Expanding applicability of the room tax, making substantive and technical changes to the local room tax, and providing a penalty

2019 Wisconsin Act 10 in effect requires lodging marketplaces to collect and remit sales taxes from third parties.

Under this bill, for transactions that occur through a marketplace provider, the marketplace provider generally collects any room tax due from a marketplace seller (a seller who sells products through a physical or electronic marketplace operated by a marketplace provider), and forwards it to the municipality on a quarterly basis, along with a form prepared by DOR. The form must include the total sales for properties located in a municipality with a room tax, the total number of nights such properties were rented, the room tax rate, and the total tax collected. Annually, beginning 90 days after the bill's effective date, DOR is required to post on its website the name of each municipality that imposes a room tax, and the rate of each room tax.

Under current law and the bill, to enforce the collection of a room tax imposed by a municipality or local exposition district, if such entities have probable cause to believe that the correct amount of room tax has not been assessed or that a room tax return is incorrect, they may inspect and audit the financial records of any person subject to the room tax. Under current law, a person who fails to comply with a request to inspect and audit such records is subject to a forfeiture not exceeding 5 percent of the room tax imposed or 5 percent of what the municipality or district determines the room tax should be, according to its best judgment. Under the bill, this same forfeiture may be imposed on a marketplace provider if the municipality or district has made three requests to inspect and audit the requested records and the marketplace provider fails to respond or comply with the request.

The technical changes made by the bill include the following:

1. Requires counties to provide DOR with the complete county tax roll.

2. Applies to the room tax a number of definitions that currently apply to the general sales and use tax.

3. Authorizes a municipality or district performing an audit related to the room tax to conduct joint audits with other such entities and to exchange audit information with DOR and any municipality that took part in the joint audit.