A Wisconsin Court of Appeals panel just handed StubHub a major loss in a sales tax case that reaches far beyond ticket sales. The court ruled that StubHub was correctly assessed $8.5 million in Wisconsin sales tax for ticket sales made through its online platform between 2008 and 2013. The ruling reversed a lower court decision that had found the company was not clearly liable under Wisconsin law during that period.
This is the kind of case that should make marketplace businesses uncomfortable, because it attacks a common assumption. Many companies believe their sales tax liability only begins after a state passes a marketplace facilitator statute. Wisconsin’s court just made it clear that is not always how the law will be interpreted.
The Size of the Assessment Matters
Wisconsin’s Department of Revenue said StubHub made roughly $154 million in taxable sales during the five year audit period. Based on that figure, the state assessed $8.5 million in unpaid sales tax, plus $6.4 million in interest and a $2.1 million nonfiling penalty. This was not a minor audit adjustment, it was a full scale seller liability assessment.
Those numbers also highlight something businesses routinely underestimate. Interest on older sales tax periods can rival the tax itself, and nonfiling penalties can make an already painful assessment much worse. Once a state characterizes the issue as a failure to file, the audit becomes less about interpretation and more about enforcement.
StubHub’s Defense Was the Standard Marketplace Argument
StubHub’s argument was familiar and, at first glance, logical. The company claimed it did not actually sell tickets, but instead provided a platform where third party sellers listed tickets and buyers purchased them. StubHub argued that Wisconsin’s marketplace facilitator statute did not take effect until years later, so Wisconsin could not retroactively impose marketplace seller responsibility for earlier years.
A circuit court judge agreed with StubHub earlier this year. The judge ruled that StubHub’s sales were not taxable under state law at the time and that it was ambiguous whether a provider of such services could be considered a seller of admissions. That ambiguity was the foundation of StubHub’s win at the lower court level.
The Appeals Court Reversed and the Reasoning Is the Real Story
The Wisconsin Court of Appeals disagreed and reversed the circuit court decision. The panel held that StubHub was already covered under Wisconsin’s broad definition of a person selling, even before Wisconsin enacted its marketplace law. That is the key legal conclusion that makes this case so important.
The court also made a point that states are increasingly pushing in audits. It said Wisconsin’s marketplace facilitator law was meant to clarify existing law, not create a new tax obligation. That framing matters because it opens the door for states to argue pre marketplace liability in other cases and other industries.
Wisconsin Tax Bulletin 172 Was a Major Factor
The court relied heavily on Wisconsin Tax Bulletin 172, issued in July 2011. That bulletin included guidance stating that ticket brokers are responsible for collecting and remitting Wisconsin sales tax on admissions sold through their websites. The court stated that reading the bulletin and its examples clearly showed the Department considered StubHub to be a taxable ticket broker.
This is a reminder that sales tax disputes are rarely decided only by statutory text. Administrative guidance often becomes the practical battlefield, especially when a department has published its interpretation for years. Once guidance is on point, courts are much less sympathetic to the argument that the law was unclear.
Why This Decision Matters Beyond Ticket Sales
This case is not really about tickets. It is about how a state defines who is the seller when a business sits in the middle of the transaction and controls the customer experience. StubHub may not have owned the tickets, but it ran the platform, processed transactions, and presented the sale to the customer through its system.
That business model is everywhere. It exists in ecommerce marketplaces, resale platforms, subscription intermediaries, and a long list of digital service models that facilitate third party transactions. The legal question is whether a platform that looks and functions like a retailer can be treated as a retailer, even before marketplace statutes explicitly say so.
The Marketplace Facilitator Statute Did Not Save StubHub
StubHub argued that Wisconsin’s marketplace facilitator law was enacted later, and therefore earlier periods should not be governed by that framework. The appeals court rejected that logic. The court said the marketplace statute was simply a clarification and a more detailed enumeration of sellers already covered under Wisconsin’s broad definition.
That is a dangerous outcome for businesses that operated in Wisconsin in the years before marketplace laws became common. It also signals that courts may be willing to let states use newer marketplace statutes as proof of legislative intent, rather than proof that the law changed. Businesses should not assume that later legislation automatically limits earlier audit exposure.
The Penalty and Interest Are the Silent Killers
The assessment in this case was not limited to tax. Wisconsin also asserted $6.4 million in interest and a $2.1 million nonfiling penalty. That combination is a reminder that historical exposure is not just about the taxability of transactions.
When a company does not file returns, states often take a more aggressive posture. The longer the audit period, the more interest becomes a separate and substantial liability. Even if a business believes it has a reasonable legal argument, the financial risk can become extreme simply because time has passed.
The Bigger Risk for Marketplace Businesses
The biggest lesson here is not that Wisconsin taxed ticket sales. The lesson is that Wisconsin was willing to treat a platform as the seller for years before a marketplace facilitator statute was enacted. The court accepted that theory and endorsed the Department’s view that StubHub was already a taxable seller under older law.
Many marketplace businesses have treated marketplace facilitator statutes as a bright line. They assume liability begins only after the statute takes effect. This case is a warning that states and courts may treat those statutes as clarifications of older seller definitions, which means historical exposure may still exist.
Final Thoughts
If you operate a marketplace platform, you should not assume your sales tax risk begins in 2018 or 2019. You should assume states will look backward, especially if you operated before marketplace statutes were enacted and did not file returns. The StubHub decision is a reminder that when a platform looks like a seller, states will argue it is a seller, and courts may agree.