Buyers of heavy trucks and trailers paid Wisconsin sales tax on federal excise tax included in the purchase price. Refunds may be available on past sales.
Buyers of heavy-duty trucks, trailers, and tractors sold in Wisconsin will no longer have to pay sales tax on the federal excise tax (FET) included in the purchase price. Plus, refunds may be available on affected sales since September 1, 2014. This change is part of the 2015 Wisconsin Act 361.
Previously, FET on the first retail sale of heavy trucks and trailers could be included in a retailer's taxable sales price, increasing the amount of sales tax a purchaser paid to the state of Wisconsin. Act 361 amended the definitions of "sales price" and "purchase price" so that FET can no longer be included in the retailer’s taxable sales price. But this condition is only met if the retailer separately states the FET on the invoice, bill of sale, or similar document given to the purchaser.
Act 361 defines heavy as follows:
- Trucks greater than 33,000 pounds
- Trailers greater than 26,000 pounds
- Tractors greater than 19,500 pounds
Use of these new definitions is retroactive to September 1, 2014.
It is important to note that the change does not impact the current sales tax exemption in Wisconsin for motor trucks, truck tractors, road tractors, buses, trailers, and semitrailers sold to common or contract carriers.
Tax refund opportunity
Because FET could originally be included in a retailer's taxable sales price as of September 1, 2014, Act 361's retroactivity means that refunds are available on any Wisconsin sales tax paid on FET since that date. It will be necessary to provide the invoice, bill of sale, or other appropriate document that reflects the FET, in order to claim a refund.
Either the buyer or seller may file for the refund. If the seller files, however, he or she must in turn refund tax and interest to the buyer.
Here is an example of how the refund would work for a $100,000 truck purchase:
| Old Method | |
|---|---|
| Truck | $100,000 |
| FET rate | 12% |
| FET | $12,000 |
| Prior WI tax base | $112,000 |
| WI sales tax 5% | $5,600 |
| Total cost | $117,600 |
| Revised Method | |
|---|---|
| Truck | $100,000 |
| FET rate | 12% |
| FET | $12,000 |
| New WI tax base | $100,000 |
| WI sales tax 5% | $5,000 |
| Total cost | $105,000 |
Difference in sales tax is refund: $600
How we can help
CLA's state and local tax practitioners can help affected truck, trailer, and tractor buyers and sellers file for any available refunds as part of the new legislation.