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Low income taxpayers see relief from online revenues

An estimated $256.4 million will come in the form of tax relief for Wisconsin taxpayers, as a result of additional revenue collected by the Department of Revenue (DOR) from out-of-state retailers and marketplace providers, for a 12-month period, ending Sept. 30, 2020. The amount is more than three times the $77.4 million in tax relief in 2019.

Last year, bipartisan legislation 2019 Wisconsin Act 10 was signed, which ensured the tax relief would be targeted toward lower and middle-income Wisconsinites.

“We are pleased the department could collect these funds from more than 9,000 remote sellers, which is up from 5,000 remote sellers previously,” said DOR secretary Peter Barca. “I am pleased to see that the changes we made in the Marketplace legislation are delivering the most relief to those who most need it.”

A 2018 decision by the U.S. Supreme Court in South Dakota vs. Wayfair, expanded the state’s authority to require out-of-state retailers and marketplace providers to collect, and remit, sales and use tax, during the period beginning Oct. 1, 2019 and ending Sept. 30.

This revenue estimate is based on tax amounts reported by filers who registered to collect taxes after the Wayfair decision and are located outside the state. Additional revenue reported by marketplace providers, is included in this amount, as the marketplace provisions included in 2019 Wisconsin Act 10 took effect Jan. 1.

Prior to 2019 Wisconsin Act 10, the rate cuts related to collections from out-of-state retailers subject to the Wayfair decision, were to be applied to all income tax brackets, which would have disproportionately benefitted higher income earners. Under 2019 Wisconsin Act 10, the rate cuts were instead focused on the lower two brackets, concentrating income tax relief for lower and middle-income Wisconsin taxpayers.