Wisconsin Computer, Software, and SaaS Tax Guide

Prepared by Sales Tax Helper

Table of Contents

1. Introduction
2. Nexus Considerations
3. General Rules and Compliance Considerations
4. Specific Exemptions
5. Sourcing Rules
6. Audit Considerations
7. Voluntary Disclosure Agreements (VDAs)
8. Conclusion
9. References & Resources

1. Introduction

Wisconsin’s sales and use tax rules pose unique challenges for software companies, SaaS
providers, and technology firms operating in the state. Wisconsin differentiates between
computer hardware, prewritten (canned) software, and custom software based on both the
method of delivery and the degree of customization involved. The tax treatment of software and technology-related services in Wisconsin hinges on several factors, making the compliance landscape complex for businesses operating in this space.

Purpose of This Guide

This guide is designed to help businesses navigate Wisconsin's sales and use tax rules related to software and technology services. It focuses on:

• Nexus Considerations: Understanding when businesses must register and collect
  Wisconsin sales tax due to physical or economic presence.
• Taxability of Software & Services: Clarifying the tax treatment of hardware, prewritten
  vs. custom software, cloud computing services, and related technology offerings.
• Sourcing Rules: Determining how and where transactions are taxed based on customer
  location and method of software delivery.
• Audit Considerations: Identifying common tax audit triggers and best practices for
  compliance.
• Voluntary Disclosure Agreements (VDAs): Explaining the process for businesses to
  rectify past noncompliance while mitigating penalties and limiting back-tax liability.

Why This Matters for Technology Companies

Wisconsin's sales tax laws impact software companies, SaaS providers, and technology firms in multiple ways:

• Sales Tax Obligations: Businesses that sell software or related services to Wisconsin
  customers may have a duty to collect and remit Wisconsin sales tax, depending on how
  the product is classified.
• Cloud Computing & SaaS Considerations: Wisconsin does not impose sales tax on
  SaaS, IaaS, or PaaS when certain conditions are met, but misclassification of transactions
  can lead to tax liabilities.
• Compliance Risks: Failure to correctly assess and collect sales tax can result in
  significant penalties, interest, and extended audit exposure.

This guide will walk through Wisconsin's specific sales tax rules governing software, SaaS, and
technology-related services while referencing applicable statutes, administrative rules, and
Wisconsin Department of Revenue guidance. Throughout the guide, official Wisconsin
Department of Revenue sources will be linked for further reference.

For general information on Wisconsin's sales and use tax publications, visit Wisconsin
Department of Revenue Publications.

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