Shipments of Tangible Personal Property - Where Do the Sales Take Place?

Sales and use taxes are imposed based on the location where the sale takes place (i.e., the location to which the sale is sourced). For sales of tangible personal property, this is generally the location where the purchaser "receives" the property.

"Receive," is defined in sec. 77.522 (1)(a)1., Wis. Stats. (2009-10), in part, to mean "taking possession of tangible personal property ... 'Receive' does not include a shipping company taking possession of tangible personal property ... on a purchaser's behalf."

Therefore, if tangible personal property is delivered to the buyer's location in Wisconsin by a shipping company, the sale takes place in Wisconsin and is taxable to Wisconsin, regardless of whether the buyer or the seller hire the shipping company.

Prior to October 1, 2009, the tax treatment was dependent on whether the shipping company was a common or contract carrier and whether the buyer or the seller hired the shipping company. Section 77.51(14r), Wis. Stats. (2007-08), stated, in part, that a sale was completed "at the time and place when and where possession is transferred by the seller or the seller's agent to the purchaser or the purchaser's agent, except that for purposes of this subsection a common carrier or the U.S. postal service shall be deemed the agent of the seller, regardless of any f.o.b. point and regardless of the method by which freight or postage is paid."

The examples, below, illustrate where the sale of tangible personal property takes place.

Index to Examples:

Example 1 - Wisconsin Purchaser Hires Shipping Company to Pick Up Property from Out-of-State Seller: In May 2011, Purchaser A, located in Wisconsin, purchases office furniture from Seller B, located in Minnesota. Purchaser A hires Shipping Company C to pick up the office furniture from Seller B and deliver it to Purchaser A's Wisconsin business location. The sale takes place at Purchaser A's Wisconsin business location where Purchaser A "receives" the office furniture, regardless of whether Shipping Company C is a common or contract carrier.

Prior to October 1, 2009:

Example 2 - Out-of-State Purchaser Hires Shipping Company to Pick Up Property from Wisconsin Seller: In May 2011, Purchaser D, located in Minnesota, purchases office furniture from Seller E, located in Wisconsin. Purchaser D hires Shipping Company F to pick up the office furniture from Seller E and deliver it to Purchaser D's Minnesota business location. The sale takes place at Purchaser D's Minnesota business location where Purchaser D "receives" the office furniture, regardless of whether Shipping Company F is a common or contract carrier.

Prior to October 1, 2009:

Example 3 - Out-of-State Seller Hires Shipping Company to Deliver Property to Wisconsin Purchaser: In May 2011, Purchaser G, located in Wisconsin, purchases office furniture from Seller H, located in Minnesota. Seller H hires Shipping Company J to deliver the office furniture from Seller H's location in Minnesota to Purchaser G's Wisconsin business location. The sale takes place at Purchaser G's Wisconsin business location where Purchaser G "receives" the office furniture, regardless of whether Shipping Company J is a common or contract carrier.

Prior to October 1, 2009:

Example 4 - Wisconsin Seller Hires Shipping Company to Deliver Property to Out-of-State Purchaser: In May 2011, Purchaser K, located in Minnesota, purchases office furniture from Seller L, located in Wisconsin. Seller L hires Shipping Company M to deliver the office furniture from Seller L's location in Wisconsin to Purchaser K's Minnesota business location. The sale takes place at Purchaser K's Minnesota business location where Purchaser K "receives" the office furniture, regardless of whether Shipping Company M is a common or contract carrier.

Prior to October 1, 2009:

Example 5 - Wisconsin Purchaser's Employee Picks Up Property From Out-of-State Seller: In May 2011, Purchaser N, located in Wisconsin, purchases office furniture from Seller O, located in Minnesota. Purchaser N sends an employee to pick up the office furniture in Minnesota and bring the office furniture to Purchaser N's Wisconsin business location. The sale takes place at Seller O's Minnesota business location where Purchaser N "receives" the office furniture.

Prior to October 1, 2009:

Example 6 - Out-of-State Purchaser's Employee Picks Up Property From Wisconsin Seller: In May 2011, Purchaser P, located in Minnesota, purchases office furniture from Seller Q, located in Wisconsin. Purchaser P sends an employee to pick up the office furniture in Wisconsin and bring the office furniture to Purchaser P's Minnesota business location. The sale takes place at Seller Q's Wisconsin business location where Purchaser P "receives" the office furniture.

Prior to October 1, 2009:

Last updated June 28, 2011