Confused about when you need a seller’s permit? This post highlights a hodge-podge of information relating to sales tax.
Here are points to keep in mind.
- $2,000 is a rule of thumb (for Wisconsin). Generally, if you sell more than $2,000 a year, you need a seller’s permit.
- Business activities generally require you to have a seller’s permit.
- Hobby activities often don’t require you to have a seller’s permit if your sales are less than $2,000.
- Personal activities (like garage sales) are usually sporadic; hence you generally don’t need a seller’s permit.
Behind the scene information: If you or your business register for a vendor event, the event organizer is required to ask each vendor for their seller’s permit information. If you don’t have a seller’s permit and/or a federal EIN, you will then need to give your SSN. The event organizer is required by the state to report vendor attendee information back to the state. (Yes, I’ve had clients receive state correspondence because of this. Not fun for the client. So you need to know what’s required.)
Below are excerpts from the Wisconsin Tax Bulletin 206. The examples are really helpful.
Garage Sales, Flea Markets, Rummage Sales, and Swap Meets
If you sell personal household items such as housewares, dishes, and clothing, your sales are not subject to sales or use tax if:
- Your sales are less than $2,000 for the calendar year or are isolated and sporadic, and
- You do not hold, and are not required to hold, a seller’s permit at the time of the sales.
It is presumed you are not pursuing a business or part-time business as a vendor of taxable products when your sales of taxable products or services do not exceed $2,000 for the calendar year as, provided in sec. 77.51(9)(a)2., Wis. Stats.
Example 1: An individual holds an annual garage sale the third weekend of May and makes sales of used household goods totaling $2,300. The individual does not hold a Wisconsin seller’s permit and makes no other sales. The individual’s sales are isolated and sporadic (one weekend per year) and the individual does not hold a seller’s permit and is not required to hold a seller’s permit. The individual’s sales are not taxable.
Example 2: An individual sells handmade jewelry at several craft fairs throughout the year. The individual does not hold a seller’s permit. Taxable sales for the calendar year total $1,850. The individual’s sales qualify for the occasional sale exemption and is not required to remit sales tax on its sales. The individual may not purchase the materials used to make the jewelry without tax, for resale. The individual must pay sales tax or remit use tax on the purchase of beads, clasps, wire, stones, and other materials used to create the jewelry.
When Are Your Sales Taxable?
You are required to remit sales tax on your sale of taxable products and services if:
- You hold, or are required to hold, a seller’s permit, or
- You are engaged in business (or a part-time business) and your taxable sales total $2,000 or more in the calendar year. This includes the sales of works of art, handmade articles, antiques, or used property if you are pursuing a vocation or part-time business as a seller of such property.
Example 3: A craft vendor believes its taxable sales will exceed $2,000 during the calendar year. Therefore, the vendor obtains a seller’s permit on January 1. The vendor does not make $2,000 in taxable sales by December 31. Since the vendor held a seller’s permit, the occasional sales exemption does not apply. The vendor must remit sales tax on all of its taxable sales for the year. The vendor may purchase craft materials it resells to its customers without tax, for resale, by providing its suppliers with a fully completed exemption certificate.
Example 4: An individual sells new and used items at flea markets throughout the year. Taxable sales for the calendar year exceed $2,000. The individual is engaged in the business of selling new and used items. The individual must register for a Wisconsin seller’s permit and remit tax on such sales. The individual may purchase items it resells without tax, for resale, by providing its vendors with a fully completed exemption certificate.
See Wisconsin Tax Bulletin 206 – July 2019 for more information.