Collecting Sales or Use Tax on Advertising and Promotional Direct Mail - For Sales Prior to July 1, 2013*

* This article provides the tax treatment of sales and purchases of advertising and promotional direct mail prior to July 1, 2013. Effective July 1, 2013, there is a sales and use tax exemption for advertising and promotional direct mail.

A seller of advertising and promotional direct mail is required to collect sales or use tax based on the location from which it was shipped unless:

Note added on July 8, 2013: Although Wisconsin offers a use tax credit for taxes paid to another state, credit for tax paid to another state on advertising and promotional direct mail purchases is not allowed if the purchaser did not provide to the seller a direct pay permit, an exemption certificate claiming advertising and promotional direct mail, or other information that indicates the appropriate taxing jurisdiction to which the advertising and promotional direct mail is delivered to the ultimate recipients.

Question: What Wisconsin sales or use tax does a seller of advertising and promotional direct mail collect if recipients' addresses are provided as jurisdiction information and that information is insufficient to determine the correct county of the recipient, for example, only the 5-digit zip code is provided as part of the mailing address?

Answer: The seller should collect and remit Wisconsin state sales or use tax on sales of advertising and promotional direct mail to recipients with Wisconsin addresses. Since insufficient information is provided for the seller to collect the correct county and stadium tax, the seller should collect and remit county and stadium sales or use tax based on the county from which the advertising and promotional direct mail was shipped (assuming it is a Wisconsin county).

Example 1: Printer D, who holds a Wisconsin seller's permit, sells advertising and promotional direct mail to Business A. Ten percent (10%) of the advertising and promotional direct mail is delivered to recipients in Wisconsin. Business A gives Printer D a completed exemption certificate claiming the direct mail exemption. Printer D should not collect and remit Wisconsin state, county, or stadium sales and use taxes on its sale of the advertising and promotional direct mail to Business A.

Business A is subject to Wisconsin state, county and stadium use tax on 10% of the advertising and promotional direct mail delivered to recipients in Wisconsin. Business A is responsible for determining the correct county where each piece of direct mail was delivered.

Example 2: Printer S, who holds a Wisconsin seller's permit, sells 50,000 pieces of advertising and promotional direct mail to Company O. Printer S ships the direct mail from its printing plant in Minnesota to recipients both in and outside Wisconsin.

Company O provides Printer S with a list of 5-digit zip codes and number of mail pieces to be delivered to each zip code. Based on this information, Printer S determines that 40% of the advertising and promotional direct mail is to be delivered to recipients in Wisconsin, but the information is not sufficient to determine the county where each piece is delivered. A nine-digit zip code is necessary to determine the correct county.

Printer S should collect Wisconsin state sales and use tax on 40% of the advertising and promotional direct mail sold to Company O.

Example 3: Printer K sells 50,000 pieces of advertising and promotional direct mail to Company T. Printer K ships the direct mail from its printing plant in Waukesha County to a U.S. Post Office in Milwaukee County for mailing to recipients both in and outside Wisconsin.

Company T provides Printer K with a list of 5-digit zip codes and number of mail pieces to be delivered to each zip code. Based on this information, Printer K determines that 40% of the advertising and promotional direct mail is to be delivered to recipients in Wisconsin, but the information is not sufficient to determine the county where each piece is delivered. A nine-digit zip code is necessary to determine the correct county.

Printer K should collect Wisconsin state and baseball stadium sales and use tax on 40% of the advertising and promotional direct mail sold to Company T. Printer K shipped the advertising and promotional direct mail from Waukesha County. Waukesha County has no county sales and use tax, but it is a part of the baseball stadium district.

Example 4: Printer P, who holds a Wisconsin seller's permit, sell's 100,000 pieces of advertising and promotional direct mail to Company Z. Printer P prints and ships the direct mail from its plant in La Crosse County.

Company Z provides Printer P a list of all Wisconsin counties, and the number of mail pieces to be delivered to recipients in each county (35,000 total), along with a statement that all of the remaining flyers (65,000) be delivered to recipients outside Wisconsin.

Printer P should collect and remit Wisconsin state, county and stadium sales or use tax on 35,000 pieces of direct mail, as applicable, based on the county list provided by Company Z.

Last updated July 8, 2013