Free with purchase - Tax changes for Wisconsin retailers

Beginning September 1, 2011, Wisconsin retailers that provide an item free of charge to a consumer with the purchase of a taxable item can purchase the free item, for resale, without Wisconsin sales or use tax.

2011 Act 32 introduces Wisconsin Statute 77.52(21) (b) which states "a person who provides a product that is not distinct and identifiable because it is provided free of charge to a purchaser who must also purchase another product that is subject to tax imposed under this subchapter from that person in the same transaction may purchase the product provided free of charge without tax, for resale."

An item that is given away with a purchase of another product is not a "distinct and identifiable product" when the sales price of the product purchased does not vary depending upon whether the free item is included in the transaction.

As an example, if you offer an iPad free with the purchase of a new vehicle, and the price of the new vehicle to the consumer does not change whether or not the consumer actually takes the free iPad, the dealership is not responsible for Wisconsin sales and use tax on the purchase of the iPad for resale.
 

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