Wisconsin – Taxability of Buy One, Get One Free Promotions

SALT Report 1276 – The Wisconsin Department of Revenue has issued a tax release regarding “buy one get one free” promotions.   Effective September 1, 2011, the sales and use tax laws changed with respect to a retailer’s purchase of products that it provides free of charge to its customers with the required purchase of like products.

Pursuant to Act 32, Laws 2011, a retailer is the consumer of the product it provides free of charge in conjunction with the purchase of another product and is required to pay sales or use tax on its purchase of the free product if the other product that is required to be purchased is exempt from or not subject to Wisconsin sales and use tax.

However, if the additional product that is required to be purchased from the retailer is a “taxable product,” the retailer may purchase the products provided free of charge to customers without paying Wisconsin sales and use tax because they are for resale.

The release further defines the terms “taxable product” and “free of charge.”

Taxable Products

  • A taxable product is a product for which a retailer’s sale of the product is subject to Wisconsin sales or use tax unless the purchaser provides the retailer with a fully completed exemption certificate.
Products Provided Free of Charge
  • A product is provided “free of charge” with the purchase of another product if the customer does not have to pay an additional amount to receive the second product.
  • A product is considered to be provided free of charge if the invoice or receipt shows a sales price for the second product, along with a discount applicable to the second product that reduces the sales price of the second product to zero.
  • If the invoice or receipt provided by the seller to the customer indicates that the seller makes a charge to the customer for the second product, and the charge is not discounted or otherwise adjusted to zero, the product is not provided free of charge.


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