Online ticket marketplace StubHub has been ordered to collect state sales tax on its transactions, following a ruling by a state appeals court on Tuesday. The court upheld penalties imposed by the state for StubHub’s failure to remit these taxes over a significant period.
The saga began in 2014 when the Wisconsin Department of Revenue (DOR) announced an audit of StubHub’s sales tax payments from 2008 to 2013, during which the company reportedly generated $154 million in sales within the state. The audit revealed that StubHub had not paid the required taxes, leading the DOR to issue a notice for the recovery of $8,495,937.50 in back taxes, alongside an additional $8,567,136.15 in accumulated interest, penalties, and fees.
After appealing the DOR’s findings, the case shifted through various legal channels, culminating in this latest decision by the appeals court, which affirmed that StubHub is liable for both the retail sales tax and the corresponding penalties. The court’s 17-page decision stated, “We conclude that StubHub is both subject to the retail sales tax and the penalty for its failure to pay the retail sales tax.”
This ruling could set a precedent for other online platforms regarding tax compliance, as it underscores the need for e-commerce businesses to navigate state tax requirements diligently. StubHub may seek further appeal to the Wisconsin Supreme Court to contest the ruling. The outcome of this case could have ramifications not only for StubHub but also for the broader online ticket selling industry in ensuring compliance with state tax laws.