Drop Shipment Sales - Change in Wisconsin Sales and Use Tax Treatment

Effective October 1, 2009, a manufacturer or other seller may accept an exemption certificate claiming resale from an out-of-state purchaser even when the manufacturer or other seller is directed to ship the product to a consumer in Wisconsin and the out-of-state purchaser does not have a Wisconsin seller's permit or Wisconsin use tax registration certificate.

Prior to October 1, 2009, a manufacturer or other seller could not have accepted an exemption certificate claiming resale from an out-of-state business not holding a Wisconsin seller's permit or use tax certificate, if the manufacturer or other seller delivered the product to a consumer in Wisconsin. (Section 77.51(14)(d), Wis. Stats. (2007-08), repealed effective October 1, 2009 by 2009 Wis. Act 2.)

Section 77.51(14)(d), Wis. Stats., was repealed as a part of the legislation necessary to conform Wisconsin's sales and use tax laws to the requirements of the Streamlined Sales and Use Tax Agreement (SSUTA).

Example: Seller A is located in Illinois and does not have a Wisconsin seller's permit or Wisconsin use tax registration certificate. Seller A receives an order from Customer C, who is located in Wisconsin. Seller A places an order for that equipment with Manufacturer B, located in Wisconsin, and directs Manufacturer B to deliver the equipment to Customer C's location in Wisconsin.

Prior to October 1, 2009: Manufacturer B was liable for Wisconsin tax on the equipment that it drop shipped to Customer C, based on the retail selling price of the sale of the equipment by Seller A to Customer C.

Effective October 1, 2009: Manufacturer B may accept a properly completed exemption certificate from Seller A claiming resale.

Page last updated January 19, 2010