping is exempt

Separately stating shipping does not generally make it non-taxable for taxable Wisconsin sales.

Not allocating mixed packages

When taxable and nontaxable items are shipped together, sellers should tax only the shipping portion related to taxable items.

Confusing retailer-collected delivery with direct carrier payment

Retailer-collected delivery charges are generally taxable for taxable sales. Purchaser-paid independent carrier charges may qualify for an exception.

Applying another state’s rule to Wisconsin

Shipping taxability varies by state. Wisconsin should be configured separately from states where separately stated shipping may be non-taxable.

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Practical Tips for Sellers Shipping to Wisconsin

Sellers shipping taxable products or providing taxable services to Wisconsin customers should generally include retailer-charged delivery charges in the taxable total charge. This applies regardless of whether delivery is made by the seller’s vehicle, common carrier, contract carrier, or USPS.

For mixed packages, sellers should allocate delivery charges between taxable and nontaxable items and retain supporting records. Sellers should also keep invoices, checkout records, carrier bills, order details, exemption certificates, marketplace reports, and sales tax filing records.

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Conclusion

In Wisconsin, delivery charges are generally taxable when a retailer sells taxable products or services and charges the purchaser for delivery. This applies regardless of whether delivery is made by the seller’s vehicle, a common or contract carrier, or USPS.

If a package includes both taxable and nontaxable items, only the shipping charges for taxable items are subject to sales tax. Separately stated direct mail delivery charges and delivery charges paid directly by the purchaser to an independent carrier may qualify for exceptions.

Source: Wisconsin Department of Revenue, Is it taxable? FAQ https://www.revenue.wi.gov/Pages/FAQS/ise-taxable.aspx