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Online sales tax changes result in $77.4m in lost revenue

Posted at 1:21 PM, Nov 01, 2019
and last updated 2019-11-01 14:22:00-04

MADISON — A new report says expanded online sales tax collection will result in $77.4 million in lost income tax revenue for the state.

A 2018 U.S. Supreme Court decision expanded states' authority to require online sellers to collect and remit sales and use taxes on products delivered to Wisconsin. State law requires the additional revenue to cover reductions in the two lowest income tax brackets.

The Legislative Audit Bureau released a report Friday that found the state Department of Revenue estimates online vendors will remit $79.2 million for the year ending Sept. 30, 2019. DOR determined that translates to income tax rate cuts from 4% to 3.86% and from 5.21% to 5.04%, which will reduce income tax revenue by $77.4 million.

The audit bureau determined that DOR's estimates appear reasonable.