Wyoming Sales Tax & Audit Guide
Straightforward Answers to Your Wyoming Sales Tax Questions.
- Do I need to collect Wyoming sales tax?
- Should I be collecting or paying Wyoming use tax?
- What do I do if I should have been collecting but haven't?
- I received an audit notice. What should I do?
- Guidance on fighting a sales tax assessment in Wyoming.
Who Needs to Collect Wyoming Sales and Use Tax?
Like most states, to be subject to Wyoming sales tax collection and its rules, your business must:
1) Have nexus with Wyoming, and
2) Sell or use something subject to Wyoming sales tax.
How is Nexus Established in Wyoming?
According to the Wyoming Department of Revenue, any business with a physical presence in Wyoming must be licensed for sales tax collection. The minimum thresholds listed below for remote sellers do not apply to businesses with a physical presence in Wyoming.
Any person who meets one of the following definitions for a vendor must license to collect and remit sales tax:
• If you are located in the state of Wyoming making sales of tangible personal property, admissions, or taxable services in Wyoming.
• This definition encompasses those who open an online business in Wyoming. If your online business provides taxable products or services, you must obtain a sales/use tax license and follow all the statutes that apply to a store-front business.
Any person located outside of Wyoming who creates nexus by:
- Having an office, distribution house, sales house, warehouse, or any place of business in Wyoming.
- Having persons who solicit sales or advertise in Wyoming.
- Have inventory or equipment in Wyoming.
- Leasing equipment in Wyoming
- Make deliveries into Wyoming using company vehicles.
Additionally, businesses that do not have a physical presence in Wyoming can establish economic nexus by exceeding a certain annual sales threshold.
Economic Nexus (Wayfair Law) and Internet Sales in Wyoming
Remote sellers and marketplace facilitators who do not create a physical nexus who meet either of the following requirements for the current calendar year or the immediately preceding calendar year have nexus:
- Gross revenue from sales of tangible personal property, admissions, or services delivered into Wyoming that exceeds one hundred thousand dollars ($100,000.00); or
- Two hundred or more separate transactions for delivery into Wyoming.
How is the $100,000 gross revenue threshold calculated?
Marketplace providers must remit sales tax on all must collect sales and use taxes on all sales it facilitates in Wyoming if the thresholds of 200 or more transactions or $100,000 or more in sales to Wyoming customers.
Which Sales are Subject to Wyoming Sales Tax?
If you have nexus in Wyoming, the next step is determining whether the products or services you sell are subject to Wyoming sales and use tax.
Unless an item is specifically exempt, sales and rentals of tangible personal property are subject to Wyoming sales tax.
The rules seem simple, but many details make applying Wyoming’s tax rules to your business challenging. We recommend scheduling a time to review your specific situation with one of our sales tax professionals.
Common Exemptions from Wyoming Sales and Use Tax:
Items exempt from Wyoming sales tax include:
The Wyoming Department of Revenue has different rules and rates depending on the industry and the type of service. Find information about sales tax on specific types of services below.
Nontaxable Services include those provided by:
- Technical Writers
- Tax Preparers
Taxable services include:
- Intrastate telecommunications, two-way mobile telecommunications, and associated equipment.
- Intrastate transportation of passengers.
- Lodging services for transient guests.
- Admissions to places of amusement, entertainment, recreation, games, or athletic events.
- Services that repair, alter, or improve tangible personal property.
- Services within oil and gas well sites, as outlined in W.S. 39-15-103(a)(i)(K).
Many people have questions about the taxability of software as a service (SaaS).
Many states already impose a tax on software as a service. As these options proliferate, states are moving to update their tax laws and, naturally, impose a tax.
To determine whether you need to collect tax on software sales, we highly recommend contacting one of our sales tax professionals to help you sort it out.
For now, we’ve summarized Wyoming’s software tax rules here:
The sale of custom software delivered electronically or otherwise, is not subject to sales tax, nor is the creation of such software. Custom computer software is software designed and developed by the author or other creator to the specifications of a specific purchaser.
Custom software also includes modifications and enhancements, which are sold as part of the custom software sale. While the service of creating custom software is not a taxable event, the person performing the service is considered a consumer of all tangible personal property or services purchased to perform the custom software service.
As tangible personal property, the sale of prewritten computer software is taxable. The sale of a modification or enhancement of prewritten computer software, designed and developed to the specifications of a specific purchaser, also remains prewritten computer software and is taxable unless there is a reasonable, separately stated charge to the customer for the modification or enhancement. In such a case, the prewritten portion would be taxable, and the separate charge for the modification or enhancement would not be taxable.
Shipping & Handling
Outbound freight is exempt from Wyoming sales tax, provided it is separately stated and distinguishable from any taxable charges that may appear on the same invoice.
While the general sales tax rules seem straightforward, applying those rules can get tricky when gray areas arise. The Wyoming Department of Revenue provides some specific guidance for the following industries:
- Computer Sales and Services
- Dude and Guest Ranches
- Oil and Gas
- Publication Lodging Industry Matrix
- Restaurant Industry
Determining Local Sales Tax Rates in Wyoming
Wyoming’s state sales tax rate is four percent (4%). In addition, the 23 counties may impose two optional taxes, either for general or specific purposes. Each option tax is limited to a maximum of two percent (2%). Counties may also impose an option tax for economic development purposes which may not exceed one percent (1%). The combined option taxes are capped at three percent (3%).
Wyoming law also allows cities, towns, and counties to impose a local option lodging tax of not more than two percent (2%). Effective January 1, 2021, municipal sales and use localities can impose a tax of up to one percent (1%). Special resort districts may impose an additional sales/use tax of not more than three percent (3%).
The Statewide Lodging Assessment imposes a five percent tax on the sales of lodging services.
Local Sales and Use Tax Tables
Here you can access charts for local Wyoming sales tax rates or see the chart below for the tax rates of the most populated Wyoming cities.
I Should Have Collected Wyoming Sales Tax, But I Didn't
Many of our competitors suggest filing a Voluntary Disclosure Agreement in each state. This is a one-size-fits-all solution that isn't always the best. Our sales tax professionals will work with you to determine your business's best and most cost-effective solution.
If you determine your business has nexus, but you have not collected Wyoming sales tax, here are your options:
1. Register and pay back taxes, penalties, and interest, or
2. Complete a VDA to cut penalties (and, in some cases, reduce your tax liability and avoid interest).
Here is what you need to know about each option to make the best decision for your business:
Option 1: Register to Pay Back Taxes, Penalties, and Interest.
A VDA is not cost-effective if the past liabilities and penalties are minimal. Be wary of the tax professionals recommending a VDA in these cases. They may want to make easy money rather than look out for your best interests. Sometimes the best resolution for a business is to register with Wyoming and pay back taxes, penalties, and interest.
When to consider registration and payment:
- If you established nexus less than 3 or 4 years ago.
- The sales tax penalty is LESS than the professional fees charged for the VDA.
- Your business does NOT have a sales tax collected issue.
Beware: Registering does not generally end past liabilities.
If you're unsure what your past liabilities are, contact us. Our state tax professionals work with you so you can make the right choice for your business.
Option 2: Voluntary Disclosure Agreement (VDA)
In many situations, voluntary disclosures are a valuable tool to reduce extended periods of past exposure.
Wyoming’s lookback period The standard lookback period is four years. So, if you should have collected sales tax over the past ten years but didn't, you may benefit from doing a VDA.
A VDA may be a good option for you if:
- You established nexus more than 3 or 4 years ago.
- You have a sales tax collected but not remitted issue.
- The sales tax penalty savings is MORE than the professional fees charged for the VDA.
What to Expect During an Audit
The typical audit process is shown in this flowchart. Detailed guidance for each Wyoming audit process stage follows in the sections below.
A Notice of Intent to Audit (Audit Questionnaire & Routine Audit Letter) -->4-6 months -->audit begins --> Preliminary Audit Findings / Audit Report Issued --> 1-3 months-->Assessment Letter.
Wyoming regularly audits businesses required to charge, collect, and remit various taxes in the state. Many audits begin with a call from a Wyoming Department of Revenue sales tax auditor. Shortly after the call, your business will receive a Notification of Intent to Audit. This notification confirms that you were lucky enough to be chosen for a Wyoming sales tax audit.
Once the audit is complete, the auditor will send you the assessment and the amount.
It is good to start with getting a state and local tax professional involved to prepare for the audit.
I Received a Wyoming Sales Tax Audit Notice. What Should I Do?
Businesses that receive a sales tax audit notice need to consider the following questions:
- Without sales tax audit experience, how can you trust that the state's auditor abides by the rules and follows proper procedures?
- How will you know when to provide documents or when to push back?
- Do you completely understand your sales and use tax areas of exposure?
- Controlling the audit is paramount to shaping favorable results. Are you confident in doing that on your own?
If you're not confident in your ability to handle a sales tax audit, it's best to hire a professional.
Contact us to learn how our sales tax professionals can give you the peace of mind and confidence you’ll need during your audit.
Visit our resource pages for more information to help you make critical decisions during your Wyoming sales and use tax audit.
What to Expect from a Wyoming Sales Tax Auditor
Here is a summary of the general audit process:
The audit process generally includes research, an entrance conference, a request for records, and a comparison of tax returns.
Once the auditor receives the necessary records, they will compare your Wyoming sales and use tax returns to your federal income tax returns or bank statements to determine whether you reported all applicable or gross sales on your Wyoming sales tax return(s).
NOTE: A slight error in how the tax was charged on even a single type of transaction can add up to a significant sales tax liability.
Once the auditor is confident all sales are accounted for, they will:
- Review your exempt and out-of-state sales.
- Conduct a use tax audit – the auditor will request accounts documents to ensure you adequately paid use tax on applicable purchases.
Common areas audited include:
- Advertising Expense
- Auto & Truck Expense
- Repair and Maintenance
- Office Expense
- Miscellaneous Expense
After reviewing all information, the auditor will prepare a proposed audit report which shows preliminary findings, and a preliminary amount due or refund. The proposed audit report is the basis for discussion between you and the auditor; it is not a final determination. It may be estimated in cases where requested information has not been provided.
If a business buys an item online without paying use tax, the business is still obligated to remit the tax to Wyoming. Believing otherwise often leads to shocking results for the unsuspecting taxpayer during an audit. Here is more information on Wyoming Use Tax.
If you have questions about your situation, contact us to discuss it with one of our tax professionals.
After the Audit – Understand and Defend Your Businesses Rights
The auditor will meet with you by phone or in person to present your Wyoming sales and use tax assessment and ensure you understand it. It's best to hold off on agreeing to the sales tax assessment until a sales tax professional has reviewed it for issues that should be challenged. You'll want to push back on areas where they have overstepped their bounds.
Many businesses wind up drastically overpaying the state because the business owner or in-house accounting personnel weren't well versed in the sales tax laws that, if challenged, could have reduced their sales tax liability.
In the following sections, we'll cover the process of challenging a Wyoming sales tax audit assessment.
Contesting Audit Findings with the Auditor
Wyoming Sales Tax Audit Protest Process Flow Chart
Assessment Issued --> Informal Protest with Department -->Department issues decision / final decision -->30 days-->File Appeal with the State Board of Equalization --> Board Issues Decision --> 30 days --> Judicial review.
NOTE: If the deadlines are missed, it can be tough to get the case reopened.
You will receive a Notice of Proposed Audit Report requesting you sign (generally within 30 days) and indicate whether you agree or disagree with the proposed findings.
It's essential to review and understand its implications carefully.
The audit report:
- Details of the auditor's findings
- Describes any proposed audit adjustments
- Shows the amount of tax, interest, and penalty due
If you disagree with the proposed changes, you may request an informal conference with the auditor. The auditor will schedule a meeting with you and their supervisor to attempt to reach an agreement.
If you and the auditor/supervisor cannot agree, the Department will issue a final notice of field audit determination. It is final unless you appeal it.
Note: Even if you signed the Notice of Proposed Audit Report indicating you disagree, you still must send a written appeal of the final notice
Audit Closing Conference
The taxpayer has a short period to contest the findings with the auditor. Any issues with the results are handled as follows:
1. Issues related to exemptions, proof of tax paid, and calculations are worth addressing with the auditor.
2. Legal interpretations of sales tax law are often not resolvable at this stage.
After this conference, the auditor will adjust the audit assessment, and a Notice of Determination will be issued.
If you cannot resolve this with the auditor, the next step is to appeal/protest the issue.
Protest Rights and Audit Finding Confirmation
If you believe the assessment is based on a mistake of fact or an error of law, you may request a protest with the Wyoming Department of Revenue. However, beware that Wyoming does not have a formal resolution or appeal process within the agency. An appeal must be filed with the Board of Equalization within 30 days.
The appeal must state why the assessment is incorrect and be sent to the Secretary of Revenue.
If you have received a Certificate of Assessment and haven't talked to someone experienced in Wyoming State tax, now is the time. Do it before these deadlines pass.
You will receive a notice of hearing noting the time and place of the hearing and the issues to be considered. The Department will send a letter with one of the following results:
- No change to the original assessment
- A decrease in the amount due or refund
- An increase in the amount due or refund
If you disagree with the decision of the Department of revenue, the next steps are an appeal with Wyoming Tax Appeals Commission and then the Circuit Court.
Settling a Wyoming Sales Tax Liability
If you are facing a sales tax audit in Wyoming, you can attempt to negotiate a settlement with the Department of Revenue. Your business must meet specific criteria to qualify. Still, it’s possible to get better results here than negotiating here than with the auditor.
The challenge for most business owners without experience and knowledge of Wyoming tax laws is knowing a fair settlement from an unreasonable settlement.
For this reason, it’s a bad idea to attempt to negotiate a settlement without an experienced tax lawyer or other professional familiar with Wyoming state and local tax law.
Contest a Wyoming Jeopardy Assessment
Wyoming may issue a Notice of Jeopardy Determination in certain situations.
The jeopardy assessment gives the Wyoming Department of Revenue the right to try to collect immediately.
Due to the jeopardy nature, the taxpayer only has a very short time to contest the assessment and must place a security deposit to fight the issue.
Unlike most states, Wyoming does not have a formal appeal process once the audit is completed. Beyond working out the issues in the case informally with the auditor, it becomes even more critical to get experienced sales tax professionals or lawyers involved as soon as possible. Once the agency issues the final decision, you only have 30 short days to appeal with the Board of Equalization.
The Wyoming Board of Equalization is a three-member board appointed by the Governor and an agency separate and distinct from the Wyoming Department of Revenue. It is versed in hearing disputes between businesses and the Wyoming Department of Revenue.
Once the appeal is filed, the case looks, smells, and feels like a court proceeding, even though it is technically not a court. The case ultimately results in findings of facts and conclusions of law issued by a three-member board. Nonetheless, it is imperative to get evidence admitted into the record, so you can continue fighting your case at the next level.
Petitioning The Wyoming District Court
If you cannot resolve your case with the Department or Tax Commission, you still have a chance to fight your Wyoming sales tax assessment – The District Court. Neither party wants to spend the time and resources on the uncertainty of the tax court. So, challenging the assessment can effectively maximize your settlement potential, but, at this stage, it is imperative that you have an experienced representative. We don't generally recommend it, but you always have the option to skip the agency protest process and file it in district court.
Our team has handled hundreds of administrative court cases. It can help your company receive the resolution you are entitled to. Get in touch with us today.
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