Shared ZIP codes lead to other municipalities paying new Milwaukee sales tax

GLENDALE, Wis. (CBS 58) – The new year brought new taxes for the city of Milwaukee, but other municipalities in the county have noticed some of their residents are being charged the tax, both for online services and by some in-person merchants.

The Milwaukee County Intergovernmental Cooperation Council (ICC) met on Monday, Jan. 8. One agenda item was the 2% City of Milwaukee sales tax that started this year. Since the start of 2024, a number of mayors in communities that border Milwaukee said they and their constituents have been charged the sales tax by mistake because of shared ZIP codes with the city.

The Glendale Common Council even scheduled a discussion Monday night about possible legal action to have courts halt the Milwaukee tax collection until the issue could be sorted out.

A representative from the State Dept. of Revenue (DOR) told the ICC they are aware of the issue and are working to address it. Greenfield Mayor Michael Neitzke told CBS 58 this is an issue he wants to be addressed quickly.

"I have a big concern, obviously. We don't want to pay," Neitzke said. "I mean, we respect the city of Milwaukee and its sales tax and all of that stuff, but the folks that live in the city of Greenfield aren't supposed to be paying it, and we just want to make sure it's fairly, and equitably resolved so we don't."

Glendale Mayor Bryan Kennedy said he first was alerted to the issue when Netflix charged the Milwaukee tax to Glendale subscribers. He then learned in was happening in stores, too.

"[A resident] sent me a picture of their Trader Joe's receipt where they were charged 7.9% sales tax," Kennedy said. "That the city of Milwaukee sales tax being charged at a Glendale store, and a Glendale resident was paying for it."

The Brass Bell music store is in Glendale but is also in the 53217 zip code that also goes into Milwaukee. General Manager John Rose said the small business had internal talks about making sure they reset the store's tax collection correctly prior to January 1.

"We definitely had discussions and procedure in place to make sure it was taken care of properly," Rose said.

DOR Communication Director Patty Mayers said the issue was companies continuing to set their tax rate based on a 5-digit zip code. She said businesses were supposed to update their rates using either a street address or 9-digit zip code.

At Monday's meeting in Glendale, Kennedy told alders he'd been talking to the DOR and was confident the state was working to get the issue straightened out.

"As quickly as we've been giving them names of stores, they've been reaching out to managers," Kennedy said. "In some cases, Secretary [Peter] Barca, himself, called a number of these large companies."

When a CBS 58 reporter made a purchase from the Glendale Trader Joe's Monday, the store properly charged a 5.9% sales tax. Milwaukee County increased its sales tax from 0.5% to 0.9%.

Rose said even though his store made the correct adjustment, there was still more work to do before everything would be in concert at the business.

"We have, obviously, these videoboards," Rose said, pointing to displays behind the register still showing prices with a 5.5% sales tax. "We have binders with price lists within them."

A list of communications from DOR provided by Mayers showed the agency emailed sales tax filers with an online tax account in October. It sent about 60,000 letters to businesses without an account later that month. The DOR sent a reminder to account holders in early December.

Kennedy said Monday the issue seemed to mostly pop up with big corporations that use third-party vendors to apply tax updates. Mayers said anyone who's been mistakenly charged should keep their receipt and ask the retailer for a refund.

Ultimately, the Glendale council was satisfied with DOR's response and instead of exploring legal action, it passed a resolution calling for the agency to ensure the Milwaukee tax wasn't being charged in the suburb. 

The DOR encourages businesses to use its Sales Tax Rate Lookup to determine the tax rate that applies to a specific street address or 9-digit ZIP code.