Many online sellers assume that before the major sales tax law changes of 2018, the digital wild west was tax-free. Wisconsin just proved that assumption wrong.
In a landmark ruling in January 2026, the state successfully sued StubHub (the massive ticket resale marketplace) for ~$17 million in back taxes from 2008–2013. Effectively shattering the common defense of “the law wasn't clear back then” and signaling that they can target sellers further back than many thought.
Key details of the ruling:
- Total liability: ~$17 million
- Period: 2008–2013
- The verdict: The court sided with the state.
The StubHub Ruling
The StubHub ruling was focused on unpaid sales tax from 2008 to 2013. The troubling part is that this period falls under what is called the ‘pre-clarification period,’ which is before the modern ‘marketplace facilitator laws’ that most states passed around 2018-2019.
That means StubHub was taxed under old laws, not new ones. The court ruled that even though specific ‘marketplace’ laws didn't exist yet, the existing definitions of a ‘seller’ were broad enough to include them.
StubHub also tried to argue that they were just a passive marketplace. Essentially, a high-tech bulletin board where users swapped tickets, and StubHub just supplied the ‘space.’
The Appeals Court disagreed. They looked at the mechanics of what StubHub did:
- StubHub collected the money from the buyer.
- StubHub kept a fee.
- StubHub transferred the ticket.
The court ruled that because StubHub controlled the money and the transaction, it fit the definition of a retailer under Wisconsin's old laws. Consequently, they owe about $8.5 million in taxes plus another $8.5 million in penalties and interest.
The lesson: If you sit in the middle of the transaction and handle the funds, the state likely views you as the retailer, not just a software provider.
How Does This Affect Modern Sellers?
Other states have been watching this case closely. Now that Wisconsin has successfully extracted $17M using old definitions, other states might launch similar look-back audits.
Who is at risk? Any business that operates in a grey area (SaaS, digital goods, dropshipping) and hasn't performed a nexus study for historical years.
The other scary implication for modern sellers is the statute of limitations. Typically, a state can only audit you for the past 3–4 years. However, that clock only starts ticking after you file a return.
If you (like StubHub) never filed a return because you thought you were exempt, the statute of limitations never started. States can legally audit your business all the way back to Day 1.
What Can You Do About It?
The first step is to conduct a nexus study to determine exactly where you had control or economic presence in past years. This identifies where you are exposed and how much you might owe.
Tip: Do this before a state contacts you. Once you receive an audit notice, your options for relief disappear.
In cases where your liability is substantial, you can use a Voluntary Disclosure Agreement (VDA). A VDA is a program where you proactively approach the state to pay back taxes.
In exchange for coming forward, states will typically waive the penalties (like the 25% negligence penalty StubHub got hit with) and limit the look-back period.
The catch? A VDA only works if you apply before the state finds you.
Lastly, states occasionally offer temporary tax amnesty programs. These are limited-time windows where you can register and pay back taxes with reduced interest and zero penalties.
Unlike VDAs, these are rare and happen on the state's schedule, not yours.
Get Expert Help With Past Sales Tax Liabilities
If you’re concerned about historical liability, TaxValet can help you fix it before the state finds you.
When you partner with us, we always start with a nexus study to quantify your exact risk. If you owe back taxes, we may advise you to use a VDA for any past liabilities we uncover.
Don’t wait for an audit notice.
Book a free consultation today and let us eliminate your sales tax worries for good.