Wisconsin – Taxability of Credit Card Swipe Fees

SALT Report 2383 – Beginning January 27, 2013 Wisconsin retailers are authorized to charge their customers a “swipe fee” if they use credit cards to pay for goods and service. Because of this, the Department of Revenue issued guidance regarding the application of sales and use tax to the credit card swipe fees.

Generally, if the product or service sold is taxable and the retailer charges a swipe fee, tax will apply to the total amount, including the swipe fee, charged by the retailer. For example, a customer purchases a television for $599 and pays using a credit card. The retailer charges the customer a 2% swipe fee on the $599 selling price.

The retailer’s taxable receipts from the sale of the television should be computed as follows:

Selling Price of the television – $599.00
Swipe fee charged by Retailer ($599 X .02) – $11.98
Total taxable receipts – $610.98

However, if a credit card is used to pay for taxable and non-taxable products or services, the retailer may apportion the swipe fee between the taxable and non-taxable purchases. For example, a customer goes to the grocery store and purchases exempt food items for $65 and taxable items for $28. The customer pays with a credit card and the grocery store charges a 2% swipe fee on the $93 total selling price.

The grocery store’s taxable receipts should be computed as follows:

Selling Price of taxable items – $28.00
Swipe fee on taxable items ($28 X .02) – $.56
Taxable Receipts – $28.56

For Further Information

Wisconsin Department of Revenue – News for Tax Professionals—Sales Tax Treatment of Credit Card “Swipe” Fees

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