We are a Utah LLC providing SAAS (software as service) on cloud available to all US market.
Wisconsin Dept of Rev. has assessed our LLC for partnership income tax, because they claim our company has nexus for income tax based on fact that our company provides service that is used by or benefits a Wisconsin-based company and (that is considered "doing business in their state".)
- Regularly performing services outside Wisconsin for which the benefits are received in Wisconsin.
- Regularly engaging in transactions with customers in Wisconsin that involve intangible property and result in receipts flowing to the corporation from within Wisconsin.
In our defense, we responded that we are not doing business in their state (WI) but rather conducting business on the cloud (in UT) and Wisconsin customers are purchasing from us here in Utah.
Our appeal was denied simply because of: Tax 2.82(4)(b)2. 2. Regularly selling products or services of any kind or nature to customers in Wisconsin that receive the product or service in Wisconsin.
(Just because we are on the cloud does that mean we are subject to income tax in every state that our customers use our services? That seems absurd but I am not a tax attorney).
- Has anyone in this forum encountered such a far reaching statute?
- Do you have any suggestions as to what to state in our appeal to the WI Commission?