Wis. Admin. Code Tax — Department of Revenue

Chapter Tax 1 GENERAL ADMINISTRATION

Wis. Admin. Code § Tax 1.001 Definition {#sec-tax-1.001 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.001}

In chs. Tax 1 to 12, 14, 16 to 18, unless otherwise specified:

(1) “Department” means the Wisconsin department of revenue.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (intro.), Register, September, 1983, No. 333, eff. 10-1-83; am. (intro.), Register, July, 1989, No. 403, eff. 8-1-89.

Wis. Admin. Code § Tax 1.01 Assessment districts {#sec-tax-1.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.01}

The secretary of revenue has divided the state into the following income tax assessment districts:

(1) Appleton district.

(a) Headquarters. Appleton.

(b) Counties served.

Brown
Calumet
Door
Florence
Fond du Lac
Forest
Green Lake
Kewaunee
Langlade
Manitowoc
Marinette
Marquette
Menominee
Oconto
Outagamie
Shawano
Sheboygan
Waupaca
Waushara
Winnebago

(2) Eau Claire district.

(a) Headquarters. Eau Claire.

(b) Counties served.

Adams
Ashland
Barron
Bayfield
Buffalo
Burnett
Chippewa
Clark
Douglas
Dunn
Eau Claire
Iron
Jackson
Juneau
LaCrosse
Lincoln
Marathon
Monroe
Oneida
Pepin
Pierce
Polk
Portage
Price
Rusk
St. Croix
Sawyer
Taylor
Trempealeau
Vilas
Washburn
Wood

(3) Madison district.

(a) Headquarters. Madison.

(b) Counties served.

Columbia
Crawford
Dane
Dodge
Grant
Green
Iowa
Jefferson
LaFayette
Richland
Rock
Sauk
Vernon

(4) Milwaukee district.

(a) Headquarters. Milwaukee.

(b) Counties served.

Kenosha
Milwaukee
Ozaukee
Racine
Walworth
Washington
Waukesha

Note: Section Tax 1.01 interprets s. 73.05, Stats.

History

1-2-56; am. Register, September, 1964, No. 105, eff. 10-1-64; am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, September, 1983, No. 333, eff. 10-1-83.

Wis. Admin. Code § Tax 1.06 Application of federal income tax regulations {#sec-tax-1.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.06}

To the extent that any provision of the internal revenue code has application in the determination of Wisconsin taxable income, Wisconsin net income, or Wisconsin income or franchise tax of any natural person, fiduciary or corporation, including tax-option (S) corporations, any United States treasury regulation interpreting the provision shall be deemed a tax rule of the Wisconsin Administrative Code.

Note: Federalization of the computation of Wisconsin gross income for individuals and fiduciaries was provided by Chapter 163, Laws of 1965, effective for taxable year 1965 and thereafter. Federalization of the computation of Wisconsin net income of a corporation was provided by 1987 Wis. Act 27, effective for taxable year 1987 and thereafter.

History

Cr. Register, March, 1966, No. 123, eff. 4-1-66; am. Register, July, 1987, No. 379, eff. 8-1-87; am Register, June, 1990, No. 414, eff. 7-1-90; CR 22-044: am. Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 1.10 Depository bank requirements for estimated tax vouchers, sales and use tax returns, and withholding, motor fuel, general aviation fuel and alternate fuels tax deposit reports {#sec-tax-1.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.10}

(1) Daily processing of documents. Screening and processing of deposit reports, returns, and vouchers shall be done daily on the date received in accordance with specific procedures provided by the department.

(2) Documents received with proper payment. The depository bank shall inscribe the date received, amount of payment and a consecutively assigned validation number upon each deposit report, return, or voucher. That same information shall be inscribed on the payment. The deposits received and validated for each day shall be combined into a single deposit to the account of the state treasurer. The processed documents shall be kept in sequence within batches for each business day. The batches for each business day shall be sent daily by special courier to the department’s revenue accounting section in Madison. A validation tape and batch card shall accompany each batch, and each day’s transmittal shall include a separate recapitulation sheet for each tax program. A copy of the combined daily deposit slip shall also be included in each day’s transmittal.

(3) Exceptions. Non-processible documents or remittances, or both, as described in writing to the depository bank by the department’s revenue accounting section, shall be exceptions to the treatment provided in sub. (1) and shall not be validated. Instead, they shall be sent to the department’s revenue accounting section with the envelopes in which they were received.

Note: Section Tax 1.10 interprets s. 71.65 (3) (a), Stats.

History

Cr. Register, March, 1975, No. 231, eff. 4-1-75; am. (1) (a) and (b) 4. and (2), Register, September, 1983, No. 333, eff. 10-1-83; renum. (1) and (2) to be (2) and (3) and am. (2) (a), cr. (1), Register, July, 1987, No. 379, eff. 8-1-87; am. (1), (2) (a) and (3), r. (2) (b), Register, June, 1990, No. 414, eff. 7-1-90; CR 21-085: am. (title) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 1.11 Requirements for examination of returns {#sec-tax-1.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.11}

(1) Public officer defined. In this section, “public officer” means any person appointed or elected according to law, who has continuous duties, has taken an oath of office and who is responsible for the exercise of some portion of the sovereign power of this state, another state or the United States, in which the public has a concern. One, but not the sole, indicium of responsibility for exercising the sovereign power is the authority to make final policy with regard to those duties of a public officer requiring access to tax files under this section.

(2) General. The provisions of ss. 70.375 (2) (b), 71.78, 72.06, 77.61 (5), 77.76 (3), 77.79, 78.80 (3) and (4), 139.11 (4), 139.38 (6), and 139.82 (6), Stats., apply to the examination of mining net proceeds, income, franchise, fiduciary, partnership, estate, sales and use, county sales and use, withholding, motor fuel, general aviation fuel, alternate fuels, fermented malt beverage, distilled spirits and wine, cigarette and tobacco product tax returns and tax credit claims. No person may examine or receive information from a tax return or tax credit claim unless specifically authorized to do so by the appropriate statute.

(3) Persons who may examine returns.

(a) Public officers of the federal government or other state governments. No information may be divulged to a public officer of the federal government or another state government or the authorized agents of the officer under the provisions specified in sub. (2) unless the information requested is necessary in the administration of the tax laws of the government; the government accords similar rights of examination or information to the Wisconsin department of revenue; the government has entered into an agreement with the department for the disclosure or exchange of information; and the public officer first complies with all of the following:

Specifies in writing the purpose for each requested examination, the statutory or other authority showing the duties of the office and the relation of the purpose to the duties of the office.
Specifies in writing the name, address and title of the agent authorized to examine tax returns.
Provides evidence that he or she is a public officer.

(b) Members of the joint, senate or assembly committee on legislative organization.

No information may be divulged to members of the joint committee on legislative organization, senate committee on organization or assembly committee on organization, or to any agent of these committees under the provisions specified in sub. (2) unless all of the following requirements are first complied with:

a. Specification in writing of the purpose for each requested examination and the relation of the purpose to the official duties of the committee requesting the examination of tax returns.

b. Specification in writing of the name, address and title of the committee member or agent authorized to examine tax returns.

c. Certification by the chairperson of the committee that the committee, by a majority vote of a quorum of its members, has approved the requested examination of tax returns by the committee member or agent.

Sales and use tax returns may not be examined by the joint committee on legislative organization.

(c) Attorney general or department of justice employees. No information may be divulged to the attorney general or department of justice employees under the provisions specified in sub. (2) unless all of the following requirements are first complied with:

The attorney general shall specify in writing the purpose for each requested examination, the statutory authority or other authority showing the duties of the office and the relation of the purpose to the duties of the office.
Each requested examination by a department of justice employee shall include the data in par. (c) 1. and an authorization identifying the employee by name, address and title. The authorization shall be signed and approved by the attorney general on whose behalf the department of justice employee is acting.

(d) District attorneys. No information may be divulged to district attorneys under the provisions specified in sub. (2) unless the following requirements are first complied with:

The tax information to be examined by the district attorney is for use in preparation for a judicial proceeding or an investigation which may result in a judicial proceeding involving any of the taxes or tax credits referred to in sub. (2) and one of the following applies:

a. The taxpayer is or may be a party to the proceeding.

b. The treatment of an item reflected in the tax information is or may be related to the resolution of an issue in the proceeding or investigation.

c. The tax information relates or may relate to a transactional relationship between the taxpayer and a person who is or may be a party to the proceeding which affects or may affect the resolution of an issue in the proceeding or investigation.

If the department allows examination of information under subd. 1. then all of the following apply:

a. The department may make disclosure on its own motion if the department has referred the case to a district attorney.

b. The department may allow the examination of information requested and the information may be examined and used solely for the proceeding or investigation for which it is requested if a district attorney requests examination of a tax or tax credit information relating to a person, the district attorney specifies in writing the purpose for each requested examination, identifies the requestor, and the person to whom the information relates, the statutory or other authority showing the duties of the office, and the relation of the purpose to the duties of the office.

Such information may be examined for use in preparation for any administrative or judicial proceeding or an investigation which may result in such proceeding pertaining to the enforcement of a specifically designated state criminal statute not involving tax administration to which this state or a governmental subdivision thereof is a party. Such information may be used solely for the proceeding or investigation for which it is requested.
If a district attorney petitions a court of record in this state for an order allowing the examination and the court issues an order after finding all of the following, the department may allow an examination of information under subd. 3.:

a. There is reasonable cause to believe, based on information believed to be reliable, that a specific criminal act has been committed;

b. There is reason to believe that such information is probative evidence of a matter in issue related to the commission of the criminal act; and

c. The information sought to be examined cannot reasonably be obtained from any other source, unless it is determined that, notwithstanding the reasonable availability of the information from another source, the information constitutes the most probative evidence of a matter in issue relating to the commission of such criminal act.

The department may deny access and shall certify the reason therefor to the court if the department determines the examination of information under subd. 4. would identify a confidential informant or seriously impair a civil or criminal tax investigation.

(e) Employees of this state. No information may be divulged to employees of this state under the provisions specified in sub. (2) unless all of the following requirements are first complied with:

The public officer of the department, division, bureau, board or commission of this state specifies in writing the purpose for each requested examination, the statutory or other authority showing the duties of the office and the relation of the purpose to the duties of the office, and the name, address and title of the employee of this state authorized to examine returns.
The department of revenue deems the examination necessary for the employee to perform his or her duties under contracts or agreements between the department of revenue and the department, division, bureau, board or commission of this state relating to the administration of tax laws or child support enforcement under s. 49.22, Stats.

(f) Taxpayers and spouses or former spouses of taxpayers.

No information may be divulged to a taxpayer under the provisions specified in sub. (2) unless the taxpayer, an officer of the taxpayer corporation or the authorized representative of the taxpayer provides appropriate identification.
No income tax information may be divulged to a taxpayer’s spouse or former spouse under the provisions specified in sub. (2) except in the following cases:

a. In the case of a joint income tax return, the spouse or former spouse signed the joint return.

b. In the case of a separate income tax return, for the 1986 tax year and thereafter, the spouse or former spouse shows that the spouse or former spouse may be liable, or the spouse’s or former spouse’s property is subject to collection, for a delinquency relating to the tax return requested to be examined.

(g) Persons designated by court order. No information may be divulged to a person designated by a court order under the provisions specified in sub. (2) unless all of the following requirements are first complied with:

The person serves a copy of the court order signed by a judge of a court of record on the custodian of files to produce a return or claim in open court in a court action pending before the judge.
The order recites that the information contained in the tax return requested to be examined is relevant to the pending action for which the order is issued.

(4) Special situations.

(a) Board of arbitration. A member of the board of arbitration established under s. 71.10 (7), Stats., or a consultant under joint contract with the states of Minnesota and Wisconsin may examine income tax returns for purposes of determining the reciprocity loss to which either state is entitled.

(c) Legislative fiscal bureau. Employees of the legislative fiscal bureau, to the extent the department deems the examination necessary to perform their duties under contracts or agreements between the department of revenue and the legislative fiscal bureau relating to the review and analysis of tax policy and state revenue collections, may examine tax returns under the provisions specified in sub. (2).

(cm) Legislative audit bureau. The state auditor and the employees of the legislative audit bureau, to the extent necessary for the bureau to carry out its duties under s. 13.94, Stats., may examine tax returns under the provisions specified in sub. (2).

(d) Lottery division. The administrator of the lottery may request examination of tax returns for the purpose of withholding delinquent Wisconsin taxes, child support, and other debts owing this state.

(e) Wisconsin economic development corporation. The chief executive officer of the Wisconsin economic development corporation and employees of the corporation may examine tax returns, except state and county sales and use tax returns, under the provisions specified in sub. (2), to the extent necessary to administer the development zone program under subch. II of ch. 238, Stats.

(f) Refund setoffs. The department may supply the address of a debtor to an agency certifying a debt of the debtor under the refund setoff provisions of s. 71.93, Stats.

(g) Successor, guarantor or surety. Any person against whom the department asserts liability under ch. 77, Stats., may examine the related sales and use tax returns.

(gm) Material interest in property subject to a tax warrant. Any person, or authorized agent of any person, who provides satisfactory evidence to the department, as determined by the department, that the person has a material interest, or intends to obtain a material interest, in a property that is subject to a tax warrant filed by the department under s. 71.91 (5), Stats., may not examine tax returns of the persons subject to the tax warrant, but may obtain the outstanding liability secured by the tax warrant.

(h) Agreements. The department may, when satisfied that the restrictions imposed under sub. (2) will be adequately safeguarded and a beneficial tax purpose is demonstrated, enter into agreements with governmental officials whereby information is disclosed or exchanged. In these instances, the requirements of this section may be modified in the discretion of the department.

(5) Form of request.

(a) With each requested examination under subs. (3) and (4), there shall also be submitted in writing or by other means as approved by the department all of the following:

The name and address of each taxpayer whose return is requested.
The type of tax return or tax credit claim, such as mining net proceeds, income, franchise, homestead credit, or sales and use tax.
The taxable period.
The taxpayer’s social security number, if available, in the case of returns relating to individuals.
In the case of a request by a public officer, a statement indicating that the authorized agent understands the provisions specified in sub. (2) and that any persons who use or permit the use of any information directly or indirectly so obtained beyond the duties imposed upon them by law or by the duties of their office shall be deemed in violation of the provisions specified in sub. (2).

(b) The information required to be submitted to the department under sub. (5) (a) shall be submitted on forms provided by the department.

Note: Section Tax 1.11 interprets ss. 70.375 (2) (b), 71.78, 72.06, 77.61 (5), 77.76 (3), 77.79, 78.80 (3) and (4), 139.11 (4), 139.38 (6) and 139.82 (6), Stats.

History

Cr. Register, August, 1975, No. 236, eff. 9-1-75; am. (4) and cr. (5), Register, January, 1976, No. 241, eff. 2-1-76; emerg. cr. (9), eff. 12-31-78; am. (1) (intro.) and (a) and (2), r. (1) (b), renum. (1) (c) to be (1) (b) and am., renum. (3) to (5) to be (6) to (8) and am. (7) and (8), cr. (3) to (5), Register, January, 1979, No. 277, eff. 2-1-79; cr. (9), Register, March, 1979, No. 279, eff. 4-1-79; am. (1) (intro.) and (b), (4) (a), r. (9), Register, July, 1981, No. 307, eff. 8-1-81; am. (1) (b), (2) (c), (3) (c), (4) (a) and (c) and (5) (b), Register, June, 1983, No. 330, eff. 7-1-83; am. (5) (intro.) and (d), Register, September, 1983, No. 333, eff. 10-1-83; r. and recr. Register, January, 1991, No. 421, eff. 2-1-91; correction in (3) (e) made under s. 13.93 (2m) (b) 7., Stats., Register, September, 1999, No. 525; CR 12-011: r. and recr. (4) (e) Register July 2012 No. 679, eff. 8-1-12; CR 13-012: am. (4) (d) Register August 2013 No. 692, eff. 9-1-13; CR 17-019: am. (2), cr. (4) (cm), (gm), am. (5) (a) 2. Register June 2018 No. 750 eff. 7-1-18; CR 21-085: am. (2), renum. (3) (d) 2. to (3) (d) 2. b. and am., cr. (3) (d) 2. (intro.), a., 3. to 5., r. (3) (f) 2. c., am. (3) (g) 1., r. (4) (b), am. (4) (c), (5) (b) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 1.12 Electronic funds transfer {#sec-tax-1.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.12}

(1) Scope. This section applies to any person who is required to or elects to pay or deposit taxes, fees, or other amounts by electronic funds transfer, or “EFT.”

(2) Purpose. The purpose of this section is to specify which taxes, fees, and other amounts are required to be paid or deposited using the EFT payment method, to provide that certain persons not required to use the EFT payment method may elect to do so and to explain the procedures for using EFT.

(3) Definitions. In this section:

(a) “ACH” means automated clearing house, a central clearing facility operated by a federal reserve bank or a private sector organization on behalf of depository financial institutions in which depository financial institutions transmit or receive ACH entries.

(b) “ACH credit” means the EFT payment option in which the payer initiates the transfer of funds by authorizing the payer’s financial institution to transfer the payment amount to the department’s depository bank.

(c) “ACH debit” means the EFT payment option in which the payer initiates the transfer of funds by authorizing the department’s depository bank to transfer the payment amount from the payer’s account.

(cg) “Combined group” has the meaning given in s. 71.255 (1) (a), Stats.

(cr) “Confirmation number” means a character code uniquely identifying the successful completion of an EFT transaction.

(d) “Electronic funds transfer” or “EFT” means any transfer of funds initiated through a terminal, telephone, or computer authorizing a financial institution to debit or credit an account on the requested settlement date.

Note: The EFT payment method allows funds to be transferred electronically from the payer’s financial institution to the department’s depository bank eliminating the need to prepare and process a paper check.

(e) “Entry” means an electronic item representing the transfer of funds in the ACH system.

(f) “Financial institution” means any bank, savings and loan, credit union, industrial bank or other institution organized under either national or state banking laws capable of both accepting deposits and making loans.

(fm) “Pass-through entity” has the meaning given in s. 71.738 (3d), Stats.

(g) “Payer” means any person who is required to or elects to pay or deposit taxes, fees, or other amounts by electronic funds transfer.

(h) “Settle” or “settlement” means to transfer funds, or a transfer of funds, between two parties in cash or negotiable items or on the books of a mutual depository to complete one or more prior transactions and made subject to a final accounting.

(i) “Settlement date” means the date on which an exchange of funds with respect to an entry or entries is reflected on the books of the department’s depository bank.

(j) “Trace number” means a character code uniquely identifying each ACH entry.

(4) Requirement or election to use EFT.

(a) Except as provided in sub. (9), the department requires the taxes, fees, and other amounts described in subds. 1. to 18. be paid or deposited using the EFT payment method. The following taxes, fees, and other amounts are included in the EFT payment requirement:

Corporate income and franchise tax estimated tax payments and tax due with the tax return when the net tax less refundable credits on the prior year’s tax return was $1,000 or more. For a combined group or combined group member, “prior year’s tax return” means the prior year’s tax return of the designated agent.
Income tax withholding payments when the required deposits were $300 or more in the prior calendar year.
General, county, and stadium sales and use tax when the aggregate amount due in the prior calendar year was $300 or more.
Fermented malt beverages tax when the tax due after the adjustment for any overpayment or additional amount due for a previous period was $1,000 or more in the prior calendar year.
Liquor or “distilled spirits and wine” tax and administrative fee when the aggregate net amount of tax and fee due in the prior calendar year was $1,000 or more.
Cigarette tax when the net tax due before printing and shipping costs was $1,000 or more in the prior calendar year.
Tobacco products tax when the tax due in the prior calendar year was $1,000 or more.
Alternate fuels tax when the total tax due in the prior calendar year was $1,000 or more.
General aviation fuel tax when the tax due in the prior calendar year was $1,000 or more.
Motor vehicle fuel tax and petroleum inspection fee when the aggregate amount due in the prior calendar year was $1,000 or more.
Individual and fiduciary income tax estimated tax payments when the estimated tax payments as required under s. 71.09, Stats., were $2,000 or more in the prior taxable year.
Installment agreement payments on overdue tax accounts, if at least one of the following requirements is met:

a. The initial overdue balance is at least $2,000.

b. The installment agreement is for more than 2 years in length.

c. The installment agreement was requested by an entity with an active business permit.

d. The installment agreement is for a person with an out-of-state account.

e. The payment history of the account dictates that it would be in the department’s best interest to require EFT.

Income and franchise tax withholding payments of pass-through entities under s. 71.775, Stats., and composite individual income tax payments made by pass-through entities on behalf of their nonresident partners or shareholders.
Withholding by an employer of the delinquent tax of an employee under s. 71.91 (7), Stats.
Local exposition tax when the general, county, and stadium sales and use tax is required to be paid using EFT, as provided in subd. 3.
Premier resort area tax when the general, county, and stadium sales and use tax is required to be paid using EFT, as provided in subd. 3.
Rental vehicle fee when the general, county, and stadium sales and use tax is required to be paid using EFT, as provided in subd. 3.
Dry cleaning facility fee when the general, county, and stadium sales and use tax is required to be paid using EFT, as provided in subd. 3.

(b) Any person not required to use the EFT payment method under par. (a) may elect to use the EFT payment method to pay or deposit the taxes, fees, or other amounts specified in par. (a).

(5) EFT payment procedures. EFT payments or deposits shall be credited by the department directly to the payer’s tax account or, for amounts described in sub. (4) (a) 14., to the employee’s delinquent tax account. The payer may use the ACH debit or ACH credit transfer option, or both, as follows:

(a) ACH debit transfers.

ACH debit transfers shall be made using department approved methods or as otherwise prescribed by the department. Required payment information includes the tax type code for the tax being paid, the tax period date to which the payment should be applied, the amount of the payment, and the effective date of the payment.
The payer shall initiate ACH debit transfers before 4:00 p.m. central standard time or central daylight savings time, as applicable, on or before the last business day prior to the prescribed due date of the payment in order for the payment to have a settlement date on or before the prescribed due date.

(b) ACH credit transfers.

A payer shall initiate ACH credit transfers through the payer’s financial institution following directions specific to that financial institution.
In order for the payment to have a settlement date on or before the prescribed due date, ACH credit transfers shall be initiated in time for the payer’s financial institution to settle the funds transfer on or before the due date of the payment.

(6) Costs to initiate EFT.

(a) ACH debit transfers shall occur at no cost to the payer.

(b) Payers using ACH credit transfers are liable for any fees charged by the payer’s financial institution.

(7) Evidence of EFT payment. A payer receives a trace number or confirmation number for each EFT transaction. The trace number or confirmation number given to the payer during the EFT transaction and included as part of the ACH entry is the payer’s confirmation of payment or deposit and shall provide proof of the date and amount of the payment or deposit.

(8) Due date of EFT payment.

(a) In order for EFT payments and deposits to be considered received on or before the prescribed due date, EFT payments or deposits shall have a settlement date on or before the prescribed due date, or the revised due date as provided in par. (c), of the payment or deposit.

(b) Payments or deposits made by EFT with a settlement date later than the prescribed due date or revised due date of the payment or deposit shall be considered late and shall be subject to all applicable late fees, penalties and interest.

Note: See s. Tax 2.67 (4) for rules applicable to a combined group with respect to late fees, penalties, and interest.

(c) When the prescribed due date falls on a weekend, legal holiday, or day the Federal Reserve Bank is closed, the payment due date is revised to be the first business day immediately following the weekend, holiday, or day the Federal Reserve Bank was closed.

Example: The prescribed due date falls on a Monday that is also Memorial Day. An ACH debit transfer must be initiated before 4:00 p.m. of the preceding Friday, so that the transfer may have a settlement date on Tuesday, the revised due date. A payer using an ACH credit transfer must work with the financial institution to initiate the transfer in time to settle on or before the revised payment due date.

(9) Exception to EFT requirement.

(a) The secretary of revenue may waive the requirement to use the EFT payment method when the secretary determines that the requirement causes an undue hardship, if the person otherwise required to use EFT does all of the following:

Requests the waiver in writing using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

Note: Form EFT-102 should be e-mailed to DORWaiverRequest@wisconsin.gov, faxed to (608) 224-5761, or addressed to Mandate Waiver Request, Wisconsin Department of Revenue, PO Box 8902, Madison, WI 53708-8902. Form EFT-102 may be obtained at https://www.revenue.wi.gov/Pages/html/formpub.aspx, under “Tax Return Information.”

Clearly indicates why the requirement causes an undue hardship.
Is current in all return and report filings and tax payments.

(b) In determining whether the EFT requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances which may prevent the payer from using the EFT method.

Examples: Examples of unusual circumstances include:

1) The person does not have access to a telephone or computer.

2) The person is physically unable to use a telephone or computer.

3) The telephone system available to the person is incompatible with the department’s telephone system used for EFT payments, deposits, or both.

Any other factor which the secretary determines is pertinent.

Note: Section Tax 1.12 interprets ss. 71.01 (8r), 71.255 (7) (b), 71.42 (3m), 71.63 (1m) and (5m), 71.65 (3) (a), 73.029, 77.58 (1m), 77.61 (14), 77.96 (5m), 78.12 (5), 78.55 (5m), 139.01 (5m), 139.30 (8m) and 139.75 (5m), Stats.

History

Cr. Register, September, 1999, No. 525, eff. 10-1-99; CR 04-049: am. (4) (a) (intro.), cr. (4) (a) 12. Register April 2005 No. 592, eff. 5-1-05; emerg. cr. (3) (fm) and (4) (a) 13., am. (4) (a) (intro.) and (7) (a) 2., eff. 12-28-05; CR 06-001: cr. (3) (fm) and (4) (a) 13., am. (4) (a) (intro.) and (7) (a) 2. Register June 2006 No. 606, eff. 7-1-06; CR 07-027: am. (1), (2), (3) (g), (4) (a) (intro.), (b) and (7) (intro.), cr. (4) (a) 14., Register October 2007 No. 622, eff. 11-1-07; CR 10-095: cr. (3) (cg), (cr), (4) (a) 15. to 18., (c), am. (3) (d), (4) (a) (intro.), 1. to 11., 12. (intro.), 13., r. (5), (6), renum. (8), (10) to be (6), (8), renum. (7), (9), (11) to be (5), (7), (9) and am. Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (8) (c) Register August 2012 No. 680, eff. 9-1-12; correction in (3) (fm) made under s. 13.92 (4) (b) 7., Stats., Register August 2022 No. 800.

Wis. Admin. Code § Tax 1.13 Power of attorney {#sec-tax-1.13 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.13}

(1) Power of attorney.

(a) A power of attorney or other written authorization executed by the taxpayer shall be required by the Wisconsin department of revenue for the taxpayer’s representative, on behalf of the taxpayer, to:

Inspect confidential information, e.g., tax returns and audit reports.
Receive notices, assessments, determinations, redeterminations, tax forms, billings, refunds, communications and correspondence containing confidential information.
Represent the taxpayer at conferences.
Execute a waiver to extend the statutory period for assessment or collection of a tax.
Execute any other waivers or agreements in behalf of the taxpayer.

(b) The power of attorney requirement applies to income, franchise, withholding, sales and use, county sales and use, estate, motor fuel, general aviation fuel, special fuel, fermented malt beverage, intoxicating liquor, cigarette and tobacco products tax matters of individuals, partnerships and corporations, including (S) corporations, and homestead and farmland preservation credit matters, and unclaimed property matters.

(c) A power of attorney or other written authorization executed by a designated agent of a combined group is considered executed by each member of the combined group with respect to combined returns within the scope of the power of attorney or other written authorization.

(2) Exceptions.

(a) A power of attorney is not required for a taxpayer’s representative to inspect confidential information or to represent the taxpayer at conferences, if the representative is accompanied by the taxpayer or, if a corporation, by an officer or authorized employee of the corporation.

(b) Generally a power of attorney is not required in the case of a trustee, receiver, guardian, administrator or executor of an estate, or a representative appointed by a court.

(4) Form of power of attorney.

(a) Form A-222. Wisconsin’s power of attorney form, Form A-222, is available from the Wisconsin department of revenue’s web site or from any Wisconsin department of revenue office.

(b) Alternate form. Use of the Wisconsin power of attorney form is not mandatory. However, the department prefers that this form or another similar form be used. An alternative form may be used, but must include all of the following:

The name of the representative.
A clear description of the scope of authority granted to the representative.
A notarized signature of the taxpayer, except federal Forms 2848 and 8655, SSTGB Form F0023, and other forms approved by the department that do not require the signature to be notarized.

(c) Expression of authority. The Wisconsin power of attorney form or substitute form shall clearly express the scope of the authority granted to the taxpayer’s representative and the Wisconsin matter covered (e.g., income, sales, or franchise tax or unclaimed property).

Note: Forms may be obtained from the department of revenue’s web site at www.revenue.wi.gov.

Note: Section Tax 1.13 interprets ss. 71.78 (4) (e), 71.255 (7) (b), 72.06, 77.61 (5) (b) 5. a., 77.76 (3), 78.80 (3), 139.11 (4), 139.38 (6) and 139.82 (6), Stats.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (1) (b), Register, September, 1983, No. 333, eff. 10-1-83; am. (1) (a) 1. and (b), (3) (a) and (4), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (a) 2. and (b), (2) (b), (3) (a) and (4) (b), Register, February, 1990, No. 410, eff. 3-1-90; CR 10-095: cr. (1) (c), am. (4) (a) Register November 2010 No. 659, eff. 12-1-10; CR 17-019: am. (1) (b), (4) (b), Register June 2018 No. 750 eff. 7-1-18; CR 19-141: am. (1) (b), r. (3) (a), (b), am. (4) (a), renum. (4) (b) to (4) (b) (intro.) and am., cr. (4) (b) 1. to 3., (c) Register September 2020 No. 777, eff. 10-1-20; r. (3) (title), cr. (4) (c) (title) under s. 13.92 (4) (b) 2., Stats., Register September 2020 No. 777; CR 21-085: am. (1) (b) Register August 2022 No. 800, eff. 9-1-22; CR 22-044: am. (1) (b) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 1.14 Petition for redetermination {#sec-tax-1.14 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.14}

(1) Scope. A person feeling aggrieved by a notice of additional assessment of income, franchise, withholding, state, county or stadium sales or use, premier resort area, local exposition, motor vehicle fuel, alternate fuels, general aviation fuel, fermented malt beverages, liquor, cigarette, tobacco products or controlled substances tax or petroleum inspection, state rental vehicle or dry cleaning fee, by a notice of reduced homestead, farmland preservation or other credits, or by a notice of refund or denial of refund may petition the department for redetermination. This section describes the administrative provisions related to the petition for department redetermination.

(2) Format of the petition. The petition for redetermination shall be in writing and shall set forth clearly and concisely the specific grievances to the assessment, reduced credit, refund or denial of refund, including a statement of the relevant facts and propositions of law upon which the grievance is based. Every petition shall be signed by the taxpayer or by a duly authorized representative.

(3) Filing deadline.

(a) To be considered “timely filed” a petition for redetermination shall be filed within 60 days after receipt of a notice of additional assessment, reduced credit, refund or denial of refund. Except as provided in par. (b), a petition for redetermination is “filed” within the proper statutory 60-day time period only if it is actually received by the department, or at the destination that the department prescribes, within the 60-day period, or it is mailed in a properly addressed envelope, with postage prepaid, the envelope is postmarked before midnight of the 60th day and the petition is actually received by the department, or at the destination that the department prescribes, within 5 business days of the prescribed 60th day date.

(b) In lieu of being received by the department or at a destination prescribed by the department, a petition for redetermination may be received at a destination prescribed by the department of administration if the petition for redetermination relates to a notice of additional assessment, reduced credit, refund or refund denial of income, franchise, withholding, motor vehicle fuel, alternate fuels, general aviation fuel, fermented malt beverages, liquor, cigarette, tobacco products or controlled substances tax, homestead, farmland preservation or other credit or state rental vehicle fee.

(4) Deposit or payment.

(a) Deposit. Any person who files a petition for redetermination may elect to deposit the amount of additional assessment, including interest and penalty, with the department, or with a person that the department prescribes, at any time before the department makes its redetermination. Any deposited amount that is later refunded shall bear interest at the statutory rate.

(b) Payment. A person may also pay any portion of the assessment admitted to be correct together with interest computed to the date of payment. However, the payment shall be considered an admission that the paid portion of the assessment is correct. The admitted portion that is paid may not be recovered in an appeal or in any other action or proceeding.

(5) Informal conference. A taxpayer may request in a petition for redetermination or at any time before the department has acted on the petition, an informal conference at which the facts and issues involved in the assessment or determination may be discussed. The conference shall be held at a time and place determined by the department.

(6) Closing stipulations. If the informal conference specified in sub. (5) results in an agreement as to facts and issues and the applicable law, the taxpayer and the department may enter into a closing stipulation.

(7) Combined groups. To the extent a notice of additional assessment of income or franchise tax, or any other notice under sub. (1), results from amounts required to be included in a combined return under s. 71.255, Stats., any act described in this section which is executed by the designated agent of the combined group is considered an act executed by all members of the combined group.

Note: Section Tax 1.14 interprets ss. 66.0615 (1m) (f) 2., 71.255 (7) (b), 71.80 (18), 71.88 (1), 71.90 (1), 77.59 (6), 77.61 (14), 77.76 (2), 77.982 (2), 77.991 (2), 77.9941 (4), 77.9951 (2), 77.9964 (2), 78.67, 78.69, 139.094, 139.11 (2m), 139.355, 139.38 (2m), 139.83, 139.835, and 168.12 (9), Stats.

History

1-2-56; am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, July, 1978, No. 271, eff. 8-1-78; renum. (1) and (2) to be (2) and (3) and am., cr. (1) and (4), (5) and (6) renum. from Tax 3.92 and 3.93 and am., Register, June, 1990, No. 414, eff. 7-1-90; CR 02-033: renum. from Tax 3.91 and am. Register October 2002 No. 562, eff. 11-1-02; CR 10-095: cr. (7) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 1.15 Enforcement of rules against a small business that has commited a minor violation {#sec-tax-1.15 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.15}

(1) Purpose. This section discloses the discretion the department will follow in the enforcement of rules against a small business that has committed a minor violation.

(2) Definitions. In this section:

(a) “Minor violation” has the meaning given in s. 227.04 (1) (a), Stats.

(b) “Small business” has the meaning given in s. 227.114 (1), Stats.

(3) Discretion the department will follow. The enforcement of rules against a small business that has committed a minor violation, including the assessment of a penalty, forfeiture, fine, or interest, shall be done on a case-by-case basis. Each case shall be determined on its merits as evaluated by the department, taking into consideration all relevant factors. Factors shall include:

(a) The difficulty and cost of compliance with the rule by the small business.

(b) The financial capacity of the small business, including the ability of the small business to pay the amount of any penalty that may be imposed.

(d) The level of public interest and concern.

(e) The opportunities available to the small business to understand and comply with the rule.

(f) Fairness to the small business and to other persons, including competitors and the public.

(4) Scope of discretion allowed. The department shall allow the discretion described in sub. (3) to be considered in all situations in which a small business has committed a minor violation, except in a situation where any of the following apply:

(a) The violation results in a substantial economic advantage for the small business.

(b) The small business has violated the same rule or guideline more than 3 times in the past 5 years.

(5) Voluntary disclosure. The department encourages a small business that has committed a minor violation to voluntarily disclose the minor violation. On a case-by-case basis, considering all relevant factors, the department may exercise discretion to:

(a) Enter into a written agreement with the small business that restricts the statute of limitations.

(b) Waive penalties.

Note: Section Tax 1.15 interprets s. 227.04, Stats.

History

CR 06-087: cr. Register November 2006 No. 611, eff. 12-1-06; CR 16-046: am. (title), (1), r. and recr. (2) to (4), am. (5) (intro.) Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 1.16 Financial record matching program {#sec-tax-1.16 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.16}

(1) Purpose. The purpose of this section is to specify procedures under which the department shall enter into agreements with financial institutions doing business in this state to operate the financial record matching program under s. 71.91 (8), Stats.

(2) Definitions. In this section:

(a) Pursuant to s. 71.91 (8) (a) 1., Stats., “account” means a demand deposit account, checking account, negotiable withdrawal order account, savings account, time deposit account, or money market mutual fund account.

(b) “Financial institution” has the meaning given in s. 49.853 (1) (c), Stats.

(3) Procedures.

(a) A financial institution doing business in this state shall enter into an agreement with the department to participate in the exchange of data on a quarterly basis. To the extent feasible, the information required under this agreement shall be submitted by electronic means prescribed by the department. The financial institution shall sign the agreement and return the agreement to the department within 20 business days of receipt of the agreement. The department shall review the agreement and, if all conditions have been met, shall sign the agreement and provide the financial institution with a copy of the signed agreement. Any changes to the conditions of the agreement shall be submitted by the financial institution or the department at least 60 days prior to the effective date of the change.

(b) A financial institution shall elect one of the following options for the exchange of data described in par. (a):

‘State matching option.’ This option is also known as the “all accounts method.” If this option is elected, the agreement described in par. (a) shall include the following:

a. The financial institution agrees to provide an electronic file to the department or department’s agent on a quarterly basis. The file contains the name, social security number or federal employer identification number of all persons having an ownership interest in an account maintained at the financial institution, together with a description of each person’s interest.

b. The department or department’s agent will perform a match against the delinquent debtor file. Upon the request of the department or the department’s agent, the financial institution shall provide the department, for each delinquent debtor who matches information provided by the financial institution under subd. 1. a., the delinquent debtor’s address of record, account number, account type and the balance of the account.

c. The department or department’s agent agrees not to disclose or retain information received from the financial institution concerning account holders who are not delinquent debtors.

‘Financial institution matching option.’ This option is also known as the “matched accounts method.” If this option is elected, the agreement described in par. (a) shall include the following:

a. The department or department’s agent agrees to provide the financial institution an electronic file on a quarterly basis. The file contains the names and social security numbers or federal employer identification numbers of delinquent debtors.

b. The financial institution agrees to return a file of matched records to the department or department’s agent. The return file of matched records contains the delinquent debtor’s name, social security number or federal employer identification number, address of record, account number, account type, the nature of the delinquent debtor’s ownership interest in the account and the balance of the account at the time that the record match is made.

c. The financial institution agrees not to disclose or retain information received from the department or the department’s agent concerning information contained in the delinquent debtor file in accordance with s. 71.91 (8) (e), Stats.

(c) A financial institution may request reimbursement from the department for costs associated with participating in the financial record matching program in an amount not to exceed $125 for each calendar quarter that the financial institution participates in the program.

History

EmR0935: emerg. cr. eff. 5-20-10; CR 09-118: cr. Register June 2010 No. 654, eff. 7-1-10.

Wis. Admin. Code § Tax 1.18 Permit predetermination {#sec-tax-1.18 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.18}

(1) Scope. This section describes the procedures for an individual to obtain a predetermination of whether he or she is eligible to apply for and obtain a permit under Chapter 125 and 139 due to his or her conviction record.

(2) Application for predetermination.

(a) An individual shall submit Form AB-790, Application for Permit Predetermination, to the department, in the manner prescribed by the department.

Note: Form AB-790 may be obtained from the department’s website at https://www.revenue.wi.gov/TaxForms2017through2019/ab-790.pdf.

(b) The department will not process the application if the application does not contain all of the requested information on the application form, including:

A statement confirming whether he or she has been convicted of a crime.
The date of conviction for any crime described in subd. 1. and a description of the nature and circumstances of the crime.
A signature of the applicant attesting to the accuracy and truthfulness of the information contained in the application.
Acknowledgment that the department has authority to conduct an investigation on the individual.

(c) An individual may submit an application for a permit without obtaining a predetermination from the department under this section.

(d) In order to make the predetermination, the department shall review the application and conduct an investigation on the individual. The department may request payment of a fee to be submitted with Form AB-790 before processing the application. The fee may not exceed the cost of making the predetermination.

(3) Predetermination is binding on the department. The department shall make a predetermination and send the predetermination in writing within 30 days of receiving the application. The predetermination by the department is binding on the department unless there is information relevant to the determination that was not available to the department at the time that the predetermination was made. The predetermination may not be appealed.

History

CR 19-158: cr. Register May 2021 No. 785, eff. 6-1-21.

Chapter Tax 2 INCOME TAXATION, RETURNS, RECORDS AND GROSS INCOME

Wis. Admin. Code § Tax 2.01 Residence {#sec-tax-2.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.01}

Individuals claiming a change of residence, i.e., domicile, from Wisconsin to another state shall file the “Residence Questionnaire,” which is a part of the 1NPR income tax form, with the Wisconsin department of revenue by attaching it to their Wisconsin income tax return for the year they claim to have changed residence, and shall furnish other information the department may require.

Note: Forms may be obtained from the department of revenue’s web site at www.revenue.wi.gov.

Note: Section Tax 2.01 interprets s. 71.02, Stats.

History

1-2-56; r. (1); renum. (2) to be (1); renum. (3) to be (2) and am., Register, September, 1964, No. 105, eff. 10-1-64; am. Register, February, 1975, No. 230, eff. 3-1-75; r. (1), renum. (2) and am., Register, July, 1987, No. 379, eff. 8-1-87; am. Register, February, 1990, No. 410, eff. 3-1-90; CR 19-141: am. Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.02 Reciprocity {#sec-tax-2.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.02}

(1) Purpose. This section explains the reciprocity agreements between Wisconsin and other states.

(2) Definitions. The following definitions pertain only to Wisconsin. Definitions of the same terms in other states may vary. In this section:

(a) “Personal service income” means all salaries, wages, commissions and fees earned by an employee and all commissions and fees earned by a self-employed person in the conduct of a profession or vocation. Personal service income does not include income derived from activities involving the substantial use of capital or labor of others.

(b) “Resident” means a natural person who is domiciled in this state.

(3) Wisconsin law.

(a) Under s. 71.05 (2), Stats., income earned by a nonresident individual for performing personal services in Wisconsin shall be excluded from Wisconsin gross income to the extent the individual’s state of residence imposes an income tax on the personal service income, if the state of residence allows either of the following:

A similar exclusion for personal service income earned by individuals domiciled in Wisconsin while working in that state.
A credit against the tax imposed by that state on the personal service income equal to the Wisconsin tax on the personal service income.

(b) Under s. 71.64 (8), Stats., a Wisconsin employer of a nonresident individual residing in a state with which Wisconsin has a reciprocity agreement under sub. (4) need not withhold Wisconsin income tax from personal service income earned in Wisconsin by the nonresident.

(4) Agreements with other states.

(a) Wisconsin has formal reciprocity agreements with:

Kentucky, for the years beginning on and after January 1, 1961.
Illinois, for the years beginning on and after January 1, 1971.
Michigan, for income earned after October 1, 1967 and years beginning on and after January 1, 1968.

(b) Wisconsin practices reciprocity with Indiana, since prior to 1960, on the basis of an informal agreement and acquiescence by Wisconsin and Indiana.

(5) Effect of reciprocity.

(a) Personal service income included under reciprocity agreements is taxed by an employee’s state of residence rather than by an employee’s state of employment. Wisconsin will not tax personal service income earned in Wisconsin by residents of states with which Wisconsin has reciprocity, and those states may not tax personal service income which a Wisconsin resident earns in those states, except as described in subs. (6), (7), and (8).

(b) For personal service income included under reciprocity agreements, an employer need only withhold income tax for the state of residence of an employee.

Note: Additional information on withholding on wages earned by employees engaged in interstate transportation activities may be obtained by writing to Wisconsin Department of Revenue, Compliance Bureau, P.O. Box 8902, Madison, WI 53708.

(6) Provisions of agreement with Illinois.

(a) The reciprocity agreement with Illinois is limited to “wages, salaries, commissions, and any other form of remuneration paid to employees for personal services.” However, the agreement does not extend to fees of lawyers, accountants and other self-employed persons deriving personal service income, to lottery winnings, or to persons identified in pars. (c) and (d).

(b) The Illinois Income Tax Act, Article 15, section 1501 (a) (20), defines a resident as “an individual (i) who is in this State for other than a temporary or transitory purpose during the taxable year; or (ii) who is domiciled in this State but is absent from the State for a temporary or transitory purpose during the taxable year.” Because of the differences in the definition of resident for Illinois and Wisconsin purposes, a person domiciled in Wisconsin may simultaneously be a resident of Illinois, or a person may be domiciled in Illinois but not be a resident of Illinois.

Example: A person is domiciled in Wisconsin and takes a job in Illinois. The person does not intend to give up his or her Wisconsin domicile, but instead intends to return to Wisconsin once his or her job in Illinois is completed, in 2 to 3 years. Assume that Illinois considers the person’s stay in Illinois as other than temporary or transitory. Therefore, the person is a resident of Illinois. The person is also a resident of Wisconsin because he or she is still domiciled in Wisconsin.

Note: The term “temporary or transitory” as used in the definition of an Illinois resident set forth in sub. (6) (b) is not defined in either Illinois law or regulations. Therefore, whether or not the purpose for which an individual is in, or is absent from, Illinois is temporary or transitory in character depends upon the facts and circumstances of each particular case.

(c) The reciprocity agreement with Illinois does not apply to any form of compensation described in par. (a) paid on or after January 1, 1974 to any individual who, at the time of payment, is simultaneously a resident of Illinois and a domiciliary of Wisconsin. All income of this person is taxable by Wisconsin. However, a credit against Wisconsin income tax may be claimed for income tax paid to Illinois.

(d) An individual who is domiciled in Illinois but is not a resident of Illinois is subject to the Wisconsin income tax on income earned in Wisconsin.

(7) Provisions of agreement with Michigan. The reciprocity agreement with Michigan is limited to income from “personal services, including salaries, wages or commissions.” The agreement does not include income which Michigan considers to be “business income,” such as fees of self-employed persons such as professionals.

(8) Provisions of agreements with Indiana and Kentucky. The reciprocity agreements with Indiana and Kentucky are limited to wages, salaries and commissions.

(10) Procedure for nonresidents.

(a) Nonresident persons employed in Wisconsin and residing in a state with which Wisconsin has reciprocity shall file form W-220, “Nonresident Employee’s Withholding Reciprocity Declaration,” with their Wisconsin employers to be exempt from withholding of Wisconsin income taxes. Upon receipt of this form, Wisconsin employers may not withhold Wisconsin income tax from Wisconsin personal service income of the employee.

(11) Procedure for Wisconsin residents.

(a) Wisconsin residents employed in a state with which Wisconsin has reciprocity shall file form 1-ES, “Wisconsin Estimated Tax Voucher,” with the Wisconsin department of revenue if their out-of-state employers do not withhold Wisconsin income tax from their personal service income and if they will have a sufficient Wisconsin tax liability to be required to make payments of estimated tax.

Note: Form 1-ES may be obtained by using the department’s estimated income tax interactive voucher at www.revenue.wi.gov/Pages/OnlineServices/voucher-1es.aspx.

(b) Wisconsin residents may have their employers cease withholding the other state’s income tax from their personal service income and may claim a refund from that state if income taxes are withheld from their personal service income after the effective date of a reciprocity agreement.

(c) Wisconsin residents earning personal service income in states where it is taxable by the other state may claim a credit on their Wisconsin income tax returns for net income taxes paid to these states.

Note: Refer to s. Tax 2.955 for information on the credit for tax paid to other states.

(12) Delinquent taxes. Reciprocity agreements do not affect the withholding of delinquent Wisconsin income taxes, interest, penalties and costs under s. 71.91 (7), Stats.

Note: Forms may be obtained from the department of revenue’s web site at www.revenue.wi.gov.

Note: Out-of-state employers of Wisconsin residents wishing to withhold Wisconsin income tax from those employees’ incomes may contact Wisconsin Department of Revenue, Compliance Bureau, P.O. Box 8902, Madison, WI 53708.

Note: The State of Maryland enacted an income tax law, Ch. 1, Laws 1992, 1st Spec. Sess., on May 1, 1992, which resulted in the termination of reciprocity between Wisconsin and Maryland, effective for taxable years beginning after December 31, 1991. Prior to enactment of Maryland Ch. 1, Laws 1992, 1st Spec. Sess., Wisconsin practiced reciprocity with Maryland since prior to 1960, based on an informal agreement and acquiescence by Wisconsin and Maryland. Under the provisions of prior Maryland law and s. 71.05 (2), Stats., a Wisconsin resident could exclude from Maryland taxation, the income from salaries, wages, and compensation for personal services to the extent Wisconsin taxed the income of and accorded similar treatment to Maryland residents.

Note: Section Tax 2.02 interprets ss. 71.05 (2) and 71.64 (8), Stats.

Note: Beginning on January 1, 1968 and ending on January 1, 2010, Wisconsin had a formal reciprocity agreement with Minnesota. The reciprocity agreement was limited to income from personal services, including wages, salaries, tips, fees, commissions, bonuses, or similar earnings, provided the taxpayer personally rendered the service. The reciprocity exclusion for personal service income did not apply where the personal or professional service income was earned as a part of a business operated by the taxpayer which had employees that did more than incidental duties for the business, or where there was the sale or delivery of goods which was more than an incidental part of the business. A partner’s salary from a partnership where the selling of goods or services of the employees was more than incidental was subject to the reciprocity exclusion, but the partnership profits were not excluded. Distributions from a tax-sheltered annuity were also considered subject to the reciprocity exclusion. To qualify for the exclusion, the Minnesota agreement required the taxpayer to have a place of abode in Wisconsin, and the taxpayer was required to customarily return to it at least once a month.

History

Cr. Register, April 1978, No. 268, eff. 5-1-78; r. and recr., Register, March, 1991, No. 423, eff. 4-1-91; am. (3) (a) (intro.), 1., (4) (a) 1. to 4., (b) (intro.), (5) (a), (6) (b), (7) and (8), r. (4) (b) 1. and 2. and (9), renum. (10) to (13) to be (9) to (12) and am. (10) (a), (b), (11) (a) and (12), Register, April, 1993, No. 448, eff. 5-1-93; CR 17-019: r. (4) (a) 4., (9), am. (10) (a), r. (10) (b), Register June 2018 No. 750 eff. 7-1-18; correction in (5) (a) made under s. 13.92 (4) (b) 7., Stats., Register June 2018 No. 750.

Wis. Admin. Code § Tax 2.03 Corporation returns {#sec-tax-2.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.03}

(1) Forms. The department shall provide forms for filing franchise or income tax returns and credit claims. Except as provided in s. Tax 2.09 or as otherwise approved by the department, tax returns and credit claims shall only be filed using the forms prescribed by the department.

(2) Information returns. Information returns required of corporations are specified in s. Tax 2.04.

(3) Filing returns.

(a) Except as provided in par. (b) and s. Tax 2.67 (2) (b), all forms and information required to be filed or furnished by corporations shall be filed or furnished by providing the information requested on the appropriate forms, signing the returns or forms as appropriate and submitting them by one of the following means:

Filing them by the use of electronic means as prescribed by the department.
Mailing them to the address specified by the department on the form or in the instructions.
Delivering them to the department or to the destination that the department or the department of administration prescribes.

(b)

The department may require the franchise or income tax return of a corporation be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first franchise or income tax return required to be filed electronically of the requirement to file electronically. This paragraph does not apply to combined returns subject to the electronic filing requirement in s. Tax 2.67 (2) (b).
The secretary of revenue may waive the requirement to file the franchise or income tax return of a corporation electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

a. Requests the waiver in writing using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

b. Clearly indicates why the requirement causes an undue hardship.

In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

a. Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the Internet.

b. Any other factor that the secretary determines is pertinent.

(c) If the return is a combined return, an officer of the designated agent corporation shall sign the combined return. Signing a return includes the process of electronically signing the return. See ss. Tax 2.03, 2.60, and 2.67 for additional rules relating to combined returns.

Note: Section Tax 2.03 interprets ss. 71.24 (1), (1m), and (3), 71.255 (1) (b) and (7), 71.365 (4) and (5), 71.44 (1) (a) and (c) and (1m), and 71.80 (18), Stats.

History

1-2-56; am. Register, September, 1964, No. 105, eff. 10-1-64; am. Register, March, 1966, No. 123, eff. 4-1-66, am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, September, 1977, No. 261, eff. 10-1-77; am. Register, September, 1983, No. 333, eff. 10-1-82; am. (1) (a), (c) and (d), renum. (1) (f) to (j) and (2) to be (1) (g) to (k) and (3) and am. (1) (h) and (k) and (3), cr. (1) (f), (L) to (p) and (2), Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. (1), am. (3), Register, June, 1990, No. 414, eff. 7-1-90; r. and recr., Register, May, 1995, No. 473, eff. 6-1-95; CR 02-033: r. (1) (j), renum. (1) (k) to (x) to be (1) (j) to (w), am. (1) (n), (o) and (s) and (4), cr. (1) (x) Register October 2002 No. 562, eff. 11-1-02; correction in (1) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register June 2006 No. 606; CR 10-095: r. and recr. (1), (3), r. (4) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 2.04 Information returns and wage statements {#sec-tax-2.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.04}

(1) Definitions. In this section:

(a) “Pass-through entity” has the meaning given in s. 71.738 (3d), Stats.

(b) “Person” means an individual, trust, estate, partnership, limited liability company, association or corporation.

(2) Compensation for services. Under ss. 71.65 (2), 71.71 (2), 71.715 (2), 71.72 and 71.80 (20), Stats., all persons carrying on activities within this state, whether taxable or not under ch. 71, Stats., are required to file with the department, on federal form W-2 or 1099-R, or on Wisconsin form 9b or other forms approved by the department, a statement of certain payments made within the preceding calendar year. As provided in sub. (6), the department may require such statement be filed electronically. For individuals who are residents of Wisconsin, the statement shall set forth the salaries, wages, bonuses, commissions, annuities, pensions, retirement pay, fees, or other remuneration paid for services whether subject to withholding or not. For individuals who are nonresidents, the statement shall include all payments for the performance of personal services in Wisconsin, whether subject to withholding or not, except retirement plan distributions identified in s. Tax 3.085 as being exempt from Wisconsin income tax. A copy of federal form 1099 may be filed in lieu of Wisconsin form 9b. The following shall also apply with respect to compensation for services:

(a) All payments which are wages within the definition under s. 71.63 (6), Stats., regardless of amount, shall be reported on federal form W-2. As provided in sub. (6), the department may require such form be filed electronically.

(b) All payments which are not wages within the definition under s. 71.63 (6), Stats., but from which Wisconsin income tax has been withheld, shall be reported on federal form W-2 or 1099-R, as appropriate. As provided in sub. (6), the department may require such form be filed electronically.

(c) Payments of $600 or more which are not wages within the definition under s. 71.63 (6), Stats., and from which no Wisconsin income tax has been withheld, shall be reported on Wisconsin form 9b or federal form 1099. As provided in sub. (6), the department may require such form be filed electronically. However, if the payment was to an employee for whom a form W-2 is required under par. (a) or (b), the payment, regardless of amount, shall be included on form W-2.

(d) All statements required shall be filed with the department by January 31. Form WT-7, “Employer’s Annual Reconciliation of Wisconsin Income Tax Withheld From Wages,” shall accompany the statements submitted, if the employer is required to be registered to withhold Wisconsin income taxes from employees’ wages.

Note: Forms W-2, 1099-R, 9b, and 1099 that are not required to be filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to the department. Forms filed on paper may be mailed to Wisconsin Department of Revenue, PO Box 8920, Madison, WI 53708-8920.

(de) The department may require Form WT-7 be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first Form WT-7 required to be filed electronically of the requirement to file electronically.

(dm) The secretary of revenue may waive the requirement for a person to file Form WT-7 electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

Requests the waiver in writing using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

Clearly indicates why the requirement causes an undue hardship.

(ds) In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the Internet.

Any other factor that the secretary determines is pertinent.

(e) Sections 71.65 (5) and 71.73 (2), Stats., permit a thirty-day extension of time to file the statements described in this subsection. A written request may be mailed or faxed to the department and to be effective shall be postmarked or faxed on or before the due date of the statements.

Note: Written requests for extensions may be mailed to Mail Stop 3-80, Wisconsin Department of Revenue, Tax Operations Business, PO Box 8902, Madison, WI 53708-8902.

(3) Rents and royalties. Under ss. 71.70 and 71.80 (20), Stats., except as provided in par. (d), all persons making payments of rents and royalties of $600 or more to individuals who are residents of Wisconsin, regardless of where the property is located, and to nonresident individuals if the property is located in Wisconsin, shall file with the department, on Form 9b or an approved substitute form, a statement of payments made in the preceding calendar year. As provided in sub. (6), the department may require such statement be filed electronically. The following shall also apply with respect to rents and royalties:

(a) A copy of federal Form 1099-MISC may be filed in lieu of Wisconsin Form 9b.

(b) Corporations shall file the statement with the department by January 31 and payers other than corporations shall file by January 31.

Note: Forms not required to be filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to Wisconsin Department of Revenue, PO Box 8920, Madison, WI 53708-8920.

(c) A 30-day extension of time for filing Forms 9b or substitute forms to report payments of rents or royalties may be allowed.

(d) The requirement to file Form 9b or a substitute form does not apply to persons other than corporations who do not deduct the payments in determining Wisconsin taxable income.

(4) Gambling winnings.

(a) Under s. 71.67 (4) (c), Stats., the administrator of the gaming commission’s lottery division shall file with the department a statement of winnings for each lottery prize of $2,000 or more paid in the preceding calendar year.

(b) Under s. 71.67 (5) (d), Stats., all persons licensed to sponsor and manage races under s. 562.05 (1) (b) or (c), Stats., shall file with the department a statement of winnings for each pari-mutuel wager payment of more than $1,000 paid in the preceding calendar year.

(c) The winnings required to be reported in pars. (a) and (b) shall be reported on federal Form W-2G or on an approved substitute form. As provided in sub. (6), the department may require such form be filed electronically.

(d) The statements required in pars. (a) and (b) shall be filed by January 31.

Note: Forms W-2G or substitute forms not required to be filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to Wisconsin Department of Revenue, PO Box 8920, Madison, WI 53708-8920.

(e) No extension of time for filing Forms W-2G or substitute forms to report payments of lottery prize winnings or pari-mutuel wager winnings may be allowed.

(5) Disallowance of deductions. Items to be reported on Forms W-2, 1099-R, 9b or substitute forms may be disallowed as deductions from gross income if not properly reported.

(6) Electronic filing requirement.

(a) Under s. 71.80 (20), Stats., if a person is required to file 10 or more wage statements or 10 or more of any one type of information return with the department, the person shall file the statements or the returns electronically, by means prescribed by the department.

(b) If a payer participates in the combined federal/state filing program for Forms 1099, the department shall waive the requirement to file those Forms 1099 or comparable information returns electronically, unless the form reports Wisconsin withholding.

(c) The secretary of revenue may waive the requirement to file wage statements or information returns electronically when the secretary determines that the requirement causes an undue hardship, if the payer does all of the following:

Requests the waiver in writing at least 30 days before the due date for filing the wage statements or information returns using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

Clearly indicates why the requirement causes an undue hardship.

(d) In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the payer from filing electronically.

Example: The payer does not have access to a computer that is connected to the Internet.

Any other factor that the secretary determines is pertinent.

(7) Combined filing program. Payers who participate in the combined federal/state filing program with the internal revenue service and report to the internal revenue service items which are required to be filed on Wisconsin Form 9b or a substitute form, are not required to file separate information returns for those items with the department of revenue, unless the form reports Wisconsin withholding.

Note: Under the combined federal/state filing program, the internal revenue service will forward information from the information returns to the department of revenue.

Note: Subchapter XI of ch. 71, Stats., requires information returns (e.g. Form 1099-R and Form 1099-MISC) to be filed by January 31, regardless of whether the returns are filed directly with the department of revenue or indirectly through the internal revenue service’s combined federal/state filing program.

(8) Electronic filing requirement for taxes withheld by pass-through entities.

(a) Except as provided in par. (b), the department may require a pass-through entity to electronically file its return for nonresident withholding taxes under s. 71.775, Stats.

(b) The secretary of revenue may waive the requirement to electronically file the return under par. (a) when the secretary determines that the requirement causes an undue hardship, if the pass-through entity does all of the following:

Requests the waiver in writing using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

Clearly indicates why the requirement causes an undue hardship.

(c) In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the pass-through entity from filing electronically.

Example: The pass-through entity does not have access to a computer that is connected to the Internet.

Any other factor that the secretary determines is pertinent.

Note: The requirement to file Wisconsin wage statements or information returns electronically for persons required to file 10 or more wage statements or 10 or more of any one type of information return with the department is effective January 1, 2018, as a result of the amendment of s. 71.80 (20), Stats., by 2017 Wis. Act 59.

Note: The requirement of payers to report lottery prize winnings and pari-mutuel wager winnings to the department is effective with winnings received by a payee on or after August 12, 1993, as a result of the creation of s. 71.67 (4) (c) and (5) (d), Stats., by 1993 Wis. Act 16.

Note: Section Tax 2.04 interprets ss. 71.26 (3) (e), 71.63 (3m), 71.65 (2), 71.67 (4) and (5), 71.68, 71.70, 71.71 (2), 71.72, 71.738 (2m), 71.74 (4) and 71.80 (20), Stats.

History

1-2-56; am. Register, September, 1964, No. 105, eff. 10-1-64, am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, September, 1977, No. 261, eff. 10-1-77; am. (1), (3), (4) and (6), cr. (7), Register, September, 1983, No. 333, eff. 10-1-83; r. and recr. Register, June, 1990, No. 414, eff. 7-1-90; r. and recr., Register, May, 1995, No. 473, eff. 6-1-95; emerg. am. (1) and (2) (d), cr. (1) (a) and (b), (2) (de), (dm) and (ds) and (8), eff. 12-28-05; CR 06-001: am. (1) and (2) (d), cr. (1) (a) and (b), (2) (de), (dm) and (ds) and (8), Register June 2006 No. 606, eff. 7-1-06; CR 10-095: am. (2) (intro.), (a) to (de), (dm) (intro.), 1., (ds) (intro.), 1., (e), (3) (intro.), (b), (4) (c), (d), (8) (a), (b) (intro.), 1., (c) (intro.), 1., r. and recr. (6) Register November 2010 No. 659, eff. 12-1-10; CR 19-141: am. (3), (4) (c), (e), (5), (6) (a), (b), (7) Register September 2020 No. 777, eff. 10-1-20; CR 21-085: am. (2) (intro.) Register August 2022 No. 800, eff. 9-1-22; correction in (1) (a) made under s. 13.92 (4) (b) 7., Stats., Register August 2022 No. 800.

Wis. Admin. Code § Tax 2.07 Earned income tax credit {#sec-tax-2.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.07}

(1) Criteria for providing information. The department has established the following criteria regarding the dissemination of information to the public concerning the federal and Wisconsin earned income tax credits:

(a) Disseminate information to potential claimants in the most cost-effective manner possible.

(b) Disseminate information to the public through multiple channels to increase the probability that potential claimants will become aware of the earned income tax credits.

(c) Utilize volunteer tax preparers and community-based organizations that have personal contact with potential claimants, to provide earned income tax credit information and assistance.

(d) Clarify the relationship between federal and Wisconsin earned income tax credits and coordinate outreach efforts with the internal revenue service, or “IRS.”

(e) Provide sufficient information to allow potential claimants to self-evaluate their eligibility for the earned income tax credits.

(f) Provide convenient ways for potential claimants to obtain additional information, assistance and forms.

(2) Methods of providing information. Methods the department uses to disseminate information to the public concerning the federal and Wisconsin earned income tax credits include the following:

(a) Produce an informational flyer, distribute copies through appropriate organizations having regular contact with potential earned income tax credit claimants throughout the state, and have additional copies available for distribution upon request.

Example: Copies of the informational flyer may be distributed to members of the Wisconsin legislature or to various sites such as municipal buildings, community agencies, or job service centers.

(b) In conjunction with the IRS, when training volunteers who provide free tax-filing assistance throughout Wisconsin, include training to identify potential earned income tax credit claimants and to assist them in claiming both the federal and Wisconsin credits.

(c) Highlight the Wisconsin earned income tax credit in the Wisconsin individual income tax and homestead credit booklets.

(e) Work with the IRS in providing joint efforts to publicize both the federal and Wisconsin earned income tax credits.

(f) Annually produce a report summarizing the level of participation in and level of benefits provided by the earned income tax credit program.

(g) Work with other state agencies, public utilities, and other organizations to distribute information about the federal and Wisconsin earned income tax credit programs.

Note: The federal earned income tax credit, provided under section 32 of the Internal Revenue Code, is available to eligible individuals and married couples filing a joint income tax return. The federal credit is computed based on the amount of adjusted gross income or earned income, and whether the individual or couple had no qualifying child, one qualifying child, or two or more qualifying children.

Note: The Wisconsin earned income tax credit is available under s. 71.07 (9e), Stats., to full-year Wisconsin residents who are eligible to claim the federal earned income tax credit. The Wisconsin credit is computed as a percentage of the federal basic credit, dependent upon whether the individual or couple have one qualifying child, two qualifying children, or three or more qualifying children.

Note: Section Tax 2.07 interprets ss. 71.07 (9e) and 73.03 (48), Stats.

History

Cr. Register, November, 1993, No. 455, eff. 12-1-93; CR 21-085: r. (2) (d) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 2.08 Returns of persons other than corporations {#sec-tax-2.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.08}

(1) Forms. The department shall provide official forms for filing income tax returns and credit claims. Except as provided in s. Tax 2.09 or otherwise approved by the department, tax returns and credit claims may only be filed using these official forms.

(2) Information returns. Information returns required of persons other than corporations are specified in s. Tax 2.04.

(3) Filing returns.

(a) All forms and information required to be filed or furnished by persons other than corporations shall be filed or furnished by providing the information requested on the appropriate forms, signing the returns or forms as appropriate and submitting them by one of the following means:

Mailing them to the address specified by the department on the form or in the instructions.
Delivering them to the department or to the destination that the department or the department of administration prescribes.
Filing them by the use of electronic means as prescribed by the department.

Note: The destination for delivering forms that the department or the department of administration prescribes and the type of electronic means the department prescribes for filing forms shall be stated on the forms or in the instructions, on the department’s Internet web site at www.revenue.wi.gov or in the department’s quarterly newsletter titled “Wisconsin Tax Bulletin” or other written material.

(b) Except as provided in pars. (c) and (d), the department may require a tax return preparer or tax preparation firm that prepared 50 or more Wisconsin individual income tax returns for the prior taxable year, to file individual income tax returns prepared by that tax return preparer or tax preparation firm electronically. The department shall notify tax return preparers and tax preparation firms by October 1 of any year of the requirement to file electronically. The requirement to file returns electronically shall be effective beginning January 1 of the year following notification.

(c) Paragraph (b) does not apply to a return on which the taxpayer has indicated that the taxpayer did not want the return filed by electronic means.

(ce) Except as provided in par. (d), the department may require a composite individual income tax return filed by a pass-through entity on behalf of its nonresident partners, members, shareholders, or beneficiaries be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first composite income tax return required to be filed electronically of the requirement to file electronically.

(ci) Except as provided in par. (d), the department may require the nonresident income or franchise tax withholding return filed by a pass-through entity to be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first income or franchise tax withholding return required to be filed electronically of the requirement to file electronically.

(cm) Except as provided in par. (d), the department may require the income tax return or request for a closing certificate of a trust or estate be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first income tax return or closing certificate required to be filed electronically of the requirement to file electronically.

(cs) Except as provided in par. (d), the department may require the income tax return of a partnership be filed electronically. The department shall provide notification at least 90 days prior to the due date of the first income tax return required to be filed electronically of the requirement to file electronically.

(d) The secretary of revenue may waive the requirement to file electronically when the secretary determines that the requirement causes an undue hardship, if the person otherwise required to file electronically does all of the following:

Requests the waiver in writing using Form EFT-102, Electronic Filing or Electronic Payment Waiver Request.

Clearly indicates why the requirement causes an undue hardship.

(e) In determining whether the electronic means requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the Internet.

Any other factor that the secretary determines is pertinent.

Note: Forms not required to be filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to the address specified on the form or in the instructions.

Note: Section Tax 2.08 interprets ss. 71.01 (5g), 71.03 (2), 71.20 (1), 71.55 (3), 71.738 (2m), and 71.80 (18), Stats.

History

1-2-56; am. Register, February, 1958, No. 26, eff. 3-1-58; am. Register, February, 1960, No. 50, eff. 3-1-60; am. Register, September, 1964, No. 105, eff. 10-1-64; r. and recr., Register, March, 1966, No. 123, eff. 4-1-66; am. Register, February, 1975, No. 230, eff. 3-1-75; am. (1), Register, November, 1977, No. 263, eff. 12-1-77; am. (3), Register, February, 1978, No. 266, eff. 3-1-78; am. (1) (a) and (b), (2) and (3), renum. (1) (c) and (d) to be (1) (k) and (l) and am., cr. (1) (c) to (j), Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. (1), am. (3) (intro.), r. (3) (a) to (c), Register, June, 1990, No. 414, eff. 7-1-90; r. and recr. Register, May, 1995, No. 473, eff. 6-1-95; CR 01-143: am. (1) (a) 2., 3. and (b) 3., renum. (1) (a) 4. to 15., 17. to 20., 21., and 22. to 28., (b) 5., 6. and (3) to be (1) (a) 5., 6., 9. to 18., 19. to 22., 24., and 26. to 32., (b) 7., 8. and (3) (a) (intro.) and am. (1) (a) 6., 15. and 18., (b) 7., and (3) (a) (intro.), cr. (1) (a) 4., 7., 8., 23., 25., (b) 5. and 6., (3) (a) 1. to 3. and (b) to (e), r. (1) (a) 16. Register July 2002 No. 559, eff. 8-1-02; CR 10-095: r. and recr. (1), am. (3) (b) (intro.), 2., (3) (d) (intro.), 1., (e) 1., cr. (3) (b) 3., (ce), (cm), (cs) Register November 2010 No. 659, eff. 12-1-10; CR 19-141: renum. (3) (b) (intro.) to (3) (b) and am., r. (3) (b) 1. to 3., cr. (3) (ci) Register September 2020 No. 777, eff. 10-1-20; correction in (3) (ci) made under s. 35.17, Stats., Register September 2020 No. 777.

Wis. Admin. Code § Tax 2.085 Claim for refund on behalf of a deceased taxpayer {#sec-tax-2.085 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.085}

(1) If a claimant is filing a deceased taxpayer’s income tax return and is due a refund, the claimant shall file Form 804, “Claim for Decedent’s Wisconsin Income Tax Refund,” with the income tax return. If the claimant did not file Form 804 with the income tax return, a refund check is issued in the deceased taxpayer’s name. If the claimant is unable to cash the refund check, the claimant shall file Form 804.

(2) If a refund is claimed on a joint Wisconsin income tax return of the surviving spouse and the decedent, the surviving spouse shall write “filing as surviving spouse” in the signature area of the return. If someone other than the surviving spouse is the personal representative, the personal representative shall also sign the joint return.

(3) Forms required to be filed under sub. (1) shall be mailed to Wisconsin Department of Revenue, P.O. Box 8903, Madison, WI 53708-8903.

Note: Section Tax 2.085 interprets s. 71.75 (10), Stats.

History

Cr. Register, October, 1976, No. 250, eff. 11-1-76; am. (1), Register, November, 1978, No. 275, eff. 12-1-78; am. (2), Register, September, 1983, No. 333, eff. 10-1-83; renum. (2) to be (3), cr. (2), Register, February, 1990, No. 410, eff. 3-1-90; CR 13-012: am. (1) to (3) Register August 2013 No. 692, eff. 9-1-13; CR 22-044: r. and recr. (1), am. (3) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 2.09 Reproduction of franchise or income tax forms {#sec-tax-2.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.09}

(1) General. Subject to the provisions of this section, the official Wisconsin franchise or income tax forms required to be filed with the department may be reproduced and the reproductions may be filed in lieu of the corresponding official forms. Any reproduction which varies from the official version in any particular way, except as authorized in this section, shall be submitted to the department for approval before it is used. The department may reject any reproduction which is in whole or in part illegible or which is of a format that has not been approved by the department.

(2) Specifications. The following specifications shall apply:

(a) Printing of reproductions shall be by conventional printing processes, photocopying, computer graphics or similar reproduction processes and shall duplicate the font sizes, graphics and format of the official form. Reproductions may be printed on one side or both sides of the paper.

(b) Reproductions of optical character reader-scannable, or OCR-scannable, documents shall bear an OCR-scannable line as prescribed for the specific document type. Photocopies of OCR-scannable forms may not be filed.

(c) The reproductions shall be on paper of substantially the same weight and texture, and of quality at least as good as that used in the official forms.

(d) In the reproduction of tax forms, official forms printed on colored paper may be reproduced on white paper, and black ink may be substituted for colored ink.

(e) The size of the reproduction, both as to dimensions of the paper and image reproduced on it, shall be the same as that of the official form, except that full-page official forms which are other than 8½ inches by 11 inches in size may be reproduced on 8½ inch by 11 inch paper.

(f) Except for returns executed by fiduciaries as provided in sub. (3) or returns filed electronically, all signatures required on returns which are filed with the department shall be original, affixed subsequent to the reproduction process.

(3) Fiduciaries. A fiduciary or the fiduciary’s agent may use a facsimile signature in filing a tax return on form 2, subject to the following conditions:

(a) Each group of returns forwarded to the department shall be accompanied by a letter signed by the person authorized to sign the returns declaring, under penalties of perjury, that the facsimile signature appearing on the returns is the signature adopted by the person to sign the returns filed and that the signature was affixed to the returns by the person or at the person’s direction. The letter shall also list each return by name and identifying number.

(b) A signed copy of the letter shall be retained by the person filing the returns and shall be available for inspection by the department.

(c) If returns are reproduced by photocopying or similar reproductive methods, the facsimile signature shall be affixed subsequent to the reproduction process.

Note: Written requests for approval of substitute forms should be mailed to Wisconsin Department of Revenue, Processing Forms Approval, P.O. Box 8903, Madison, WI 53708-8903.

Note: Section Tax 2.09 interprets ss. 71.03 (6) (a), 71.20 (1), 71.24 (1) and 71.44 (1) (a), Stats.

History

1-2-56; am. Register, February, 1958, No. 26, eff. 3-1-58; am. Register, February, 1960, No. 50, eff. 3-1-60; am. (2), Register, March, 1966, No. 123, eff. 4-1-66; am. (5) and cr. (6), Register, August, 1974, No. 224, eff. 9-1-74; am. (intro.), (2), (6) (intro.) and (a), Register, November, 1977, No. 263, eff. 12-1-77; am. (3), Register, September, 1983, No. 333, eff. 10-1-83; correction in (5) made under s. 13.93 (2m) (b) 4., Stats., Register, July, 1987, No. 379; r. and recr. Register, May, 1996, No. 485, eff. 6-1-96; CR 10-095: am. (1) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 2.10 Copies of federal returns, statements, schedules, documents, etc. to be filed with Wisconsin returns {#sec-tax-2.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.10}

(1) Individuals and fiduciaries. At the time of filing Wisconsin income tax returns by individuals and fiduciaries, a complete copy of the federal income tax return for the same taxable year, including all schedules, statements, documents and computations which affect the computation of Wisconsin income, credits or penalties, shall be included and filed with the Wisconsin return. If the federal form is filed electronically, a copy of the electronic material as contained in replicas of the official forms or on forms designated by the electronic filer shall be included and filed with the Wisconsin return.

(2) Partnerships and limited liability companies treated as partnerships.

(a) Except as provided in par. (b), at the time of filing Wisconsin income tax returns by partnerships and limited liability companies treated as partnerships under s. 71.20 (1), Stats., a complete copy of the federal income tax return for the same taxable year, including all schedules, statements, documents and computations which affect the computation of Wisconsin income, deductions and credits, shall be included and filed with the Wisconsin return. If the federal form is filed electronically, a copy of the electronic material as contained in replicas of the official forms or on forms designated by the electronic filer shall be included and filed with the Wisconsin return.

(b) Copies of the federal schedules K-1 are not required to be filed for those partners or members for whom a Wisconsin schedule 3K-1 is being filed for the same taxable year. A Wisconsin schedule 3K-1 shall be filed in lieu of federal schedule K-1 for a partner or member if any of the following applies:

The computation of the Wisconsin income or deductions differs from the federal amount.
The partner or member is a nonresident of Wisconsin or part-year resident of Wisconsin and the partnership or limited liability company has activities within and without Wisconsin.
The partnership or limited liability company calculates any Wisconsin income tax credits.

Note: Section Tax 2.10 interprets ss. 71.03 (5) and 71.20 (1), Stats.

History

Register, December, 1965, No. 120, eff. 1-1-66; am. Register, June, 1990, No. 414, eff. 7-1-90; r. and recr. Register, May, 1995, No. 473, eff. 6-1-95: CR 21-085; am. (1) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 2.105 Notice by taxpayer of federal audit adjustments and amended returns {#sec-tax-2.105 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.105}

(1) Purpose. This section clarifies the time periods for a taxpayer to report federal audit adjustments and federal and other state amended returns for Wisconsin franchise or income tax and economic development surcharge purposes, and the result if a taxpayer fails to report the adjustments or amended returns.

(2) Definition. In this section, “taxpayer” includes individuals, estates, trusts, partnerships, limited liability companies and corporations. For combined groups, “taxpayer” includes the designated agent of a combined group under s. 71.255 (1) (a), Stats., if any member of the combined group was the subject of a federal audit adjustment or amended return.

(3) General.

(a) Under ss. 71.76 and 77.96 (4), Stats., a taxpayer meeting the conditions described in sub. (4) shall report to the department changes or corrections made to a tax return by the internal revenue service, or file with the department amended Wisconsin franchise or income tax returns or amended economic development surcharge returns reporting any information contained in amended returns filed with the internal revenue service, or with another state if there has been allowed a credit against Wisconsin taxes for taxes paid to that state. If such changes, corrections, or amended returns relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall report such changes or corrections or file amended combined returns.

Note: See s. Tax 2.65 for additional rules relating to the designated agent of a combined group.

(b) Except as provided in sub. (5), the department may give notice to the taxpayer of assessment or refund within 90 days of the date the department receives the taxpayer’s report of federal adjustments or amended return described in par. (a). The 90-day limitation does not apply to instances where the taxpayer files an incorrect franchise or income tax return or economic development surcharge return with intent to defeat or evade the franchise or income tax or economic development surcharge assessment.

(4) Taxpayer required to report.

(a) Federal adjustments. If the federal net income tax payable, a credit claimed or carried forward, a net operating loss carried forward or a capital loss carried forward on a taxpayer’s federal tax return is adjusted by the internal revenue service in a way which affects the amount of Wisconsin net franchise or income tax or economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward, the taxpayer shall report the adjustments to the department within 90 days after they become final. If such adjustments relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall report such adjustments. The following shall also apply with respect to federal adjustments:

‘Finality of federal adjustments.’ For the purpose of determining when the federal adjustments become final, the following shall be deemed a final determination:

a. Payment of any additional tax, not the subject of any other final determination described in subd. 1. b., c., d. or e.

b. An agreement entered into with the internal revenue service waiving restrictions on the assessment and collection of a deficiency and accepting an overassessment. Federal form 870, “Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment,” or 870-AD, “Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment,” are the forms prescribed for this purpose.

c. Expiration of the 90-day time period, or the 150-day period in the case of a notice addressed to a person outside the United States, within which a petition for redetermination may be filed with the United States tax court with respect to a statutory notice of deficiency issued by the internal revenue service, if a petition is not filed with that court within that time.

d. A closing agreement entered into with the internal revenue service under section 7121 of the Internal Revenue Code.

e. A decision by the United States tax court or a judgment, decree or other order by a court of competent jurisdiction which has become final, or the date the court approves a voluntary agreement stipulating disposition of the case. A court of competent jurisdiction includes a United States district court, a court of appeals, a court of claims or the United States supreme court.

f. For combined groups, the “finality of federal adjustments” is determined on the basis of that particular combined group member the adjustments of which ultimately affect the amount of Wisconsin net franchise or income tax or economic development surcharge payable, the amount of a Wisconsin credit, credit carryforward, net business loss, net business loss carryforward, capital loss or capital loss carried forward of the combined group to which that member belongs.

Note: Decisions of the U.S. tax court and other courts ordinarily become final as follows:

a. If no appeal is made of a U.S. tax court decision, it becomes final upon expiration of a period of 90 days after the decision is entered. Decisions in unappealable cases involving deficiencies of $50,000 or less heard by the U.S. tax court under section 7463 of the Internal Revenue Code become final 90 days after they are entered.

b. Appealed decisions of the U.S. tax court become final as set forth in section 7481 of the Internal Revenue Code.

c. A decision of a U.S. district court normally becomes final if not appealed to the U.S. court of appeals within 60 days of the judgment, decree or order.

d. A decision of the U.S. court of claims or the U.S. court of appeals normally becomes final unless an appeal or a petition for certiorari is filed with the U.S. supreme court within 90 days of the judgment or decree.

e. A decision of the U.S. supreme court is normally final upon the expiration of a period of 25 days from the date the decision is rendered, if a motion for reconsideration or rehearing is not filed within that time.

‘Information to report to department.’ The taxpayer shall submit to the department a copy of the final federal audit report issued by the internal revenue service together with any other documents or schedules necessary to inform the department of the adjustments as finally determined. The report shall be included with an amended Wisconsin return if a Wisconsin refund is being claimed and may be, but is not required to be, included with an amended return if additional Wisconsin tax or economic development surcharge is due or if there is no change in tax or economic development surcharge.
‘Agreement with adjustments.’ A taxpayer shall be deemed to concede the accuracy of the federal adjustments for Wisconsin franchise or income tax or economic development surcharge purposes unless a statement is included with the report to the department stating why the taxpayer believes the adjustments are incorrect.

(b) Amended returns. If a taxpayer files an amended federal tax return and the changes on the amended federal tax return affect the amount of Wisconsin net franchise or income tax or economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward, the taxpayer shall file with the department an amended Wisconsin return reflecting the same changes. A taxpayer filing an amended return with another state shall file an amended Wisconsin return if a credit has been allowed against Wisconsin taxes for taxes paid to that state and if the changes affect the amount of Wisconsin net franchise or income tax or economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward. If the changes described in this paragraph relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall file an amended combined return. Changes to a net operating or business loss carryforward may not be made unless the change to the incurred loss was computed on a return that was filed within 4 years of the unextended due date for filing the original return for the taxable year in which the loss was incurred. Changes to a net operating or business loss carry-back may not be made unless the change to the loss is claimed within 4 years of the unextended due date for filing the original return for the taxable year to which the loss is carried back. The amended Wisconsin return shall be filed within 90 days after the date the amended return is filed with the internal revenue service or other state.

(c) Where and how to submit report or amended return. An amended Wisconsin return or a taxpayer’s report of federal adjustments submitted with an amended Wisconsin return shall be filed in accordance with the provisions of s. Tax 2.12 (5) and (6). A taxpayer’s report of federal adjustments submitted to the department without an amended return shall be identified as reflecting federal adjustments made by the internal revenue service and shall be mailed to Wisconsin Department of Revenue, Audit Bureau, P.O. Box 8906, Madison, WI 53708-8906. The report submitted without an amended return may not be made a part of or attached to any Wisconsin tax return.

(5) Assessments and refunds by department. If a taxpayer reports federal adjustments or files an amended Wisconsin return with the department within 90 days after the adjustments become final or after an amended return is filed with the internal revenue service or another state, the department may make an assessment or issue a refund relating to the report or amended return as follows:

(a) Assessments. Under s. 71.77 (2), Stats., the department may make an assessment within 4 years from the date the original Wisconsin franchise or income tax return was filed. However, under s. 71.77 (7) (a), Stats., if the taxpayer reported less than 75% of the correct net income and the additional tax for the year exceeds $200 for a joint return, or $100 for a return other than a joint return, an assessment may be made within 6 years after the return was filed. If an assessment relates to a federal adjustment that affects a combined report, the department may issue such assessment to either the corporation whose income was adjusted for federal purposes or to the designated agent of the combined group, or both.

Note: See s. Tax 2.67 (4) for rules relating to the statute of limitations as applied to combined returns.

(b) Refunds. Under s. 71.75 (2), Stats., the department may issue a refund if an amended return is filed within 4 years of the unextended date the original Wisconsin franchise or income tax return was due.

An assessment may be made later than the 4- and 6-year periods provided in par. (a) if notice of the assessment is given to the taxpayer within 90 days of the date the department receives a timely report of federal adjustments or an amended Wisconsin return. However, the assessment made after the expiration of the 4- and 6-year periods shall only relate to those federal adjustments or the changes on the amended Wisconsin return.
If a taxpayer reports federal adjustments to the department after the expiration of the 4-year period for filing an amended Wisconsin return as described in par. (b), a refund based upon federal adjustments reducing the taxpayer’s federal tax liability, which are applicable to the taxpayer’s Wisconsin tax or economic development surcharge liability, may still be made if notice of the refund is given to the taxpayer within 90 days of the date the department received a timely report of the federal adjustments.
The 90-day period for the department’s giving notice of an assessment or issuing a refund may be extended if a written agreement is entered into by the department and the taxpayer prior to the expiration of the 90 days.
If federal adjustments or changes on an amended return filed with the internal revenue service or another state pertain to a year which has been previously field audited by the department and the field audit has been finalized, an assessment or refund nevertheless may be made. However, the assessment or refund shall only relate to those federal adjustments or the changes on the amended return. Notice of the assessment or refund shall be given to the taxpayer within 90 days of the date the department received the report of federal adjustments or an amended Wisconsin return from the taxpayer.

Examples: 1) Federal adjustments were made to an individual’s 2013 calendar- year basis federal income tax return; the adjustments became final on June 1, 2018. On August 15, 2018, within 90 days after the adjustments became final, the department received the taxpayer’s report of the adjustments. Although the 4-year period provided by s. 71.77 (2), Stats., for making adjustments to the 2013 Wisconsin return expired on April 15, 2018, the department had until November 13, 2018, 90 days after the date the department received a report of the adjustments, to give notice of an assessment to the taxpayer.

2) An individual filed an amended 2015 calendar-year basis New York return on June 1, 2016. An amended Wisconsin return, reflecting the changes on the amended New York return, was filed with the department on July 12, 2016. Under the 4-year assessment period in s. 71.77 (2), Stats., the department has 4 years from April 15, 2016, the due date of the 2015 return, in which to notify the taxpayer of any assessment relating to the changes on the amended New York return.

(6) Taxpayer’s failure to report federal adjustments or file amended Wisconsin return; adjustments and amended returns relating to taxable year 1987 and thereafter. If a taxpayer fails to report federal adjustments or the filing of an amended federal or other state return, relating to the taxable year 1987 and thereafter, within the 90-day period described in sub. (3) (b), the department may assess additional Wisconsin franchise or income tax or economic development surcharge relating to the adjustments or amended return within 4 years after discovery by the department.

Example: An individual taxpayer filed a 2015 calendar-year basis Wisconsin income tax return on April 15, 2016. The internal revenue service made adjustments to the 2015 federal income tax return which the taxpayer did not report to the department within 90 days after the adjustments became final. The internal revenue service reports these adjustments to the department under the exchange of information agreement between the two agencies on May 1, 2018. The department may issue an assessment for the adjustments any time on or before May 1, 2022.

Note: Section 71.76, 1989 Stats., was amended by 1991 Wis. Act 39, effective for federal changes or corrections to a federal income tax return that became final on or after August 15, 1991, and for amended federal and other state returns filed on or after August 15, 1991. Under the statute in effect immediately prior to the enactment of 1991 Wis. Act 39, a taxpayer was required to report internal revenue service adjustments to taxable income that affected the income reportable or tax payable to Wisconsin, and to file an amended Wisconsin return if information contained on an amended federal or other state tax return affected income reportable or tax payable to Wisconsin.

Note: Section Tax 2.105 interprets ss. 71.255 (1) and (7), 71.75 (2), 71.76, 71.77 (2) and (7) and 77.96 (4), Stats.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; correction in (3) (a) 1. a. made under s. 13.93 (2m) (b) 4., Stats., Register, July, 1987, No. 379; r. (2), (4) and (5) (d); renum. (1), (3), (5) (a) to (c) and (6) to be (2), (4), (6) and (7) and am. (2), (4) (a) 1.b., c. and e, (b), (6) (a) to (c) and (7), cr. (1), (3) and (5), Register, February, 1990, No. 410, eff. 3-1-90; r. and recr. Register, May, 1996, No. 485, eff. 6-1-96; CR 10-095: am. (1), (2), (3), (4) (a) (intro.), 2., 3., (b), (5) (a), (c) 2., (6) (a), cr. (4) (a) 1. f. Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (1), (3) (a), (b), (4) (a) (intro.), 1. f., 2., 3., (b), (5) (c) 2., (6) (a) Register July 2012 No. 679, eff. 8-1-12; CR 19-141: am. (4) (b) Register September 2020 No. 777, eff. 10-1-20; CR 21-085: am. (5) (c) 4. (Examples), (6) (a) (Example), r. (6) (b) Register August 2022 No. 800, eff. 9-1-22; renum. (6) (a) to (6) under s. 13.92 (4) (b) 1., Stats., Register August 2022 No. 800.

Wis. Admin. Code § Tax 2.11 Credit for sales and use tax paid on fuel and electricity {#sec-tax-2.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.11}

(1) Definitions. In this section:

(a) Fuel and electricity “consumed in manufacturing” means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process. Fuel and electricity are not “consumed in manufacturing” if they are used in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development, receiving, storage, sales, distribution, warehousing, shipping, advertising or administrative department activities. However, fuel and electricity used directly in manufacturing steam which is used by the manufacturer in further manufacturing or in heating a facility, or both, is consumed in manufacturing.

(b) “Manufacturing” has the meaning specified in s. 77.51 (7h) (a), Stats., by virtue of s. 71.28 (3) (a) 1., Stats.

(d) “Sales and use tax under ch. 77 paid by the corporation” has the meaning specified in s. 71.28 (3) (a) 2., Stats.

(2) Credit allowable.

(a) Under s. 71.28 (3), Stats., a corporation may reduce its income or franchise tax liability for the year by an amount equal to the Wisconsin state and county sales and use taxes it has paid on fuel and electricity consumed in manufacturing personal property within Wisconsin.

(b) If separate gas or electric meters are not used to accurately measure the fuel and electricity consumed in manufacturing in Wisconsin, a reasonable allocation is necessary.

(c) The credit is allowable for all Wisconsin and Wisconsin county sales and use taxes paid during the taxable year on fuel or electricity destined for manufacturing purposes, regardless of when the fuel or electricity was or is to be consumed.

Note: Refer to Streets and Roads Construction Corporation v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-6239, July 28, 1981, and Fort Howard Paper Company v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-8266, November 1, 1983.

(3) Carry forward of unused credit.

(a) If a corporation is entitled to a sales and use tax credit under s. 71.28 (3), Stats., the credit, to the extent not offset by the tax liability of the same year, may be offset against the tax liability of the subsequent year and each succeeding year up to a total of 15 years until the credit has been completely offset.

Note: The carry forward of the sales tax credit was increased from 5 to 15 years by 1985 Wis. Act 29, and the 15 year carry forward first applies to credits carried forward from the 1980 taxable year.

(b) The sales tax credit shall first be offset against the income or franchise tax liability computed for the tax year before an unused credit from a prior year may be applied.

(4) Credit includable in net income. Under s. 71.26 (2), Stats., the credit computed for sales and use taxes paid on fuel and electricity consumed in manufacturing under s. 71.28 (3), Stats., shall be included in net income for the tax year. Except for tax-option corporations, the entire credit computed for the tax year is includable in net income, even though the credit is not entirely used or no income or franchise tax liability exists. Under s. 71.34 (1k) (e), Stats., tax-option corporations shall only include in net income the amount of credit computed under s. 71.28 (3), Stats., and used to offset the income or franchise tax liability of the current year.

Note: Section Tax 2.11 interprets ss. 71.26 (2), 71.28 (3) and 71.34 (1k) (e), Stats.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (2) (a) r. (1) (d), (2) (b) and (3) (a), renum. (3) (b) and (c) to be (3) (a) and (b), cr. (4), Register, September, 1983, No. 333, eff. 10-1-83; am. (1) (intro.) and (3), renum. (1) (a) to (c) to be (1) (d), (b) and (a) and am., cr. (1) (c), r. and recr. (2) and (4), Register, February, 1990, No. 410, eff. 3-1-90; corrections in (1) (b) and (4) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652.

Wis. Admin. Code § Tax 2.12 Claims for refund and other amended returns {#sec-tax-2.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.12}

(1) Scope. This section applies to amended Wisconsin franchise or income tax returns, including amended combined returns, amended partnership returns, amended economic development surcharge returns and amended farmland preservation credit and homestead credit claims.

(2) Definitions. In this section:

(a) “Claim for refund” means an amended Wisconsin return or credit claim as described in sub. (1), on which a refund is requested.

(b) “Timely filed,” in the case of an amended return or credit claim, means either of the following:

If the amended return or credit claim is mailed, it is mailed in a properly addressed envelope with postage prepaid and is received by the department, or is received at the destination that the department or the department of administration prescribes, within 5 business days after the last day of the statutory limitation period or extended limitation period.
If the amended return or credit claim is not mailed, it is in the possession of the department, or is received at the destination that the department or the department of administration prescribes, prior to the expiration of the statutory limitation period or extended limitation period.

(3) General.

(a) The department shall accept amended returns and credit claims to correct previously filed original, other amended or adjusted Wisconsin franchise or income tax returns, partnership returns, economic development surcharge returns or farmland preservation credit or homestead credit claims.

(b) A refund of taxes or credits under ch. 71, Stats., or economic development surcharge under s. 77.96 (4), Stats., may be claimed only by filing an amended return or credit claim, on a form and in the manner described in subs. (5) and (6).

(c) An amended Wisconsin return shall be filed with the department if either an amended federal return is filed or an amended return is filed with another state for which a credit for taxes has been allowed against Wisconsin taxes, and the changes to the amended federal or other state return affect the amount of Wisconsin net franchise or income tax or economic development surcharge payable, a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward. Changes to a net operating or business loss carryforward may not be made unless the change to the incurred loss was computed on a return that was filed within 4 years of the unextended due date for filing the original return for the taxable year in which the loss was incurred. Changes to a net operating or business loss carry-back may not be made unless the change to the loss is claimed within 4 years of the unextended due date for filing the original return for the taxable year to which the loss is carried back.

(d) An amended Wisconsin return filed to report internal revenue service adjustments as provided in s. Tax 2.105 (4) (a) shall include a copy of the final federal audit report.

(e) An amended return or credit claim does not begin or extend the statute of limitation periods for assessing additional tax or economic development surcharge or claiming a refund.

(4) Timely filing.

(a) Except as provided in par. (b), if an amended return or credit claim shows a refund, it shall be filed within 4 years of the unextended due date of the original return.

(b) The 4-year filing limitation in par. (a) does not apply in the following situations:

Except as provided in subds. 3. and 4., a claim for refund may not be filed for any year covered by a field audit that resulted in a refund or no change in the tax owed, or in an assessment that has become final under s. 71.88 (1) (a) or (2) (a), 71.89 (2), 73.01 or 73.015, Stats., provided the department advises the taxpayer that the field audit is final unless the taxpayer appeals the result.
Except as provided in subds. 3. and 4., a claim for refund may not be filed for any item of income or deduction assessed as a result of an office audit, provided the assessment has become final under s. 71.88 (1) (a) or (2) (a), 71.89 (2), 73.01 or 73.015, Stats. Section 71.88 (1) (a), Stats., provides that a taxpayer may file a petition for redetermination within 60 days of receipt of a notice of additional assessment, refund or denial of refund. If a taxpayer does not file a petition for redetermination of a notice of assessment, refund or refund denial, the adjustments made in the notice are final and conclusive. The taxpayer is not entitled to a refund on any subsequent claim for refund based on the same adjustments as those in the notice of assessment, refund or denial of refund.

Examples: 1) Taxpayer A files an amended 2016 return to claim additional business expenses. The department allows only a portion of the claimed additional expenses, based on a difference in interpretation of the law. A notice of refund is issued March 1, 2019. The taxpayer does not file a petition for redetermination. In December 2019, the taxpayer files another amended return claiming the same additional business deductions as those disallowed in the prior notice of refund. The taxpayer is not entitled to a refund on the claim for refund. The March 1, 2019, notice of refund is final.

2) Taxpayer B files an amended 2016 return to claim additional business expenses. The department disallows a portion of the claimed additional expenses, due to lack of substantiation of the expenses as requested in a letter to the taxpayer. A notice of refund is issued March 1, 2019. The taxpayer does not file a petition for redetermination. In December 2019, the taxpayer submits adequate substantiation to support the full deduction. The deduction is not allowed and no additional refund will be issued. Since no petition for redetermination was filed for the March 1, 2019, notice of refund, that notice is final.

3) Taxpayer C files a timely 2017 return claiming a refund of earned income credit and excess income tax withheld. During the processing of the return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. The taxpayer does not respond to the request for additional information. A notice of refund is issued in July 2018, to refund the excess income tax withheld only. The taxpayer does not file a petition for redetermination. The taxpayer files a timely 2018 return claiming a refund of earned income credit and excess income tax withheld. During the processing of this return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. This letter requests the same information that was requested for the processing of the 2017 return. The taxpayer submits the additional information needed for both the 2017 and 2018 returns. Since the taxpayer did not submit a petition for redetermination for the 2017 notice of refund, that notice is final. A notice of refund for the earned income credit is issued for 2018 only.

a. For taxable years beginning on or after January 1, 2000, a claim for refund for each year for which an amount due is calculated as a result of items adjusted in an office audit or field audit assessment or refund may be filed within 4 years of the date of the adjustment notice, provided no petition for redetermination was filed and, if the adjustment notice was an assessment, the amount due was paid. No refund claim may be filed under this subd. 3. a. for any year that resulted in a refund or no change in the amount owed.

Examples: 1) Taxpayer D files a timely 2015 return. The department completes an office audit of this return by issuing a notice of refund dated March 30, 2020. The notice of refund allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.

2) Taxpayer E files timely 2015 and 2016 returns. The department completes an audit of the returns and issues a notice of refund dated March 30, 2020. The notice of refund allows an additional itemized deduction credit for each year but also disallows a portion of the claimed business expenses for each year, with the net result being a refund for each year. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.

3) Taxpayer F files a timely 2010 return on April 15, 2011. The department completes an office audit of this return by issuing a notice of additional tax due dated March 30, 2015. The notice of additional tax due allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses.

4) Taxpayer G files timely 2010 and 2011 returns. The department completes an office audit of these returns by issuing a notice of refund dated March 30, 2015. The notice of refund allows an additional itemized deduction credit resulting in a refund for 2010 and disallows a portion of the claimed business expenses for an assessment for 2011, with the net result being a refund for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses for the year 2011.

5) Taxpayer H files timely 2010 and 2011 returns. The department completes an office audit of these returns by issuing a notice of additional tax due dated March 30, 2015. The notice of additional tax due allows an additional itemized deduction credit resulting in a refund for 2010 and disallows a portion of the claimed business expenses resulting in an assessment for 2011, with the net result being an assessment for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses for the year 2011.

b. For taxable years beginning prior to January 1, 2000, a claim for refund for each year for which an amount due is calculated as a result of items adjusted in an office audit or field audit net assessment may be filed within 2 years of the date of the assessment notice, provided no petition for redetermination was filed and the amount due was paid. No refund claim may be filed under this subd. 3. b. for any year that resulted in a refund or no change in the amount owed or, in the case of a multiple year audit resulting in a net refund, for any year for which an amount due is calculated.

Examples: 1) Taxpayer I files a timely 1999 return on April 15, 2000. The department completes an office audit of this return by issuing a notice of refund dated March 30, 2004. The notice of refund allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.

2) Taxpayer J files timely 1998 and 1999 returns. The department completes an office audit of these returns by issuing a notice of refund dated March 30, 2003. The notice of refund allows an additional itemized deduction credit resulting in a refund for 1998 and disallows a portion of the claimed business expenses for an assessment for 1999, with the net result being a refund for the two years combined. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for 1998 or 1999.

A claim for refund of an overpayment attributable to a capital loss carryback may be filed by a corporation, or designated agent of a combined group, within 4 years after the due date, or extended due date, for filing the return for the taxable year of the capital loss that is carried back.

Note: For combined groups, see s. Tax 2.61 (6) (c) for rules applicable to capital gains and losses.

If the limitation period for making an assessment or refund has been extended by written agreement between a taxpayer and the department, a claim for refund relating to the year or years covered by the extension agreement may be filed during the extension period.

Note: For combined groups, refer to s. Tax 2.65 for rules applicable to the designated agent of a combined group.

An amended Wisconsin return filed under the provisions of sub. (3) (c) shall be filed with the department within 90 days after the date the amended federal or other state return is filed.
An amended Wisconsin return filed under the provisions of sub. (3) (d) shall be filed with the department within 90 days of the date on which the federal audit adjustments become final.
An amended Wisconsin return filed under the provisions of s. 71.30 (4), Stats., to claim a reduction of income resulting from a renegotiation or price redetermination of a defense contract or subcontract shall be filed within one year of the final determination.

Note: Refer to s. Tax 2.105 for additional information regarding amended Wisconsin returns required as a result of filing amended federal or other state returns, or reports required as a result of federal audit adjustments made by the internal revenue service.

(5) Forms.

(a) Beginning on or after January 1, 2015, except as provided in par. (c), a claim for refund shall be filed on the same form as the original form, in the manner prescribed in sub. (6).

(c) The department may prescribe a special form for taxpayers to use in claiming a refund, to address a specific tax issue. In this situation, the special form may be used in lieu of the amended form prescribed in par. (a).

Example: Wisconsin form 1X-R was developed in 1993 to address the issue of the flow-through of interest exempt from Wisconsin taxes received from a qualified retirement plan.

(d) An amended Wisconsin return or credit claim filed for a purpose other than to request a refund is not required to be filed on a specific form.

(6) Manner.

(a) An amended return or credit claim shall be in writing, indicate the reporting period for which the change was made and contain a statement setting forth the specific grounds upon which the amended form is based.

(b) An amended return or credit claim other than form 1X shall be identified as an amended form by checking the “amended return” box if one is provided on the form or by marking “AMENDED” across the top of the first page of the amended form.

(d) An amended return or credit claim shall be mailed to the department at the address specified on the form or in its instructions.

Note: Subchapter VII of ch. 77, Stats., was amended by 1999 Wis. Act 9 to create a recycling surcharge effective for taxable years beginning on or after January 1, 2000, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. For taxable years ending before April 1, 1999, subch. VII of ch. 77, Stats., provided for a temporary recycling surcharge; the term “economic development surcharge” as used in this section refers to the “temporary recycling surcharge” for those years and to the “recycling surcharge” prior to July 1, 2011.

Note: Section Tax 2.12 interprets ss. 71.255 (1), (4), and (7), 71.30 (4), 71.738 (2m), 71.74, 71.75, 71.76, 71.77, 71.80 (18) and 77.96 (4), Stats.

Cross Reference: See s. Tax 2.67 (2) (e) for rules relating to amended returns for combined groups.

History

Cr. Register, August, 1976, No. 248, eff. 9-1-76; am. (1) (a), Register, September, 1983, No. 333, eff. 10-1-83; am, (1) (a) and (b), r. and recr. (1) (c) and (2), Register, February, 1990, No. 410, eff. 3-1-90; r. and recr. Register, May, 1996, No. 485, eff. 6-1-96; CR 02-033:am. (1), (3) (a), (b), (c) and (e), (4) (b) 1., 2., 4., 5., and (6) (b) to (d), r. and recr. (2), (4) (b) 3., and (5) (a), renum. and am. (5) (b) to be (5) (c), cr. (5) (b) and (d), Register October 2002 No. 562, eff. 11-1-02; CR 10-095: am. (1), (4) (b) 4. Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (1), (3) (a) to (c), (e) Register July 2012 No. 679, eff. 8-1-12; CR 17-019: am. (5) (a), (b) Register June 2018 No. 750 eff. 7-1-18; CR 19-141: am. (3) (c) Register September 2020 No. 777, eff. 10-1-20; CR 21-085: am (4) (b) 2. (Examples), 3. a. (Examples), (5) (a), r. (5) (b), am. (5) (c) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 2.30 Property located outside Wisconsin — depreciation and sale {#sec-tax-2.30 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.30}

(1) Scope. This section applies only with respect to resident individuals, estates, and trusts.

(2) Definition. In this section, “Internal Revenue Code” means the Internal Revenue Code in effect for the taxable year specified in s. 71.01 (6), Stats.

Example: For taxable year 2017, “Internal Revenue Code” means the Internal Revenue Code in effect on December 31, 2016.

(3) Resident individuals, estates, and trusts. Income or loss derived from property and business located outside Wisconsin by resident individuals, estates, and trusts, is taxable or deductible as appropriate under ch. 71, Stats. Except as provided in sub. (4), the basis for depreciation and for determining gain or loss on disposition of property for these taxpayers is the same as the basis determined under the Internal Revenue Code, whether the property was acquired before becoming or while a resident of this state.

(4) Exceptions.

(a) When an individual acquires a new residence, the adjusted basis of the new residence is not reduced for nonrecognized gain from the sale or exchange of an old residence located outside Wisconsin if:

The sale or exchange of the old residence occurred in taxable year 1975 or thereafter when the individual was not a resident of Wisconsin; or
The sale or exchange of the old residence occurred before taxable year 1975, whether the individual was a resident or not at the time of the sale or exchange.

(b) When an individual sells or exchanges a principal residence located outside Wisconsin and the nonrecognition of gain provisions do not apply, the adjusted basis of the residence sold or exchanged is not reduced for nonrecognized gain from any previous sale or exchange of a principal residence located outside Wisconsin if:

The previous sale or exchange occurred in taxable year 1975 or thereafter when the individual was not a resident of Wisconsin; or
The previous sale or exchange occurred before taxable year 1975, whether the individual was a resident or not at the time of the sale or exchange.

Example: A taxpayer becomes a Wisconsin resident on July 1, 1988. Prior to becoming a Wisconsin resident the taxpayer had owned several different homes. Each time a new home was acquired, the federal nonrecognition of gain provisions applied with respect to the gain realized from the sale of the previous home. Upon becoming a Wisconsin resident, the taxpayer owned a home in Missouri with a federal adjusted basis of $65,000 ($95,000 cost, less $30,000 of gains postponed from prior sales). The Missouri home was sold for $97,000 in August 1988. The taxpayer decides not to purchase a new residence. The Wisconsin adjusted basis of the Missouri home is $95,000.

(c) For residential real property and certain agricultural real property placed in service during taxable year 1986, depreciation and gain or loss on disposition of the property shall be computed under the Internal Revenue Code in effect on December 31, 1980 unless:

The property is placed in service out-of-state by a taxpayer during taxable year 1986 before the taxpayer becomes a Wisconsin resident. In this case, the property’s adjusted basis and depreciation are the same as the amounts allowable for federal tax purposes.

Example: A taxpayer becomes a Wisconsin resident on January 1, 1987. Prior to that date, the taxpayer is an Illinois resident. On July 1, 1986, the taxpayer purchases and places in service residential real property located in Illinois. On the taxpayer’s 1987 Wisconsin return, the taxpayer’s adjusted basis and depreciation on this property will be the same as the amounts shown on the taxpayer’s 1987 federal return. The taxpayer does not have to recompute the basis of the property and depreciate it using one of the methods permitted under the December 31, 1980 Code.

The property located out-of-state is acquired in a transaction occurring in taxable year 1986 or thereafter where the basis of the property in the hands of the transferee is the same as the adjusted basis of the property in the hands of the transferor. The adjusted basis of the property on the date of the transfer is the same as the federal adjusted basis.

Example: A taxpayer is a Wisconsin resident. The taxpayer receives by gift on January 1, 1986, residential real property located in Illinois. The adjusted basis of the property to the donor, transferor, is $200,000. In acquiring the property by gift, the taxpayer, transferee, receives the same adjusted basis in the property as the transferor. The Wisconsin adjusted basis will be the federal adjusted basis on January 1, 1986.

Note: In the case of Wisconsin Department of Revenue vs. Romain A. Howick, 100 Wis. 2d 274 (1981), the Wisconsin supreme court held that for the purpose of determining a loss on a sale, the basis of property located outside Wisconsin acquired before the owner became a Wisconsin resident is the basis determined under the Internal Revenue Code. In this section the same principle is applied to gains realized on the disposition of such property. This principle was codified into s. 71.05 (1) (m), Stats., by 1985 Wis. Act 261, effective for the earliest taxable year in respect to which additional assessments or refunds may be made. Section 71.05 (1) (n) and (o), Stats., was also created by 1985 Wis. Act 261 to provide exceptions with respect to a principal residence effective for the same period of time. Section 71.05 (l), (m), (n), and (o), Stats., was renumbered s. 71.05 (12) (a), (b), and (c), Stats., by 1987 Wis. Act 312.

Note: Section 71.07 (1), Stats., was amended by Chapter 39, Laws of 1975, effective with the 1975 taxable year. Prior to the 1975 taxable year, income or loss derived from real property or tangible personal property followed the situs of the property from which derived. Section 71.07 (1), Stats., was renumbered ss. 71.04 (1) (a) and 71.362 (1), Stats., by 1987 Wis. Act 312.

Note: Section Tax 2.30 interprets ss. 71.05 (12) (a), (b) and (c), (15), (16), (17) and (18) and 71.04 (1) (a), Stats.)

History

Cr. Register, April, 1978, No. 268, eff. 5-1-78; r. and recr. (3), Register, July, 1982, No. 319, eff. 8-1-82; r. (2), renum. (1) to be (2) and am., cr. (1) and (4), am. (3), Register, June, 1990, No. 414, eff. 7-1-90; CR 19-141: am. (2) (Example) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.31 Compensation received by nonresident members of professional athletic teams {#sec-tax-2.31 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.31}

(1) Scope. This section apportions and allocates to Wisconsin, in a fair and equitable manner, a nonresident employee’s total compensation for services rendered in Wisconsin as a member of a professional athletic team. The section does not apply to employees domiciled in a state with which Wisconsin has a reciprocity agreement.

Note: Wisconsin has reciprocity agreements with Illinois, Indiana, Kentucky, and Michigan.

(2) Definitions. In this section:

(a) Except as provided in subds. 1. and 2., “duty days” means all days during the taxable year from the beginning of a professional athletic team’s official pre-season training period through the last game in which the team competes or is scheduled to compete and days on which a member of a professional athletic team renders a service for a team on a date outside this time period. Rendering a service includes conducting training and rehabilitation activities at the facilities of the team. Included within duty days shall be game days, practice days, days spent at team meetings, promotional caravans and preseason training camps, days spent participating in instructional leagues, days spent at special games such as the “Pro Bowl” or an “all-star” game and days served with the team through all post-season games in which the team competes or is scheduled to compete. The following exceptions to this definition apply:

Duty days for any person who joins a professional athletic team after the beginning of the team’s official pre-season training period shall begin on the day the person joins the team. Conversely, duty days for any person who leaves a professional athletic team before the last scheduled game shall end on the day the person leaves the team. Where a person switches professional athletic teams during a taxable year, separate duty day calculations shall be made for the periods the person was with each team.
Days for which a member of a professional athletic team is not compensated and is not rendering services for the team in any manner, including days when the member has been suspended without pay and prohibited from performing any services for the team, may not be treated as duty days.

(b) “Member of a professional athletic team” includes employees who are active players, players on the disabled list or any other persons such as coaches, managers and trainers, and who are required to and do travel with and perform services on behalf of a professional athletic team on a regular basis.

(c) “Professional athletic team” includes, but is not limited to, any professional baseball, basketball, football, hockey or soccer team.

(d) “Total compensation for services rendered as a member of a professional athletic team” means the total compensation received during the taxable year by the member for services rendered from the beginning of the official pre-season training period through the last game in which the team competes or is scheduled to compete during that taxable year, and during the taxable year on a date outside this time period. The compensation includes, but is not limited to, salaries, wages, bonuses as described in sub. (3) (c) and any other type of compensation paid during the taxable year to a member of a professional athletic team for services performed in that year. The compensation may not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments or any other payments not related to services rendered for the team.

Examples: Services rendered on a date that does not fall within the regular season include participation in:

1) Instructional leagues.

2) The “Pro Bowl.”

3) Promotional caravans.

(3) Method of allocation.

(a) General. The allocation to Wisconsin of income earned by a nonresident employee as total compensation for services rendered as a member of a professional athletic team shall be made on the basis of a fraction, the numerator of which is the number of duty days spent within Wisconsin rendering services for the team in any manner during the taxable year and the denominator of which is the total number of duty days spent both within and outside Wisconsin during the taxable year.

(b) Duty days during the taxable year. Duty days shall be included in the fraction described in par. (a) for the taxable year in which they occur, including where a team’s official pre-season training period through the last game in which the team competes, or is scheduled to compete, occurs during more than one taxable year. The following additional provisions apply:

Days during which a member of a professional athletic team is on the disabled list, does not conduct rehabilitation activities at facilities of the team and is not otherwise rendering services for the team in Wisconsin, may not be considered duty days spent in Wisconsin. However, all days on the disabled list shall be included in the total duty days spent both within and outside Wisconsin.
Travel days that do not involve either a game, practice, team meeting, promotional caravan or other similar team event may not be considered duty days spent in Wisconsin but shall be considered in the total duty days spent both within and outside Wisconsin.

Performance bonuses earned as a result of play during the season, including bonuses paid for championship, playoff or “bowl” games played by a team or for selection to all-star league or other honorary positions.
Bonuses paid for signing a contract, unless all of the following conditions are met:

a. The payment of the signing bonus is not conditional upon the signee playing any games for the team or performing any subsequent services for the team, or even making the team.

b. The signing bonus is payable separately from the salary and any other compensation.

c. The signing bonus is nonrefundable.

Examples: The following examples illustrate the provisions of this subsection:

1) Player A, a member of a professional athletic team, is a nonresident of Wisconsin. Player A’s contract for the team requires A to report to the team’s training camp and to participate in all exhibition, regular season, and playoff games. Player A has a two-year contract which covers seasons that occur during taxable year 1/taxable year 2, and taxable year 2/taxable year 3. Player A’s contract provides that A receive $500,000 for the season which occurs during taxable year 1/taxable year 2, and $600,000 for the season which occurs during taxable year 2/taxable year 3. Player A receives $550,000 from the contract during taxable year 2 ($250,000 for one-half the year 1/year 2 season and $300,000 for one-half the year 2/year 3 season). The portion of the compensation received by Player A for taxable year 2 which is allocable to Wisconsin is determined by multiplying the compensation Player A receives during the taxable year ($550,000) by a fraction, the numerator of which is the total number of duty days Player A spends rendering services for the team in Wisconsin during taxable year 2 (attributable to both the year 1/year 2 season and the year 2/year 3 season) and the denominator of which is the total number of Player A’s duty days spent both within and outside Wisconsin for the entire taxable year 2.

2) Player B, a member of a professional athletic team, is a nonresident of Wisconsin. During the season, B is injured and is unable to render services for B’s team. While B is undergoing medical treatment at a clinic, which is not a facility of the team but is located in Wisconsin, B’s team travels to Wisconsin for a game. The days B’s team spends in Wisconsin for practice, games, meetings, etc., while B is present at the clinic, are not considered duty days spent in Wisconsin for Player B for that taxable year, but those days are included within total duty days spent both within and outside Wisconsin.

3) Player C, a member of a professional athletic team, is a nonresident of Wisconsin. During the season, C is injured and is unable to render services for C’s team. C performs rehabilitation exercises at the facilities of C’s team in Wisconsin as well as at personal facilities in Wisconsin. The days C performs rehabilitation exercises in the facilities of C’s team are considered duty days spent in Wisconsin for Player C for that taxable year. However, days Player C spends at personal facilities in Wisconsin are not considered duty days spent in Wisconsin for Player C for that taxable year, but those days are included within total duty days spent both within and outside Wisconsin.

4) Player D, a member of a professional athletic team, is a nonresident of Wisconsin. During the season, D travels to Wisconsin to participate in the annual all-star game as a representative of D’s team. The days D spends in Wisconsin for practice, the game, meetings, etc., are considered to be duty days spent in Wisconsin for Player D for that taxable year, as well as included within total duty days spent both within and outside Wisconsin.

5) Assume the same facts as in example 4, except that Player D is not participating in the all-star game and is not rendering services for D’s team in any manner. Player D is instead traveling to and attending the game solely as a spectator. The days Player D spends in Wisconsin for the game are not considered to be duty days spent in Wisconsin. However, those days are included within total duty days spent both within and outside Wisconsin.

6) Player E, a member of a professional athletic team, is a nonresident of Wisconsin. During the pre-season, E travels to Wisconsin to participate in a training camp which E’s team conducts in Wisconsin. E performs no further services in Wisconsin. E’s team does not play any regular season or playoff games in Wisconsin. The days E spends in Wisconsin at the team’s training camp are considered to be duty days spent in Wisconsin for Player E for that taxable year.

(4) Alternative methods of allocation. It is presumed that application of the provisions of this section will result in a fair and equitable apportionment of compensation received by nonresident members of professional athletic teams. Where it is demonstrated that the method provided under this section does not fairly and equitably apportion the compensation, the department may require the member of a professional athletic team to apportion and allocate the compensation under a method which the department prescribes, provided the prescribed method results in a fair and equitable apportionment. A nonresident member of a professional athletic team may submit a proposal for an alternative method to apportion compensation where the member demonstrates that the method provided under this section does not fairly and equitably apportion the compensation. The proposed method shall be fully explained on the member’s Wisconsin income tax return.

Note: Section Tax 2.31 interprets ss. 71.02 and 71.04 (1) (a) and (11), Stats.

History

Cr. Register, May, 1996, No. 485, eff. 6-1-96.

Wis. Admin. Code § Tax 2.32 Economic development surcharge — gross receipts defined {#sec-tax-2.32 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.32}

(1) Purpose. This section defines “gross receipts” for purposes of the economic development surcharge under subch. VII of ch. 77, Stats.

Note: For taxable years beginning before January 1, 2013, an economic development surcharge is imposed on: (a) individuals, estates, trusts, statutory employees and partnerships that have at least $4,000,000 in gross receipts from a trade or business for the taxable year; (b) corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year; and (c) individuals, estates, trusts and partnerships engaged in farming that have at least $4,000,000 in gross receipts from farming for the taxable year. For taxable years beginning on or after January 1, 2013, an economic development surcharge is only imposed on corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year.

(2) Definitions. In subch. VII of ch. 77, Stats., and this section:

(a) “Gross receipts from all activities of corporations” means the sum of the following items reportable by corporations other than those listed in pars. (c) and (d):

Gross receipts or sales reportable on federal Form 1120, U. S. corporation income tax return.
Gross dividends reportable on federal Form 1120.
Gross interest income reportable on federal Form 1120.
Gross rents reportable on federal Form 1120.
Gross royalties reportable on federal Form 1120.
The gross sales price from the disposition of capital assets and business assets includable in computing the net gain or loss on federal Form 1120.
Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(b) “Gross receipts from all activities of exempt organizations taxable as corporations” means the sum of the following items reportable by those entities:

Gross receipts or sales reportable on federal Form 990-T, exempt organization business income tax return.
The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on federal Form 990-T.
Gross rents includable in computing rent income on federal Form 990-T.
Gross income from unrelated debt-financed property includable in computing unrelated debt-financed income on federal Form 990-T.
Gross interest, annuities, royalties and rents from controlled organizations includable in computing those items of income on federal Form 990-T.
Gross investment income includable in computing investment income on federal Form 990-T.
Gross exploited exempt activity income includable in computing that item of income on federal Form 990-T.
Gross advertising income includable in computing advertising income on federal Form 990-T.
Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(c) “Gross receipts from all activities of insurance companies” means the sum of the following items reportable by insurance companies:

Gross premiums earned reportable on Schedule A on federal Form 1120-PC, U. S. property and casualty insurance company income tax return.
Gross dividends reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.
Gross interest income reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.
Gross rents reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.
Gross royalties reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.
The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.
Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(d) “Gross receipts from all activities of tax-option (S) corporations” means the sum of the following items reportable by S corporations:

Gross receipts or sales reportable on federal Form 1120S, U. S. corporation income tax return for an S corporation.
Gross rents includable in computing the income from real estate and other rental activities reportable on Schedule K of federal Form 1120S.
Gross interest income reportable on Schedule K of federal Form 1120S.
Ordinary dividends reportable on Schedule K of federal Form 1120S.
Gross royalties includable in computing royalty income reportable on Schedule K of federal Form 1120S.
The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on federal Form 1120S and Schedule K of federal Form 1120S.
Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(3) Combined groups. The economic development surcharge applies to each member of a combined group separately. See s. Tax 2.82 for rules pertaining to the imposition and calculation of the economic development surcharge for combined group members.

Note: Section Tax 2.32 interprets subch. VII of ch. 77, Stats.

Note: Subchapter VII of ch. 77, Stats., was amended by 1999 Wis. Act 9 to replace the expired temporary recycling surcharge with a recycling surcharge, effective for taxable years beginning on or after January 1, 2000, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. This section applies to the economic development surcharge.

History

Cr. Register, August, 2000, No. 536, eff. 9-1-00; CR 10-095: am. (2) (g) (intro.), cr. (3) Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (title), (1), (2) (a) 1., (d), 1., 3. to 6., (e) 1., (g) 1., 2., (h) 1., (3) Register July 2012 No. 679, eff. 8-1-12; CR 14-005: r. (2) (e) to (h) Register August 2014 No. 704, eff. 9-1-14; CR 19-141: am. (2) (a) 1. to 6., (b) 1. to 8., (c) 1. to 6., (d) 1. to 6. Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.39 Apportionment method {#sec-tax-2.39 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.39}

(1) General. Except as provided in sub. (3), any person, except resident individuals, resident estates, and resident trusts, engaged in business both in and outside this state shall apportion its apportionable income using the statutory apportionment method as provided in s. 71.04 (4) or 71.25 (6), Stats., when the person’s business in this state is an integral part of a unitary business unless the department, in writing, allows reporting on a different basis. However, if a corporation is in a combined group, the corporation’s Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7) or (8), as applicable. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

Note: See s. Tax 2.62 for rules that apply to determining if a unitary business exists.

Note: A corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Apportionable income” has the meaning given in s. 71.25 (5) (a), Stats.

(ag) “Combined group” has the meaning given in s. 71.255 (1) (a), Stats.

(ar) “Commercial domicile” has the meaning given in s. 71.22 (1g), Stats.

(b) “Engaged in business in and outside this state” means having business activity which is sufficient to create nexus in this state and at least one other state or foreign country. For a combined group, the activities of the combined group are taken as a whole in determining if the combined group is engaged in business in and outside this state, as provided in s. 71.255 (5) (a), Stats.

(c) “Gross receipts” means gross sales less returns and allowances, plus service charges, freight, carrying charges or time-price differential charges incidental to the sales. Federal and state excise taxes, including sales and use taxes, shall be included as part of the receipts if the taxes are passed on to the purchaser or included as part of the selling price of the product.

(cm) “Intangible property” includes patents, copyrights, trademarks, trade names, service names, franchises, licenses, plans, specifications, blueprints, processes, techniques, formulas, designs, layouts, patterns, drawings, manuals, technical know-how, contracts, and customer lists. Intangible property does not include stocks, bonds, certificates of deposit, or other securities.

(d) “Nexus” means that a taxpayer’s business activity in a state or foreign country is of such a degree that the state or foreign country has jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer. For a combined group, the activities of the combined group are taken as a whole in determining if the combined group has nexus in a state or foreign country, as provided in s. 71.255 (5) (a), Stats. Nexus may exist even if a state or foreign country does not impose a tax on the taxpayer. Conversely, voluntary filing and paying income or franchise taxes when not required to do so, or paying a fee for qualification, organization or for the privilege of doing business in that state or foreign country does not, in itself, create nexus.

Note: Refer to s. Tax 2.82 for a description of factors which are recognized in determining whether nexus exists.

Examples: 1) State A imposes a corporation franchise tax measured by net income for the privilege of doing business in that state. Corporation X files a return and pays the $50 minimum tax, although it carries on no activities in State A. Corporation X does not have nexus in State A under these circumstances.

2) State B requires all nonresident corporations which qualify or register to do business in State B to pay to the secretary of state an annual license fee or tax for the privilege of doing business in the state regardless of whether the privilege is in fact exercised. The amount paid is determined according to the total authorized capital stock of the corporation; the rates are progressively higher by bracketed amounts. The statute sets a minimum fee of $50 and a maximum fee of $500. State B also imposes a corporation income tax. Nonresident Corporation Y is qualified to do business in State B and pays the required fee to the secretary of state but does not carry on any activities in State B. Corporation Y does not have nexus in State B under these circumstances.

3) State C requires all nonresident corporations qualified or registered to do business in State C to pay to the secretary of state an annual permit fee or tax for doing business in the state. The base of the fee or tax is the sum of (1) outstanding capital stock, and (2) surplus and undivided profits. The fee or tax base attributable to State C is determined by a three-factor apportionment formula. Nonresident Corporation Z, which operates a plant in State C, pays the required fee or tax to the secretary of state. Corporation Z by virtue of its operation of a plant in State C has nexus in State C.

4) State D imposes a corporation franchise tax measured by net income for the privilege of doing business in that state. Corporation W files a return based upon its business activities in the state but the amount of computed liability is less than the minimum tax. Corporation W pays the minimum tax. Corporation W has nexus in State D under these circumstances.

5) Corporation U is actively engaged in manufacturing farm equipment in State E. State E imposes a net income tax but exempts corporations engaged in manufacturing farm equipment. Corporation U has nexus in State E under these circumstances.

6) Corporation V has a sales office and warehouse located in State F. State F does not impose a corporation franchise or income tax. Corporation V has nexus in State F.

(e) “Nonapportionable income” has the meaning given in s. 71.25 (5) (b), Stats.

(f) “State” means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, and any territory or possession of the United States. A foreign country is not a state.

(3) Apportionment fraction.

(a)

For taxable years beginning before January 1, 2006, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, as defined in ss. 71.04 (8) (a) and (b) 1. and 71.25 (10) (a) and (b) 1., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (a) or 71.25 (6) (a), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors.
If one of the factors described in subd. 1. is omitted pursuant to s. 71.04 (10) or 71.25 (11), Stats., the percentages of the fraction represented by the remaining factors shall be adjusted as follows:

a. If either the property factor or payroll factor is omitted, the other factor shall represent 33.3333 percent of the fraction and the sales factor shall represent 66.6667 percent of the fraction.

b. If the sales factor is omitted, the property factor and the payroll factor shall each represent 50 percent of the fraction.

If either the numerator or the denominator of the sales factor is zero or a negative number, the sales factor shall be determined as described in s. 71.04 (4m) (a) 1., (b) 1., or (c) 1. or 71.25 (6m) (a) 1., (b) 1., or (c) 1., Stats.

(b)

For taxable years beginning after December 31, 2005, and before January 1, 2007, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (b) or 71.25 (6) (b), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors.
If one of the factors described in subd. 1. is omitted pursuant to s. 71.04 (10) or 71.25 (11), Stats., the percentages of the fraction represented by the remaining factors shall be adjusted as follows:

a. If either the property factor or payroll factor is omitted, the other factor shall represent 25 percent of the fraction and the sales factor shall represent 75 percent of the fraction.

b. If the sales factor is omitted, the property factor and the payroll factor shall each represent 50 percent of the fraction.

If either the numerator or the denominator of the sales factor is zero or a negative number, the sales factor shall be determined as described in s. 71.04 (4m) (a) 1., (b) 1., or (c) 1. or 71.25 (6m) (a) 1., (b) 1., or (c) 1., Stats.

(c)

For taxable years beginning after December 31, 2006, and before January 1, 2008, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (c) or 71.25 (6) (c), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors.
If one of the factors described in subd. 1. is omitted pursuant to s. 71.04 (10) or 71.25 (11), Stats., the percentages of the fraction represented by the remaining factors shall be adjusted as follows:

a. If either the property factor or payroll factor is omitted, the other factor shall represent 11.1111 percent of the fraction and the sales factor shall represent 88.8889 percent of the fraction.

b. If the sales factor is omitted, the property factor and the payroll factor shall each represent 50 percent of the fraction.

If either the numerator or the denominator of the sales factor is zero or a negative number, the sales factor shall be determined as described in s. 71.04 (4m) (a) 1., (b) 1., or (c) 1. or 71.25 (6m) (a) 1., (b) 1., or (c) 1., Stats.

(d) For taxable years beginning after December 31, 2007, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use only the sales factor to compute the apportionment fraction, as provided in s. 71.04 (4) (d) or 71.25 (6) (d), Stats. Sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of the sales factor. If either the numerator or the denominator of the sales factor is zero or a negative number, the sales factor shall be determined as described in ss. 71.04 (4m) (a) 2., (b) 2., or (c) 2. or 71.25 (6m) (a) 2., (b) 2., or (c) 2., Stats.

Note: See ss. Tax 2.46, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, 2.502, and 2.505 for special apportionment fractions of interstate direct air carriers, motor carriers, railroads, pipelines, financial institutions, broker-dealers, investment advisers, investment companies, underwriters, public utilities, telecommunications companies, and professional sports clubs.

Note: Corporations that are in combined groups use a modified sales factor to compute their Wisconsin share of apportionable income of the entire combined group. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

(e) The apportionment method may be used only if the taxpayer or combined group is engaged in business both in Wisconsin and at least one other state or foreign country and its business in Wisconsin is an integral part of a unitary business. For a combined group that has made the controlled group election provided in s. 71.255 (2m), Stats., the entire combined group’s business is deemed to be a single unitary business.

Note: A qualifying combined group may petition for an alternative apportionment method. See s. Tax 2.64 for details.

(4) Property factor.

(a) Numerator; denominator. The numerator of the property factor shall include the average value of the real and tangible personal property owned or rented and used by the taxpayer in Wisconsin in the production of apportionable income during the tax period. The denominator shall include the average value of all of the real and tangible personal property located everywhere owned or rented and used by the taxpayer in the production of apportionable income during the tax period. Property in transit on the date or dates for determining its average value, as described in par. (f), shall be considered to be at its destination, for purposes of computing the property factor. The value of mobile or movable property such as construction equipment, trucks, airplanes or other equipment which is located within and without Wisconsin during the tax period shall be determined for purposes of the numerator of the factor on the basis of the ratio of time used, serviced and stored within Wisconsin to total time used, serviced and stored during the tax period. However, an automobile assigned to a traveling employee shall be included in the numerator of the factor if the employee’s compensation is assigned to Wisconsin under the payroll factor.

Note: Refer to ss. 71.04 (5) and 71.25 (7), Stats.

(b) Owned property. Property owned by the taxpayer is valued at its original cost for purposes of computing the property factor. As a general rule “original cost” is deemed to be the basis of the property for federal income tax purposes, prior to any adjustments, at the time of acquisition by the taxpayer and adjusted by subsequent capital additions or improvements to the property and partial disposition of the property, by reason of sale, exchange, abandonment or other means. If the original cost of property is unascertainable, the property shall be included in the factor at its fair market value as of the date of acquisition by the taxpayer. Any subsequent adjustments, other than depreciation or amortization, to net income which affect property, such as capitalizations of repairs and adjustments to inventory, shall also be included in the property factor. The original cost of depletable property such as mines, oil and gas wells and timber shall be reduced by any extraction to the extent that cost depletion has been allowed. Inventories shall be included in the factor in accordance with the valuation method used for Wisconsin income or franchise tax purposes. Property acquired by gift or inheritance shall be included in the factor at its basis for federal income tax purposes. Pollution abatement equipment or waste treatment facilities written off as an expense under s. 71.04 (2b) and (2g), 1985-86 or prior years Stats., but still in use, shall be included at original cost.

Note: Refer to ss. 71.04 (5) (c) and 71.25 (7) (c), Stats.

(c) Rented property. Property rented by the taxpayer is valued at 8 times the net annual rental determined at arm’s length for purposes of computing the property factor. Net annual rental is the annual rental paid by the taxpayer, or allocated by the department pursuant to s. 71.10 (1), 71.30 (2) or 71.80 (1) (b), Stats., less any annual rental received by the taxpayer from sub-rentals. In exceptional cases this definition of net annual rental may result in a negative value or clearly inaccurate valuation. In these exceptional instances, any other method which will properly reflect the net annual rental value may be required by the department or may be requested by the taxpayer; however, in no case may the net annual rental be less than an amount which bears the same ratio to the total annual rental paid by the taxpayer as the rental value of the part of the property used by the taxpayer in the production of apportionable income bears to the total rental value of the same rental property.

(cm) Annual rental. In this subsection, annual rental:

Is the amount paid as rental for the property for a 12-month period. Where property is rented for less than a 12-month period, the net rent paid for the actual period of rental shall constitute the “annual rental” for the tax period. Where a taxpayer has rented property for a term of 12 or more months and the tax period for which the property factor is being computed covers a period of less than 12 months, such as may be due to a reorganization or change of accounting period, the net rent paid for the short tax period shall be annualized; however, if the rental term is for less than 12 months, the rent shall be adjusted accordingly.
Is the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer or for its benefit for the use of the property and includes:

a. Any amount payable for the use of real or tangible personal property, or any part of the property, whether designated as a fixed sum of money or as a percentage of sales, profits, or otherwise.

b. Any amount payable as additional rent or in lieu of rents, such as interest, taxes, insurance, repairs or any other items which are required to be paid by the terms of the lease or other arrangement, but does not include amounts paid as service charges, such as utilities or janitor services. If a payment includes rent and other charges unsegregated, such as rental charges for public warehouses, the amount of rent shall be determined by making a reasonable allocation between the rent and the other items.

Does not include incidental day-to-day expenses such as hotel or motel accommodations, daily rental of automobiles or royalties based on extraction of natural resources, whether represented by delivery or purchase. For this purpose, a royalty includes an amount paid to a holder of an interest in real property which constitutes a sharing of current or future production of natural resources from the property, whether denominated as royalty, advanced royalty, rental, delay rental or otherwise.

Note: Refer to ss. 71.04 (5) (c) and 71.25 (7) (c), Stats.

(d) Leasehold improvements. Leasehold improvements shall, for the purposes of the property factor, be treated as property owned by the taxpayer regardless of whether the taxpayer is entitled to remove the improvements or the improvements revert to the lessor upon expiration of the lease. The original cost of leasehold improvements shall be included in the factor.

(e) Construction in progress. Property or equipment under construction during the tax period, except inventoriable goods in process, shall be excluded from the factor until the property is actually used by the taxpayer in the regular course of its trade or business. If the property is partially used by the taxpayer in the regular course of its trade or business while under construction, the value of the property to the extent used shall be included in the property factor.

(f) Averaging property values. As a general rule the “average value” of property shall be determined by averaging the value at the beginning and ending of the tax period, but the department may require or the taxpayer may utilize the averaging of monthly values during the tax period if reasonably required to properly reflect the average value of the taxpayer’s property. Averaging by monthly values shall generally be applied if substantial fluctuations in the values of the property exist during the tax period, or where property is acquired after the beginning of the tax period or disposed of before the end of the tax period.

Note: Refer to ss. 71.04 (5) (d) and 71.25 (7) (d), Stats.

(5) Payroll factor.

(a) Numerator; denominator. The numerator of the payroll factor shall include the total amount paid in Wisconsin during the tax period by the taxpayer for compensation in the production of apportionable income and the denominator shall include the total compensation paid everywhere during the tax period by the taxpayer in the production of apportionable income. Compensation is paid in Wisconsin and included in the numerator if, as provided in ss. 71.04 (6) (b) and 71.25 (8) (b), Stats., one of the following applies:

The individual’s service is performed entirely within Wisconsin.

Example: Corporation A has a manufacturing plant located in Wisconsin. The compensation of an Illinois resident who works at the Wisconsin manufacturing plant is included in the numerator of the payroll factor since the employee’s service is performed entirely in Wisconsin.

The individual’s service is performed within and without Wisconsin, but the service performed without Wisconsin is incidental to the individual’s service within Wisconsin.

Example: Corporation B has its headquarters and a manufacturing plant in Wisconsin. Corporation B also has a manufacturing plant located in Indiana. The manager of the Wisconsin manufacturing plant spends two weeks during the tax year at the manufacturing plant located in Indiana training the new plant manager. The compensation of the Wisconsin plant manager is included in the numerator of the payroll factor because the purposes performed in Indiana is incidental to the service performed in Wisconsin.

A portion of the service is performed in Wisconsin and the base of operations of the individual is in Wisconsin.

Example: Corporation C has a sales office located in Wisconsin. A salesperson working out of the Wisconsin office solicits sales in Wisconsin, Minnesota and Iowa. Since a portion of the salesperson’s service is performed in Wisconsin and the salesperson’s base of operations is in Wisconsin, the compensation of the salesperson is included in the numerator of the payroll factor.

A portion of the service is performed in Wisconsin and, if there is no base of operations, the place from which the individual’s service is directed or controlled is in Wisconsin.

Example: Corporation D has its regional sales office in Wisconsin. An Iowa resident works out of her home as a salesperson for Corporation D and solicits sales in Iowa, Illinois and Wisconsin. The salesperson is directed from the regional sales office located in Wisconsin. The compensation of the Iowa salesperson is included in the numerator of the payroll factor since a portion of her service is performed in Wisconsin, she has no base of operations and she is directed from Wisconsin.

A portion of the service is performed within Wisconsin and neither the base of operations of the individual nor the place from which the service is directed or controlled is in any state in which some part of the service is performed, but the individual’s residence is in Wisconsin.

Example: Corporation E is headquartered in and has its sales office in Indiana and maintains inventory in Wisconsin. A Wisconsin resident salesperson solicits sales in Wisconsin and Minnesota. The compensation of the Wisconsin salesperson is included in the numerator of the payroll factor since a portion of the salesperson’s service is performed in Wisconsin, the salesperson is a resident of Wisconsin and the salesperson is directed or controlled from Indiana but performs no services in Indiana.

The individual is neither a resident of nor performs services in Wisconsin but is directed or controlled from an office in Wisconsin and returns to Wisconsin periodically for business purposes and the state in which the individual resides does not have jurisdiction to impose income or franchise taxes on the employer.

Example: Corporation F has its sales office in Wisconsin. A salesperson resides in Nebraska and solicits sales in Nebraska and Kansas. Corporation F does not have nexus in Nebraska or Kansas. The salesperson returns to the Wisconsin sales office for two weeks each year for meetings and training. The compensation of the Nebraska salesperson is included in the numerator of the payroll factor since he is directed from an office in Wisconsin, returns to Wisconsin periodically for business purposes and Corporation F does not have nexus in Nebraska.

Note: Refer to ss. 71.04 (6) (a) and (b) and 71.25 (8) (a) and (b), Stats.

(b) Services. An individual shall be considered to be performing a service in Wisconsin during the year if the individual performs services in Wisconsin for at least 5 days during the year. The compensation of any one employee may not be split between 2 or more states during the year; however, this does not apply if the employee is transferred or changes positions during the year.

Wages, salaries, commissions and any other form of remuneration paid to employees for personal services including amounts contributed to a qualified cash or deferred arrangement under section 401 (k) of the Internal Revenue Code on behalf of employees who have elected to participate in the plan. However, matching contributions to the trust by an employer under section 401 (k) of the Internal Revenue Code are not included since the employees do not have a right to receive the matching contributions directly in cash.
The value of board, rent, housing, lodging and other benefits or services furnished to employees by the taxpayer in return for personal services, provided that these amounts constitute income to the recipient under the federal Internal Revenue Code for the year for which the payroll factor is computed. In the case of employees not subject to the federal Internal Revenue Code, such as citizens of foreign countries employed in foreign countries, the determination of whether the benefits or services constitute income to the employees shall be made as though the employees are subject to the federal Internal Revenue Code.
Deductible management or service fees paid, or management or service fees allocated by the department under s. 71.10 (1), 71.30 (2) or 71.80 (1) (b), Stats., to a related corporation, as defined in section 267 (f) (1) of the Internal Revenue Code, as consideration for the performance of personal services. As provided in s. 71.25 (8) (d), Stats., the recipient of these fees may not include the compensation paid to its employees with respect to the personal services in either the numerator or denominator of its payroll factor and the situs of the fees is in Wisconsin if the services fulfill one of the requirements of par. (a). Except for these management or service fees, payments made to an independent contractor or any other person not properly classifiable as an employee are excluded.

Examples: 1) Corporation A, headquartered in Illinois, owns 100% of the stock of Corporation B which is headquartered in Wisconsin. Employees of Corporation A perform all the accounting functions for Corporation B. For these services Corporation A charged $30,000 of office payroll as management fees to Corporation B, which paid that amount to Corporation A. If the employees of Corporation A that performed the accounting services for Corporation B were based in Illinois and spent only part of their time in Wisconsin while performing these services, no portion of the $30,000 is includable in the numerator of the payroll factor of Corporation B because the services do not meet the requirements of par. (a). The entire $30,000 is includable in the denominator of the payroll factor of Corporation B. If Corporation A files a Wisconsin return on the apportionment basis, it may not include in its computation of the payroll factor the $30,000 paid to its employees for services they performed for Corporation B.

2) Corporation C, headquartered in Wisconsin, owns 100% of the stock of Corporation D which is also headquartered in Wisconsin. Employees of Corporation C prepare all tax returns for Corporation D. For these services Corporation C charged $20,000 of tax department payroll as management fees to Corporation D, which paid that amount to Corporation C. All of the services were performed in Wisconsin. The $20,000 is included in both the numerator and denominator of the payroll factor of Corporation D. Corporation C may not include the $20,000 in either the numerator or denominator of its payroll factor.

Note: Refer to ss. 71.04 (6) (d) and 71.25 (8) (d), Stats.

(d) Excludable compensation. Compensation paid to produce nonapportionable income or losses or income exempt from taxation under ch. 71, Stats., may not be included in the numerator or denominator of the payroll factor.

Note: Refer to ss. 71.04 (6) (c) and 71.25 (8) (c), Stats.

(6) Sales factor.

(a) Numerator; denominator. The numerator of the sales factor shall include the taxpayer’s gross receipts from sales that are in this state and the denominator shall include the taxpayer’s gross receipts from sales everywhere during the taxable year. Gross receipts that are not derived in the production of apportionable income and items described in ss. 71.04 (7) (f) and 71.25 (9) (f), Stats., may not be included in the sales factor.

Note: A corporation that is a combined group member must adjust its sales factor numerator and denominator as described in s. Tax 2.61 (7).

(b) Sales of tangible personal property attributable to Wisconsin.

Gross receipts from the sales of tangible personal property, except sales to the federal government as described in subd. 4., are in Wisconsin if the property is delivered or shipped to a purchaser within Wisconsin regardless of the f.o.b. point or other conditions of the sales. Some situations in which property is considered to be delivered or shipped to a purchaser within Wisconsin are if:

a. The property is picked up outside Wisconsin by a purchaser having a Wisconsin business location and the purchaser returns to Wisconsin with the property.

Example: Corporation B is a Minnesota brewer that sells beer to a Wisconsin purchaser to be picked up at the brewer’s shipping dock in Minnesota. The purchaser is a beer distributor which used its own vehicle to pick up the beer and haul it back to Wisconsin. Corporation B is subject to the tax by the state of Wisconsin. These dock sales are assigned to Wisconsin in Corporation B’s sales factor in its apportionment formula for Wisconsin tax purposes, since the purchaser’s location is in Wisconsin and the product is shipped to Wisconsin. Therefore, Corporation B, for Wisconsin franchise tax purposes, will include the amount of this dock sale in both the numerator and the denominator of the sales factor.

Note: In Pabst Brewing Co. v. Wisconsin Department of Revenue (Ct. App. Dist. IV, 1986), 130 Wis. 2d 291, the taxpayer sold beer to an Illinois distributor who picked it up in its own truck at the taxpayer’s Wisconsin shipping dock and hauled it to Illinois. The Court held that the sales were not Wisconsin sales, since the location of the purchaser, rather than the location of the pickup of the product, controlled the determination of where the sale was assigned for purposes of the sales factor. The Court noted that if the sales were assigned to Wisconsin, the method of delivery, a condition of the sale, would be the determinative, which is contrary to statute. These sales are referred to as “dock sales,” which are those sales where a purchaser uses its owned or rented vehicles or a common carrier it has made arrangements with to take delivery of the product at the seller-taxpayer’s shipping dock.

b. The taxpayer, at the designation of the purchaser, or the purchaser delivers to or has the property shipped to a recipient other than the purchaser within Wisconsin.

Example: Corporation M is a Wisconsin manufacturer that sells plumbing ware to an Illinois wholesaler and retailer to be picked up at the manufacturer’s shipping dock in Wisconsin. The purchaser has its corporate headquarters in Illinois. The purchaser uses its own vehicle to pick up plumbing ware and haul it to the job site of the purchaser’s customer. The customer is a plumbing contractor that is working on a new motel being constructed in Madison, Wisconsin. These dock sales are assigned to Wisconsin in Corporation M’s sales factor in its apportionment formula for Wisconsin tax purposes, since the purchaser’s customer’s location is in Wisconsin and the product is shipped to Wisconsin. The delivery to the plumbing contractor was at the designation of the purchaser and that is where the product was delivered. Therefore, Corporation M, for Wisconsin franchise tax purposes, is required to include the amount of this dock sale in both the numerator and the denominator of the sales factor.

c. The shipment by either the taxpayer or the purchaser terminates in Wisconsin, even though the property is subsequently transferred by the purchaser to another state.

Example: Corporation B has a Wisconsin manufacturing plant which makes engines for an Indiana based manufacturer. Title to the engines passes to the purchaser after the engines are tested. Corporation B, at the direction of the purchaser, ships the tested engines to a public warehouse in Wisconsin. The warehouse stores the engines until directed to ship them by the purchaser. These sales are included in the numerator of the sales factor for Corporation B since the public warehouse is considered to be a business location of the Indiana purchaser and the warehouse is located in Wisconsin.

d. The recipient is in Wisconsin, even though the property is ordered from outside Wisconsin.

Example: Corporation A manufactures batteries at a location in Wisconsin. It sells batteries to an Illinois retailer which operates stores nationwide. The purchaser orders the batteries from its Illinois location and directs Corporation A to ship the batteries to its warehouse in Wisconsin. These sales are included in the numerator of the sales factor since the batteries were shipped to a Wisconsin location.

e. The property is being shipped by a seller or purchaser from one state to a consignee in another state and is diverted while enroute to a purchaser in Wisconsin, or the designee of a purchaser who is in Wisconsin.

Example: Corporation X, a manufacturer located in Superior, Wisconsin, sells a portion of its manufactured product via a consignment arrangement with a retailer-consignee in Chicago, Illinois. Pursuant to an order from the Chicago consignee for additional inventory, Corporation X ships via its own trucks additional inventory of its product to Chicago. After entering Illinois but before reaching Chicago, the driver receives instructions from the consignee to deliver the entire load to a customer in Beloit, Wisconsin. Since the property was shipped to a purchaser in Wisconsin, the sale is attributable to Wisconsin and the gross receipts from the sale are included in both the numerator and denominator of Corporation X’s sales factor.

If the taxpayer does not have nexus in the state of destination, the sale is attributed to Wisconsin if the property is shipped from an office, store, warehouse, factory or other place of storage in Wisconsin. For taxable years beginning before January 1, 2009, the amount included in the numerator of the sales factor shall be 50% of the gross receipts from the sale. For taxable years beginning on or after January 1, 2009, the amount included in the numerator of the sales factor shall be the total gross receipts from the sale. For purposes of this subdivision:

a. Sales are attributed to Wisconsin even though the taxpayer has a certificate of authority in the state of destination but the business activities in the destination state do not result in nexus based on the standards in s. Tax 2.82.

b. Sales are not attributed to Wisconsin if the taxpayer is incorporated in the state of destination other than Wisconsin.

If a taxpayer’s salesperson located in an office in Wisconsin makes a sale to a purchaser in another state in which the taxpayer does not have nexus and the property is not shipped or delivered from Wisconsin, the following rules apply:

a. If the taxpayer has nexus in the state from which the property is delivered or shipped, then the sale is in that state.

b. If the taxpayer does not have nexus in the state from which the property is delivered or shipped, then the sale is in Wisconsin. For taxable years beginning before January 1, 2009, the amount included in the numerator of the sales factor shall be 50% of the gross receipts from the sale. For taxable years beginning on or after January 1, 2009, the amount included in the numerator of the sales factor shall be the total gross receipts from the sale.

With respect to sales to the federal government:

a. Gross receipts from the sales of tangible personal property are in Wisconsin if the property is shipped from an office, store, warehouse, factory or other place of storage in Wisconsin and delivered to the federal government, including its agencies and instrumentalities, in Wisconsin regardless of the f.o.b. point or other conditions of sale. For purposes of this section, only sales for which the federal government makes direct payment to the seller pursuant to the terms of its contract constitute sales to the federal government. Thus, sales by a subcontractor to the prime contractor, the party to the contract with the federal government, do not constitute sales to the federal government.

b. Gross receipts from the sales of tangible personal property are in Wisconsin if the property is shipped from an office, store, warehouse, factory or other place of storage in Wisconsin and delivered to the federal government, including its agencies and instrumentalities, outside Wisconsin and the taxpayer does not have nexus in the destination state. For taxable years beginning before January 1, 2009, the amount included in the numerator of the sales factor shall be 50% of the gross receipts from the sale. For taxable years beginning on or after January 1, 2009, the amount included in the numerator of the sales factor shall be the total gross receipts from the sale.

For purposes of applying subds. 2. to 4., whether the taxpayer has nexus in the destination state is determined using the same standards as set forth in s. Tax 2.82.

Except as described in subd. 2., the numerator of the sales factor includes gross receipts from the lease, rental, licensing, or other use of tangible personal property owned by the taxpayer and the sublease of tangible personal property if the property is located in this state during the entire period of lease, rental, licensing, sublease, or other use. If the property is used in and outside this state during the period of lease, rental, licensing, or sublease, gross receipts are included in the numerator of the sales factor to the extent that the property is used in this state. The proportion of use in this state is determined by multiplying the gross receipts from the lease, rental, licensing, sublease, or other use of the property by a fraction having as a numerator the number of days the property is in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of days that the property is leased, rented, licensed, or subleased in all states having jurisdiction to tax the taxpayer during the taxable year.
Gross receipts from the lease, rental, or licensing of moving property, including motor vehicles, rolling stock, aircraft, vessels, or mobile equipment, owned by the taxpayer and the sublease of moving property are included in the numerator of the sales factor to the extent that the property is used in this state. The proportion of use of moving property in this state is determined as follows:

a. The proportion of use of a motor vehicle or rolling stock in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the motor vehicle or rolling stock by a fraction having as a numerator the number of miles traveled within this state by the motor vehicle or rolling stock while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of miles traveled by the motor vehicle or rolling stock while leased, rented, licensed, or subleased in the taxable year.

b. The proportion of use of an aircraft in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the aircraft by a fraction having as a numerator the number of takeoffs and landings of the aircraft in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of takeoffs and landings of the aircraft while leased, rented, licensed, or subleased in the taxable year.

c. The proportion of a vessel or mobile equipment in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the vessel or mobile equipment by a fraction having as a numerator the number of days that the vessel or mobile equipment is in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of days that the vessel or mobile equipment is leased, rented, licensed, or subleased in the taxable year.

d. If the taxpayer is unable to determine the use of moving property under subd. 2. a., b., or c. while the property is leased, rented, licensed, or subleased in the taxable year, the moving property is conclusively deemed to be used in the state in which the property is located at the time that the lessee, licensee, or sublessee takes possession of the property.

(d) Sales, leases, rentals, or licensing of real property attributable to Wisconsin. The numerator of the sales factor includes gross receipts from the sale, lease, rental, licensing, or other use of real property owned by the taxpayer if the real property is located in this state and gross receipts from the sublease of real property if the real property is located in this state.

(e) Receipts attributable to Wisconsin from the use of computer software. Receipts attributable to Wisconsin from providing the use of computer software are determined as provided in ss. 71.04 (7) (df) and 71.25 (9) (df), Stats.

Note: For taxable years beginning after December 31, 2004 and before January 1, 2009, subd. 3. of ss. 71.04 (7) (df) and 71.25 (9) (df), Stats., provided that if the taxpayer is not subject to income tax in the state in which the gross receipts are considered received but the taxpayer’s commercial domicile is in Wisconsin, 50 percent of the taxpayer’s receipts from the transaction are included in the numerator of the sales factor. This provision was repealed by 2009 Wis. Act 28.

(f) Sales of services attributable to Wisconsin. Sales of services are attributable to Wisconsin as provided in ss. 71.04 (7) (dh) and 71.25 (9) (dh), Stats.

Note: For taxable years beginning after December 31, 2004 and before January 1, 2009, subd. 4. of ss. 71.04 (7) (dh) and 71.25 (9) (dh), Stats., provided that if the taxpayer is not subject to income tax in the state in which the benefit of the service is received, 50 percent of the taxpayer’s receipts from the transaction are included in the numerator of the sales factor to the extent the taxpayer’s employees or representatives performed the service from a location in Wisconsin. This provision was repealed by 2009 Wis. Act 28.

(g) Receipts from intangible property for taxable years beginning before January 1, 2009. For taxable years beginning before January 1, 2009, the numerator of the sales factor includes gross receipts from the sale, licensing the use of, or other use of intangible property, if the income producing activity occurs in this state during the taxable year. If the income producing activity occurs in and outside this state, the gross receipts shall be allocated between those states having jurisdiction to tax the taxpayer based on the direct costs of performance. For purposes of this paragraph, “income producing activity” means the act or acts engaged in by the taxpayer, or persons acting on behalf of the taxpayer, for the ultimate purpose of obtaining gains or profit, and “costs of performance” means direct costs determined in a manner consistent with generally accepted accounting principles and in accordance with accepted conditions or practices in the trade or business of the taxpayer.

Note: Refer to ss. 71.04 (7) (d), (df), and (dh) and 71.25 (9) (d), (df), and (dh), 2007-08 Stats., as affected by 2005 Wis. Act 25.

(h) Receipts from intangible property for taxable years beginning on or after January 1, 2009. For taxable years beginning on or after January 1, 2009, the amount includable in the numerator of the sales factor for gross receipts from the sale of, license of, or allowing use of intangible property in this state is determined as provided in ss. 71.04 (7) (dj) and (dk) and 71.25 (9) (dj) and (dk), Stats. For purposes of applying these paragraphs, excluding ss. 71.04 (7) (dj) 2. and 71.25 (9) (dj) 2m., the following rules apply:

To determine the purchaser’s or licensee’s use of intangible property in this state, factors that may be considered include the number of licensed sites in each state, the volume of property manufactured, produced, or sold pursuant to the arrangement at locations in this state, or other data that reflects the relative usage of the intangible property in this state.
If the purchaser’s or licensee’s billing address or commercial domicile is in this state, that billing address or commercial domicile may not conclusively determine that the transaction is in this state except in cases where the location of use of the intangible property cannot be determined. If the location of use of the intangible property cannot be determined, subds. 3. and 4. apply.
If the location of use of the intangible property cannot be determined, the gross receipts from the sale of, license of, or other receipts from allowing use of intangible property are in this state if the purchaser’s or licensee’s commercial domicile is in this state.
If subd. 3. would otherwise apply except that the state of the purchaser’s or licensee’s commercial domicile cannot be determined, the gross receipts from the sale of, license of, or allowing use of intangible property are in this state if the purchaser or licensee is billed for the purchase, license, or use of the intangible property at a location in this state.

(i) The provisions of pars. (c) to (h) shall also apply to sales to the federal government.

Note: Section Tax 2.39 interprets ss. 71.04 (4), (4m), (5), (6), (7), (10), and (11), 71.25 (5), (6), (6m), (7), (8), (9), (11), and (15), and 71.255 (5), Stats.

Note: The provisions of s. Tax 2.39 first apply for taxable years beginning on January 1, 2005. For returns required under combined reporting, the provisions of s. Tax 2.39 first apply for taxable years beginning on January 1, 2009.

History

Cr. Register, August, 1973, No. 212, eff. 9-1-73; cr. (1m); r. and recr. (5) (f) 5., Register, November, 1973, No. 215; eff. 12-1-73; cr. (intro.), Register, January, 1978, No. 265, eff. 2-1-78; r. and recr. Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (f), (4) (c), (cm) 2. a. and (f), r. (6) (b) 2. b., renum. (6) (b) 2. c. to be (6) (b) 2. b., Register, May, 1995, No. 473, eff. 6-1-95; emerg. am. (3) (a) (intro.), eff. 9-19-98; am. (3) (a) (intro.), Register, March, 1999, No. 519, eff. 4-1-99; CR 06-063: am. (1) and (2) (a), (b) and (e), (6) (a) and (b) 4. a., r. and recr. (3) and (6) (c), r. (6) (b) 4. b. and (7), renum. (6) (b) 4. c. to be (6) (b) 4. b. and am., Register November 2006 No. 611, eff. 12-1-06; EmR0943: eff. 12-31-09 and CR 10-001: am. (1), (2) (b), (d), (3) (d), (e), (6) (b) 1. d., 2. (intro.), 3. b., 4. b., and (6) (c) (title), cr. (2) (ag), (ar), (cm), (6) (b) 5., and (d) to (i), r. (6) (c) 1. to 4., 7. and 8., renum. (6) (c) 5. and 6. to be (6) (c) 1. and 2. and am. (6) (c) 1. and 2. d. Register June 2010 No. 654, eff. 7-1-10; correction in (2) (cm) made under s. 13.92 (4) (b) 4., Stats., Register June 2010 No. 654; CR 17-019: am. (3) (a) 1., (b) 1., (c) 1., (d), Register June 2018 No. 750 eff. 7-1-18; CR 19-141: am. (6) (f), (h) (intro.) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.41 Separate accounting method {#sec-tax-2.41 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.41}

(1) When the separate accounting method is used, separate records must be kept of sales, cost of sales and expenses for the Wisconsin business as distinct from the remainder of the business. Overhead items of income and expense must then be allocated to the business within and without Wisconsin upon a basis or combination of bases justified by the facts and conditions. For example: the ratio of Wisconsin sales to total sales usually represents a satisfactory basis for a merchandising business, while the ratio of direct cost of material and labor in Wisconsin to the total gives a more accurate result for a construction business.

(a) Federal income taxes are based upon income and should, therefore, be allocated to Wisconsin business on the basis of income. Federal income taxes are deductible for income years through 1974 only on the cash basis, and the allocation to Wisconsin business for any year, therefore, must be based upon the ratio of income within Wisconsin to the total income of the year on which the federal income taxes are assessed, even though that ratio differs from the ratio of the year in which the taxes are actually paid. Federal income taxes are not deductible for income years 1975 and thereafter.

(b) The relationship of the general overhead items to Wisconsin operations will determine whether the home office income and expense should be allocated to the Wisconsin business. Miscellaneous income, such as income from intangibles and income from tangible property used in the business, and such overhead items as officers’ salaries, office salaries, office rent and sundry office expenses should ordinarily be included in the allocation.

(2) Net rentals received from real estate held purely for investment purposes and not used in the operation of the business are not subject to allocation but are taxable in full if the property is located in Wisconsin. Gross rentals must be reduced by all expenses related to such investment property.

Note: Section Tax 2.41 interprets ss. 71.04 (4) and 71.25 (6), Stats.

History

1-2-56; am. Register, February, 1958, No. 26, eff. 3-1-58; am. Register, November, 1977, No. 263, eff. 12-1-77.

Wis. Admin. Code § Tax 2.44 Permission to change basis of allocation {#sec-tax-2.44 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.44}

Except when income must be reported on the apportionment basis, permission to make a change either from separate accounting to apportionment, or vice versa shall be obtained in writing from the department upon written application setting forth in detail the reasons why the desired change will more clearly reflect the taxpayer’s Wisconsin income. Such application shall be mailed to the Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906 before the end of the tax year for which the change is desired.

Note: Section Tax 2.44 interprets ss. 71.04 (4) and 71.25 (6), Stats.

History

1-2-56, am. Register, September, 1964, No. 105, eff. 10-1-64; am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, September, 1983, No. 333, eff. 10-1-83; corrections made under s. 13.93 (2m) (b) 6., Stats., Register, March, 1999, No. 519.

Wis. Admin. Code § Tax 2.45 Apportionment in special cases {#sec-tax-2.45 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.45}

When the business of any person, other than an interstate professional sports club or “financial organization” or“public utility,” as defined in s. 71.25 (10), Stats., within Wisconsin is an integral part of a unitary business conducted within and without Wisconsin, but because of unusual or unique circumstances the portion of the income of the person derived from business transacted in Wisconsin cannot be ascertained with reasonable certainty by use of the apportionment formula provided in s. 71.25 (6), Stats., or by separate accounting in view of the unitary nature of the business, the department will substitute in the place of some or all of the statutory apportionment factors another factor or other factors as will reasonably apportion to Wisconsin the business income properly assignable to Wisconsin. In any case in which an apportionment of business income is made pursuant to this regulation the taxpayer, at the time of the assessment, will be apprised of the factors used in the formula adopted.

Note: Section Tax 2.45 interprets s. 71.25 (12), Stats.

History

Cr. Register, December, 1956, No. 12, eff. 1-1-57; am. Register, August, 1973, No. 212, eff. 9-1-73; am. Register, September, 1983, No. 333, eff. 10-1-83; am. Register, July, 1989, No. 403, eff. 8-1-89.

Wis. Admin. Code § Tax 2.46 Apportionment of apportionable income of interstate air carriers {#sec-tax-2.46 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.46}

(1) General. The apportionable income of an air carrier engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the air carrier is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: An air carrier that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definition. In this section, “engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(3) Apportionment formula computation. An air carrier that is engaged in business in and outside this state shall apportion its apportionable income to this state on the basis of the ratio obtained by taking the arithmetical average of the following 3 ratios:

(a) The ratio which the aircraft arrivals and departures within this state scheduled by such carrier during the calendar or fiscal year bears to the total aircraft arrivals and departures within and without this state scheduled by such carrier during the same period; provided that in the case of nonscheduled operations all arrivals and departures shall be substituted for scheduled arrivals and departures.

(b) The ratio which the revenue tons handled by such carrier at airports within this state during the calendar or fiscal year bears to the total revenue tons handled at airports within and without this state during the same period.

(c) The ratio which such air carrier’s originating revenue within this state for the calendar or fiscal year bears to the total originating revenue within and without this state for the same period.

Note: Air carriers that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

Note: Section Tax 2.46 interprets ss. 71.04 (8) (c) and 71.25 (10) (c), Stats.

History

Cr. Register, December, 1956, No. 12, eff. 1-1-57; am. (intro.). Register, August, 1973, No. 212, eff. 9-1-73; EmR0943: emerg. r. and recr. eff 12-31-09; CR 10-001: r. and recr. Register June 2010 No. 654, eff. 7-1-10; correction to (1) (title) made under s. 13.92 (4) (b) 2., Stats., Register June 2010 No. 654.

Wis. Admin. Code § Tax 2.465 Apportionment of apportionable income of interstate air freight forwarders affiliated with a direct air carrier {#sec-tax-2.465 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.465}

(1) General. The apportionable income of a qualified air freight forwarder affiliated with a direct air carrier and engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the qualified air freight forwarder is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: A qualified air freight forwarder that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) An air freight forwarder is “affiliated” with a direct air carrier if all of the following apply:

The air freight forwarder owns or controls either directly or indirectly at least 80% of the ownership interests of the direct air carrier, or at least 80% of the ownership interests of the air freight forwarder is owned or controlled either directly or indirectly by the direct air carrier, or at least 80% of the ownership interests of both the air freight forwarder and the direct air carrier is owned or controlled either directly or indirectly by the same interests.
The air freight forwarder is principally engaged in the business of air freight forwarding.
The air freight forwarder’s air freight forwarding business is carried on principally with the direct air carrier.

(b) “Combined group” has the same meaning as in s. Tax 2.60 (2) (a).

(c) “Direct air carrier” means a business entity principally engaged in air transportation through the direct operation of aircraft under a certificate issued by the federal aviation administration.

(d) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(e) “Originating revenue in this state” means all revenue derived from shipments that were first physically consigned to a qualified air freight forwarder in this state for transportation, regardless of the method or methods of transportation.

(f) “Qualified air freight forwarder” means a person to whom all of the following apply:

The person is engaged primarily in the facilitation of the transportation of property by air.
The person does not operate aircraft.
The person is in the same combined group as an affiliated direct air carrier.

(3) Apportionment formula computation. For taxable years beginning on or after January 1, 2014, a qualified air freight forwarder that is engaged in business in and outside this state shall apportion its apportionable income to this state on the basis of the ratio obtained by taking the arithmetical average of the following 3 ratios:

(a) The ratio which aircraft arrivals and departures within this state scheduled by the affiliated direct air carrier during the calendar or fiscal year bears to the total aircraft arrivals and departures within and without this state scheduled by such direct air carrier during the same period; provided that if the affiliated direct air carrier conducts nonscheduled operations all arrivals and departures shall be substituted for scheduled arrivals and departures.

(b) The ratio which the revenue tons handled by the affiliated direct air carrier at airports within this state during the calendar or fiscal year bears to the total revenue tons handled at airports within and without this state during the same period.

(c) The ratio which such qualified air freight forwarder’s originating revenue in this state for the calendar or fiscal year bears to the total revenue of such qualified air freight forwarder within and without this state for the same period.

History

CR 13-078: cr. Register April 2014 No. 700, eff. 5-1-14.

Wis. Admin. Code § Tax 2.47 Apportionment of apportionable income of interstate motor carriers {#sec-tax-2.47 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.47}

(1) General. The apportionable income of a motor carrier engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the motor carrier is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: A motor carrier that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(1m) Definitions. In this section:

(a) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(b) “Ton mile” means the movement of one ton of persons or property, or both, the distance of one mile. For carriage of persons, each person shall be considered the equivalent of 200 pounds.

(2) Apportionment formula computation. For taxable years beginning on or after January 1, 1997, a motor carrier that is engaged in business in and outside this state shall apportion its apportionable income to this state on the basis of the arithmetical average of the following 2 factors:

(a) The ratio of the gross receipts from carriage of persons or property, or both, first acquired for carriage in Wisconsin to the total gross receipts from carriage of persons or property, or both, everywhere.

(b) The ratio of ton miles of carriage in Wisconsin to ton miles of carriage everywhere.

Note: Motor carriers that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

(3) Substitution of factors. Whenever gross receipts data is not available the department may authorize or direct substitution of a similar factor, such as gross tonnage, and whenever ton mile data is not available the department may similarly authorize substitution of a similar factor, such as revenue miles.

(4) Mercantile and manufacturing businesses. This section does not apply to any mercantile or manufacturing business which engages in some interstate carriage as an incident of the mercantile or manufacturing business.

Note: Section Tax 2.47 interprets ss. 71.04 (8) (c) and 71.25 (10) (c), Stats.

History

Cr. Register, April, 1966, No. 124, eff. 5-1-66; am. (intro.). Register, August, 1973, No. 212, eff. 9-1-73; r. and recr. Register, October, 1996, No. 490, eff. 1-1-97; EmR0943: emerg. am. (title), (2) (title) and (intro.), cr. (intro.), r. and recr. (1), eff. 12-31-09; CR 10-001: am. (title), (2) (title) and (intro.), r. and recr. (1), cr. (1m) Register June 2010 No. 654, eff. 7-1-10; correction to (1) (title) made under s. 13.92 (4)(b) 7., Stats., Register June 2010 No. 654.

Wis. Admin. Code § Tax 2.475 Apportionment of apportionable income of interstate railroads and car line companies {#sec-tax-2.475 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.475}

(1) General. The apportionable income of a railroad or car line company engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the company is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: A railroad or car line company that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(1m) Definitions.

(a) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(b) “Gross receipts from carriage” means gross receipts received for the carriage of property or persons net of interline payments made to other railroads as a result of the interchange of carriage between and among railroads. Gross receipts from carriage includes interline payments received from other railroads.

(c) “Revenue ton mile” means the movement of one net ton of property or persons, or both, the distance of one mile, for consideration. For carriage of persons, each person shall be considered the equivalent of 150 pounds, and the average weight of the contents of head end cars, or “baggage cars,” is considered to be 4 tons.

(2) Interstate railroads. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income for taxable years beginning on or after January 1, 1991, the apportionable income of a railroad engaged in business in and outside this state shall be apportioned to Wisconsin on the basis of the arithmetical average of the following 2 factors:

(a) The ratio of the gross receipts from carriage of property or persons, or both, first acquired for carriage in Wisconsin to the total gross receipts from carriage of property or persons, or both, everywhere.

(b) The ratio of revenue ton miles of carriage in Wisconsin to revenue ton miles of carriage everywhere.

Note: Railroads that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

(3) Substitution of factors. Whenever gross receipts data is not available the department may authorize or direct substitution of a similar factor, such as gross tonnage, and whenever revenue ton mile data is not available the department may similarly authorize substitution of a similar factor, such as revenue miles.

(4) Car line companies. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income for taxable years beginning on or after January 1, 1991, the income of a car line company engaged in business in and outside this state shall be allocated or apportioned to Wisconsin as provided in s. 71.04 (4) or 71.25 (6), Stats., and s. Tax 2.39.

Note: Section 71.26 (1) (a), Stats., was amended by 1991 Wis. Act 39, effective for taxable years beginning on or after January 1, 1991. For taxable years beginning before January 1, 1991, railroads and car line companies were exempt from Wisconsin franchise and income taxation.

Note: Section Tax 2.475 interprets ss. 71.04 (8) (c) and 71.25 (10) (c), Stats.

History

Emerg. cr. eff. 2-17-92; cr. Register, August, 1992, No. 440, eff. 9-1-92; EmR0943: emerg. am. (title), (2) (intro.) and (4), cr. (intro.) and (1) (a), renum. (1) (a) and (b) to be (1) (b) and (c), eff. 12-31-09; CR 10-001: am. (title), (2) (intro.) and (4), r. and recr. (1), cr. (1m) Register June 2010 No. 654, eff. 7-1-10; corrections to (1) (title) and (1m) (title) made under s. 13.92 (4) (b) 2., Stats., Register June 2010 No. 654; CR 17-019: am. (1) (title), (2) (intro.) Register June 2018 No. 750 eff. 7-1-18.

Wis. Admin. Code § Tax 2.48 Apportionment of apportionable income of interstate pipeline companies {#sec-tax-2.48 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.48}

(1) General. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income, the apportionable income of a pipeline company engaged in business in and outside this state shall be apportioned to Wisconsin on the basis of the arithmetical average of the 3 factors in subs. (3), (4) and (5), except if the pipeline company is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: A pipeline company that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Compensation” includes:

Wages, salaries, commissions and any other form of remuneration paid to employees for personal services.
The value of board, rent, housing, lodging and other benefits or services furnished to employees by the taxpayer in return for personal services, provided that these amounts constitute income to the recipient under the federal Internal Revenue Code for the year for which the payroll factor is computed. In the case of employees not subject to the federal Internal Revenue Code, such as citizens of foreign countries employed in foreign countries, the determination of whether the benefits or services constitute income to the employees shall be made as though the employees are subject to the federal Internal Revenue Code.
Deductible management or service fees paid, or management or service fees allocated by the department under s. 71.10 (1), 71.30 (2) or 71.80 (1) (b), Stats., to a related corporation, as defined in section 267 (f) (1) of the Internal Revenue Code, as consideration for the performance of personal services. The recipient of these fees may not include the compensation paid to its employees with respect to the personal services in either the numerator or denominator of its payroll factor.

(am) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(b) “Traffic unit” means the transportation for a distance of one mile of one barrel of oil, one gallon of gasoline or one thousand cubic feet of natural or casinghead gas, or other appropriate measure of product.

(3) Property factor.

(a) Numerator; denominator. The numerator of the property factor shall include the average value of the real and tangible personal property owned and used by the taxpayer in Wisconsin in the production of apportionable income during the tax period. The denominator shall include average value of all of the real and tangible personal property located everywhere owned and used by the taxpayer in the production of apportionable income during the tax period. Property in transit on the date or dates for determining its average value, as described in par. (e), shall be considered to be at its destination, for purposes of computing the property factor. The value of mobile or movable property such as construction equipment, trucks or airplanes which is located within and without Wisconsin during the tax period shall be determined for purposes of the numerator of the factor on the basis of a ratio of time used, serviced or stored within Wisconsin to total time used, serviced or stored during the tax period. However, an automobile assigned to a traveling employee shall be included in the numerator of the factor if the employee’s compensation is assigned to Wisconsin under the payroll factor.

(b) Valuation. Property owned by the taxpayer is generally valued at its cost net of depreciation and write-offs as determined for Wisconsin franchise or income tax purposes. Any adjustments to net income which affect property, such as capitalizations of repairs, depreciation or amortization adjustments and adjustments to inventory, shall also be included in the property factor. The value of depletable property, such as mines, oil and gas wells and timber, shall be original cost reduced by any extraction to the extent that depletion has been allowed. Inventories shall be included in the factor in accordance with the valuation method used for Wisconsin franchise or income tax purposes. In any case in which the property factor is distorted by reason of the taxpayer depreciating property in Wisconsin by a method different from that used to depreciate property outside Wisconsin, or in any case in which the Wisconsin net cost cannot be ascertained, the department shall authorize or direct some other method of determining the property fraction that will produce an equitable result.

(c) Leasehold improvements. Leasehold improvements shall, for purposes of the property factor, be treated as property owned by the taxpayer regardless of whether the taxpayer is entitled to remove the improvements or the improvements revert to the lessor upon expiration of the lease. The original cost of leasehold improvements net of amortization shall be included in the factor.

(d) Construction in progress. Property or equipment under construction during the tax period, except inventoriable goods in process, shall be excluded from the factor until the property is actually used by the taxpayer in the regular course of its trade or business. If the property is partially used by the taxpayer in the regular course of its trade or business while under construction, the value of the property to the extent used shall be included in the property factor.

(e) Averaging property values. As a general rule the “average value” of property shall be determined by averaging the value at the beginning and ending of the tax period, but the department may require or the taxpayer may utilize the averaging of monthly values during the tax period if monthly averaging is reasonably required to properly reflect the average value of the taxpayer’s property. Averaging by monthly values will generally be applied if substantial fluctuations in the values of the property exist during the tax period, or where property is acquired after the beginning of the tax period or disposed of before the end of the tax period.

(4) Payroll factor.

(b) Compensation paid in Wisconsin. Except as provided in par. (c), compensation is paid in Wisconsin if one of the following applies:

The individual’s service is performed entirely within Wisconsin.

Example: Corporation A has a terminal located in Wisconsin. The compensation of an Illinois resident who works at the Wisconsin terminal is included in the numerator of the payroll factor since the employee’s service is performed entirely in Wisconsin.

The individual’s service is performed within and without Wisconsin, but the service performed without Wisconsin is incidental to the individual’s service within Wisconsin.

Example: Corporation B has its headquarters and a storage and distribution facility in Wisconsin. Corporation B also has a distribution facility located in Indiana. The manager of the Wisconsin storage and distribution facility spends two weeks during the tax year at the storage and distribution facility located in Indiana training the new facility manager. The compensation of the Wisconsin facility manager is included in the numerator of the payroll factor because the service performed in Indiana is incidental to the service performed in Wisconsin

A portion of the service is performed within Wisconsin and the base of operations of the individual is in Wisconsin.

A portion of the service is performed within Wisconsin and, if there is no base of operations, the place from which the individual’s service is directed or controlled is in Wisconsin.

A portion of the service is performed within Wisconsin and neither the base of operations of the individual nor the place from which the service is directed or controlled is in any state in which some part of the service is performed, but the individual’s residence is in Wisconsin.

Example: Corporation E is headquartered in and has its sales office in Indiana. It has a terminal located in Wisconsin. A Wisconsin resident salesperson solicits sales in Wisconsin and Minnesota. The compensation of the Wisconsin salesperson is included in the numerator of the payroll factor since a portion of the salesperson’s service is performed in Wisconsin, the salesperson is a resident of Wisconsin, and the salesperson is directed or controlled from Indiana but performs no service in Indiana.

The individual is neither a resident of nor performs services in Wisconsin, but is directed or controlled from an office in Wisconsin and returns to Wisconsin periodically for business purposes and the state in which the individual resides does not have jurisdiction to impose income or franchise taxes on the employer.

Example: Corporation F has its sales office in Wisconsin. A salesperson resides in Nebraska and solicits sales in Nebraska and Kansas. Corporation F does not have nexus in Nebraska or Kansas. The salesperson returns to the Wisconsin sales office for two weeks each year for meetings and training. The compensation of the Nebraska salesperson is included in the numerator of the payroll factor since the salesperson is directed from an office in Wisconsin, returns to Wisconsin periodically for business purposes and Corporation F does not have nexus in Nebraska.

(c) Management fee situs. The situs of management or service fees described in sub. (2) (a) 3. is in Wisconsin to the extent the related corporation’s employees performing the services meet one of the requirements in par. (b).

(d) Services. An individual shall be considered to be performing a service in Wisconsin during the year if the individual performs services for at least 5 days during the year. The compensation of any one employee may not be split between 2 or more states during the year; however, this does not apply if the employee is transferred or changes positions during the year.

(e) Excluded compensation. Compensation related to the operation, maintenance, protection or supervision of real or tangible and intangible personal property used in the production of nonapportionable income, and amounts paid to retired employees shall be excluded from both the numerator and the denominator of the payroll factor. Except for management or service fees paid to a related corporation, payments made to an independent contractor or any other person not properly classifiable as an employee are also excluded.

(f) Elimination of factor. In any case in which the company has no employees nor pays management or service fees to a related corporation, or in which the department determines that employees are not a substantial income producing factor, the department may order or permit the elimination of the payroll factor and the use of the arithmetical average of the other 2 factors to arrive at the Wisconsin apportionment percentage.

(5) Traffic unit factor. The numerator shall be the total number of traffic units in Wisconsin during the tax period. The denominator shall be the total number of traffic units everywhere during the tax period.

Note: Pipeline companies that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

Note: Section Tax 2.48 interprets s. 71.25 (10) (c), Stats.

History

Cr. Register, November, 1969, No. 167, eff. 12-1-69; am. (intro.), Register, August, 1973, No. 212, eff. 9-1-73; am. (1) (intro.), r. (1) (a), (b) and (c), r. and recr. (2), cr. (3), (4) and (5), Register, June, 1991, No. 426, eff. 7-1-91; reprinted to restore dropped copy in (3) (e), Register, March, 1999, No. 519; EmR0943: eff. 12-31-09 and CR 10-001: am. (title) and (1), cr. (2) (am) Register June 2010 No. 654, eff. 7-1-10.

Wis. Admin. Code § Tax 2.49 Apportionment of apportionable income of interstate financial institutions {#sec-tax-2.49 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.49}

(1) Scope. A financial institution that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the financial institution is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

Note: A financial institution that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Billing address” means the address indicated in the taxpayer’s books and records on the first day of the taxable year, or on a later date in the taxable year when the customer relationship began, to which a taxpayer under this section regularly sends any notice, statement, or bill to the taxpayer’s customer. The billing address of a customer who is a natural person means the address of that person’s domicile.

(b) “Borrower located in this state” means either of the following:

A borrower that is engaged in a trade or business and uses the loan proceeds in trade or business activities in this state. If it cannot be determined where the funds are used, “borrower located in this state” means a borrower whose billing address is in this state.
A borrower whose billing address is in this state, but is not engaged in a trade or business.

(c) “Commercial domicile” means the location from which a trade or business is principally managed and directed. If the taxpayer is organized under the laws of a foreign country, the commonwealth of Puerto Rico, or any territory or possession of the United States, “commercial domicile” shall be deemed for the purposes of this section to be the state of the United States or the District of Columbia from which the taxpayer’s trade or business in the United States is principally managed and directed. It shall be rebuttably presumed that the location from which a trade or business is principally managed and directed is the state of the United States or the District of Columbia at which the greatest number of the taxpayer’s employees work, have their office or base of operations, or are directed or controlled, as of the last day of the taxable year.

(d) “Credit card” includes a credit card, debit card, purchase card, charge card, and a travel or entertainment card.

(dm) “Credit card bank” means an institution that is primarily engaged in credit card operations, which does not accept demand deposits or deposits that the depositor may withdraw by check or similar means for payment to third parties or others, and which does not engage in the business of making commercial loans.

(e) “Credit card issuer’s reimbursement fee” means the fee that a taxpayer receives from a merchant’s bank because a person to whom the taxpayer has issued a credit card has paid for merchandise or services sold by the merchant with the credit card.

(f) “Domicile” means a natural person’s true, fixed, and permanent home where that person intends to remain permanently and indefinitely and to which, whenever absent, that person intends to return. A natural person may have only one domicile at any time.

(fm) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(g) “Financial institution” means any financial organization whether incorporated or organized under federal law or under the laws of any state or foreign country that is one of the following:

A bank holding company as defined in s. 221.0901 (2) (c), Stats., including a federal bank holding company, an in-state bank holding company, an out-of-state bank holding company, and a foreign bank holding company.
A bank as defined under 12 USC 1841 (c), including a national bank organized and existing as a national bank association pursuant to the provisions of 12 USC ch. 2 and a state bank organized and operating under ch. 221, Stats.
A savings and loan holding company as defined under 12 USC 1467a (1) (D) or s. 215.01 (24m), Stats.
A savings bank holding company as defined in s. 214.01 (1) (tm), Stats.
A savings association or federal savings bank as defined in 12 USC 1813 (b), including a savings and loan association, building and loan association, or cooperative bank, and an association as defined in s. 215.01 (1), Stats., and a savings bank as defined in s. 214.01 (1) (t), Stats.
A trust company operating as a fiduciary under ch. 223, Stats., or a corporation, limited liability company, association, partnership, business trust, or other legal entity authorized to act as a trustee, personal representative, executor, administrator, guardian, conservator, assignee, or agent or in any other fiduciary capacity for individuals and businesses in the administration of trust funds, estates, and custodial arrangements, in stock and bond transfer and registration, in fiduciary investment and estate planning, and other related services.
An industrial bank, industrial loan company, or similar organization as described in 12 USC 1841 (c) (2) (H).
A safe deposit company that maintains vaults for the deposit and safe-keeping of valuables and rents compartments or boxes to customers who have exclusive access to these compartments or boxes, subject to the oversight and under the rules and regulations of the company.
A private banker including an unincorporated entity operated as a partnership that specializes in investing and managing the money of private clients.
Any corporation engaged in international or foreign banking that is organized under the provisions of 12 USC 611 to 633.
Any agency or branch of a foreign depository as defined in 12 USC 3101.
Any credit union to the extent not exempt under s. 71.26 (1) (a), Stats., and s. 186.113 (20), Stats.
A production credit association organized under 12 USC 2071 or a land bank created under the Federal Farm Loan Act.
A consumer finance company, small loan company, or a sales finance company licensed under ch. 218, Stats.
A mortgage banker as defined in s. 224.71 (3), Stats.
A credit card bank.
Any subsidiary of an entity described in subds. 1. to 16., if a significant purpose for the subsidiary is to hold investments or if the subsidiary primarily functions to hold investments, as provided in s. 71.25 (10) (a) 2., Stats.

(h) “Guarantor of a loan located in this state” means a guarantor whose billing address is in this state.

(hm) “Intangible property” has the same meaning as in s. Tax 2.39 (2) (cm).

(i) “Investment banking services” include assisting business customers in obtaining new financing by underwriting and selling new securities issued by the customer to the public.

(j) “Loan” means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of an extension of credit from another. “Loans” include participations, syndications, and leases treated as loans for federal income tax purposes. “Loans” do not include properties treated as loans under section 595 of the Internal Revenue Code prior to its repeal by P.L. 104-188; futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; non-interest bearing balances due from depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in a real estate mortgage investment conduit, or other mortgage-backed or asset-backed security; and other similar items.

(k) “Loan secured by real property” means that any of the collateral used to secure a loan or other obligation at the time the original loan or obligation was incurred or during the current taxable year is real property. A loan secured by real property includes an installment sales contract for real property. An “agricultural lien” as defined in s. 409.102 (1) (b), Stats., or a “fixture filing” as defined in s. 409.102 (1) (js), Stats., does not by itself constitute a loan secured by real property.

(L) “Loan secured by tangible personal property” means that any of the collateral used to secure a loan or other obligation, other than a loan secured by real property, at the time the original loan or obligation was incurred or during the current taxable year is tangible personal property. A loan secured by tangible personal property includes an installment sales contract for tangible personal property.

(m) “Loan servicing fees” include fees or charges for originating and processing loan applications, such as prepaid interest and loan discounts, and for collecting, tracking, and accounting for loan payments received. “Loan servicing fees” also include gross receipts from the sale of loan servicing rights.

(n) “Merchant discount” means the fee or negotiated discount that is charged to a merchant for accepting a credit card as payment for merchandise or services that are sold to the credit card holder.

(o) “Participation” means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral.

Note: In a loan participation, the credit originator initially makes the loan and subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.

(p) “Person” means a natural person, estate, trust, partnership, limited liability company, corporation, or any other business entity.

(q) “Regular place of business” means an office at which the taxpayer carries on its business in a regular and systematic manner and which is regularly maintained, occupied, or used by employees of the taxpayer.

(r) “State” means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States.

(s) “Syndication” means an extension of credit in which 2 or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.

(t) “Taxpayer” means a financial organization that is subject to apportionment under this section.

(3) Apportionment formula computation. For taxable years beginning after December 31, 2005, a financial institution that is engaged in business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The financial institution shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats. The financial institution shall apportion its remaining net income to this state as follows:

(a) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be apportioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 60% of the fraction and a payroll factor under sub. (5) representing 40% of the fraction.

(b) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be apportioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 80% of the fraction and a payroll factor under sub. (5) representing 20% of the fraction.

(c) For taxable years beginning before January 1, 2008, in any case in which the financial institution has no employees nor pays management or service fees to a related entity, or in which the department determines that employees are not a substantial income producing factor, the department may order or permit the elimination of the payroll factor.

(d) For taxable years beginning after December 31, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the receipts factor under sub. (4).

Note: Financial institutions that are in combined groups use the receipts factor numerator and denominator to compute the modified sales factor, which then determines the financial institution’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

(4) Receipts factor. The receipts factor is the ratio of the taxpayer’s receipts in this state to the taxpayer’s total receipts everywhere during the taxable year. Interest, dividends, gross receipts or net gains from sales of securities held for investment purposes, and other income from investment assets may not be included in the receipts factor. The receipts factor shall include all of the following items:

Note: A financial institution that is a combined group member must adjust its receipts factor numerator and denominator as described in s. Tax 2.61 (7).

(a) Gross receipts from the lease of real property. The numerator of the receipts factor includes gross receipts from the lease, rental, or licensing of real property owned by the taxpayer if the real property is located in this state and gross receipts from the sublease of real property if the real property is located in this state.

(b) Gross receipts from the lease of tangible personal property.

Except as described in subd. 2., the numerator of the receipts factor includes gross receipts from the lease, rental, or licensing of tangible personal property owned by the taxpayer and the sublease of tangible personal property if the property is located in this state during the entire period of lease, rental, licensing, sublease, or other use. If the property is used in and outside this state during the period of lease, rental, licensing, or sublease, gross receipts are included in the numerator of the receipts factor to the extent that the property is used in this state. The proportion of use in this state is determined by multiplying the gross receipts from the lease, rental, licensing, sublease, or other use of the property by a fraction having as a numerator the number of days the property is in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of days that the property is leased, rented, licensed, or subleased in all states having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in the taxable year.
Gross receipts from the lease, rental, or licensing of moving property, including motor vehicles, rolling stock, aircraft, vessels, or mobile equipment, owned by the taxpayer and the sublease of moving property are included in the numerator of the receipts factor to the extent that the property is used in this state. The proportion of use of moving property in this state is determined as follows:

c. The proportion of use of a vessel or mobile equipment in this state is determined by multiplying the gross receipts from the lease, rental, licensing, or sublease of the vessel or mobile equipment by a fraction having as a numerator the number of days that the vessel or mobile equipment is in this state while leased, rented, licensed, or subleased in the taxable year and having as a denominator the total number of days that the vessel or mobile equipment is leased, rented, licensed, or subleased in the taxable year.

d. If the taxpayer is unable to determine the use of moving property under subd. 2. a., b., or c. while the property is leased, rented, licensed, or subleased in the taxable year, the moving property is conclusively deemed to be used in the state in which the property is located at the time that the lessee, renter, licensee, or sublessee takes possession of the property.

The numerator of the receipts factor includes gross interest, fees, points, charges, and penalties from loans secured by real property if the real property securing the loan is located in this state. If the real property securing the loan is located in both this state and one or more other states or foreign countries, the gross interest, fees, points, charges, and penalties shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country.
The determination of whether the real property securing a loan is located in this state shall be made at the time the original agreement was made and for each subsequent taxable year.

(d) Gross interest and other fees from loans secured by tangible personal property.

The numerator of the receipts factor includes gross interest, fees, points, charges, and penalties from loans secured by tangible personal property if the tangible personal property securing the loan is located in this state as described in par. (b). If the tangible personal property securing the loan is located in both this state and one or more other states or foreign countries, the gross interest, fees, points, charges, and penalties shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the tangible personal property securing the loan located in each state or foreign country.
The determination of whether the tangible personal property securing a loan is located in this state shall be made at the time the original agreement was made and for each subsequent taxable year.

(e) Gross interest and other fees from loans not secured by real or tangible personal property. The numerator of the receipts factor includes interest, fees, points, charges, and penalties from loans that are not secured by real or tangible personal property if the loan borrower is located in this state.

(f) Net gains from the sale of loans. The numerator of the receipts factor includes net gains from the sale of loans, determined as follows:

The amount of net gains, but not less than zero, from the sale of loans secured by real property located in this state. If the real property securing the loan is located in both this state and one or more other states or foreign countries, the net gain shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country.
The amount of net gains, but not less than zero, from the sale of loans secured by tangible personal property located in this state as described in par. (b). If the tangible personal property securing the loan is located in both this state and one or more other states or foreign countries, the net gain shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the tangible personal property securing the loan located in each state or foreign country.
The amount of net gains, but not less than zero, from the sale of loans not secured by real or tangible personal property if the loan borrower is located in this state.

(g) Gross receipts from credit card receivables. The numerator of the receipts factor includes gross interest, fees, points, charges, and penalties from credit card receivables and gross receipts from annual fees and other fees charged to credit card holders if the billing address of the credit card holder is in this state.

(h) Net gains from the sale of credit card receivables. The numerator of the receipts factor includes net gains, but not less than zero, from the sale of credit card receivables if the billing address of the credit card holder is in this state.

(i) Credit card issuer’s reimbursement fees. The numerator of the receipts factor includes the taxpayer’s credit card issuer’s reimbursement fees if the billing address of the credit card holder is in this state.

(j) Gross receipts from merchant discount. The numerator of the receipts factor includes gross receipts from merchant discount if the merchant’s trade or business is located in this state. If the merchant’s trade or business is located in and outside this state, the numerator includes only receipts from merchant discounts on sales made in this state. If the location of a sale cannot be determined, the numerator includes the merchant discount on the sale if the merchant’s commercial domicile is in this state. The receipts shall be computed net of any credit card holder charge backs but may not be reduced by any interchange transaction fees or by any issuer’s reimbursement fees paid to another for charges made by its credit card holders.

(k) Loan servicing fees.

The numerator of the receipts factor includes loan servicing fees derived from loans owned by the taxpayer or another person, including servicing participations, and secured by real property located in this state. If the real property securing the loan is located in both this state and one or more other states or foreign countries, the loan servicing fees shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the real property securing the loan located in each state or foreign country. If the location of the real property securing the loan cannot be determined, the numerator includes the loan servicing fees if the loan borrower or guarantor of the loan is located in this state.
The numerator of the receipts factor includes loan servicing fees derived from loans owned by the taxpayer or another person, including servicing participations, and secured by tangible personal property located in this state as described in par. (b). If the tangible personal property securing the loan is located in both this state and one or more other states or foreign countries, the loan servicing fees shall be divided among those states or foreign countries having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the fair market value of the tangible personal property securing the loan located in each state or foreign country. If the location of the tangible personal property securing the loan cannot be determined, the numerator includes the loan servicing fees if the loan borrower or guarantor of the loan is located in this state.
The numerator of the receipts factor includes loan servicing fees derived from loans owned by the taxpayer or another person, including servicing participations, and not secured by real or tangible personal property if the loan borrower or guarantor of the loan is located in this state.

(L) Gross receipts from travelers checks, cashiers checks, certified checks, and money orders. The numerator of the receipts factor includes gross fees or other charges for the issuance of travelers checks, cashiers checks, certified checks, and money orders if the checks or money orders are purchased in this state.

(m) Gross receipts from automated teller machines. The numerator of the receipts factor includes gross receipts from the usage of automated teller machines located in this state.

(n) Gross receipts from safety deposit boxes. The numerator of the receipts factor includes gross receipts from the rental of safety deposit boxes if the boxes are located in this state.

(o) Gross receipts from maintaining accounts. The numerator of the receipts factor includes gross receipts from the maintenance of accounts, including but not limited to service charges for maintaining accounts, overdraft charges, charges for copies of statements and checks, and fees for account reconciliation, if either of the following applies:

The service is provided to an account holder that is not engaged in a trade or business, and the account holder’s billing address is in this state.
The service is provided to an account holder that is engaged in a trade or business, the account holder maintains a regular place of business in this state, and the service received relates to the business in this state. If the account holder receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the account holder, in the regular course of the account holder’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the account holder’s billing address is in this state.

(p) Gross receipts from electronic funds transfer. The numerator of the receipts factor includes electronic funds transfer fees if either of the following applies:

The service is provided to a customer that is not engaged in a trade or business, and the customer’s billing address is in this state.
The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(q) Gross receipts from cash management services. The numerator of the receipts factor includes the gross amount of any fees or charges generated from cash management services, including but not limited to lockbox services, depository transfer checks, and payables management, if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(r) Gross receipts from international trade services. The numerator of the receipts factor includes the gross receipts from international trade services, including but not limited to letters of credit and bankers acceptance notes, if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(s) Gross receipts from data processing services, document imaging services, and microfilming services. The numerator of the receipts factor includes the gross receipts from data processing services, document imaging services, and microfilming services if the service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(t) Gross receipts from research services. The numerator of the receipts factor includes gross receipts from research services if either of the following applies:

The service is provided to a customer that is not engaged in a trade or business, and the customer’s billing address is in this state.
The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(u) Gross receipts from trust services. The numerator of the receipts factor includes gross receipts from trust services if either of the following applies:

The service is provided to a customer that is not engaged in a trade or business, and the customer’s billing address is in this state.
The service is provided to a customer that is engaged in a trade or business, the customer maintains a regular place of business in this state, and the service received relates to the business in this state. If the customer receives the service in more than one state or the state in which the service is received cannot be determined, the service is received in this state if the customer, in the regular course of the customer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the services are received in this state if the customer’s billing address is in this state.

(v) Gross receipts from investment banking services. The numerator of the receipts factor includes gross receipts, including commissions, management fees, or underwriting fees, earned from investment banking services if either of the following applies:

The issuer of the securities is not engaged in a trade or business, and the issuer’s billing address is in this state.
The issuer of the securities is engaged in a trade or business, the issuer of the securities maintains a regular place of business in this state, and the securities relate to that person’s business in this state. If the securities relate to that person’s regular place of business in more than one state, the receipts from the performance of the service are included in the numerator of the receipts factor according to the portion of the service received in this state. If the regular place of business to which the securities relate cannot be determined, the service is received in this state if the issuer of the securities, in the regular course of the issuer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the service is received in this state if the issuer’s billing address is in this state.

(w) Gross receipts from security brokerage services.

The numerator of the receipts factor includes fees, commissions, margin interest, and other gross receipts from security brokerage services if the customer’s billing address is in this state.
The numerator of the receipts factor includes net gains, net of commissions, but not less than zero, from sales of trading assets if the customer’s billing address is in this state. “Trading assets” include securities, commodities, and related financial instruments that a taxpayer acquires and holds for sale in its inventory account. The receipts factor does not include gross receipts or net gains from sales or other dispositions of investment assets.

(x) Gross receipts from other services. The numerator of the receipts factor includes gross receipts from services that are not described in pars. (a) to (w) if the purchaser of the service received the benefit of the service in this state under any of the following circumstances:

The benefit of a service is received in this state if any of the following applies:

a. The service relates to real property that is located in this state.

b. The service relates to tangible personal property that is delivered directly or indirectly to customers in this state.

c. The service is purchased by an individual who is physically present in this state at the time that the service is received.

d. The service is provided to a person engaged in a trade or business in this state and relates to that person’s business in this state.

If the purchaser of a service receives the benefit of a service in more than one state, the gross receipts from the performance of the service are included in the numerator of the receipts factor according to the portion of the service received in this state.

(y) Gross receipts from computer software.

The numerator of the receipts factor includes gross receipts from the use of computer software if the purchaser or licensee uses the computer software at a location in this state.
Computer software is used at a location in this state if the purchaser or licensee uses the computer software in the regular course of business operations in this state, for personal use in this state, or if the purchaser or licensee is an individual whose domicile is in this state. If the purchaser or licensee uses the computer software in more than one state, the gross receipts shall be divided among those states having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the use of the computer software in those states. To determine computer software use in this state, the department may consider the number of users in each state where the computer software is used, the number of site licenses or workstations in this state, and any other factors that reflect the use of computer software in this state.

(z) Gross royalties and other gross receipts from intangibles.

The numerator of the receipts factor includes gross royalties and other gross receipts received for the use of intangible property if the user, purchaser, or licensee uses the intangible property at a location in this state.
Intangible property is used at a location in this state if the user, purchaser, or licensee uses the property in the operation of a trade or business at a location in this state, for personal use in this state, or if the user, purchaser, or licensee is an individual whose domicile is in this state. If the user, purchaser, or licensee uses the intangible property in more than one state, the gross royalties and other gross receipts from the sale or use of the intangible property shall be divided among those states having jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer in proportion to the use of the intangible property in those states. To determine intangible property use in this state, the department may consider the number of licensed sites in each state, the volume of property manufactured, produced, or sold at locations in this state, or any other factors that reflect the use of the intangible property in this state.

(ze) Gross receipts from services provided to regulated investment companies.

Except as provided in subd. 2., the numerator of the receipts factor includes gross receipts and net gain described under pars. (a) to (z) from services provided to or on behalf of a regulated investment company, as defined in section 851 of the Internal Revenue Code. The regulated investment company is considered the purchaser or consumer of the services.
At the taxpayer’s option, the portion of the gross receipts received from a regulated investment company from the sale of administration, distribution, or management services shall be included in the numerator of the receipts factor as described in subd. 3. A taxpayer that makes this election shall use this method to determine the receipts included in the numerator of the receipts factor from each regulated investment company for or on behalf of which it performs services and shall compute the receipts from each regulated investment company separately. For purposes of this subdivision:

a. “Administration services” include clerical, accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal, and tax services provided for a regulated investment company but only if the provider of the services also provides, or is affiliated with a person that provides, distribution or management services to the regulated investment company.

b. “Distribution services” include advertising, servicing investor accounts, marketing, or selling shares of the regulated investment company. In the case of advertising, servicing, or marketing shares, the services shall be performed by a person that is or, in the case of a closed end company, was either engaged in the service of selling the shares or affiliated with a person that is engaged in the service of selling the shares. In the case of an open end company, the service of selling shares shall be performed pursuant to a contract entered into under 15 USC 80a-15(b).

c. “Management services” include rendering investment advice directly or indirectly to a regulated investment company, determining when sales and purchases of securities are to be made on behalf of the regulated investment company, selling or purchasing securities constituting assets of a regulated investment company, and related activities, but only if the activities are performed pursuant to a contract with the regulated investment company entered into under 15 USC 80a-15(a), for a person that has entered into the contract with the regulated investment company or for a person that is affiliated with a person that has entered into the contract with a regulated investment company.

d. A person is affiliated with another person if each person is a member of the same affiliated group, as defined under section 1504 of the Internal Revenue Code without regard to sub. (b) of section 1504.

e. Receipts received from a regulated investment company include amounts received directly or indirectly from the regulated investment company and amounts received from shareholders in the regulated investment company.

The numerator of the receipts factor includes the sum of receipts determined by multiplying the gross receipts from the sale of administration, distribution, and management services provided to or on behalf of each separate regulated investment company by a fraction, computed as follows:

a. The numerator of the fraction is the sum of the monthly percentages determined for each month of the regulated investment company’s taxable year for federal income tax purposes, which taxable years ends within or at the same time as the taxpayer’s taxable year, but excluding any month during which the regulated investment company had no outstanding shares. The monthly percentage for each month is determined by dividing the number of shares in the regulated investment company that are owned on the last day of the month by shareholders whose domicile or commercial domicile is in this state by the total number of shares in the regulated investment company outstanding on that date.

b. The denominator of the fraction is the number of monthly percentages.

(zm) Other sales. The numerator of the receipts factor includes all other receipts described in s. Tax 2.39 (6) (b) to (i), to the extent not described in this subsection.

(zs) Receipts not taxed. For taxable years beginning before January 1, 2009, fifty percent of the taxpayer’s receipts that are apportioned under this section to a state which does not have jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer shall be included in the numerator of the apportionment fraction if the taxpayer’s employees or representatives performed such services from a location in this state. With regard to receipts described in pars. (a) to (ze), this paragraph does not apply to taxable years beginning on or after January 1, 2009.

(5) Payroll factor. The payroll factor is the ratio of the total compensation paid to employees located in this state to the total compensation paid to employees located everywhere, determined in accordance with the provisions of ss. 71.04 (6) and 71.25 (8), Stats., and s. Tax 2.39 (5). “Compensation paid to employees” includes deductible management or service fees paid to a related entity directly or indirectly for the performance of personal services, and the situs of the fees is in this state if the services are performed in this state. The recipient of the fees may not include the compensation paid to its employees with respect to the personal services in either the numerator or denominator of its payroll factor.

Note: The provisions of s. Tax 2.49 first apply for taxable years beginning on January 1, 2006.

History

Cr. Register, August, 1973, No. 212, eff. 9-1-73; am. (1) (b), Register, July, 1978, No. 271, eff. 8-1-78; corrections in (1) (b) and (3) made under s. 13.93 (2m) (b) 7., Stats., Register, March, 1999, No. 519; CR 04-031: r. and recr. Register June 2006 No. 606, eff. 7-1-06; correction in (4) (zm) made under s. 13.93 (2m) (b) 7., Stats., Register November 2006 No. 611; corrections in (1) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31-09 and CR 10-001: am. (1), (2) (h), (3) (intro.), (4) (intro.), (z) 1., (zm) and (zs), cr. (2) (dm), (fm), (g) 16., 17., (hm) and (3) (d), r. (3) (c), renum. (3) (d) to be (3) (c) Register June 2010 No. 654, eff. 7-1-10; CR 19-141: am. (2) (hm), (4) (x) 1. b., c. Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.495 Apportionment of apportionable income of interstate brokers-dealers, investment advisers, investment companies, and underwriters {#sec-tax-2.495 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.495}

(1) Scope. A brokerage house, investment adviser, investment company, or underwriter that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the brokerage house, investment adviser, investment company, or underwriter is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

Note: A brokerage house, investment adviser, investment company, or underwriter that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Billing address” means the address indicated in the taxpayer’s books and records on the first day of the taxable year, or on a later date in the taxable year when the customer relationship began, to which a taxpayer regularly sends any notice, statement or bill to the taxpayer’s customer. The billing address of a customer who is a natural person means the address of that person’s domicile.

(b) “Brokerage commission” includes, but is not limited to, all sales fees on agency or principal transactions whether charged explicitly or implicitly.

(d) “Broker-dealer” means a person engaged in the business of effecting transactions in securities, commodities, and related financial instruments for the account of another or for the person’s own account. “Broker-dealer” does not include a sales agent; an issuer with respect to purchasing and selling the issuer’s own securities; a bank, savings institution, or trust company, when effecting transactions for its own account or as an agent; a person in that person’s capacity as a personal representative, executor, administrator, holder of power of attorney, guardian, trustee of a testamentary or inter vivos trust, conservator, or pledgee; or any other person excluded from the definition of “broker-dealer” in s. 551.102 (4), Stats.

(e) “Commercial domicile” means the location from which a trade or business is principally managed and directed. If the taxpayer is organized under the laws of a foreign country, the commonwealth of Puerto Rico, or any territory or possession of the United States, “commercial domicile” shall be deemed for the purposes of this section to be the state of the United States or the District of Columbia from which the taxpayer’s trade or business in the United States is principally managed and directed. It shall be rebuttably presumed that the location from which a trade or business is principally managed and directed is the state of the United States or the District of Columbia at which the greatest number of the taxpayer’s employees work, have their office or base of operations, or are directed or controlled, as of the last day of the taxable year.

(em) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(f) “Investment adviser” has the meaning given in 15 USC 80b-2 (a) (11).

(g) “Investment company” has the meaning given in 15 USC 80a-3.

(h) “Person” means a natural person, estate, trust, partnership, limited liability company, corporation, or any other business entity.

(i) “Regular place of business” means an office at which the taxpayer carries on its business in a regular and systematic manner and which is regularly maintained, occupied, or used by employees of the taxpayer.

(j) “Sales agent” means any individual other than a broker-dealer who represents a broker-dealer or issuer in effecting or attempting to effect transactions in securities. A sales agent includes a partner, officer, or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions.

(k) “State” means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States.

(L) “Taxpayer” means a broker-dealer, investment adviser, investment company, or underwriter who is subject to apportionment under this section.

(m) “Trading assets” include securities, commodities, and related financial instruments that a taxpayer acquires and holds for sale in its inventory account.

(n) “Underwriter” includes all persons described under 15 USC 77b (a) (11).

(3) Apportionment formula computation. For taxable years beginning after December 31, 2005, a broker-dealer, investment adviser, investment company, or underwriter that is engaged in business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The broker-dealer, investment adviser, investment company, or underwriter shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats. The broker-dealer, investment adviser, investment company, or underwriter shall apportion its remaining net income to this state as follows:

(a) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be apportioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 60% of the fraction, a payroll factor under sub. (5) representing 20% of the fraction, and a property factor under sub. (6) representing 20% of the fraction.

(b) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be apportioned using an apportionment fraction composed of a receipts factor under sub. (4) representing 80% of the fraction, a payroll factor under sub. (5) representing 10% of the fraction, and a property factor under sub. (6) representing 10% of the fraction.

(c) In any case in which the taxpayer has no employees nor pays management or service fees to a related entity, or in which the department determines that employees are not a substantial income producing factor, the department may order or permit the elimination of the payroll factor. In any case in which the taxpayer has no property, or in which the department determines that property is not a substantial income producing factor, the department may order or permit the elimination of the property factor. This subsection does not apply to taxable years beginning after December 31, 2007.

(d) For taxable years beginning after December 31, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the receipts factor under sub. (4).

Note: Brokers-dealers, investment advisers, investment companies, and underwriters that are in combined groups use the receipts factor numerator and denominator to compute the modified sales factor, which then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

(4) Receipts factor. The receipts factor is the ratio of the taxpayer’s receipts in this state to the taxpayer’s total receipts everywhere during the taxable year. Interest, dividends, gross receipts or net gains from sales of securities, and other income from investment assets held by a taxpayer in the taxpayer’s investment account may not be included in the receipts factor. The receipts factor shall include the items described in pars. (a) to (h).

Note: A broker-dealer, investment adviser, investment company, or underwriter that is a combined group member must adjust its receipts factor numerator and denominator as described in s. Tax 2.61 (7).

(a) Gross brokerage commissions. The numerator of the receipts factor includes gross brokerage commissions earned if the billing address of the customer is in this state.

(b) Gross margin interest. The numerator of the receipts factor includes total margin interest earned on behalf of brokerage accounts owned by customers if the billing address of the customer is in this state.

(c) Gross account maintenance fees. The numerator of the receipts factor includes account maintenance fees received on behalf of brokerage accounts owned by customers if the billing address of the customer is in this state.

(d) Gross receipts from trading assets.

Except as provided in subds. 1m., 2., and 3., the numerator of the receipts factor includes gross receipts, net of commissions, from sales of trading assets, if the day-to-day decisions regarding the trading assets occur at a location in this state. If the day-to-day decisions regarding the trading assets occur at locations both in and outside this state, the assets shall be considered to be located at the location where the trading policies and guidelines are established. It shall be rebuttably presumed that the location where the trading policies and guidelines are established is at the taxpayer’s commercial domicile.

1m. Except as provided in subd. 2., at the election of the taxpayer, for taxable years beginning after December 31, 2014, the numerator of the receipts factor includes gross receipts, net of commissions, from sales of trading assets if the customer’s billing address is in this state. Once made, an election under this subdivision cannot be revoked without prior consent from the department. If a request to change an election has been approved by the department, the change becomes effective with the first taxable year ending on or after approval by the department.

If the inclusion of gross receipts results in substantial distortion of the receipts factor, the department may order or permit the substitution of net gain, net of commissions, from sales of trading assets.
Subdivision 2. does not apply to any taxpayer who, before January 1, 2023, elected to use the customer billing address method defined in subd. 1m. if the taxpayer has not revoked that election, and who, for any taxable year beginning after December 31, 2021, determines its receipts factor under this section by using the average of the receipts factors determined by using (a) gross receipts, net of commissions, and (b) net gain, net of commissions, from sales of trading assets for the taxable year, with all other components of the receipts factor remaining the same. Any such taxpayer may compute its receipts factor under this subsection using that averaging method. The department cannot require any taxpayer who elected before January 1, 2023, to use the customer billing address method, if the taxpayer has not revoked that election, to use any other method of determining its receipts factor under this section.

(e) Investment company receipts. The numerator of the receipts factor includes gross payments received on investment contracts issued by the taxpayer and held by customers if the billing address of the customer is in this state. “Investment contract” includes any bonds, shares, coupons, certificates of membership, or other obligations or agreements issued by the taxpayer to return to the holders or owners money or anything of value at some future date.

(f) Gross receipts from underwriting services. The numerator of the receipts factor includes gross receipts, including gross commissions, gross management fees, or gross underwriting fees, earned in performing underwriting activities on behalf of the issuer of the securities if either of the following applies:

The issuer of the securities is not engaged in a trade or business, and the issuer’s billing address is in this state.
The issuer of the securities is engaged in a trade or business, the issuer of the securities maintains a regular place of business in this state, and the securities relate to that person’s business in this state. If the securities relate to that person’s regular place of business in more than one state, the receipts from the performance of the service are included in the numerator of the receipts factor according to the portion of the service received in this state. If the regular place of business to which the securities relate cannot be determined, the service is received in this state if the issuer of the securities, in the regular course of the issuer’s business, ordered the service from an office in this state. If the ordering office cannot be determined, the service is received in this state if the issuer’s billing address is in this state.

(g) Other gross receipts or net gains. The numerator of the receipts factor includes any other gross receipts or net gains as provided in s. Tax 2.49 (4).

(h) Receipts not taxed. For taxable years beginning before January 1, 2009, fifty percent of the taxpayer’s receipts that are apportioned under this section to a state which does not have jurisdiction to impose an income tax or franchise tax measured by net income on the taxpayer shall be included in the numerator of the apportionment fraction if the taxpayer’s commercial domicile is in this state. With regard to receipts described in pars. (a) to (f), this paragraph does not apply to taxable years beginning on or after January 1, 2009.

(6) Property factor. The property factor is determined in accordance with the provisions of ss. 71.04 (5) and 71.25 (7), Stats., and s. Tax 2.39 (4).

Note: The provisions of s. Tax 2.495 first apply for taxable years beginning on January 1, 2006.

History

CR 04-031: cr. Register June 2006 No. 606, eff. 7-1-06; corrections in (1), (2) (d) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31-09 and CR 10-001: am. (1), (3) (intro.), (4) (intro.) and (h), cr. (2) (em) and (3) (d), r. (3) (c), renum. (3) (d) to be (3) (c) Register June 2010 No. 654, eff. 7-1-10; CR 14-077: am. (4) (d) 1., cr. (4) (d) 1m. Register May 2015 No. 713, eff. 6-1-15; 2023 Wis. Act 19: am. (4) (d) 1., cr. (4) (d) 3. Register July 2023 No. 811, eff. 7-7-23.

Wis. Admin. Code § Tax 2.50 Apportionment of apportionable income of interstate public utilities {#sec-tax-2.50 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.50}

(1) Scope. A public utility that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the public utility is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

Note: A public utility that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(b) “Payroll factor” means the payroll fraction computed under s. 71.04 (6) or 71.25 (8), Stats., and s. Tax 2.39.

(d) “Public utility” means any business entity that owns or operates any plant, equipment, property, franchise, or license for the production, transmission, sale, delivery, or furnishing of electricity, water, or steam the rates of charges for goods or services of which have been established or approved by a federal, state, or local government or governmental agency.

(e) “Sales factor” means the sales fraction computed under ss. 71.04 (4m) and (7) or 71.25 (6m) and (9), Stats., and s. Tax 2.39.

(3) Apportionment formula computation. For taxable years beginning after December 31, 2004, a public utility that is engaged in business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The public utility shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats. The public utility shall apportion its remaining net income to this state as follows:

(a) For taxable years beginning before January 1, 2006, apportionable income shall be apportioned using an apportionment fraction obtained by taking the arithmetical average of the sales factor, property factor, and payroll factor.

(b) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor representing 60% of the fraction, the property factor representing 20% of the fraction, and the payroll factor representing 20% of the fraction.

(c) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor representing 80% of the fraction, the property factor representing 10% of the fraction, and the payroll factor representing 10% of the fraction.

(d) For taxable years beginning after December 31, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor.

Note: Public utilities that are in combined groups must adjust the numerator and denominator of the sales factor as described in s. Tax 2.61 (7).

Note: The provisions of s. Tax 2.50 first apply for taxable years beginning on January 1, 2005.

Note: Section Tax 2.50 interprets ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats.

History

Cr. Register, August, 1973, No. 212, eff. 9-1-73; am. (1), Register, February, 1990, No. 410, eff. 3-1-90; emerg. r. and recr. eff. 12-5-05; CR 05-117: r. and recr. Register June 2006 No. 606, eff. 7-1-06; corrections in (1) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31-09 and CR 10-001: am. (1) and (3) (intro.), renum. (2) (a) to (d) to be (2) (b) to (e), cr. (2) (a) Register June 2010 No. 654, eff. 7-1-10.

Wis. Admin. Code § Tax 2.502 Apportionment of apportionable income of interstate telecommunications companies {#sec-tax-2.502 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.502}

(1) Scope. A telecommunications company that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section, except if the telecommunications company is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats.

Note: A telecommunications company that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) “Cable television service” means cable service as defined in 47 USC 522(6) when provided over a cable system as defined in 47 USC 522(7).

(am) “Engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(b) “Payroll factor” means the payroll fraction computed under s. 71.04 (6) or 71.25 (8), 2001 Stats., and s. Tax 2.39.

(c) “Property factor” means the property fraction computed under s. 71.04 (5) or 71.25 (7), 2001 Stats., and s. Tax 2.39.

(d) “Telecommunications company” means any person that owns, operates, manages, or controls any plant or equipment used to furnish telecommunications services and cable television services within this state directly or indirectly to the public and derives at least 70% of its gross income for the current taxable year from the provision of telecommunications services and cable television services, excluding internet service and the resale of telecommunications by telecommunications resellers as defined in s. 196.01 (9), Stats. For purposes of the 70% test, gross income does not include interest, dividends, rents, royalties, capital gains or ordinary gains from asset dispositions, other than in the normal course of business. “Telecommunications company” does not include internet service providers.

(e) The following terms have the same definitions as provided in ss. 77.51 and 77.522 (4) (a), Stats.:

“Ancillary services” (s. 77.51 (1ba), Stats.).
“Call-by-call basis” (s. 77.522 (4) (a) 2., Stats.).
“Communications channel” (s. 77.522 (4) (a) 3., Stats.).
“Customer” (s. 77.522 (4) (a) 4., Stats.).
“Customer channel termination point” (s. 77.522 (4) (a) 5., Stats.).
“Home service provider” (s. 77.522 (4) (a) 7., Stats.).
“Interstate telecommunications services” (s. 77.51 (5n), Stats.).
“Intrastate telecommunications services” (s. 77.51 (5r), Stats.).
“Mobile telecommunications service” (s. 77.522 (4) (a) 8., Stats.).
“Place of primary use” (s. 77.522 (4) (a) 9., Stats.).
“Postpaid calling service” (s. 77.522 (4) (a) 10., Stats.).
“Prepaid calling service” (s. 77.51 (10d), Stats.).
“Prepaid wireless calling service” (s. 77.51 (10f), Stats.).
“Private communication service” (s. 77.51 (11c), Stats.).
“Service address” (s. 77.51 (17m), Stats.).
“Telecommunications services” (s. 77.51 (21n), Stats.).

(3) Apportionment formula computation. For taxable years beginning after December 31, 2004, a telecommunications company that is engaged in business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The telecommunications company shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b), Stats. The telecommunications company shall apportion its remaining net income to this state using an apportionment fraction obtained by taking the arithmetical average of the property factor, payroll factor, and sales factor. The sales factor is determined as prescribed in subs. (4) and (5), as applicable.

(4) Sales factor for taxable years beginning before January 1, 2009. For taxable years beginning before January 1, 2009, the sales factor is the sales factor as would be determined under s. 71.25 (9), 2001 Stats.

(5) Sales factor for taxable years beginning on or after January 1, 2009. For taxable years beginning on or after January 1, 2009, the sales factor is determined as provided in s. 71.25 (9), Stats., as effective for the current taxable year. For purposes of computing the numerator of a telecommunications company’s sales factor under this subsection, the following rules apply:

(a) General. Except as provided otherwise in par. (b) to (f), gross receipts from the sale of a telecommunications service or mobile telecommunications service are in this state if the customer’s place of primary use of the service is in this state.

(b) Telecommunications services on call-by-call basis. Gross receipts from the sale of telecommunications services sold on an individual call-by-call basis are in this state if either of the following applies:

The call both originates and terminates in this state.
The call either originates or terminates in this state and the service address is located in this state.

(c) Postpaid calling services, prepaid calling services, and prepaid wireless calling services. Gross receipts from the sale of postpaid calling services, prepaid calling services, and prepaid wireless calling services are in this state if the origination point of the telecommunication signal, as first identified by the service provider’s telecommunication system or, if the system used to transport telecommunication signals is not the seller’s, as identified by information received by the seller from its service provider, is located in this state.

(d) Private communication services. The following gross receipts from the sale of private communication services are in this state:

Any separate charge attributable to a customer channel termination point located within this state.
If all customer channel termination points are located entirely in this state, the gross receipts attributable to those customer channel termination points.
Fifty percent of the gross receipts attributable to segments of a channel between two customer channel termination points located in different states, if one of those customer channel termination points is located in this state.
If the segments are not charged separately, the gross receipts attributable to segments of a communications channel that is located in this state and in more than one other state or equivalent jurisdiction, computed based on a percentage determined by dividing the number of customer channel termination points in this state by the total number of customer channel termination points in all jurisdictions where segments of the communications channel are located.

(e) Ancillary services. Gross receipts from the sale of ancillary services are in this state if the customer’s place of primary use is in this state.

(f) Carrier network access and sales for resale. The following gross receipts from carrier network access and from the sale of telecommunications services for resale are in this state:

Gross receipts from access fees attributable to intrastate telecommunications service that both originates and terminates in this state.
Where subd. 1. does not apply, 50 percent of the gross receipts from access fees attributable to interstate telecommunications service if the interstate call either originates or terminates in this state.
Gross receipts from interstate end user access line charges, including the surcharge approved by the federal communications commission and levied pursuant to 47 CFR 69, if the customer’s service address is in this state.
Gross receipts from sales of telecommunications services to other telecommunication service providers for resale if the reseller’s sale to the customer would be sourced to this state under the rules of this subsection, provided the information is readily available to make that determination. If the information is not readily available, the taxpayer must use a reasonable and consistent method to determine the amount of gross receipts from sales for resale that are derived from Wisconsin, based on the information that is available.

(g) Other sales. Sales other than those described in pars. (a) to (f) are in this state if so determined under s. 71.25 (9), Stats., and s. Tax 2.39.

Note: Telecommunications companies that are in combined groups must adjust the numerator and denominator of each of their apportionment factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details.

Note: The provisions of s. Tax 2.502 first apply for taxable years beginning on January 1, 2005.

Note: Section Tax 2.502 interprets ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats.

History

Emerg. cr., eff. 12-5-05; CR 05-117: cr. Register June 2006 No. 606, eff. 7-1-06; corrections in (1) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31-09 and CR 10-001: am. (1) and (3), cr. (2) (am), (e), (4) and (5), r. (2) (d) and (f), renum. (2) (e) to be (2) (d) and am. Register June 2010 No. 654, eff. 7-1-10; correction in (5) (f) 3. made under s. 13.92 (4) (b) 4., Stats., Register June 2010 No. 654; correction in (2) (e) 14. made under s. 13.92 (4) (b) 7., Stats., Register June 2018 No. 750.

Wis. Admin. Code § Tax 2.505 Apportionment of apportionable income of interstate professional sports clubs {#sec-tax-2.505 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.505}

(1) Scope. The apportionable income of professional sports clubs engaged in business in and outside Wisconsin during the year shall be apportioned to Wisconsin using the apportionment fraction described in s. 71.25 (6), Stats., and the apportionment formula computation described in s. 71.25 (6m), Stats., if applicable, except if the professional sports club is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). The property, payroll, and sales factors described in s. 71.25 (6) and (6m), Stats., shall be determined as described in this section.

Note: A professional sports club that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definition. In this section, “engaged in business in and outside this state” has the same meaning as in s. Tax 2.39 (2) (b).

(3) Property factor. The property factor is a fraction as defined in s. 71.25 (7), Stats. Owned or rented real and tangible personal property shall be included in the factor as provided in s. 71.25 (7), Stats., and s. Tax 2.39 (4). Minor equipment, such as uniforms, and playing and practice equipment, need not be included in the factor.

Note: The property factor does not apply to taxable years beginning after December 31, 2007.

(4) Payroll factor. The payroll factor is a fraction as defined in s. 71.25 (8), Stats. Compensation shall be reported as provided in s. 71.25 (8), Stats., and s. Tax 2.39 (5). Bonuses and payments shall be included in the payroll factor on a prorated basis in accordance with internal revenue service ruling 71-137, Cum. Bull., 1971-1. Compensation paid for optioned players shall be included in the factor only if paid directly to the player by the taxpayer.

Note: The payroll factor does not apply to taxable years beginning after December 31, 2007.

(5) Sales factor. The sales factor is a fraction as defined in s. 71.25 (9), Stats. Sales shall be included in the factor in accordance with s. 71.25 (9), Stats., s. Tax 2.39 (6) and the following rules:

(a) Gate receipts. Gate receipts include all receipts from games played at the taxpayer’s home facility plus any gate receipts received from games played away from the taxpayer’s home facility. The numerator of the sales fraction for taxpayers whose home facility is in Wisconsin shall include all gate receipts from games played in its home facility. The numerator of the sales fraction for taxpayers whose home facility is outside Wisconsin shall include the percentage of gate receipts received from games played in Wisconsin.

(b) Radio and television receipts. Radio and television receipts received by the taxpayer as its proportionate share from a league or association contract with the major communications networks are in Wisconsin in proportion to the number of games played in Wisconsin to total games played by the taxpayer covered by the contract during the season. Local television and radio receipts are in Wisconsin if the games are played in Wisconsin.

(c) Concession income and miscellaneous income. Concession income is assigned to the numerator if the concession is operated within Wisconsin. Miscellaneous income such as parking lot income, advertising income, and other similar income is assigned to the numerator if the activity is conducted within Wisconsin.

(d) Player contracts, franchises, and similar sources. Income from player contract transactions, franchise fees, and other similar sources shall be excluded from the numerator and the denominator of the sales fraction.

Note: Professional sports clubs that are in combined groups must adjust the numerator and denominator of the sales factor as described in s. Tax 2.61 (7).

Note: The provisions of s. Tax 2.505 first apply for taxable years beginning on January 1, 2005.

Note: Section Tax 2.505 interprets s. 71.25 (6), Stats.

History

Cr. Register, December, 1980, No. 300, eff. 1-1-81; am. (1) to (3) (intro.), (c) and (d), Register, July, 1989, No. 403, eff. 8-1-89; emerg. am. (title), (intro.) to (3) (intro.) and (d) (title), eff. 10-12-07; CR 07-091: am. (title), (intro.) to (3) (intro.) and (d) (title) Register March 2008 No. 627, eff. 4-1-08; EmR0943: emerg. am. (intro.), renum. (1) to (3) to be (2) to (4), cr. (1), eff. 12-31-09; CR 10-001: renum. (intro.) and (1) to (3) to be (1) and (3) to (5) and am. (1), cr. (2) Register June 2010 No. 654, eff. 7-1-10; correction to (1) (title) made under s. 13.92 (4) (b) 2., Stats., Register June 2010 No. 654.

Wis. Admin. Code § Tax 2.60 Definitions relating to combined reporting {#sec-tax-2.60 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.60}

(1) Purpose. This section provides definitions applicable to ss. Tax 2.61, 2.62, 2.63, 2.64, 2.65, 2.66, and 2.67, which interpret the combined reporting provisions of s. 71.255, Stats.

(2) Definitions.

(a) “Combined group” has the meaning given in s. 71.255 (1) (a), Stats. The following subdivisions clarify this meaning:

If a group of corporations satisfies all three conditions described in s. Tax 2.61 (2) (a), it is considered a combined group even if the group is not eligible to apportion its income because all corporations in the group do business solely in Wisconsin.
A combined group remains in existence for as long as two or more corporations meet all three conditions described in s. Tax 2.61 (2) (a) with regard to the same unitary business. The mere addition of new members or departure of existing members does not create a new combined group.
Any commonly controlled group that has made a controlled group election is a combined group, and each member of a commonly controlled group that has made the controlled group election is a combined group member.

(b) “Combined group member” means a corporation for which any part of the corporation’s net income or loss is subject to combination and therefore required to be included in a combined report, or any member of a commonly controlled group that is subject to a controlled group election.

(c) “Combined report” has the meaning given in s. 71.255 (1) (b), Stats. A combined report is considered a return filed pursuant to ss. 71.24 (1) or (1m) or 71.44 (1) or (1m), Stats., as applicable, by each corporation included in the combined report. For this reason, the term “combined return” is used throughout the rules of this chapter to refer to a combined report.

(d) “Combined return” has the same meaning as “combined report” as explained in par. (c). In general, a combined return includes the computation of combined unitary income, the apportionment of the income to each combined group member, as applicable, any separate entity items, loss carryforwards, and credits of each combined group member, and the net tax and economic development surcharge liability of each combined group member. To be considered complete, a combined return shall contain all the items required in s. Tax 2.67 (2) (c).

(e) “Combined unitary income” means the combined group’s net income or loss attributable to the unitary business which is subject to combination under s. 71.255, Stats., before apportionment and net business loss carryforwards. Combined unitary income excludes any amounts that are not subject to combination because of the water’s edge rules.

(f) “Controlled group election” means an election to include every member of the commonly controlled group in the combined group as provided by s. 71.255 (2m), Stats., and further described in s. Tax 2.63.

(g) “Corporation” includes corporations, publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code, limited liability corporations treated as corporations under the Internal Revenue Code, joint stock companies, associations, common law trusts and all other entities treated as corporations under section 7701 of the Internal Revenue Code, unless the context requires otherwise in this chapter or in ch. 71, Stats.

(h) “Designated agent” means the corporation in the combined group responsible for acting on behalf of the group for matters relating to the combined return, as further described in s. Tax 2.65.

(i) “Income” and “net income” include net losses, unless the context requires otherwise.

(j) “Intercompany transaction” means a transaction between two members of the same combined group.

(k) “Internal Revenue Code” has the meaning given in ss. 71.22 (4) and (4m) and 71.42 (2), Stats., as applicable.

(L) “Nonincludable corporation” means a corporation that is not required to use combined reporting even if it satisfies all three conditions described in s. Tax 2.61 (2) (a). A nonincludable corporation cannot be a combined group member even if the nonincludable corporation is a member of a commonly controlled group which has made the controlled group election.

(Lm) “Pre-2009 net business loss carryforward” has the meaning given to “pre-2009 net business loss carry-forward” in s. 71.255 (6) (bm) 1., Stats.

(m) “Separate entity item” means a combined group member’s item of net income or loss or apportionment factor amount which is not subject to combination but instead must be accounted for on a separate entity basis. Separate entity items may include those listed in s. Tax 2.61 (5) (b) to (g). Net business loss carryforwards may be separate entity items if they are non-sharable loss carryforwards as provided in s. Tax 2.61 (9).

(n) “State” means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States.

(o) “Unitary business income” means the net income or loss derived from the unitary business, whether or not the income or loss is subject to combination. “Unitary business” is explained further in s. Tax 2.62.

(p) “Unitary combination” means the computation of combined unitary income and of each member’s share of the combined unitary income.

(q) “Water’s edge rules” means the rules provided under s. Tax 2.61 (4) under which some or all of a corporation’s items attributable to a unitary business are not subject to combination because of the degree of the corporation’s activity outside the United States.

Note: Section Tax 2.60 interprets s. 71.255, Stats.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-006: cr. (2) (Lm) Register July 2012 No. 679, eff. 8-1-12; CR 12-011: am. 2.60 (2) (d) Register July 2012 No. 679, eff. 8-1-12.

Wis. Admin. Code § Tax 2.61 Combined reporting {#sec-tax-2.61 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.61}

(1) Scope. Section 71.255, Stats., generally requires corporations that are commonly controlled and engaged in a unitary business to compute their net income on a combined basis. This section explains when combined reporting is required and how to compute a corporation’s net income and tax liability under combined reporting. Subsections (2) to (4) describe who must use combined reporting and what income is subject to combination. Subsections (5) to (9) explain how to compute the taxable income of a combined group member, including net business loss carryforwards. Subsection (10) provides rules relating to credits and credit carryforwards.

(2) Corporations required to use combined reporting.

(a) General. A corporation is required to use combined reporting if it satisfies each of the following three conditions:

The corporation is a member of a “commonly controlled group” as defined in s. 71.255 (1) (c), Stats. See sub. (3) for rules that apply to identifying a commonly controlled group of corporations.
The corporation is engaged in a “unitary business,” as defined in s. 71.255 (1) (n), Stats., with one or more other corporations in its commonly controlled group, or the commonly controlled group makes a controlled group election. See s. Tax 2.62 for rules to determine whether corporations are engaged in a unitary business. See s. Tax 2.63 for rules pertaining to the controlled group election.
The corporation has unitary business income that is subject to combination under the water’s edge rules described in sub. (4).

(b) Effect of controlled group election. If a controlled group election applies as indicated in par. (a) 2., all corporations in the commonly controlled group are deemed to be engaged in the same unitary business, and all of their net income or loss and apportionment factors are deemed to be derived from that unitary business. In general, this means that if the controlled group election applies, all members of the commonly controlled group are included in a combined report. However, despite this election, a corporation may be required to exclude some or all of its net income, loss, and apportionment factors from the unitary combination if so required under the water’s edge rules described in sub. (4).

(c) Corporations treated as pass-through entities. Except as provided in par. (f), corporations that are included in the definition of “pass-through entity” in s. 71.255 (1) (m), Stats., including tax-option corporations, real estate investment trusts, regulated investment companies, real estate mortgage investment conduits, and financial asset securitization investment trusts, are nonincludable corporations. However, to the extent the net income or loss of these corporations is included in the net income of, or distributed to, a combined group member, the net income or loss is subject to combination to the extent derived from the unitary business and otherwise subject to combination under the water’s edge rules described in sub. (4). The provisions of s. 71.255 (1) (m), Stats., do not affect the taxation of tax-option corporations, real estate investment trusts, regulated investment companies, real estate mortgage investment conduits, or financial asset securitization investment trusts, other than to exclude them from combined reporting except where their inclusion is required under par. (f).

(d) Tax exempt organizations. A corporation that is exempt from income and franchise taxes under ss. 71.26 (1) or 71.45 (1), Stats., is a nonincludable corporation except to the extent it has unrelated business taxable income as defined in section 512 of the Internal Revenue Code. The net unrelated business taxable income, and any corresponding apportionment factors are subject to combination to the extent the net income or loss is derived from the unitary business and is otherwise subject to combination under the water’s edge rules described in sub. (4).

(e) Disregarded entities. An entity that is disregarded as a separate entity for federal income tax purposes under section 7701 of the Internal Revenue Code is considered a branch or division of its owner for Wisconsin income and franchise tax purposes. A corporation shall include the net income or loss and apportionment factors of any disregarded entity of which it is an owner in the combined report to the extent they would be included if the corporation itself earned the income. The water’s edge rules described in sub. (4) do not apply to disregarded entities except insofar as the rules apply to the owner of the disregarded entity.

(f) Other provisions that may apply. Nothing in ss. Tax 2.60 to 2.67 is intended or should be construed as a waiver of the department’s authority under s. 71.255 (2) (f), Stats., or any other authority granted to the department by law. Section 71.255 (2) (f), Stats., provides the following:

The department may require that a combined report include the items of any person or entity who is not otherwise a combined group member but who is a member of the unitary business, in order to reflect proper apportionment of income of the entire unitary business.
If the reported income or loss of a combined group member engaged in a unitary business with a person or entity who is not otherwise a combined group member represents an avoidance or evasion of tax by either party, the department may require all or any part of the income or loss and apportionment factors of either party to be included in or excluded from a combined report, or may require the use of a different apportionment factor or factors.

(3) Commonly controlled group. In general, s. 71.255 (1) (c), Stats., provides that a commonly controlled group exists in cases where there is common ownership or control of stock representing more than 50 percent of the voting power of the corporations in the group. The corporations in a commonly controlled group shall be determined as provided in s. 71.255 (1) (c), Stats., which is further explained in the following paragraphs:

(a) Stock attribution rules. For purposes of s. 71.255 (1) (c) 1. and 2., Stats., a shareholder is considered to have indirect ownership of stock or indirectly own stock if the shareholder has constructive ownership of the stock by operation of section 318 of the Internal Revenue Code, except as provided in subds. 1. and 2.

Example: Corporation A owns stock representing 40% of the voting power of Corporation B and has a 50% interest in Partnership C. Partnership C owns stock representing 30% of the voting power of Corporation B. By operation of section 318 of the Internal Revenue Code, Corporation A constructively owns stock representing 55% (= 40% + (50% x 30%)) of the voting power of Corporation B.

In applying section 318(a)(2) of the Internal Revenue Code, if a partnership, estate, trust, or corporation owns, directly or indirectly, more than 50 percent of an entity, it shall be considered to own all of the stock or other ownership or control interests owned by that entity.

Example: Corporation D owns stock representing 10% of the voting power of Corporation E and has a 75% interest in Partnership F. Partnership F owns stock representing 45% of the voting power of Corporation E. Corporation D is considered to constructively own stock representing 55% (= 10% + 45%) of the voting power of Corporation E. This is because Corporation D owns more than 50% of Partnership F and is therefore considered to own all of the Corporation E stock owned by Partnership F.

If a person has an option to acquire stock or other ownership interests in an entity, the stock or ownership interests are not considered owned by the person unless the department determines it to be necessary to prevent tax avoidance.

(b) Common owner or owners. The common owner or owners need not be combined group members, and the common owner or owners may be persons other than corporations.

(c) Multiple unitary businesses. A commonly controlled group may be engaged in one or more unitary businesses. Therefore, a commonly controlled group may contain more than one combined group.

(d) Voting power.

A shareholder has ownership or control of stock representing more than 50 percent of the voting power of a corporation only if the shareholder has ownership or control of more than 50 percent of the total combined voting power of all classes of stock of the corporation entitled to vote.
A group of two or more corporations need not be commonly owned to be commonly controlled. As provided in s. 71.255 (1) (c) 3., Stats., a group of corporations may be a commonly controlled group if stock representing more than 50 percent of the voting power in each corporation are interests that cannot be separately transferred. If a group of 2 or more corporations would be considered stapled entities under section 269B of the Internal Revenue Code and the regulations that interpret it, without regard to whether the corporations are foreign or domestic, the corporations shall be considered part of a commonly controlled group.
The mere ownership of stock entitled to vote does not by itself mean that the shareholder owning the stock has the voting power of the stock. If there is any agreement, whether express or implied, that any shareholder will not vote its stock or will vote it only in a specified manner, or that shareholders owning stock having 50 percent or less of the total combined voting power will exercise voting power normally possessed by a majority of stockholders, the department may presume that the nominal ownership of the voting power is not determinative of which shareholders actually hold the voting power and may disregard the nominal ownership. This presumption may be rebutted by the taxpayer.
If a shareholder owns shares of stock of a corporation which has another class of stock outstanding, the voting power of that other class of stock will be deemed owned by any person or persons on whose behalf it is exercised if the facts indicate that the shareholders of that other class of stock do not exercise their voting rights independently or fail to exercise their voting rights. If the voting power in that other class of stock is not exercised and the percentage of voting power of that class of stock is substantially greater than its proportionate share of the corporate earnings, the department may presume that the principal purpose of the arrangement was avoid the inclusion of the corporation in the commonly controlled group and may disregard the voting power of the class of stock that was not exercised. This presumption may be rebutted by the taxpayer.

(4) Water’s edge. This subsection describes how a corporation that is otherwise a combined group member must determine and report items that are not subject to combination due to the extent of the corporation’s activities outside the United States, as provided in s. 71.255 (2), Stats. In general, the corporation must consider whether it is a foreign corporation or domestic corporation, whether it qualifies as an “80/20 corporation,” and whether its income is from foreign sources or U.S. sources. The following rules apply:

(a) Qualifying as a “foreign corporation”. For purposes of the water’s edge rules in pars. (d) and (e), a “foreign corporation” means any corporation that is not incorporated, organized, or created in the United States or under the laws of the United States or any state. For purposes of determining whether a corporation is a foreign corporation or a domestic corporation, the following rules apply:

If, for federal purposes, a corporation is treated as created or organized under the laws of both the U.S. and a foreign jurisdiction, it is a domestic corporation.
A foreign corporation that domesticates and is treated by a state as organized under the laws of that state is a domestic corporation.
If an entity is organized in a foreign country and is recognized in that country as a corporation, but the entity’s owner elects to treat that entity as a branch for U.S. taxation purposes or the entity is a disregarded entity, the entity shall be treated as a branch of its owner.

(b) Qualifying as an “80/20 corporation”.

For purposes of the water’s edge rules in pars. (d) and (e), a corporation is an “80/20 corporation” if 80 percent or more of its worldwide gross income during the testing period is “active foreign business income” as defined in subchapter N of the Internal Revenue Code.
The testing period for purposes of subd. 1. is the tested corporation’s taxable year that would be included in the combined group’s taxable year, as determined by s. 71.255 (8), Stats. If the tested corporation was not otherwise eligible to be a combined group member for any part of that taxable year (for example, the corporation did not satisfy the conditions in sub. (2) (a) 1. or 2.), the testing period is the portion of that taxable year in which the corporation was otherwise eligible to be a member.
An 80/20 corporation may be either a foreign corporation or a domestic corporation.
For purposes of this paragraph, a corporation’s active foreign business income includes gross income attributed from subsidiary corporations as provided in subchapter N of the Internal Revenue Code, but only to the extent the gross income of the subsidiary corporations is derived from the combined group’s unitary business.
A disregarded entity’s active foreign business income and worldwide gross income shall be combined with those of its owner for purposes of applying the test in subd. 1.

For purposes of the water’s edge rules in pars. (d) and (e), income is foreign source income if it is from sources without the United States as provided in sections 861 through 865 of the Internal Revenue Code, except as provided in subd. 2. “United States” has the same meaning as in sections 861 through 865 of the Internal Revenue Code.
For a foreign corporation, foreign source income does not include income that is subject to United States taxation because it is effectively connected with the conduct of a trade or business within the United States under sections 861 through 865 of the Internal Revenue Code, even if the income is otherwise from sources without the United States. However, this subdivision shall be disregarded in applying the test under par. (b) 1.
All income that is not foreign source income is U.S. source income.

(d) Water’s edge rules for domestic corporations.

A domestic corporation that is not an 80/20 corporation shall include in the unitary combination all net income or loss from the unitary business regardless of whether it is foreign source income or U.S. source income, and any apportionment factors related to that net income or loss.
A domestic corporation that is an 80/20 corporation is a consolidated foreign operating corporation. A consolidated foreign operating corporation shall include in the unitary combination its net income or loss from the unitary business to the extent it is both U.S. source income and is income described in s. 71.255 (2) (d), Stats., and any apportionment factors related to that net income or loss. The consolidated foreign operating corporation may not include in the unitary combination any foreign source income, income not described in s. 71.255 (2) (d), Stats., expenses or deductions related to the excluded income as provided in sub. (6) (h), or apportionment factors related to the excluded income. However, the excluded income may still be taxable as described in par. (h). The income described in s. 71.255 (2) (d), Stats., is explained further in par. (f).

(e) Water’s edge rules for foreign corporations.

A foreign corporation that is not an 80/20 corporation shall include in the unitary combination its net income or loss from the unitary business to the extent it is U.S. source income, and any apportionment factors related to that net income or loss. The corporation may not include in the unitary combination any foreign source income, expenses or deductions related to the excluded income as provided in sub. (6) (h), or apportionment factors related to the excluded income. However, this foreign source income may still be taxable as described in par. (h).
Except as provided in subd. 3., a foreign corporation that is an 80/20 corporation may not include any income, expenses, or apportionment factors in the unitary combination, but may still have taxable income as described in par. (h).
A foreign corporation that is an 80/20 corporation but elects to be included in a federal consolidated return for the taxable year shall be treated as if it is a domestic corporation, in which case the rules of par. (d) 2. apply to the corporation. This subdivision applies regardless of whether the combined group has made the controlled group election.

(f) Includable income of consolidated foreign operating corporations. The net income that a consolidated foreign operating corporation shall include in a unitary combination, as described in par. (d) 2., includes the items described in subds. 1. to 5. to the extent the income is U.S. source income and from the unitary business, regardless of whether earned or incurred directly by that corporation or by a pass-through entity in which the corporation has an interest:

Interest income or income generated from intangible property, whether or not the income is derived from persons or entities related to the consolidated foreign operating corporation. Income generated from intangible property includes income related to the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property; income from factoring transactions or discounting transactions; royalty, patent, technical, and copyright fees; and licensing fees. For purposes of this subdivision, “intangible property” has the meaning given in s. 71.22 (3h), Stats.
Income derived from interest expenses or intangible expenses that were paid, accrued, or incurred by combined group members to or for the benefit of the consolidated foreign operating corporation; to the extent those amounts were not already included under subd. 1. For purposes of this subdivision, “interest expenses” has the meaning given in s. 71.22 (3m), Stats., and “intangible expenses” has the meaning given in s. 71.22 (3g), Stats.
Dividend income received from a real estate investment trust that is not a qualified real estate investment trust as defined in s. 71.22 (9ad), Stats.
Gains or losses derived from the sale or lease of real or personal property located in the United States.
Expenses or deductions related to the income, gains, and losses described in subds. 1. to 4., determined in the manner provided in sub. (6) (h).

(g) Applicability of federal treaties. If a corporation’s income is not included in gross income for federal income tax purposes under the provisions of a federal treaty, the income is not included in gross income for Wisconsin purposes and shall not be included in combined unitary income.

(h) Taxation of income not subject to combination under water’s edge. Any income, expenses, and apportionment factors that are excluded from the unitary combination under pars. (d) and (e) shall be taken into account by the separate corporation that earned the income. The following rules apply to determining and reporting Wisconsin net income or loss not subject to combination under the water’s edge rules:

The net income or loss is presumed to be from a unitary business and therefore apportionable.
The corporation’s nexus depends on whether the corporation is a “combined group member” as defined in s. Tax 2.60 (2) (b). If the corporation is a combined group member, the provisions of subd. 3. apply. If the corporation is not a combined group member, the provisions of subd. 4. apply.
Under s. 71.255 (5) (a), Stats., a corporation that is a combined group member is doing business in this state if any member of the combined group is doing business in this state relating to the unitary business. If the corporation is a combined group member because of the controlled group election, that corporation is doing business in this state if any member of the combined group is doing business in this state. In either case, an apportioned share of the corporation’s net income or loss that is not subject to combination under the water’s edge rules may be taxed by Wisconsin. “Doing business in this state” is defined in s. 71.22 (1r), Stats., and further explained in s. Tax 2.82.
If the corporation is not a combined group member, s. 71.255 (5) (a), Stats., does not apply. Instead, the corporation is doing business in this state if, when considered as a separate entity, it is “doing business in this state” as defined in s. 71.22 (1r), Stats., and further explained in s. Tax 2.82. For example, and without limitation, the corporation may have nexus in this state if any agent of the corporation, including a member of the combined group, acts on the corporation’s behalf in this state in a manner that would create nexus under s. 71.22 (1r), Stats., s. Tax 2.82, or otherwise.
The provisions of ss. 71.26 (2) (a) 7. and 71.45 (2) (a) 16., Stats., requiring an addition modification for interest expenses, rent expenses, intangible expenses, and management fees paid, accrued, or incurred to a related entity, apply to any amounts not subject to combination which were paid, accrued, or incurred by the corporation to any related entity, even if the related entity was a combined group member.
The numerator and denominator of the apportionment ratio shall include only that corporation’s apportionment factors attributable to unitary business income that is not subject to combination. Intercompany transactions may not be eliminated from the apportionment factors unless the department determines those transactions have no economic substance as determined under the provisions of ss. 71.30 (2m) or 71.80 (1m), Stats., as applicable, or if the department determines that those transactions have no business purpose other than tax avoidance. If the corporation is a combined group member, it must apply the provisions of sub. (7) (c) in computing the amount of throwback sales includable in the numerator.
Income separately apportioned as described in this paragraph may be reported on a designated line of the combined return, supported by a department-prescribed schedule, instead of reporting that income on a separate return. This separately apportioned income shall be considered a separate entity item. See s. Tax 2.67 (2) (d) for filing requirements relating to separate entity items.

Examples: 1) A, B, and C are corporations in a commonly controlled group and engaged in a unitary business. All of the income of the corporations is derived from the unitary business. A and B are incorporated in Delaware. C is incorporated in France. The income of A and B is derived exclusively from U.S. sources. Ninety percent of C’s worldwide gross income is active foreign business income. The remaining 10% of C’s worldwide gross income is U.S. source income, some of which has situs in Wisconsin. C has agents acting on its behalf in Wisconsin which create nexus because their activities exceed the protection of P.L. 86-272. Since C is a foreign 80/20 corporation, none of its net income, expenses, or apportionment factors may be included in the unitary combination. Thus, C is not a combined group member.

However, C is subject to tax on an apportioned share of its worldwide net income, to the extent the income is not exempt by federal treaty. In determining the apportioned share, the numerator and denominator of C’s apportionment factors are its numerator and denominator computed for C on a separate entity basis. Since C is not a combined group member, it cannot consider the activities of A or B when it computes its throwback sales for purposes of the numerator. C is required to report this income to Wisconsin as a separate entity item.

2) Combined Group DE consists of Member D and Member E. Both D and E are Delaware corporations. All of the income of D and E is derived from the unitary business. All of D’s income is from sources within the U.S. However, 85% of E’s worldwide gross income is active foreign business income, making E a domestic 80/20 corporation. E has total of $150,000 of income from the unitary business, net of expenses. Of this amount, $100,000 is derived from intangible property and $50,000 is derived from service fees. D and E must include in the unitary combination all of D’s income, expenses, and apportionment factors and E’s income, expenses, and apportionment factors only to the extent related to its income derived from intangible property. Since E is a domestic 80/20 corporation and service fees are not one of the types of income subject to combination for a domestic 80/20 corporation, E’s service fee income, and expenses and apportionment factors relating to that income, must be excluded from the unitary combination.

However, E is subject to tax on an apportioned share of its service fee income. E has nexus in Wisconsin because it is a member of Group DE, which is doing business in Wisconsin. In determining the apportioned share, the numerator and denominator of E’s apportionment factors are its numerator and denominator including only the factors relating to its service fee income and computed for E on a separate entity basis. However, since E is a combined group member, it may consider the activities of D when it computes its throwback sales for purposes of the numerator. E is required to report this income to Wisconsin as a separate entity item.

(5) Taxable income of a combined group member. The taxable income of a combined group member consists of the components listed in this subsection. For purposes of pars. (c) and (d), a “distinct business activity” means a business activity that is not unitary with the combined group’s unitary business. For purposes of determining the expenses and deductions attributable to each component, the provisions of sub. (6) (h) apply. A combined group member’s taxable income is the total of all of the following:

(a) Its apportioned share of the combined unitary income, as computed under subs. (6) and (7), or, in the case of a combined group where all members are doing businesses solely within Wisconsin, its unitary business income subject to combination as computed under subs. (6) and (8). A corporation may have a share of combined unitary income or unitary business income from more than one combined group, in which case s. Tax 2.67 (2) (d) 4. applies.

(b) An apportioned share of the unitary business income not subject to combination under the water’s edge rules of sub. (4), or in the case of a combined group where all members are doing business solely within Wisconsin, its total unitary business income not subject to combination under the water’s edge rules of sub. (4).

(c) An apportioned share of income from a distinct business activity conducted within and outside this state wholly by the member.

(d) Its income from a distinct business activity conducted entirely within this state wholly by the member.

(e) Its nonbusiness income or loss allocable to this state.

(f) Its income realized from the purchase and subsequent sale or redemption of lottery prizes, if the winning tickets were originally bought in this state.

(g) To the extent not included in combined unitary income under par. (a), any income, loss, or deduction allocated or apportioned in an earlier year which is taken into account as Wisconsin source income or loss during the taxable year, other than a net business loss carryforward. Under this paragraph, non-sharable net capital loss carryovers may be used to offset the taxable income of a combined group member, as described in sub. (6) (c).

(h) Its net business loss carryforward, including any other combined group members’ net business loss carryforwards which may offset the member’s share of combined unitary income under the provisions of sub. (9).

(6) Computation of combined unitary income. This subsection interprets s. 71.255 (4), Stats., relating to a combined group’s computation of business income subject to combination, which is called “combined unitary income” for purposes of this section. The steps to compute combined unitary income are as follows:

(a) General.

Compute the sum of each combined group member’s net income determined under the Internal Revenue Code before Wisconsin modifications, without regard to net capital gain or loss, net gain or loss under section 1231 of the Internal Revenue Code, net gain or loss from involuntary conversions, or deductions for charitable contributions. Compute this income as if the member were not consolidated for federal purposes.
Defer or recognize any intercompany income, expense, gain, or loss between combined group members as described in par. (b), except to the extent the income, expense, gain, or loss is excluded from the combined unitary income because it does not relate to the unitary business or is not subject to combination under the water’s edge rules of sub. (4).
Add net capital gain includable in the combined unitary income, applying the loss limitation as described in par. (c) and using the federal basis of assets. Any differences between the federal and Wisconsin basis of assets, including basis differences that arise from the application of par. (f), are accounted for as Wisconsin modifications under subd. 6. The Wisconsin basis of a corporation’s depreciable property for the first year the corporation becomes taxable in Wisconsin equals its federal basis as of the beginning of the taxable year in which the corporation becomes taxable in Wisconsin, as required under s. 71.265, Stats. The federal basis shall be computed under the Internal Revenue Code in effect for federal purposes as required under ss. 71.22 (4) and (4m), 71.26 (3) (y), 71.42 (2), and 71.98 (3), Stats.

Note: Under ss. 71.22 (4) and (4m), 71.26 (3) (y), and 71.42 (2), Stats., the federal bonus depreciation provisions in section 168(k) of the Internal Revenue Code are excluded from the Internal Revenue Code in effect for Wisconsin purposes. Therefore, the federal basis computed under subd. 3. must be computed without regard to any bonus depreciation claimed for federal purposes.

Subtract any net section 1231 loss or net loss from involuntary conversions that results from the aggregation in par. (c) 1.
Subtract the charitable contributions deduction includable in the combined unitary income, computed as described in par. (d).
Apply Wisconsin addition and subtraction modifications provided in ss. 71.26 and 71.45, Stats., as applicable. For interest expenses, rent expenses, intangible expenses, and management fees paid, accrued, or incurred between combined group members, including pass-through entities owned by those members to the extent of their distributive shares of income, the addition modifications for related entity expenses under ss. 71.26 (2) (a) 7. and 71.45 (2) (a) 16., Stats., are not required to the extent the recipient of the income includes the income in the combined unitary income.
Subtract any dividends that qualify for elimination under par. (e) to the extent the dividends did not qualify for a subtraction modification under subd. 6.
If a combined group member is an insurance company, subtract the portion of net income attributable to the insurance company’s life insurance operations as determined using s. 71.45 (2) (b), Stats.
Subtract the income, as modified by subds. 6. to 8., which is not includable in combined unitary income because it is not derived from the unitary business or is not subject to combination under the water’s edge rules of sub. (4). The income subtracted under this subdivision shall be net of any directly or indirectly related expenses as provided in par. (h). The amount subtracted under this subdivision may not duplicate any amounts already subtracted.

(b) Intercompany transactions. Defer or recognize any intercompany income, expense, gain, or loss between combined group members that would be deferred or recognized between those members under 26 CFR 1.1502-13 as if the combined group were a federal consolidated group, except that the provisions for intercompany dividends are excluded and replaced with par. (e). This paragraph does not apply to intercompany transactions which occurred in taxable years beginning before January 1, 2009 or to intercompany transactions where the income, expense, gain, or loss would not otherwise be subject to combination. For modifications to 26 CFR 1.1502-13 that are necessary in the case of a combined group doing business solely in this state, see sub. (8). Any deferred intercompany income, expense, gain, or loss that is recognized under this paragraph shall be recognized by the same combined group member that deferred the income, expense, gain, or loss. The deferred income, expense, gain, or loss shall be recognized when required under 26 CFR 1.1502-13 as if the combined group were a federal consolidated group, or when any of the following apply:

The buyer resells the object of the deferred intercompany transaction to an entity that is not a member of the combined group.
The object of the deferred intercompany transaction is used outside the combined group’s unitary business as a result of the buyer’s resale, conversion, or transfer of the asset.
The buyer and seller are no longer members of the same combined group, regardless of whether they are in the same unitary business.

Example: S and B are combined group members. S has land with a basis of $130,000 at the end Year 1. In Year 2, S sells the land to B for $100,000. B holds the land until Year 3, when it sells it to X, a person outside the combined group, for $110,000. Assume both sales are otherwise includable in the combined unitary income. Applying 26 CFR 1.1502-13 to S and B in the manner described in this paragraph, S would not recognize any gain or loss on the sale of the land to B in Year 2. However, in Year 3, S would recognize a $30,000 loss and B would recognize a simultaneous $10,000 gain. Thus, in Year 2, the combined group cannot include S’s $30,000 loss on sale of land in its combined unitary income, but in Year 3, the combined group can include a $20,000 loss on sale of land (the net amount of S’s Year 2 loss and B’s Year 3 gain) in its combined unitary income. However, the capital loss limitation may limit this loss, as described further in par. (c).

(c) Capital gains and losses. Compute the capital loss limitation so that it applies to the combined group as a whole, to the extent the capital gains and losses are derived from the unitary business and otherwise subject to combination. Rules to determine the capital loss limitation, the assignment of capital gains and losses to members, and the amounts available for carryover, are as follows:

For short-term capital gains or losses, long-term capital gains or losses, section 1231 gains or losses, and involuntary conversions, aggregate all combined group members’ amounts within each class of gain or loss. Except as provided in subd. 8., include sharable net capital loss carryovers as described in subd. 2. but not non-sharable net capital loss carryovers.
A combined group member’s sharable net capital loss carryover is any available net capital loss carryover which would be a sharable loss carryforward under sub. (9) (a) if it were a net business loss carryforward. A non-sharable net capital loss carryover is any available net capital loss carryover which would be a non-sharable loss carryforward under sub. (9) (b) if it were a net business loss carryforward. Net capital loss carryovers that are otherwise non-sharable may be included in the aggregation under subd. 1. if they were carryovers of a subgroup as described in sub. (9) (e) 1., but only in an amount not exceeding the net capital gain the subgroup would have if its amounts were not aggregated with those of the other combined group members.
Determine and apply the capital loss limitation under section 1211 of the Internal Revenue Code for the combined group based on the aggregate amounts computed in subd. 1. The provisions of 26 CFR 1.1502-22 and 1.1502-23, and the regulations which they reference, shall apply for this purpose, except that the separate return limitation year provisions are excluded and replaced with the provisions of this paragraph and except to the extent otherwise inconsistent with ss. 71.26 and 71.45, Stats., and the provisions of this section.
If the result is a net capital gain for the group, the net capital gain shall be apportioned to Wisconsin for the members in the same manner as all other combined unitary income as described in sub. (7), except that if the combined group is doing business solely in Wisconsin, the net capital gain is assigned to the members as described in sub. (8) (b). If the result is a net capital loss for the group, the net capital loss shall be assigned to the members that would have a net capital loss from the unitary business if their amounts were not aggregated with those of the other members of the combined group, in proportion to the amount of that net capital loss.

Examples: 1) Combined Group PQR consists of Member P, Member Q, and Member R. In Group PQR’s unitary combination for 2010, P, Q, and R aggregate their short term capital gains and losses (including sharable capital loss carryovers), long-term capital gains and losses, section 1231 gains and losses, and involuntary conversions, and compute a total of $20,000 in net capital gain for Group PQR. P’s Wisconsin apportionment percentage computed under sub. (7) is 10%; Q’s is 25%; and R’s is 50%. P’s apportioned share of this net capital gain is $2,000 (= $20,000 x 10%), Q’s apportioned share is $5,000 (= $20,000 x 25%) and R’s apportioned share is $10,000 (= $20,000 x 50%).

2) Combined Group STU consists of Member S, Member T, and Member U. In the taxable year 2010, S, T, and U have the following capital gains and losses and section 1231 gains and losses attributable to the unitary business and subject to combination:

When S, T, and U aggregate each class of capital gains and losses and section 1231 gains and losses, Group STU has a net capital loss of $10,000. However, if S, T, and U’s capital gains and losses and section 1231 gains and losses were not aggregated with one another, S would have a net capital loss of $12,000 (its section 1231 loss would be treated as ordinary under section 1231(a)(2) of the Internal Revenue Code), T would have a net capital loss of $4,000, and U would have a net capital gain of $6,500. Thus, the amount of Group STU’s net capital loss that would be assigned to S is $7,500 (= ($12,000 / $16,000) x $10,000) and the amount that would be assigned to T is $2,500 (= ($4,000 / $16,000) x $10,000). None of the net capital loss would be assigned to U since it did not contribute to Group STU’s net capital loss.

After applying subd. 4., each member computes its net capital gain or loss from separate entity items without considering capital loss carryover amounts. If the result is a net capital loss, the loss may not be deducted except as provided in subd. 6. If the result is a net capital gain, the member may subtract from that amount, subject to the capital loss limitation, any current year net capital loss from the unitary business as computed in subd. 4. and any available net capital loss carryovers, whether they are sharable or non-sharable. The current year net capital loss from the unitary business shall be considered used before the net capital loss carryovers. Any remaining carryover may be used as provided in subd. 6.

Example: Assume the same facts as Example 2 in subd. 4. Assume also that S has a $10,000 long term capital gain from separate entity items in 2010 and a net capital loss carryover of $3,000 which was incurred in 2008. Since the current year net capital loss from the unitary business is considered used before the net capital loss carryover, at the end of 2010 S would have a remaining 2008 net capital loss carryover of $500 (= $10,000 - $7,500 current year net capital loss from unitary business - $3,000 net capital loss carryover).

If a member has a share of net capital gain from the unitary business as computed in subd. 4., the member may use any available net capital loss, including current year net capital loss from separate entity items and net capital loss carryovers, to offset that net capital gain. If the group uses apportionment, the member uses the available net capital loss by claiming a deduction equal to the amount of the available net capital loss that does not exceed the group’s net capital gain from the unitary business, multiplied by the member’s apportionment percentage from the unitary combination. The current year net capital loss from separate entity items shall be considered used before the net capital loss carryovers.

Example: Assume the same facts as Example 1 in subd. 4. Assume that Q has a $5,000 long term capital gain from separate entity items and a net capital loss carryover of $6,000 which was incurred in 2008. Since the net capital loss carryover was incurred in a taxable year beginning before 2009, it is non-sharable and could not be used in computing the aggregate net capital gain or loss of the unitary business as described in subd. 1. However, Q may use the non-sharable loss carryover to offset its net capital gain from separate entity items. After doing this, Q has a $1,000 available net capital loss (= $5,000 - $6,000) to use against its share of the $20,000 net capital gain from the unitary business. To use the remaining carryover, Q may claim an additional capital loss deduction of $250 (= $1,000 available carryover x 25% apportionment percentage). After claiming this deduction, Q would have no remaining net capital loss carryover.

After each member applies subds. 4. to 6., as applicable, the member may carry back or carry forward any remaining net capital loss carryover as provided in section 1212 of the Internal Revenue Code and may share that carryover to the extent it is a sharable carryover. The sharable carryovers available for use in the aggregation under subd. 1. are determined without regard to when any non-sharable carryovers were incurred and are applied in the order the underlying sharable loss was incurred. The carryovers available to offset the member’s net capital gain under subds. 5. and 6. are applied in the order the underlying loss was incurred. If the carryover available to offset the member’s net capital gain under subds. 5. and 6. consists of both a sharable and non-sharable amount incurred in the same taxable year, the carryover is applied from the sharable and non-sharable amounts on a pro rata basis according to the amount of each type of carryover available from that year.

Example: Member L is a member of Combined Group LM. Group LM uses a calendar year. At the beginning of 2012, L has the following available net capital loss carryovers:

Since the sharable net capital loss carryovers available for use in the aggregation under subd. 1. are determined without regard to when any non-sharable carryovers were incurred, the total sharable carryover that L may include in Group LM’s computation of aggregate net capital gain or loss for the year 2012 is $14,000 (= $4,000 + $0 + $10,000). Assume $12,000 of this amount is absorbed in the aggregation. Since carryovers are applied in the order incurred, L’s remaining sharable carryover of $2,000 is from its 2011 net capital loss. This carryover is available to L to offset against its net capital gain from separate entity items for 2012.

Assume L has a net capital gain from separate entity items of $4,000 and applies its available net capital loss carryover to offset this amount. Since carryovers are applied in the order incurred, $2,500 of the amount used is from its 2008 non-sharable carryover and $500 is from its 2010 non-sharable carryover. Since the remaining $1,000 carryover used is from 2011 where L has both a sharable and a non-sharable carryover, the amount of each carryover used is determined on a pro rata basis. Since L has $2,000 in sharable carryover from 2011 and $2,000 in non-sharable carryover from 2011, the remaining $1,000 carryover used is applied equally from the sharable and non-sharable carryovers. Thus, at the end of its 2012 taxable year, L has $1,500 in sharable carryovers and $1,500 in non-sharable carryovers available to carry forward or carry back.

If a member has sharable net capital loss carryovers, that member may choose not to use them in the aggregation under subd. 1. If more than one member includes sharable net capital loss carryovers in the aggregation under subd. 1., the amount of each member’s carryover used shall be computed on a pro rata basis according to the amount of carryover each member included in the aggregation.

Example: Combined Group QR consists of Member Q and Member R. Group QR is on a calendar year. For 2010, Q and R have the following amounts:

Assume the long term capital gains and section 1231 gains and losses are derived from Group QR’s unitary business and are subject to combination. Before applying the carryovers, Group QR has an aggregate net capital gain of $9,000 (= $6,000 + $2,000 + ($3,000 - $2,000)). Both Q and R use their sharable net capital loss carryovers to offset this amount. The amount used from Q’s sharable carryover is $6,000 (= $9,000 x ($10,000 / $15,000)) and the amount used from R’s sharable carryover is $3,000 (= $9,000 x ($5,000 / $15,000)). After applying these carryovers, Q’s remaining sharable carryover is $4,000 (= $10,000 - $6,000) and R’s remaining sharable carryover is $2,000 (= $5,000 - $3,000).

(d) Charitable contributions. Compute the charitable contributions deduction limitation so that it applies to the combined group as a whole. Rules to determine the charitable contributions deduction limitation are as follows:

Compute the aggregate total deductions for charitable contributions for the taxable year, and any carryforwards of those deductions, for all combined group members.
Determine and apply the charitable contributions deduction under Internal Revenue Code section 170, before any Wisconsin modifications under ss. 71.26 or 71.45, Stats., as if the combined group were a consolidated group for federal purposes. The provisions of 26 CFR 1.1502-24, and the regulations which it references, shall apply for this purpose, except to the extent otherwise inconsistent with ss. 71.26 and 71.45, Stats., and the provisions of this section.

Example: Combined Group GH consists of Member G and Member H. G incurred $5,000 in charitable contribution deductions relating to the unitary business in Year 1, while H incurred $15,000 in charitable contribution deductions. Assume the federal taxable income upon which the charitable contribution limitation (10% of adjusted taxable income) would be based is $50,000 for G and $30,000 for H. Applying 26 CFR 1.1502-24 to Group GH in the manner described in this paragraph, Group GH would include a charitable contribution deduction of $8,000 (= lesser of ($5,000 + $15,000) or (($50,000 + $30,000) x 10%)) in its combined unitary income.

Any unused charitable contribution deduction after applying subd. 2. is assigned to the member that incurred the expense and is available to that member to offset its net income, if any, from separate entity items, subject to the limitation of section 170 of the Internal Revenue Code. Any of a member’s remaining unused charitable contribution may be carried over by that member and used in subsequent years, subject to the carryover period provided in section 170 of the Internal Revenue Code. The unused carryover may either be shared in a subsequent combined report in the manner described in subd. 2. or may be used by that member specifically.

Example: Assume the same facts as in the example for subd. 2. After the computation of Group GH’s combined unitary income for Year 1, the amount of unused charitable contribution deduction available to G would be $3,000 (= $12,000 unused deduction x ($5,000 / $20,000)) and the amount available to H would be $9,000 (= $12,000 x ($15,000 / $20,000)). Assume G has separate entity items in Year 1 and the adjusted federal taxable income from those items is $20,000. G may deduct $2,000 (= $20,000 x 10%) of its unused deduction against its income from separate entity items. Assume H does not have separate entity items in Year 1 and both G and H are in Group GH in Year 2. In Year 2, Group GH could include $10,000 of charitable contribution deduction carryover from Year 1 ($1,000 from G and $9,000 from H) in its combined unitary income, subject to the limitations of section 170 of the Internal Revenue Code.

(e) Dividends. Eliminate dividends paid between members of the same combined group, but only if the dividends were paid from earnings and profits attributable to net income or loss that was includable in that group’s combined unitary income in the current taxable year or a prior taxable year, and only to the extent the dividend does not exceed the payee’s basis in the payer’s stock. The following rules apply in determining the dividends that may be eliminated under this paragraph:

The elimination of dividends applies only to the extent that the dividends received deduction provided in ss. 71.26 (3) (j) or 71.45 (2) (a) 8., Stats., does not apply.
For purposes of this paragraph, dividends are treated as paid out of current earnings and profits, and if the dividends paid exceed current earnings and profits, then the dividends are treated as paid out of earnings and profits accumulated in preceding years, beginning with the year closest to the current year (LIFO rule). With respect to an individual taxable year, dividends are treated as paid from all earnings and profits earned in that taxable year on a pro rata basis according to the proportion of net income that was included in the combined unitary income for that taxable year (pro rata rule). Earnings and profits are determined as provided in par. (g).

Note: See the examples under subds. 4. and 5. for application of the LIFO and pro rata rules.

A combined group member’s earnings and profits attributable to the unitary business that were generated in its taxable years beginning before January 1, 2009, shall be deemed to be earnings and profits attributable to combined unitary income if the corresponding net income would have been included in the group’s combined unitary income in those years had s. 71.255, Stats., been in effect and required combined reporting in those years.
To the extent that a dividend is paid out of earnings and profits that were generated while the payer was not, or in the case of subd. 3. would not have been, a member of the combined group, the dividend may not be eliminated.

Example: Combined Group MN consists of Member M and Member N. The combined group was formed when Corporation M acquired 60% of Corporation N on June 1, 2009. Group MN uses a calendar year. During 2010, N paid a dividend to M of $500,000. N’s current earnings and profits for 2010, before accounting for the distribution to M, are $100,000. N’s earnings and profits attributable to its 2009 calendar year are $1,000,000, of which $50,000 (5% of the total) were earned while N was a member of Group MN. Assume N had no separate entity items while it was a member of Group MN. Also assume M did not deduct any foreign taxes attributable to the dividend and N has sufficient stock basis. Applying the LIFO and pro rata rules of subd. 2., the amount of dividend that qualifies for elimination from Group MN’s combined unitary income in 2010 is $120,000 (= $100,000 + (5% x $400,000)). Under the pro rata rule, 95%, or $380,000, of dividends paid out of N’s 2009 earnings and profits are considered to be paid from pre-acquisition earnings and profits.

To the extent that a dividend is paid out of earnings and profits that were generated in taxable years when the payer was, or in the case of subd. 3. would have been, a member of the combined group for all or a portion of the taxable year, any portion of the dividend attributable to separate entity items may not be eliminated.

Example: Combined Group GH consists of Member G and Member H. G owns 55% of H. Group GH is on a calendar year and both G and H were members of the group for the entire taxable year. During 2010, H paid a dividend of $1,000,000 to G. H’s current year earnings and profits are $2,500,000. Of these earnings and profits, $250,000 (10% of the total) is attributable to separate entity items of H. Assume G did not deduct any foreign taxes attributable to the dividend and H has sufficient stock basis. Applying the pro rata rule of subd. 2., the amount of dividend that qualifies for elimination from Group GH’s combined unitary income is $900,000 (= $1,000,000 x 90%). Under the pro rata rule, 10%, or $100,000, of dividends paid out of H’s current year earnings and profits are considered to be attributable to separate entity items.

The amount of dividends eliminated under this paragraph may not exceed the payee’s basis in stock of the payer as determined under par. (f).
The amount of dividends eliminated under this paragraph shall be net of any taxes paid on the dividends to a foreign nation if those taxes were claimed as a deduction under ch. 71, Stats.

(f) Stock basis adjustments. A combined group member’s basis in stock of a subsidiary that is a member of the same combined group shall be adjusted to reflect the subsidiary’s distributions and items of income, gain, deduction and loss taken into account while the subsidiary was a member of the combined group. Except as provided in subds. 1. to 4. and except to the extent otherwise inconsistent with this section or ss. 71.26 or 71.45, Stats., the provisions of 26 CFR 1.1502-32, and the regulations which it references, shall apply in determining the amount of basis adjustment as if the Wisconsin combined group is a federal consolidated group:

A basis adjustment may not be made for the subsidiary’s distributions or items of income, gain, deduction, or loss taken into account for the subsidiary’s taxable years beginning before January 1, 2009.
A basis adjustment may not be made for the subsidiary’s items of income, gain, deduction, or loss to the extent those items were not included in the group’s combined unitary income. In the case of tax-exempt income, a basis adjustment may not be made to the extent the income is attributable to items that were not included in the combined unitary income.
An adjustment to reduce basis shall be made for the subsidiary’s distributions to the extent those distributions are from earnings and profits attributable to items that were included in the group’s combined unitary income, or from earnings and profits attributable to items deemed to be included in the group’s combined unitary income under par. (e) 3. for purposes of the dividend elimination under par. (e). For purposes of determining the amount of basis reduction under this subdivision, the LIFO and pro rata rules of par. (e) 2. apply.

Example: Combined Group CD consists of Member C and Member D. C owns 65% of D. Group CD is on a calendar year. At the beginning of taxable year 2009, C’s basis in the stock of D is $2,000,000. In the group’s taxable year 2009, D has $100,000 of net income, all of which is included in Group CD’s 2009 combined unitary income. During 2009, D pays a dividend of $300,000 to C. Assume the entire dividend from D to C qualifies for elimination under par. (e) 3. and is eliminated from Group CD’s combined unitary income in 2009. C’s basis in the stock of D as of the beginning of 2010 is $1,800,000 (= $2,000,000 + $100,000 – $300,000).

A basis adjustment may not be attributed to a subsidiary from a lower-tier subsidiary’s items of income, gain, deduction, or loss, except to the extent that the lower-tier subsidiary’s items of income, gain, deduction, or loss originated in taxable years beginning on or after January 1, 2009 and were included in the combined unitary income of that same unitary business.

Example: Combined Group QRS consists of Member Q, Member R, and Member S. Q owns all the stock of R, and R owns all the stock of S. Group QRS is on a calendar year. As of the beginning of 2009, Q had an unadjusted basis of $500,000 in R stock, which includes R’s unadjusted basis of $200,000 in S stock under the rules of 26 CFR 1.1502-32. In the group’s 2009 taxable year, R had a total of $80,000 of net income and S had a total of $150,000 of net income. Of S’s net income, $20,000 was attributable to overseas operations, the income from which was not included in combined unitary income under the water’s edge rules. Neither R nor S made any distributions in 2009. At the end of 2009, Q’s basis in R stock is $710,000 (= $500,000 + $80,000 + $150,000 - $20,000). Q’s basis in R stock cannot include any amounts attributed from S that are attributable to separate entity items.

(g) Earnings and profits. A combined group member’s earnings and profits shall be adjusted to reflect the undistributed earnings and profits of any subsidiary that is a member of the same combined group, subject to the following rules and limitations:

Except as provided in subd. 2. and except to the extent otherwise inconsistent with this section or ss. 71.26 or 71.45, Stats., the provisions of 26 CFR 1.1502-33, and the regulations which it references, shall apply in determining earnings and profits as if the Wisconsin combined group is a federal consolidated group.
Undistributed earnings and profits attributed to a subsidiary of a combined group member from any lower-tier subsidiary may not be included in the combined group member’s earnings and profits or its subsidiary’s earnings and profits except to the extent the lower-tier subsidiary’s earnings and profits are attributable to net income that was, or in the case of par. (e) 3. would have been, included in the group’s combined unitary income.

Example: Combined Group EFG consists of Member E, Member F, and Member G. E owns all the stock of F, and F owns all the stock of G. Group EFG is on a calendar year. During the taxable year 2009, E has current year earnings and profits of $300,000 and F has current year earnings and profits of $500,000, both exclusive of any amounts attributed from subsidiaries. Assume these amounts are attributable entirely to items included in Group EFG’s 2009 combined unitary income. G has current year earnings and profits of $400,000. However, $50,000 of this amount is attributable to overseas operations, the income from which was not included in combined unitary income under the water’s edge rules. Assume none of the corporations made distributions in 2009. F’s total current year earnings and profits are $850,000 (= $500,000 + ($400,000 - $50,000 attributed from G)), and E’s current year earnings and profits are $1,150,000 (= $300,000 + $850,000 attributed from F).

(h) Allocation of expenses and deductions.

Combined unitary income shall exclude any expenses or deductions that are directly or indirectly related to income that is not subject to combination. If any expense or amount otherwise deductible is indirectly related both to income subject to combination and income not subject to combination, a reasonable proportion of the expense or amount shall be allocated to each type of income, in light of all the facts and circumstances.
The allocation in subd. 1. shall be made according to the methods required or allowed for federal income tax purposes under the applicable sections of the Internal Revenue Code, including their corresponding regulations, except that section 265 of the Internal Revenue Code and its corresponding regulations are modified as provided in s. 71.26 (3) (L), Stats. For example, and without limitation, the allocation may be required under section 482 of the Internal Revenue Code or, for an expense related to foreign source income, under sections 861 to 865 of the Internal Revenue Code.
For purposes of applying this paragraph, a combined group member’s income from outside the unitary business shall be treated as income of an affiliated corporation, and if a combined group member has U.S. source income excluded from the unitary combination under s. Tax 2.61 (4) (f), that U.S. source income shall be treated as foreign source income.

(7) Apportionment of combined unitary income. A combined group is considered to be a single taxpayer for purposes of determining whether it is engaged in business both within and outside Wisconsin. For combined groups engaged in business both within and outside Wisconsin, the combined unitary income is apportioned to the combined group members as provided in s. 71.255 (5), Stats. Under this section, each member’s share of the combined unitary income is the product of the combined unitary income and the member’s modified sales factor ratio. The following rules apply to this computation:

(a) Numerator of modified sales factor.

For combined group members required to use the sales factor as provided in s. 71.25 (6) and (9), Stats., the numerator of the member’s modified sales factor ratio is the numerator of its sales factor as determined under s. 71.25 (9), Stats., and s. Tax 2.39 as if it were not a member of a combined group, except as provided in subd. 5. and pars. (c) to (e).
For combined group members that are insurers subject to tax under subch. VII of ch. 71, Stats., the numerator of the member’s modified sales factor is the numerator of its premiums factor as determined under s. 71.45 (3) (a), Stats., as if it were not a member of a combined group, except as provided in subd. 5. and pars. (d) and (e).
For combined group members that are “financial organizations” as defined in s. 71.25 (10), Stats., the numerator of the member’s modified sales factor is the numerator of its receipts factor as determined under ss. Tax 2.49 or 2.495, as applicable, as if it were not a member of a combined group, except as provided in subd. 5. and pars. (c) to (e).
For combined group members that are required to apportion their income using more than one factor under s. 71.25 (10), Stats., and ss. Tax 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or 2.502, the numerator of the member’s modified sales factor is determined as provided in par. (g).
The numerator of the modified sales factor may not include sales, premiums, or receipts which are not included in the combined unitary income as computed in sub. (6).

(b) Denominator of modified sales factor. The denominator of a combined group member’s modified sales factor ratio is the sum of the separate company denominators of each combined group member, so that each member of the combined group has the same modified sales factor denominator. Each combined group member’s separate company denominator is determined as follows:

For combined group members required to use the sales factor as provided in s. 71.25 (6) and (9), Stats., the member’s separate company denominator for purposes of the modified sales factor is the denominator of its sales factor as determined under s. 71.25 (9), Stats., and s. Tax 2.39 as if it were not a member of a combined group, except as provided in subd. 5. and pars. (d) and (e).
For combined group members that are insurers subject to tax under subch. VII of ch. 71, Stats., the member’s separate company denominator for purposes of the modified sales factor is the denominator of its premiums factor as determined under s. 71.45 (3) (a), Stats., as if it were not a member of a combined group, except as provided in subd. 5. and pars. (d) and (e).
For combined group members that are “financial organizations” as defined in s. 71.25 (10), Stats., the member’s separate company denominator for purposes of the modified sales factor is the denominator of its receipts factor as determined under ss. Tax 2.49 or 2.495, as applicable, as if it were not a member of a combined group, except as provided in subd. 5. and pars. (d) and (e).
For combined group members that are required to apportion their income using more than one factor under s. 71.25 (10), Stats., and ss. Tax 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or 2.502, the member’s separate company denominator for purposes of the modified sales factor is determined as provided in par. (g).
The separate company denominator for purposes of the modified sales factor may not include sales, premiums, or receipts which are not included in the combined unitary income as computed under sub. (6).

(c) Throwback sales. If a combined group member’s sale of tangible personal property is destined for a state in which any member of the combined group has nexus under the standards set forth in s. Tax 2.82, and that nexus relates to the unitary business, the sale may not be included in the numerator of the member’s modified sales factor. If a combined group member is subject to the controlled group election, that member’s numerator shall not include sales destined for a state in which any member of the combined group has nexus under the standards set forth in s. Tax 2.82.

(d) Intercompany transactions.

Any transaction between members of the same combined group shall be excluded from the numerator and denominator of the modified sales factor. However, if the seller subsequently recognizes income or loss from the intercompany transaction under the provisions of s. 71.255 (4) (g), Stats., and sub. (6) (b), the seller’s modified sales factor shall include any factors corresponding to that income or loss in the year it recognizes the income or loss.
If a combined group member sells an item or service to another combined group member and the purchaser subsequently resells it to a third party outside of the combined group, the situs of the sale between the combined group members and the sale from the purchasing member to the third party shall both be determined based on the situs of the sale from the purchasing member to the third party, and the purchasing member shall exclude from the numerator and denominator of the modified sales factor the amount the selling member already included under subd. 1. attributable to the item or service that was resold.

Example: Combined Group YZ consists of Member Y and Member Z. Group YZ is on a calendar year. On December 30, 2009, Y sells a widget with a cost of $400 to Z, for $600. Y ships the widget to Z’s warehouse in Wisconsin. On January 30, 2010, Z resells the widget to Q, an unrelated third party, for $700. Z ships the widget to Q’s headquarters in Illinois. Assume both the sale by Y and the sale by Z are subject to combination, and assume that Z has nexus in Illinois. In 2009, Y did not recognize any gain on the sale to Z because the gain was deferred under the provisions of s. 71.255 (4) (g), Stats., and sub. (6) (b). Since the gain on the sale was not recognized, Y cannot include the $600 sale in its apportionment factors for 2009. In 2010, the year the widget was resold by Z, Y must include its $200 of gain on the sale to Z (= $600 - $400) in combined unitary income. Y must also include the sale amount of $600 in the modified sales factor denominator for 2010. Z must include its $100 gain on the sale to Q (= $700 - $600) in combined unitary income for 2010. However, since $600 of Z’s sales price has already been included in the combined group’s modified sales factor, Z may only include $100 of the sale amount in the modified sales factor denominator. Neither Y nor Z include these amounts in their modified sales factor numerators since both sales have a situs in Illinois where Z has nexus. Under the provisions of par. (c), Z’s nexus in Illinois applies to both itself and Y for purposes of applying the throwback rule.

If an item or service is sold between more than two combined group members before it is sold to a customer outside of the combined group, the situs of these intercompany sales shall be the situs of the ultimate sale to the customer outside of the combined group, and each purchasing combined group member shall exclude from the numerator and denominator of the modified sales factor the amount its selling member already included under subd. 1.

(e) Pass-through entities. A combined group member’s numerator and denominator for purposes of the modified sales factor generally includes the apportionment factors of pass-through entities owned directly or indirectly by the member, in proportion to the combined group member’s distributive share of the pass-through entity’s net income or loss included in the combined unitary income. However, a combined group member’s modified sales factor may not include apportionment factors of a real estate investment trust, regulated investment company, real estate mortgage investment conduit, or financial asset securitization investment trust. Additionally, subds. 1. and 2. apply in order to avoid duplication. For purposes of subds. 1. and 2., “sale” includes sales as defined in s. 71.25 (9), Stats., premiums under s. 71.45 (3) (a), Stats., or receipts under ss. Tax 2.49 or 2.495, as applicable, which would otherwise be included in a combined group member’s modified sales factor.

If a sale is made by a combined group member to a pass-through entity which is more than 50 percent owned, directly or indirectly, by members of the combined group as provided in subd. 3., the selling member shall subtract from its modified sales factor numerator and denominator, as applicable, an amount equal to the gross receipts of the sale multiplied by the sum of all combined group members’ interests in the pass-through entity as of the date of the sale. This subdivision applies to the extent the gross receipts of the sale are otherwise includable in combined unitary income. For purposes of this subdivision, a combined group member’s interest in the pass-through entity as of the date of the sale means the percentage of the pass-through entity’s income or loss that is allocable to the member in the taxable year of the sale.

Examples: 1) Combined Group LM consists of Member L and Member M. L owns a 40% interest in Partnership P. M owns a 60% interest in Partnership P. On March 1, 2010, L sells a widget to Partnership P for $10,000, and this sale is includable in Group LM’s combined unitary income. In its computation of apportionment factors for 2010, L must subtract an amount of $10,000 (= $10,000 x (40% + 60%)) from the modified sales factor denominator and, if applicable, from its numerator.

2) Assume the same facts as Example 1, except that Member L owns a 25% interest and M owns a 50% interest in Partnership P. In its computation of apportionment factors for 2010, L must subtract an amount of $7,500 (= $10,000 x (25% + 50%)) from the modified sales factor denominator and, if applicable, from its numerator.

If a sale is made by a pass-through entity to a combined group member and more than 50 percent of the pass-through entity is directly or indirectly owned by members of the combined group as provided in subd. 3., each member with an interest in the pass-through entity shall subtract from its modified sales factor numerator and denominator, as applicable, any amount attributable to the sale. This subdivision applies to the extent the gross receipts of the sale are otherwise includable in combined unitary income.

Example: Combined Group ST consists of Member S and Member T. S owns a 20% interest in Partnership R. T owns an 80% interest in Partnership R. On October 1, 2010, Partnership R sells a widget to S for $20,000, and this sale is includable in Group ST’s combined unitary income. In its computation of apportionment factors for 2010, S must subtract an amount of $4,000 (= $20,000 x 20%) from its sales factor denominator and, if applicable, from its numerator. Similarly, T must subtract an amount of $16,000 (= $20,000 x 80%) from its sales factor denominator and, if applicable, from its numerator.

For purposes of subds. 1. and 2., a pass-through entity is owned more than 50 percent by combined group members if the aggregate amount of the combined group members’ interests in the pass-through entity, without regard to any agreement to allocate gains or losses on a basis other than their capital interests, is more than 50 percent, or the combined group members taken as a whole have more than 50 percent of the management rights of the pass-through entity, as evidenced by the terms of the agreement under which the pass-through entity was formed, voting rights, provisions of state or federal law, or otherwise.

(f) Special rules for zeroes and negative numbers in factors. This paragraph applies the special rules in ss. 71.25 (6m) and 71.45 (3e), Stats., to combined group members as follows:

If both the numerator and denominator of a member’s modified sales factor are zero, none of the combined unitary income shall be apportioned to the member. The member’s separate company denominator has no effect on this determination.
If the numerator of a member’s modified sales factor is a negative number, none of the combined unitary income shall be apportioned to the member. The member’s separate company denominator has no effect on this determination.
If the numerator of a member’s modified sales factor is a positive number and the denominator is a negative number or zero, all of the combined unitary income shall be apportioned to the member. The member’s separate company denominator has no effect on this determination. If this subdivision would result in apportioning all of the combined unitary income to more than one member, the combined unitary income shall be apportioned to the members having positive modified sales factor numerators in proportion to the amounts of their numerators.

Example: Combined Group XY consists of Member X and Member Y. In its taxable year 2009, Group XY has combined unitary income of $50,000. X and Y have the following apportionment factors:

The modified sales factor denominator, or sum of the separate company denominators, is ($5,000). The amount of combined unitary income that would be apportioned to X is $12,500 (= $50,000 x ($5,000 / $20,000)). The combined unitary income that would be apportioned to Y is $37,500 (= $50,000 x ($15,000 / $20,000)).

(g) Multiple factor formulas. If a combined group member is required under s. 71.25 (10), Stats., to use an apportionment formula prescribed in ss. Tax 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or 2.502, the member’s modified sales factor is computed as follows:

The numerator of the modified sales factor is the product of the member’s apportionment percentage computed under ss. Tax 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or 2.502, as applicable, as if the member were not a member of a combined group except as provided in subds. 3. to 5., and the member’s separate company denominator determined in subd. 2.
Except as provided in subds. 3. to 5., the member’s separate company denominator for purposes of the modified sales factor is the member’s total company sales that would be includable in the sales factor computed under s. 71.25 (9), Stats., as if the member were required to use the sales factor and were not a member of a combined group.
Neither the numerator nor denominator shall include amounts that are not included in or directly related to income included in the combined unitary income as computed under sub. (6).
Intercompany transactions shall be excluded or recognized in the numerator and denominator, as applicable, in the manner described in par. (d).
To the extent the computation in this paragraph involves the sales factor as provided in s. 71.25 (9), Stats., the provisions of pars. (c) and (e) apply.

(h) Alternative apportionment. A qualifying combined group may petition the department to use an alternative apportionment method, as provided in s. Tax 2.64.

(i) Apportionment factors for dual-sourced income. If a corporation is eligible to exclude foreign source income from combined unitary income under sub. (4) (d) to (f) and the Internal Revenue Code requires the corporation to source a transaction both within the United States and without the United States, the corporation shall exclude from its modified sales factor any amounts attributable to the portion of the transaction that constitutes foreign source income under sub. (4) (c). The amounts excluded from the modified sales factor under this paragraph shall be the amounts includable in the modified sales factor as if the transaction was sourced entirely within the United States, multiplied by the percentage of the transaction’s gross receipts that constitutes foreign source income under sub. (4) (c).

(8) Income computation for groups doing business solely in Wisconsin. For combined groups that are engaged in business solely in Wisconsin, and therefore not eligible to use apportionment, each member’s net income subject to combination is determined on a separate entity basis and then adjusted to reflect the member’s status as a combined group member. These incomes are added together to arrive at the combined unitary income. Therefore, if some combined group members have net income from the unitary business and others in the same group have net loss from the unitary business, the combined group’s tax liability is based on the total aggregate net income or loss of the unitary business. When each member computes its share of the combined unitary income, the provisions of sub. (6) apply, except that the modifications in pars. (a) to (d) are required:

(a) Intercompany transactions. To the extent that sub. (6) (b) does not apply, intercompany transactions that consist of interest or other expenses paid, accrued, or incurred by one member to another are disregarded so that they neither increase nor decrease a member’s net income or loss. This paragraph does not apply to intercompany transactions which occurred in taxable years beginning before January 1, 2009 or to intercompany transactions where the income, expense, gain, or loss would not otherwise be subject to combination.

(b) Capital gains and losses.

The net capital gain or loss, after applying any sharable net capital loss carryover, is first determined for the combined group as a whole in the manner described in sub. (6) (c) 1. to 3. If the result is a net capital gain for the group, the net capital gain is assigned to the members that would have a net capital gain from the unitary business if they were not members of the combined group, in proportion to the amount of that net capital gain. If the result is a net capital loss for the group, the net capital loss is assigned to the members that would have a net capital loss from the unitary business if they were not members of the combined group, in proportion to the amount of that net capital loss.

Note: See Example 2 under sub. (6) (c) 4. for an example of this assignment method.

After applying subd. 1., each member computes its net capital gain or loss from separate entity items and applies the provisions of sub. (6) (c) 5. to 7., except that in applying the provisions of sub. (6) (c) 6., the applicable apportionment percentage is one hundred percent.

(c) Basis adjustments. A combined group member’s basis in stock of a subsidiary that is a member of the same combined group shall be adjusted in the manner prescribed in sub. (6) (f). Intercompany interest and other expenses shall be included in these adjustments, even if those transactions were disregarded in the computation of the member’s income for the taxable year as provided in par. (a).

(d) Earnings and profits. A combined group member’s earnings and profits shall be adjusted to reflect the undistributed earnings and profits of a subsidiary that is a member of the same combined group in the manner prescribed in sub. (6) (g). Intercompany interest and other expenses shall be included in these adjustments, even if those transactions were disregarded in the computation of the member’s income for the taxable year as provided in par. (a).

(9) Net business losses. A combined group member may carry forward its net business loss as provided in ss. 71.26 (4) and 71.45 (4), Stats. A net business loss carryforward is an attribute of the separate corporation rather than of the combined group. However, s. 71.255 (6) (b) and (bm), Stats., provides that a combined group member may share all or a portion of its net business loss carryforward with the other members of its combined group if certain conditions are met. This subsection explains which net business loss carryforwards are sharable, how to compute the sharable amount, and how to apply the shared losses. The following rules apply:

(a) Sharable loss carryforwards. A combined group member may share its net business loss carryforward incurred in a taxable year beginning on or after January 1, 2009 with other combined group members to the extent that all of the following conditions are met:

The net business loss is attributable to combined unitary income included in a combined report.
The member originally computed the net business loss in the combined report for the same combined group as the combined group that will use the shared loss carryforward, regardless of whether corporations have joined or left the combined group in the intervening years.
The member is still a member of the combined group described in subd. 2. for the year the loss carryforward will be shared.

(b) Non-sharable loss carryforwards. A combined group member’s net business loss carryforward incurred in a taxable year beginning on or after January 1, 2009 that cannot be shared with other combined group members includes amounts attributable to the following:

Net business losses attributable to separate entity items.
Net business losses attributable to a different unitary business.

Net business loss carryforwards incurred by that same member in taxable years beginning before January 1, 2009, in the order that the underlying net business losses were incurred.
Sharable and non-sharable net business loss carryforwards under par. (d) incurred in taxable years beginning on or after January 1, 2009, in the order that the underlying net business losses were incurred. If the net business loss carryforward to be used consists of both a sharable amount and a non-sharable amount incurred in the same taxable year, the amount of sharable and non-sharable carryforward used shall be determined on a pro rata basis according to the amount of each type of carryforward available from that year.
For loss carryforwards shared in a taxable year that begins after December 31, 2011, pre-2009 net business loss carryforwards under par. (dm).

Example: Combined Group EFG consists of Member E, Member F, and Member G. E has the following loss carryforwards:

In 2010, E’s share of combined unitary income plus its separate entity items equal $14,000. After using its carryforwards to offset this income, E has $4,000 of remaining net business loss carryforward (= ($10,000) + ($6,000) + ($2,000) + $14,000). Of this amount, a portion is a sharable carryforward that may be applied against F and G’s shares of combined unitary income in the manner described in par. (d). Since loss carryforwards are applied in the order incurred, the $10,000 carryforward from 2008 is used in its entirety, and $4,000 of the 2009 carryforward is used. The portion of E’s remaining carryforward from 2009 that is sharable is $3,000 (= $4,000 x [$6,000 / $8,000]) and the portion that is non-sharable is $1,000 (= 4,000 x [$2,000 / $8,000]).

In 2012, E has the following loss carryforwards:

In addition, in 2012 E received a pre-2009 net business loss carryforward of $3,000 ($60,000 x 5%) from Member F. E’s share of combined unitary income plus its separate entity items for 2012 equal $16,000. After using its carryforwards to offset this income, E has $1,000 of remaining net business loss carryforward (= ($3,000) + ($1,000) + ($4,000) + ($6,000) + ($3,000) + $16,000). Since the loss carryforwards are first applied to the net business loss carryforwards incurred in 2009 and after, the $4,000 carryforward from 2009 and the $10,000 carryforward from 2011 are used in their entirety. The remaining $2,000 of loss carryforwards are applied to the pre-2009 net business loss carryforward. The remaining pre-2009 net business loss carryforward is $1,000.

(d) Method of sharing. The amount of net business loss carryforward under par. (c) 2. eligible for sharing shall be computed and assigned as follows:

Each combined group member shall first apply its total available net business loss carryforward against its total Wisconsin income as computed under sub. (5) (a) to (g), including net income or loss attributable to separate entity items. A combined group member’s net business loss carryforward shall be considered used against its net income from separate entity items before its share of combined unitary income.
Each member shall then separate any remaining net business loss carryforward into the sharable amount and the non-sharable amount, as applicable, using the ordering rules in par. (c). The sharable net business loss carryforward amounts for each combined group member shall then be aggregated, except that any combined group member that elects not to share its sharable amount as provided in par. (h) may exclude some or all of its sharable amount from the aggregate sharable amount.
Except as provided in par. (g), relating to insurance companies, the aggregate sharable amount shall be assigned to each combined group member in proportion to its share of combined unitary income as computed in subs. (6) to (8), net of any losses from separate entity items or loss carryforwards already applied. The sharable amount may only be assigned to a member to the extent the member’s share of combined unitary income has not already been offset by losses taken into account under subd. 1. An amount may not be assigned to a combined group member whose share of combined unitary income, net of any losses already applied by the member under subd. 1., is zero or less.
Any remaining sharable amount remains an attribute of the corporation that originally incurred the loss. The aggregate sharable amount used under subd. 3. shall be considered used proportionately from the sharable net business loss carryforwards of the corporations which contributed to the aggregate sharable amount.

Example: Combined Group ABCD consists of Member A, Member B, Member C, and Member D. The corporations have the following net business loss carryforwards and net income amounts in 2010:

Assume all of A and B’s net business loss carryforwards are sharable. The aggregate sharable amount is $40,000 (= $24,000 + $16,000). This amount may be allocated to C and D based upon their respective shares of combined unitary income after applying any losses from separate entity items. C’s adjusted share of combined unitary income is $20,000 (its $1,000 carryforward is considered used against its $3,000 net income from separate entity items before its share of combined unitary income) and D’s adjusted share of combined unitary income is $5,000 (= $20,000 - $15,000). The aggregate sharable amount exceeds the sum of C and D’s adjusted shares of the combined unitary income, which is $25,000 (= $20,000 + $5,000). Thus, C and D’s adjusted shares of combined unitary income are fully offset by the aggregate sharable amount.

After the aggregate sharable amount is applied, the remaining aggregate sharable amount is $15,000 (= $40,000 - $25,000). Since the remaining sharable amount remains an attribute of the corporation that originally incurred the loss, at the end of 2010, A would have $9,000 (= $15,000 x ($24,000 / $40,000)) in remaining net business loss carryforward, and B would have $6,000 (= $15,000 x ($16,000 / $40,000)) in remaining net business loss carryforward.

(dm) Pre-2009 net business loss carryforwards.

For a combined group member’s first taxable year beginning after December 31, 2011, the member may, after using the pre-2009 net business loss carryforward to offset its own income for the taxable year, and after using sharable losses to offset its own income for the taxable year, use 5 percent of the pre-2009 net business loss carryforward to offset the income of all other members of the combined group for the taxable year and for each of the 19 subsequent taxable years.

Example: Member A of Wisconsin Combined Group ABC has pre-2009 net business loss carryforwards of $100 million as of December 31, 2008. A’s share of the combined group’s income is $2 million in 2009, $3 million in 2010, and $5 million in 2011. A’s one-time calculation of the annual 5% sharable amount is $4.5 million, computed as follows: [$100 million pre-2009 net business loss carryforward less the taxable income offset by the net business loss carryforward ($2 million in 2009, $3 million in 2010, and $5 million in 2011) multiplied by 5 percent].

In 2012 Member A’s share of the combined group’s Wisconsin income is $1 million. Member A first applies its pre-2009 net business loss carry-forward against its $1 million share of the combined group’s Wisconsin income. The remaining members of the group may use the $4.5 million sharable loss to offset the remaining group income on a proportionate basis. Assuming the combined group has enough income in 2012 to fully use the entire $4.5 million in pre-2009 net business loss carryforward, the pre-2009 net business loss carryforward available in 2013 is $84.5 million ($90 million total sharable loss less $1 million of Member A’s income offset by the net business loss carry-forward, less $4.5 million sharable loss utilized by the corporation in 2012). If Member A’s share of the combined group’s income is $0 for all the remaining years of the pre-2009 carry-forward, and the remaining members of the combined group were eligible to share the full $4.5 million net business loss carry-forward each year, the sharable pre-2009 net business loss available in 2031 will be $3.5 million ($4.5 million annual sharable loss computed in 2012 less $1 million loss used by Member A in 2012).

Except as provided in par. (g), relating to insurance companies, the sharable pre-2009 net business loss carryforward under subd. 1. shall be assigned to each combined group member in proportion to its share of combined unitary income as computed in subs. (6) to (8), net of any losses from separate entity items or loss carryforwards already applied. An amount may not be assigned to a combined group member whose share of combined unitary income is zero or less. Any remaining sharable amount becomes part of the combined group’s pre-2009 net business loss carryforward that may be shared by all combined group members in subsequent years.

Example: Member D of Combined Group DEF has a pre-2009 net business loss carry-forward of $2 million as of January 1, 2012. The 5% sharable amount allowed to members E and F in each year for taxable years 2012 through 2031 is $100,000 ($2 million net business loss carryforward multiplied by 5%). Member E’s proportional share of the $100,000 sharable net business loss in 2012 is $30,000. After using all other allowable losses, Member E has $20,000 in income remaining to offset against its share of the pre-2009 net business loss carryforward. The remaining $10,000 net business loss carryforward not used by Member E in 2012 becomes part of the combined group’s pre-2009 net business loss carryforward that may be shared by all combined group members in 2013 and is in addition to the 5% net business loss carryforward previously computed. As a result, the net business loss carryforward available in 2013 is $110,000 ($100,000 combined group yearly sharable loss plus Member E’s $10,000 proportional share of the $100,000 loss in 2012 that was not fully utilized by Member E in 2012).

Notwithstanding the provisions of ss. 71.26 (4) (a) and 71.45 (4) (a), Stats., under ss. 71.26 (4) (b) and 71.45 (4) (b), Stats., any unused pre-2009 net business loss carryforward under subd. 1. may be offset against the income of the members of the combined group for the 20 taxable years that begin after December 31, 2011.

Example: As of December 31, 2008, Member G of Combined Group GHI has a loss carryforward of $30,000 that is in the 14th year of the 15 year carryforward period under s. 71.26 (4) (a), Stats. Member G does not have any income to offset the $30,000 loss carryforward in its taxable years beginning in 2009, 2010, or 2011. For taxable years beginning on or after January 1, 2012, Member G is allowed to use the $30,000 pre-2009 net business loss carryforward to offset any of its own income first, then offset its proportional share of Combined Group GHI’s income, and finally, any remaining loss may be shared proportionately among the other members of Combined Group GHI. Under s. 71.26 (4) (b), Stats., Member G’s pre-2009 net business loss carryforward of $30,000 begins a new carryforward period of 20 years from its taxable year beginning in 2012.

(e) Departing combined group members. Except as provided in subds. 1. and 2., if a corporation leaves a combined group or is no longer eligible to be a combined group member, the corporation’s remaining net business loss carryforward may not be shared with any other combined groups but shall be available only to that corporation. The following exceptions apply:

If a subgroup of two or more corporations leaves a combined group on the same date and immediately thereafter the corporations become a separate combined group or together become members of a new combined group, those corporations may share their remaining sharable net business loss carryforwards attributable to the former combined group with one another. For purposes of the computations in par. (d), the new combined group’s combined unitary income shall be used in place of the former combined group’s combined unitary income. This subdivision also applies to combined groups that merge to become a new combined group by operation of the controlled group election as described in s. Tax 2.63 (2) (c).
If a corporation leaves a combined group or is no longer eligible to be a combined group member, but subsequently rejoins the combined group, the corporation may share its net business loss carryforward with that combined group to the extent the carryforward otherwise qualifies as a sharable loss carryforward under par. (a).

(f) New combined group members. If a new member joins the combined group or is formed within the combined group, the member may use the net business loss carryforwards shared by other combined group members in the same manner as described in this subsection, even if those losses originated before the new member was part of the group.

(g) Special rules for insurance companies. Under s. 71.45 (4), Stats., the net business loss of an insurance company cannot include the dividends received deduction provided in s. 71.26 (3) (j), Stats. Further, an insurance company may not use net business loss carryforwards in cases where its franchise or income tax liability is limited by two percent of its gross premiums as provided in s. 71.46 (3), Stats. Therefore, the following rules apply:

For purposes of applying s. 71.45 (4), Stats., if a dividend qualified for both the dividends received deduction under s. 71.26 (3) (j), Stats., and the elimination of dividends under sub. (6) (e), the dividend is considered to be eliminated under sub. (6) (e) rather than deducted under s. 71.26 (3) (j), Stats.
If an insurance company is a member of a combined group that is engaged in business both within and outside Wisconsin and has a net business loss, the dividends received deduction that shall be added back to that loss includes the insurance company’s apportioned share of the total dividends received deduction which was deducted from the combined unitary income under s. 71.26 (3) (j), Stats., regardless of whether the insurance company was the combined group member which received the dividend.
If an insurance company is a combined group member and its tax liability measured by its total Wisconsin net income as provided in sub. (5), including any net business loss carryforwards available from other combined group members, exceeds two percent of its gross premiums as defined in s. 76.62, Stats., plus 7.9 percent of the income described in sub. (5) (f), its tax liability shall be limited to two percent of the gross premiums plus 7.9 percent of the income described in sub. (5) (f). If the insurance company’s tax liability is limited in this manner, its business loss carryforwards may not be shared with any other combined group members, and if the group is otherwise sharing loss carryforwards, loss carryforwards may not be assigned to the insurance company.

(h) Elections.

Although a combined group member is entitled to the benefit of a net business loss carryforward, the member may elect not to use a portion or any of the available net business loss carryforward for a taxable year. This election does not reduce the amount of carryforward available for the following taxable year nor suspend the carryforward period provided in ss. 71.26 (4) and 71.45 (4), Stats.
A combined group member may also elect not to share a portion or any of its sharable net business loss carryforward with other combined group members. However, if the corporation shares any part of its sharable net business loss carryforward, the shared amount shall be divided among all members in the manner prescribed in this subsection, except as otherwise provided in pars. (d), (e) 1., and (g) 3. A combined group member’s election under this subdivision is effective only for the taxable year in which the election is made and shall have no effect on the member’s ability to share net business loss carryforwards in future taxable years.

(i) Applicability of Internal Revenue Code.

Notwithstanding the provisions of this subsection, the total amount of net business loss carryforward that may be used by a combined group member or shared with other combined group members for a taxable year is limited by section 382 of the Internal Revenue Code as provided in s. 71.26 (3) (n), Stats. Section 382 of the Internal Revenue Code shall be applied without regard to the federal consolidated return regulations under section 1502 of the Internal Revenue Code.
If a combined group member is acquired by another combined group member, section 381 of the Internal Revenue Code controls whether the acquiring corporation may succeed to the target corporation’s net business loss carryforwards. Wisconsin follows section 381 of the Internal Revenue Code, but modifies it in s. 71.26 (3) (n), Stats., so that it applies to Wisconsin net business loss carryforwards instead of federal net operating loss carryovers. If the acquirer succeeds to the target corporation’s net business loss carryforwards, the target corporation’s carryforwards shall be treated as originally incurred by the acquiring corporation and shall maintain their character as sharable or non-sharable.
The separate return limitation year provisions of the federal regulations under section 1502 of the Internal Revenue Code do not apply to net business loss carryforwards. The provisions of this subsection apply in place of these limitations.

(10) Credits. A credit is an attribute of the separate corporation rather than of the combined group, and credits are computed for each corporation separately. However, s. 71.255 (6) (c), Stats., provides that a combined group member may share all or a portion of its research credits with the other members of the combined group. For purposes of this subsection, the term “research credit” means only the research expense credit under ss. 71.28 (4) or 71.47 (4), Stats., and the research facilities credit under ss. 71.28 (5) or 71.47 (5), Stats. This subsection explains how credits are computed and applied as well as the special rules that apply to research credits.

(a) Nonrefundable credits other than research credits. A combined group member’s nonrefundable credits other than research credits, including carryforwards of those credits, may only be used by that combined group member to offset the tax liability attributable to its own taxable income as computed under sub. (5).

(b) Refundable credits. Any refundable credits computed by a combined group member shall be claimed on the combined return and refunded to the designated agent to the extent not used to offset the total tax liability reported on the combined return.

(c) Sharing of research credits. If a combined group member computes a research credit, or has a carryforward of a research credit, the member may share a portion or all of the credit with the other members. For purposes of determining the sharable amount, the provisions of sub. (9) (e) and (f) apply to available research credits in the same manner as they apply to net business loss carryforwards. Research credit carryforwards incurred in taxable years beginning before January 1, 2009 are sharable to the extent the corporation with the credits would have been a member of the combined group had s. 71.255, Stats., been in effect and required combined reporting in those years. The method of sharing these credits is as follows:

Each combined group member shall first apply its total available credits, including its research credits, against its gross tax liability, if any, including its tax liability attributable to separate entity items. A combined group member’s available credits shall be considered used against its tax liability from separate entity items before its tax liability from its share of combined unitary income. Available credits shall be used in the order specified in s. 71.30 (3), Stats. A combined group member may elect to apply a carryforward of a research credit before applying the research credit computed for the current taxable year.
Each member shall then separate any remaining available research credit into the sharable and non-sharable amount, as applicable. The ordering rules provided in sub. (9) (c), relating to net business loss carryforwards, also apply to research credit carryforwards. The sharable research credits for each combined group member shall then be aggregated, except that any combined group member that elects not to share its sharable amount may exclude some or all of its sharable amount from the aggregate sharable amount.
The sharable amount shall be assigned to each combined group member in proportion to its tax liability from its share of combined unitary income. The sharable amount may only be assigned to a member to the extent the member’s tax liability from combined unitary income has not already been offset by other credits and carryforwards applied by that member under subd. 1. An amount may not be assigned to a combined group member whose tax liability from combined unitary income has been fully offset by other credits.
Any remaining sharable amount remains an attribute of the corporation that originally generated the credit. The aggregate sharable amount used under subd. 3. shall be considered used proportionately from the sharable research credits of the corporations which contributed to the aggregate sharable amount.

Example: Combined Group FGH consists of Member F, Member G, and Member H. F, G, and H have the following amounts in 2010:

Assume all of the research expense credit carryforward is sharable. The aggregate sharable amount is $25,000 (= $15,000 + $10,000). This amount may be assigned to H to the extent of its tax liability from its share of the combined unitary income after applying its own credits. After H applies its own credits, the remaining tax liability from combined unitary income is $5,000 (= ($17,000) + $2,000 + $20,000; its $17,000 economic development credit is applied against tax liability from separate entity items before tax liability from combined unitary items). Since this amount is less than the aggregate sharable amount, the entire remainder of H’s tax liability from combined unitary income ($5,000) is offset by the aggregate sharable amount.

After the aggregate sharable amount is applied, the remaining aggregate sharable amount is $20,000 (= $25,000 - $5,000). Since the remaining sharable amount remains an attribute of the corporation that originally generated the credit, at the end of 2010, F would have $12,000 (= $20,000 x ($15,000 / $25,000)) in remaining research credit carryforward, and G would have $8,000 (= $20,000 x ($10,000 / $25,000)) in remaining research credit carryforward.

The provisions of sub. (9) (h), as they relate to elections applicable to net business loss carryforwards, apply also to available research credits under this paragraph.

(d) Exception for funded research. If a combined group member incurs expenses that are otherwise qualified research expenses under section 41(d) of the Internal Revenue Code but for the fact that the research is funded by another combined group member, the expenses shall be considered qualified research expenses of the combined group member performing the research, and the reimbursement from the combined group member funding the research may not be considered a qualified research expense of the funding member. Regardless of where the funding member is located, the research must be performed in this state to qualify for the research credit for Wisconsin purposes.

Example: Combined Group AB consists of Member A and Member B. In Year 1, B performs research that would be “qualified research” under section 41(d) of the Internal Revenue Code, except for the fact that A and B have entered into a contract where A provides funding for all of B’s research at a markup of 10%. Neither A nor B perform any other research. During Year 1, A paid B $220,000 for research services, all of which would be “qualified research” for B if the research were not funded by A. On AB’s Year 1 combined return, B may include $200,000 of qualified research expenses (= $220,000 - $20,000 markup) in its computation of the research credit. However, A may not compute any research credit. Since A and B are members of the same combined group, the funding arrangement between A and B is ignored for purposes of computing the research credit.

(e) Applicability of Internal Revenue Code. The provisions of sub. (9) (i), as they relate to net business loss carryforwards, also apply to carryforwards of credits under this subsection.

Note: Section Tax 2.61 interprets s. 71.255, Stats.

Cross Reference: See s. Tax 2.60 for definitions that relate to this section.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-006: am. (9) (intro.), (a) (intro.), 1., (b) (intro.), r. (9) (b) 1., r. and recr. (9) (c) Register July 2012 No. 679, eff. 8-1-12; CR 13-078: am. (7) (a) 4., (b) 4., (g) (intro.), 1. Register April 2014 No. 700, eff. 5-1-14; CR 16-046: am. (9) (c) 3. (Example) Register January 2018 No. 745, eff. 2-1-18; CR 19-141: am. (4) (b) 1., 4., (6) (a) 3., r. and recr. (7) (h) Register September 2020 No. 777, eff. 10-1-20; correction in (6) (a) 3. made under s. 35.17, Stats., Register September 2020 No. 777.

Wis. Admin. Code § Tax 2.62 Unitary business {#sec-tax-2.62 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.62}

(1) Scope. Section 71.255 (2) (a), Stats., provides that a corporation engaged in a unitary business with one or more other corporations in the same commonly controlled group is generally required to determine its share of income from that unitary business using a combined report. Section 71.255 (1) (n), Stats., defines “unitary business.” The purpose of this section is to provide further interpretation of the meaning of “unitary business.”

(2) General. A unitary business is a single, commonly controlled economic enterprise for which the components of the enterprise are sufficiently interdependent, integrated, and interrelated through their activities to such a degree that if the enterprise is doing business both within and outside a state, the state is permitted under the U. S. Constitution to tax a fairly apportioned share of the total net income of the enterprise.

(a) Commonly controlled. A unitary business may consist of a single entity or a group of two or more related entities, including corporations, tax-option corporations, partnerships, limited liability companies, sole proprietorships, estates, and trusts. A group of related entities may satisfy the commonly controlled requirement of a unitary business if they are related in any of the following ways:

The entities are related under the provisions of section 267 of the Internal Revenue Code which disallow losses on sales between related persons. By reference, this includes the rules in section 707(b) of the Internal Revenue Code, relating to partnerships.
The entities are related under section 1563 of the Internal Revenue Code, which defines a “controlled group of corporations” for federal income tax purposes.
The entities are corporations in the same “commonly controlled group” for Wisconsin purposes. “Commonly controlled group” has the meaning given in s. 71.255 (1) (c), Stats., as further interpreted by s. Tax 2.61 (3).

(b) Components of enterprise. The components of a commonly controlled economic enterprise may consist either of divisions of a single entity or of multiple entities, or both. For purposes of this section, the term “participants” is used to describe these components of an economic enterprise.

In general, the participants in a commonly controlled economic enterprise are considered a unitary business if their activities generate a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts. Subsection (3) presents indicators that sharing or exchange and flow of value are present.
The participants in a commonly controlled economic enterprise may also be considered a unitary business if there is unity of operation and use, as further explained in sub. (4).
Under s. 71.255 (1) (n), Stats., the definition of “unitary business” shall be construed to the broadest extent permitted by the U.S. Constitution. Thus, case law provides additional guidance to determine whether a unitary business exists. Subsection (5) presents factors that have been considered by the U.S. Supreme Court to be determinative of a unitary business.

(d) Fairly apportioned. If a unitary business has nexus in Wisconsin and is doing business both within and outside Wisconsin, an apportioned share of the unitary business’s net income is taxable by Wisconsin under the rules of this paragraph. If a unitary business is doing business only in Wisconsin, no apportionment applies and all of the unitary business’s income is taxable by Wisconsin unless specifically exempt. The following rules apply to the apportionment of income of a unitary business:

For any participant in the unitary business that is not a member of a commonly controlled group of corporations as provided in s. Tax 2.61 (3), the participant’s income from the unitary business is generally apportioned in the manner provided by ss. Tax 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable. However, the participant may be required to apportion its income under the combined reporting rules provided in s. Tax 2.61 if certain conditions apply, as further explained in s. Tax 2.61 (2) (f).
For any participant in the unitary business that is a member of a commonly controlled group of corporations as provided in s. Tax 2.61 (3), the participant’s income from the unitary business shall be apportioned under the combined reporting rules provided in s. Tax 2.61.
A corporation that is engaged in the unitary business may have both apportionable income and nonapportionable income, as provided in s. 71.25 (5), Stats.

(e) Members of unitary business that are not in combined group. It is possible that one or more members of a unitary business may not be members of a combined group. Members of a unitary business that may not be members of a combined group include the following:

Individuals or entities that are considered “pass-through entities” for purposes of combined reporting under s. 71.255 (1) (m), Stats. This includes partnerships, limited liability companies treated as partnerships, tax-option corporations, estates, trusts, real estate investment trusts, regulated investment companies, real estate mortgage investment conduits, and financial asset securitization investment trusts.
Corporations whose net income and apportionment factors are not subject to combination under the water’s edge rules of s. Tax 2.61 (4).
Corporations that are related under the rules of sections 267 or 1563 of the Internal Revenue Code but are not in a “commonly controlled group” as provided under s. Tax 2.61 (3).

(f) Members of combined group that are not in unitary business. A combined group may include corporations that are not engaged in a unitary business if the combined group’s designated agent has properly made the controlled group election as provided in s. Tax 2.63.

(3) Sharing, exchange, and flow of value.

(a) General. Participants in a commonly controlled economic enterprise have sharing or exchange of value among them and a significant flow of value to the separate parts, and thus are a unitary business, if any of the following are true:

The participants in the enterprise contribute or are expected to contribute in a nontrivial way to each other’s profitability.
Each participant in the enterprise is either dependent on, or is depended upon by, one or more other participants in the enterprise for achieving one or more nontrivial business objectives.
The economic enterprise offers one or more participants some economies of scale or economies of scope that benefit the enterprise.
The prices charged on transactions between participants in the enterprise are inconsistent with the arms-length principle. However, if these prices are consistent with the arms-length principle, that fact does not negate in any way the existence of a unitary business (Exxon Corp.

v. Dept. of Revenue of Wisconsin, 447 U.S. 207, 100 S. Ct. 2109 (1980)).

(b) Examples of flow of value. Activities between participants that constitute a flow of value between them include any of the following:

Assisting in acquisition of assets.
Assisting with filling personnel needs.
Lending funds, guaranteeing loans, or pledging assets.
Interplay in the area of corporate expansion, including but not limited to common future planning or development of the enterprise.
Providing technical assistance, general operational guidance, or overall operational strategic advice.
Supervising.
Sharing use of trade names, patents, or other intellectual property.

(4) Unity of operation and use. This subsection explains when participants in a commonly controlled economic enterprise are considered a unitary business because they have unity of operation and use.

(a) General. If the participants in a commonly controlled economic enterprise have both unity of operation and unity of use, they shall be considered engaged in a unitary business.

(b) Unity of operation. Unity of operation means there is functional integration among the participants, and is evidenced generally by shared support functions. Activities that indicate unity of operation include:

Centralized purchasing, marketing, advertising, accounting, or research and development.
Intercorporate sales or leases, including equipment and real estate.
Intercorporate services, including administrative, data management, computer support, employee benefits, human resources, insurance, tax compliance, legal, financial, and cash management services.
Intercorporate debts.
Intercorporate use of proprietary materials, including trade names, trademarks, service marks, patents, copyrights, and trade secrets.

(c) Unity of use. Unity of use is evidenced generally by centralized management or use of centralized policies. Factors that indicate unity of use include:

Centralized executive force.
Interlocking directorates or corporate officers.
Intercompany employee transfers.
Common employee and executive training programs.
Common hiring and personnel policies.
Common recruiting programs.
Common employee handbooks.
Common employee benefit programs.

(5) Factors considered by u.s. supreme court. Since, as provided in s. 71.255 (1) (n), Stats., the definition of “unitary business” shall be construed to the broadest extent permitted by the U.S. Constitution, case law provides further guidance to determine whether a unitary business exists. Subsections (3) and (4) are reflective of that case law. Factors that have been considered by the U.S. Supreme Court to be determinative of a unitary business include:

(a) Unity of use and management (Butler Bros. v. McColgan, 315 U.S. 501, 508, 62 S. Ct. 701, 704 (1942)).

(b) A concrete relationship between the out-of-state and the in-state activities that is established by the existence of the unitary business (Container Corp. of America v. Franchise Tax Bd. of California, 463 U.S. 159, 167, 103 S. Ct. 2983, 2941 (1983)).

(c) Functional integration, centralization of management, and economies of scale (Mobil Oil Corp. v. Comm’r of Taxes of Vermont, 445 U.S. 425, 438, 100 S. Ct. 1223, 1232 (1980)).

(d) Substantial mutual interdependence (F.W. Woolworth Co. v. Taxation and Revenue Dept. of New Mexico, 458 U.S. 354, 371, 102 S. Ct. 3128, 3139 (1982)).

(e) Some sharing or exchange of value not capable of precise identification or measurement — beyond the mere flow of funds arising out of a passive investment or a distinct business operation (Container, 463 U.S. at 166, 103 S. Ct. at 2940).

(6) Presumptions. The presumptions in pars. (a) to (g) apply when determining whether participants in a commonly controlled economic enterprise are considered a unitary business. Any of these presumptions may be rebutted by the taxpayer or by the department. However, the noncontrolling factors in par. (h) may not be used to rebut these presumptions.

(a) Horizontal integration. An entity or commonly controlled group of entities is presumed to be engaged in a unitary business when all of its activities are in the same general line of business.

(b) Vertical integration. An entity or commonly controlled group of entities is presumed to be engaged in a unitary business when its various divisions, segments, branches, or affiliates are engaged in different steps in a vertically structured enterprise.

(c) Centralized management. An entity or commonly controlled group of entities that might otherwise be considered as engaged in more than one unitary business is presumed to be engaged in one unitary business when there is strong central management coupled with the existence of centralized departments or affiliates for such functions as financing, advertising, research and development, or purchasing.

(d) Different business segments. An entity operating different business segments within the organizational structure of the single business entity is presumed to be engaged in a single unitary business with respect to the business segments.

(e) Newly acquired corporations.

Except as provided in subd. 2., when a corporation acquires another corporation so that the acquired corporation is a member of a commonly controlled group for the first time, it shall be presumed that the acquiring and acquired corporations are not engaged in a unitary business for the purchaser’s taxable year that includes the acquisition. If the purchaser is already a combined group member, the taxable year that includes the acquisition is the taxable year of the combined group.
The presumption against unity in subd. 1. shall not apply if, immediately preceding the acquisition, the acquiring and acquired corporations were engaged in a unitary business apart from being in the same commonly controlled group, or if the designated agent of the combined group has properly made the controlled group election as provided in s. Tax 2.63.
If either the taxpayer or the department rebuts the presumption in subd. 1., the provisions of s. 71.255 (9), Stats., relating to part-year members of a combined group, shall apply.

(f) Newly formed corporations. Where a corporation or more than one corporation forms, or has formed, a new corporation, it shall be presumed that the formed corporation is engaged in a unitary business with the forming corporation or corporations from the date of its formation.

(g) Refusal to provide information. The department’s determination of whether an entity is engaged in a unitary business is presumed to be correct if the taxpayer unreasonably refuses to provide information pertinent to the determination of a unitary business.

(h) Noncontrolling factors. The following factors may not negate the presumptions in pars. (a) to (g):

The use of arms-length pricing for sales, exchanges, or transfers between entities (Exxon Corp.

v. Dept. of Revenue of Wisconsin, 447 U.S. 207, 100 S. Ct. 2109 (1980)).

The fact that a business uses a separate accounting system, including separate accounting by division, by entity, by geographical area, by business function, or by business segment.

(7) Passive holding companies.

(a) A passive holding company that is in a commonly controlled economic enterprise and holds intangible assets that are used by the enterprise in a unitary business shall be deemed to be engaged in the unitary business, even if the holding company’s activities are primarily passive.

(b) A passive parent holding company that directly or indirectly controls one or more operating company subsidiaries engaged in a unitary business shall be deemed to be engaged in a unitary business with the subsidiary or subsidiaries, even if the holding company’s activities are primarily passive.

(8) Pass-through entities. For purposes of pars. (a) and (b), “pass-through entity” includes a partnership, limited liability company treated as a partnership, tax-option corporation, estate, or trust, but does not include corporations treated as real estate investment trusts, regulated investment companies, real estate mortgage investment conduits, or financial asset securitization investment trusts.

(a) For purposes of determining the scope of the unitary business, any business conducted by a pass-through entity that is controlled directly or indirectly by a corporation shall be treated as conducted by the corporation to the extent of the corporation’s distributive share of the pass-through entity’s income, regardless of the percentage of the corporation’s ownership interest.

(b) Any business conducted directly or indirectly by one corporation is unitary with that portion of a business conducted by another corporation through its direct or indirect interest in a pass-through entity if the requirements of s. 71.255 (1) (n), Stats., are otherwise met with respect to the corporations’ interests in the pass-through entity and the corporations are members of the same commonly controlled group.

Note: Section Tax 2.62 interprets s. 71.255 (1) (n), Stats.

Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.61 (2) for more information on determining whether corporations are required to use combined reporting. See s. Tax 2.63 for more information on the controlled group election.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; correction in (8) (intro.) and renumbering of (7) (a), (b), (8) (a) and (b) made under s. 13.92 (4) (b) 1. and 7., Stats., Register April 2010 No. 652; CR 13-078: am. (2) (d) 1. Register April 2014 No. 700, eff. 5-1-14; CR 19-141: am. (2) (d) 1. Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.63 Controlled group election {#sec-tax-2.63 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.63}

(1) Scope. Section 71.255 (2m), Stats., allows a commonly controlled group of corporations to elect to include every member of the commonly controlled group in a single combined group for combined reporting purposes. This section provides rules relating to making the election, continuity of the election, and limitations of the election.

(2) Making the election. Preapproval by the department is not required to make the election. The designated agent of the combined group shall make the election on behalf of the group as described in this subsection. Paragraph (c) provides rules relating to identifying the designated agent in cases where a commonly controlled group consists of corporations that previously filed as more than one combined group.

(a) Time period for making election. The designated agent shall make the election on an original, timely filed combined return which includes all members of the commonly controlled group. A return shall be considered timely if it is filed by the designated agent on or before the due date of the return, including applicable extensions. If the return is timely filed without an extension, the designated agent may make the election by filing an amended combined return on or before the end of the automatic 7-month extension period provided in s. 71.24 (7) or 71.44 (3), Stats. A return filed after the end of the automatic 7-month extension period, whether an original or amended return, may not constitute a valid controlled group election for the taxable year to which the return applies, although an election may be filed for a subsequent taxable year subject to the limitation in sub. (3) (c).

(b) Method of election and required documentation.

For the first year the designated agent makes the election, the designated agent shall check a designated line of the combined return to indicate that a controlled group election is in effect.
For the first year the designated agent makes the election, the designated agent shall include a statement with the combined return which lists every corporation that is a member of the commonly controlled group, and indicates that each corporation has agreed to be bound by the election and that the election shall apply to any member that subsequently enters the group.

If a commonly controlled group consists of corporations that previously filed as more than one combined group, the controlled group election creates a new combined group. For purposes of application of loss carryforwards and research credits under s. Tax 2.61, each former combined group included in the new combined group is a subgroup as described in s. Tax 2.61 (9) (e) 1. and the corporations within each subgroup are eligible to share loss carryforwards and research credits from taxable years prior to the election with all the members of that subgroup, to the extent sharing would otherwise be allowed under s. Tax 2.61 (6) (c), (9), and (10).
A new combined group described in subd. 1. shall appoint the designated agent of one of the former combined groups to be the designated agent, and the provisions of s. Tax 2.65 apply to that designated agent. The corporation that files the first combined return under the election shall be deemed the appointed designated agent for the new combined group.

(3) Continuity of election.

(a) Ten-year period. The controlled group election is binding for and applicable to all members of the commonly controlled group for the taxable year for which the election is made and for the next nine taxable years. The election is also binding on any corporations that join the commonly controlled group during the period the election is in effect. Any corporation that departs the commonly controlled group is not bound by the election for the taxable years after its departure from the group, except if par. (b) applies or if the corporation rejoins the commonly controlled group.

(b) Reorganizations.

When a merger or acquisition occurs between two combined groups where the acquiring group has not made the controlled group election but the target group has made the controlled group election, the controlled group election of the target group terminates on the date of the transaction. However, the designated agent of either the acquiring group or the target group may make the controlled group election with respect to all corporations that are in its commonly controlled group as determined after considering the effect of the merger or acquisition, provided the requirements in sub. (2) are met and the election is not precluded by par. (c).
When a merger or acquisition occurs between two combined groups where the acquiring group has made the controlled group election but the target group has not made the controlled group election, all corporations in the commonly controlled group as determined after considering the effect of the merger or acquisition are bound by the acquirer’s controlled group election.
When a merger or acquisition occurs between two combined groups that have both made the controlled group election, the expiration date of the controlled group election for the entire commonly controlled group as determined after considering the effect of the merger or acquisition is the expiration date of the acquirer’s controlled group election.
When a commonly controlled group that has made the controlled group election divests stock of one or more subgroups of members so that the subgroups are no longer in the commonly controlled group, those subgroups are no longer bound by the controlled group election, except if both the book value of total assets of a subgroup and its total fair market value are greater than those of the divesting group, then the subgroup is bound by the controlled group election and the controlled group election of the divesting group terminates on the date of the transaction.

After the ten-year period described in par. (a), the designated agent may renew the election for another ten taxable years, without prior written approval from the department. The renewal shall be made on an original, timely filed return for the first taxable year after completion of the ten-year period. Except as provided in subd. 3., the requirements for a renewal of an election are the same as for making the original election as described in sub. (2).
If the election is not timely renewed as provided in subd. 1., the election is considered to be revoked by the designated agent. In the case of a controlled group election that is not timely renewed, a new election may not be permitted in any of the next three taxable years.
The designated agent may renew the election on an amended return filed after the end of the automatic 7-month extension period provided in s. 71.24 (7) or 71.44 (3), Stats., only if the original return was consistent with the controlled group election remaining in place and that the failure to comply with the requirements of sub. (2) was due to oversight or mistake.

Note: Section Tax 2.63 interprets s. 71.255 (2m), Stats.

Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.61 (2) (b) for more information on the effect of the controlled group election. See s. Tax 2.65 for more information on the duties of the designated agent. See s. Tax 2.67 for more information on combined returns.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-011: r. (4) Register July 2012 No. 679, eff. 8-1-12; correction in (3) (a), (b) 1. under s. 13.92 (4) (b) 7. Register July 2012 No. 679.

Wis. Admin. Code § Tax 2.64 Alternative apportionment for combined groups including specialized industries {#sec-tax-2.64 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.64}

(1) Scope. Section 71.255 (5) (a), Stats., provides that a combined group is generally required to use the modified sales factor method to apportion its combined unitary income. However, s. 71.255 (5) (b), Stats., provides that a qualifying combined group may petition the department to use an alternative apportionment method. This section provides rules relating to the eligibility requirements, continuity, and limitations of this privilege.

(2) Eligibility requirements.

(a) Qualifying combined group. A qualifying combined group is a combined group for which 30 percent or more of the combined unitary income would, in the absence of combined reporting, be required to be apportioned using more than one factor under a method described in ss. Tax 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or 2.502.

(b) Requirements for petition. The designated agent of the combined group requesting an alternative apportionment method shall file a petition no less than 60 days before filing the first original, timely filed return using the alternative method. If a return using the modified sales factor method has already been timely filed without an extension, the designated agent may file an amended return using the alternative method if it files a petition no less than 60 days before the end of the automatic 7-month extension period provided in ss. 71.24 (7) or 71.44 (3), Stats., as applicable, and the petition is approved by the department. The petition shall include the following:

The full name, address, and federal employer identification number of each member of the combined group.
The combined group’s taxable year for which the alternative apportionment method as requested would begin to be effective.
A description of the alternative apportionment method requested.
A complete and precise statement of the reasons for the modification requested, including why the modified sales factor method would result in an unfair representation of the degree of unitary business activity in this state. This statement shall provide clear and convincing evidence of its assertions.
A calculation of the combined group’s tax liability for the first taxable year to which the petition applies and for the previous taxable year, using the apportionment method prescribed in s. 71.255 (5) (a), Stats., for both years. For the previous taxable year’s computation, this amount shall be computed as if a combined report including those same corporations were required in the previous taxable year, even if it was before s. 71.255, Stats., was in effect.
A calculation of the combined group’s tax liability for the first taxable year to which the petition applies and for the previous taxable year, similar to the calculation in subd. 5., but using the requested apportionment method instead of the modified sales factor method.
A calculation of each combined group member’s tax liability for the first taxable year to which the petition applies and for the previous taxable year, similar to the calculations in subds. 5. and 6., computed as if each corporation were not a member of the combined group and using the method prescribed by ss. Tax 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation.
A statement as to whether any combined group member is being audited by the department at the time of the petition.

(c) Limitation. The department may not grant a taxpayer’s petition for an alternative apportionment method if the alternative method would result in a lower tax liability than the sum of the tax liabilities of the combined group members computed as if they were not members of a combined group and using the apportionment method prescribed by ss. Tax 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation.

(d) Approval or rejection.

The petition shall be approved by the department in writing. The department shall approve or reject the petition within 45 days after receiving it. However, failure of the department to act within 45 days or acceptance of a return using the alternative apportionment method does not constitute approval of the petition or method used. The department may, after receipt and review of the petition, require additional information necessary to determine whether the modified sales factor method does not fairly represent the degree of unitary business activity in this state. If the department does not have all the required information to approve the petition, the 45-day period described in this paragraph is suspended until the information is provided. Filing of a petition does not affect the accrual of interest on underpayment of estimated taxes.
If the designated agent timely files a petition as described in par. (b) but does not receive an order from the department approving or rejecting the petition before the due date of the return, the designated agent must file the return using the modified sales factor method. If the department subsequently approves the petition, the designated agent may amend the return using the approved method, in which case the amended return must contain the attachments described in par. (e).

(e) Attachments to return. For each combined return on which the alternative apportionment method is used, the designated agent shall include the following documentation with the return:

A copy of the department’s written approval for the alternative apportionment method.
A calculation of the combined group’s tax liability computed as if it used the modified sales factor method instead of the alternative apportionment method.
A calculation of each combined group member’s tax liability for the taxable year included in the combined return computed as if each corporation were not a member of the combined group and using the apportionment method prescribed by ss. Tax 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, or 2.502, as applicable to each corporation.

(3) Continuity and limitations.

(a) Continuity.

If the department approves the alternative apportionment method, the combined group engaged in that unitary business shall continue to use the alternative apportionment method for six taxable years following the first year for which the alternative method was approved, except as provided in par. (b).
No later than 60 days before filing the first return for a period subsequent to the expiration of the seven-year period in subd. 1., the designated agent of the combined group shall file a new petition with the department in order to continue using the alternative apportionment method. The new petition is subject to the same requirements as the original petition except that the designated agent shall include the calculations described in sub. (2) (b) 5. to 7. for the first year to which the renewed election applies and each of the years to which the previous election applied.

(b) Limitations.

If the sum of the tax liabilities of the combined group members for the taxable year computed as if they were not combined group members, as reported in the attachment described in sub. (2) (e) 3., is greater than the combined group’s tax liability using the alternative apportionment method, the combined group may not use the alternative method for the taxable year. Instead, the combined group shall use the modified sales factor method. For each of the remaining taxable years in the seven-year period described in par. (a) 1., the combined group shall use the alternative apportionment method to the extent the limitations of this paragraph do not apply.
If the combined group is no longer a qualifying combined group as described in sub. (2) (a), the combined group may no longer use the alternative apportionment method beginning with the year the combined group no longer qualifies. If it subsequently becomes a qualifying combined group in a later taxable year, the designated agent of the group may file a new petition for an alternative apportionment method.

Note: Mail petitions for alternative apportionment methods to: Administration Technical Services — Corporations Unit, Wisconsin Department of Revenue, P.O. Box 8933, Mail Stop 6-40 Madison, WI 53708-8933.

Note: This section interprets s. 71.255 (5) (b), Stats.

Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.65 for more information on the duties of the designated agent. See s. Tax 2.67 for more information on combined returns.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 13-078: am. (2) (a), (b) 7., (c), (e) 3. Register April 2014 No. 700, eff. 5-1-14; CR 19-141: am. (2) (b) 7., (c), (e) 3. Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.65 Designated agent of combined group {#sec-tax-2.65 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.65}

(1) Scope. Section 71.255 (7), Stats., requires every combined group to have a designated agent to act on behalf of the group. This section provides rules relating to identifying the designated agent and describes the scope and limitations of the agency relationship.

(2) Identifying designated agent.

(a) Eligibility. The combined group may select any member as the designated agent, subject to a limitation that the designated agent’s taxable year shall be the same as the combined group’s taxable year.

(b) Creation of agency. A combined group shall appoint a designated agent. The corporation which files, or will file, the first combined return for the combined group is deemed to be appointed as the designated agent. If no combined return is filed, the department shall appoint the parent corporation of the combined group to be the designated agent, or if there is no parent corporation, the department may appoint any corporation in the combined group to be the designated agent.

(c) Continuity of agency into future years. Once a member of the combined group is appointed as the designated agent, it shall remain the designated agent of that group for all future years unless one of the following applies:

The designated agent leaves the combined group, in which case the corporation which files, or will file, the first combined return after the date the designated agent leaves is deemed to be appointed as the new designated agent.
Except as provided in subd. 3., the combined group, or portion of the combined group that includes the designated agent, is acquired by another combined group, in which case the corporation which files, or will file, the first combined return after the date of the acquisition is deemed to be appointed as the new designated agent.
The designated agent ceases to exist, in which case the designated agent shall notify the department in writing that another member of the combined group (or successor corporation of any member of the combined group) will thereafter act as designated agent for that taxable year and any prior taxable years. The member appointed for that taxable year and any prior taxable years need not be the new designated agent for all future taxable years. The substitute designated agent will succeed to the rights and responsibilities of the former designated agent and may in turn appoint another designated agent for future taxable years. If the designated agent fails to notify the department in writing of the new designated agent, the department may select a surviving member of the combined group to act as the designated agent.
Where subd. 2. does not apply, the designated agent is still a member of the combined group but submits a written request to the department for another combined group member to act as designated agent, and the department grants the request.

(d) Continuity of agency for prior years. The designated agent of a combined group for a prior taxable year shall continue to act as the designated agent for that taxable year unless the designated agent ceases to exist, in which case par. (c) 3. applies, or the designated agent submits a written request to the department for another combined group member to act as designated agent, and the department grants the request.

Note: Send requests to change the combined group’s designated agent and notifications of successor designated agents to: Corporation Processing Unit, Wisconsin Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908. However, if the request relates to prior taxable years that are under audit, the designated agent may submit the written request to the department’s representative that has notified the designated agent of the audit.

(e) Designated agent for purposes of resolving disputes over combined group membership. If the department determines that one or more corporations are members of a combined group and no combined return was filed, the group of corporations the department asserts is a combined group may appoint a member of that group as the designated agent solely for purposes of contesting the department’s determination. The appointment of a designated agent under this paragraph may not be construed as a concession by either the corporations or the department regarding the existence of a combined group or the proper composition of a combined group.

(3) Scope and limitations of agency.

(a) Duties of designated agent. The designated agent is generally required to act on behalf of the combined group in its own name in all matters relating to the combined return. This includes performing the following duties:

Filing the combined return, including the reporting of any separate entity items attributable to combined group members.
Filing any extension of time to file the combined return.
Filing any amended combined returns or claims for refunds or credits relating to the combined return, including any separate entity items attributable to combined group members.
Sending and receiving all correspondence with the department regarding the combined return, except that if correspondence relates to separate entity items or a payment made by another member of the combined group as provided in s. Tax 2.66 (2), the department may send the correspondence to that other member or the designated agent, or both.
Remitting taxes applicable to the combined return, including estimated taxes, except as otherwise provided in s. Tax 2.66.
Participating on behalf of the group in any investigation or hearing by the department regarding the combined return, including producing all information requested and filing any appeal. Unless provided otherwise in writing, any appeal filed by the designated agent relating to the combined return shall be considered filed by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members the combined group.
Executing waivers, closing agreements, powers of attorney, and other documents relating to the combined return. Unless the department and taxpayer agree otherwise in writing, any waiver, closing agreement, power of attorney, or other document executed by the designated agent relating to the combined return shall be considered executed by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members of the combined group.
Receiving assessment notices regarding the combined return. Subject to par. (f), a notice received by the designated agent is considered received by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members the combined group. If a notice relates to separate entity items that are attributable to a combined group member other than the designated agent, the designated agent may submit a written request to the department to reissue the notice or a portion of the amount of the notice to the combined group member responsible for the separate entity items. The designated agent shall submit the written request on or before the due date shown on the notice.

Note: Send written requests to reissue notices relating to separate entity items to: Mail Stop 3-107, Wisconsin Department of Revenue, PO Box 8906, Madison, WI 53708-8906.

Receiving any refunds relating to the combined return.

(b) Exclusivity. Except as provided in this paragraph, no person other than the designated agent shall have authority to act for or represent itself or the combined group regarding the duties listed in par. (a). A combined group member, or a corporation which the taxpayer asserts is a combined group member, may assume any of the duties listed in par. (a) under any of the following conditions:

By election of the designated agent or the applicable combined group member, a combined group member may perform any of the duties listed in par. (a) to the extent those duties relate to separate entity items. This may include the filing of a separate return to report the member’s separate entity items, subject to the requirements of par. (c).
A combined group member may make estimated payments on its own behalf to the extent allowed in s. Tax 2.66 (2).
If a combined return was filed, the department may allow any corporation which it asserts should be added to or eliminated from the combined group to represent itself after receipt of a written request from the corporation. However, that corporation shall still be bound by any action taken by the designated agent before the corporation’s request to represent itself has been accepted by the department.

Note: A corporation that wishes to represent itself should submit the written request to the department’s representative that has notified the corporation of the department’s assertion.

(c) Reporting of separate entity items. If a combined group member chooses to file a separate Wisconsin return to report its separate entity items rather than having the designated agent include them in the combined return in the manner described in s. Tax 2.67 (2) (d) 3., the member shall consider the totality of its share of items from the combined return plus its separate entity items for purposes of applying any limitations, so that its total net tax plus economic development surcharge does not differ from the amount that would have been due if the separate entity items had been included in the combined return. The combined group member shall submit a copy of the combined return with its separate return.

(d) Unauthorized acts. The department is not bound by unauthorized acts made with respect to a combined return by a corporation that is not the designated agent. The department may choose to receive the benefits or assume the obligations of unauthorized acts, in which case the department is bound only if it takes affirmative steps to expressly manifest its intent to receive the benefits or assume the obligations of the acts.

(e) Failure to act. If the designated agent is unable or unwilling to fulfill its obligations with respect to the combined return, is unresponsive, or has not been identified to the department, the department may appoint a new designated agent, or it may deal directly with any member of the combined group in respect to its share of the combined return items in which case each member shall have full authority to act for itself.

(f) Joint and several liability. Under s. 71.255 (1) (n), Stats., the members of a combined group shall be jointly and severally liable for the combined tax, penalty, and interest attributable to the combined unitary income, net of any loss carryforwards and credits applied. This paragraph does not apply to any tax, interest, or penalty attributable to separate entity items. Although the department may send correspondence, notices, refunds, assessments, or other documents relating to any combined group member’s separate entity items to the designated agent, and the designated agent may choose to pay any tax, interest, or penalty on behalf of a combined group member, the tax, interest, or penalty attributable to separate entity items is ultimately the responsibility of the combined group member or members to which the separate entity items are attributable.

(g) Confidentiality provisions. The designated agent is an agent under s. 71.78 (4) (e), Stats. Therefore, the department may provide information relating to any member of the combined group to the designated agent, including information relating to the member’s separate entity items.

Note: This section interprets s. 71.255 (7), Stats.

Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.66 for more information on combined estimated tax requirements. See s. Tax 2.67 for more information on combined returns.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-011: am. (3) (c) Register July 2012 No. 670, eff. 8-1-12.

Wis. Admin. Code § Tax 2.66 Combined estimated tax payments {#sec-tax-2.66 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.66}

(1) Scope. In general, s. 71.255 (7) (b) 5., Stats., provides that only the designated agent of a combined group may make estimated tax payments applicable to a combined return. This section provides exceptions to the general rule, explains the estimated tax requirements, and provides rules for applying estimated payments and overpayments.

(2) Separate estimated payments.

(a) When separate estimated payments are allowed. Although the designated agent is always authorized to make estimated payments on behalf of any and all of its combined group members, a combined group member other than the designated agent may make estimated payments on its own behalf if any of the following apply:

For the first taxable year for which a combined group files a combined return, any member of the group may make estimated payments on its own behalf.
For the first taxable year for which a corporation is a member of a combined group, that corporation may make estimated payments on its own behalf.
Any combined group member may make estimated payments on its own behalf to the extent those payments relate to separate entity items.

(b) Reporting of separate estimated payments. If a combined group member other than the designated agent makes separate estimated payments and applies those payments to the combined return, the designated agent shall notify the department of those payments on a department-prescribed form filed with the combined return. This notification authorizes the department to apply the separate estimated payments to the combined return.

(3) Determination of required estimated payments.

(a) General. If a combined return is filed, the amount of any addition to tax under s. 71.84 (2), Stats., shall be computed as if the combined group were one corporation. “Tax shown on the return” and “tax for the taxable year” as defined in s. 71.29 (1) (b), Stats., have the same meaning with respect to a combined return as to a separate return.

(b) Computation of thresholds. Since, as provided in par. (a), “tax shown on the return” has the same meaning with respect to a combined return as to a separate return, the amounts of the following thresholds are the same regardless of the number of combined group members included in the combined return:

Section 71.29 (7), Stats., which provides that no interest on underpayment is required if the tax shown on the return for the taxable year is less than $500.
Section 71.29 (9), Stats., which provides that for corporations that have Wisconsin net incomes of less than $250,000 and whose preceding taxable year was a 12-month taxable year, estimated payments may be based on the lesser of 90 percent of tax shown on the return for the current taxable year or the tax shown on the return for the preceding year.

(c) Effect of separate entity items. The amount of net income and tax shown on a combined return includes net income and tax attributable to separate entity items. If the combined return includes separate entity items of a corporation that would otherwise be a combined group member except that it has no items that are subject to combination under the water’s edge rules of s. Tax 2.61 (4), the corporation is considered a combined group member for purposes of determining required estimated payments.

Example: Combined Group AB consists of Member A and Member B. Group AB filed a combined return for calendar year 2010. The 2010 return includes $30,000 of net tax attributable to Member A’s items and $20,000 attributable to Member B’s items, including $5,000 attributable to B’s separate entity items. The 2010 combined return also includes $10,000 of net tax from the separate entity items of Corporation C, which would be a combined group member except that none of its items are subject to combination under the water’s edge rules. If Group AB is not eligible to base its estimated taxes on its 2009 net tax under the provisions of par. (b), Group AB’s required estimated tax payments for purposes of its 2010 combined return are $54,000 (= ($30,000 + $20,000 + $10,000) x 90%).

(d) Annualized income installment method. For purposes of the annualized income installment method provided in s. 71.29 (9) (c) and (10) (c), Stats., the previous year’s apportionment percentage for a combined group equals the sum of the combined group members’ modified sales factor numerators as determined under s. Tax 2.61 (7) (a) for the combined group’s preceding taxable year, divided by the combined group’s modified sales factor denominator as determined under s. Tax 2.61 (7) (b) for the combined group’s preceding taxable year.

(e) Change in membership. For purposes of applying par. (a) and except as provided in par. (f), the combined group’s “tax shown on the return” for the current taxable year or the preceding taxable year is the tax shown on the combined return for the applicable year, without regard to corporations that have joined or left the group.

Example: Group JK files a combined return for the calendar year 2009. During 2010, Member J acquires L and L becomes a member of the combined group. If the group qualifies to determine its estimated tax obligations for 2010 based on its preceding year’s tax liability, its preceding year’s tax liability only includes the tax shown on Group JK’s 2009 combined return; it does not include any tax liability from L’s 2009 separate return.

(f) First combined return year. The following rules apply to the computation of required estimated payments for the first year that a combined group files a combined return:

If the total of the combined group’s Wisconsin net income reported on the combined return is less than $250,000, the required estimated payments may be based on the sum of the members’ tax shown on their Wisconsin returns for the preceding year as provided by s. 71.29 (9) (a) 2., Stats., but only if all combined group members filed a Wisconsin return which covered a full 12 months in the preceding taxable year. If a member was included in the combined return of another combined group in the preceding taxable year, its tax shown on the return for that year is the tax attributable to the sum of its share of combined unitary income and income from separate entity items reported on that return.
If one or more combined group members did not file a Wisconsin return which covered 12 months in the preceding taxable year, the combined group shall base its required estimated payments on 90 percent of the tax shown on the combined return as provided under s. 71.29 (9) (a) 1. or (10) (b), Stats., as applicable.
The previous year’s apportionment percentage for purposes of the annualized income installment method equals the sum of the current combined group members’ apportionment factor numerators from their returns for the preceding taxable year, divided by the sum of the apportionment factor denominators from their returns for the preceding taxable year. If a member was included in the combined return of another combined group in the preceding taxable year, its apportionment percentage for this purpose is its modified sales factor numerator for that taxable year as determined under s. Tax 2.61 (7) (a), divided by its separate company denominator for that taxable year as determined under s. Tax 2.61 (7) (b).
For purposes of subds. 1. to 3., if a combined group member has a taxable year different than the combined group’s taxable year, the member’s preceding taxable year is its taxable year most recently ended before the first day of the combined group’s taxable year.

(4) Rules for applying estimated payments and overpayments.

(a) Separate returns filed in year following combined return year. If a combined group terminates and the former members properly file separate returns in the subsequent year, any combined estimated payments made for that year shall be credited against the separate tax liabilities of the former members of the combined group in the manner allocated by the designated agent. The designated agent shall notify the department of the manner in which the payments are to be allocated. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return.

(b) Combined estimated payments but no combined return. If combined estimated payments are made for a taxable year but no combined return is filed for that year or for the previous year, the estimated payment shall only be credited to the corporation that made the payment.

If a combined group member has a credit for an overpayment of taxes from a prior taxable year when it was not a combined group member, the member may, through its designated agent, authorize the department to apply some or all of the credit against the total tax liability reported on the combined return. To carry out this authorization, the designated agent shall file a department-prescribed form with the combined return to notify the department of the amount to be applied. Alternatively, the member may file a claim for refund of the overpayment, in which case the overpayment shall be refunded to that member.
If a corporation leaves a combined group that has an overpayment of taxes carried over from a prior combined return year, the designated agent may allocate a portion of that overpayment to the former member. The designated agent shall notify the department of the amount to be allocated to the former member. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return.

(d) Erroneous combined estimated payments. If a designated agent makes estimated payments on the erroneous premise that a corporation is an eligible member of the combined group, and discovers the error prior to the time the combined group and the corporation file their respective returns, the designated agent may allocate some or all of the combined estimated payments to the corporation. The designated agent shall notify the department of the amount to be allocated. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return. The combined group and the corporation shall each compute their addition to tax under s. 71.84 (2), Stats., as if the estimated payments allocated to the corporation had actually been paid by it rather than by the combined group.

(e) Erroneous separate estimated payments. If a corporation makes separate estimated payments on the erroneous premise that it is not a combined group member, the following rules apply:

If the corporation discovers the error prior to the time the designated agent files the combined return for the taxable year, and the corporation has not filed a separate return for the period that should have been included in that combined return or otherwise received a refund of the separate estimated payments, the corporation may apply the separate estimated payments to the combined return. The designated agent shall report the separate estimated payments in the manner described in sub. (2) (b).
If the corporation discovers the error prior to the time the designated agent files the combined return for the taxable year, but the corporation has already filed a separate return for the period that should have been included in the combined return, the corporation shall file an amended separate return showing no net income, overpayment, or underpayment, and stating that the corporation will join in the filing of a combined return and identifying the designated agent of the combined group. Unless the corporation specifies otherwise on the amended return, the department will not refund the erroneously paid amounts. When the designated agent files the combined return including that corporation, the corporation may apply the separate estimated payments to the combined return unless the corporation specified otherwise on its amended return or has otherwise received a refund of the separate estimated payments. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).
If the corporation discovers the error after the designated agent has filed the combined return for the taxable year, but the corporation has not filed a separate return or otherwise received a refund of the separate estimated payments, the designated agent shall file an amended combined return and apply the corporation’s separate estimated payments to the amount due on the amended combined return. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).
If the corporation discovers the error after the designated agent has filed the combined return for the taxable year and after the corporation has already filed a separate return for the period that should have been included in the combined return, the corporation shall file an amended separate return and the combined group shall file an amended combined return. The provisions of subd. 2. apply with respect to the amended separate return. The corporation may apply the separate estimated payments to the amended combined return unless the corporation specified otherwise on its amended return or has otherwise received a refund of the separate estimated payments. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).

Note: If an allocation described in sub. (4) (a), (c) 2., or (d) is necessary and the department has not prescribed a form to use to notify the department of the allocation, send correspondence notifying the department of the allocation to: Corporation Processing Unit, Wisconsin Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908.

Note: Section Tax 2.66 interprets ss. 71.255 (7), 71.29, and 71.84 (2), Stats.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 22-044: renum. (2) (c) 4. to (2) (c) 4. (intro.) and am., cr. (2) (c) 4. a. to d. Register June 2023 No. 810, eff.7-1-23.

Wis. Admin. Code § Tax 2.67 Combined returns {#sec-tax-2.67 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.67}

(1) Scope. This section provides rules relating to the filing of combined returns by corporations required to use combined reporting under s. 71.255, Stats. This section explains the filing requirements for combined returns, provides rules relating to defining the taxable year included in a combined return, and describes how interest, penalties, and statutes of limitations apply to combined returns.

(2) Filing requirements for combined returns.

(a) General. The designated agent of a combined group shall file a combined return on behalf of the group. For each combined group member included in the combined return, the combined return satisfies the member’s requirement for filing returns under ss. 71.24 (1) or (1m) or 71.44 (1) or (1m), Stats., as applicable. The combined return shall be filed by the date provided in ss. 71.24 (1), (1m), and (7) or 71.44 (1), (1m), and (3), Stats., as applicable.

(b) Electronic filing. All combined returns shall be filed electronically. The secretary of revenue may waive the requirement to file a combined return electronically when the secretary determines that the requirement causes an undue hardship, if the person requests the waiver in writing and clearly indicates why the requirement causes an undue hardship. In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the Internet.

Any other factor that the secretary determines is pertinent.

Note: Written requests should be e-mailed to DORWaiverRequest@wisconsin.gov, faxed to (608) 224-5761, or addressed to Mandate Waiver Request, Wisconsin Department of Revenue, PO Box 8902, Madison, WI 53708-8902.

Note: Forms not filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to the address specified on the form or in the instructions.

(c) Components of combined return. A combined return shall include the following items, and shall be considered incomplete if any of these items are excluded:

One Wisconsin Form 6, Income or Franchise Tax Return, for the combined group as a whole.
If the combined group is using apportionment, one of the following forms, per member as applicable:

a. Schedule A-01, Wisconsin Single Sales Factor Apportionment Data for Nonspecialized Industries.

b. Schedule A-02, Wisconsin Apportionment Percentage for Interstate Financial Institutions.

c. Schedule A-03, Wisconsin Apportionment Percentage for Interstate Motor Carriers.

d. Schedule A-04, Wisconsin Apportionment Percentage for Interstate Telecommunications Companies.

e. Schedule A-05, Wisconsin Premium Factor for Insurance Companies.

f. Schedule A-06, Wisconsin Receipts Factor for Interstate Brokers-Dealers, Investment Advisors, Investment Companies, and Underwriters.

g. Schedule A-07, Wisconsin Apportionment Percentage for Interstate Air Carriers.

h. Schedule A-08, Wisconsin Apportionment Percentage for Broadcasters.

i. Schedule A-09, Wisconsin Apportionment Percentage for Interstate Railroads.

j. Schedule A-10, Wisconsin Apportionment Percentage for Interstate Pipeline Companies.

k. Schedule A-11, Wisconsin Apportionment Percentage for Interstate Air Freight Forwarders Affiliated with a Direct Air Carrier.

Any other required supporting forms and schedules listed in s. Tax 2.03, as applicable. Unless stated otherwise in the instructions, supporting forms and schedules shall be prepared separately for each combined group member.
A copy of the complete federal return for each combined group member, including all supporting schedules and any amended returns, for the member’s taxable year included in the combined return. For combined group members that also file in a federal consolidated return, any of the following alternatives shall be considered to satisfy this requirement:

a. A copy of the federal consolidated return, including all supporting forms, schedules, and statements for each corporation included in the consolidated return, as submitted to the internal revenue service.

b. Pro forma federal returns prepared separately for each combined group member, including all supporting forms and schedules prepared separately for each combined group member.

c. A spreadsheet showing the line-by-line computation of taxable income of each combined group member included in the federal consolidated return, including consolidating adjustments, plus the supporting forms, schedules, and statements filed with the internal revenue service pertaining to each member. The supporting statements shall include balance sheets as of the beginning and end of the tax year, a reconciliation of income per books with income per return, and a reconciliation of retained earnings, to the extent the member was required to submit these items to the internal revenue service.

For combined groups that also file in a federal consolidated return, a copy of federal Form 851, Affiliations Schedule.

(d) Separate entity items.

Subject to the provisions of s. Tax 2.65 (3) (b), if any combined group member has separate entity items, the designated agent shall include those separate entity items in the combined return. If a corporation that would otherwise be a combined group member has no items that are subject to combination under the water’s edge rules of s. Tax 2.61 (4), the designated agent may include that corporation’s separate entity items in the combined return, in which case the combined return shall include the items specified in sub. (2) (c) 5. and 6. and subd. 3. for that corporation as if it is a combined group member. Alternatively, the corporation may file a separate Wisconsin return to report those items.
The joint and several liability provisions of s. Tax 2.65 (3) (f) do not apply to any tax, interest, or penalty attributable to separate entity items. Although the department may send correspondence, notices, refunds, assessments, or other documents relating to any combined group member’s separate entity items to the designated agent, and the designated agent may choose to pay any tax, interest, or penalty on behalf of a combined group member, the tax, interest, or penalty attributable to separate entity items is ultimately the responsibility of the combined group member or members to which the separate entity items are attributable.
The separate entity net income or loss and apportionment factors included in the combined return shall be reported on Wisconsin Form N, Nonapportionable and Separately Apportioned Income. The designated agent shall complete and submit Form N with the combined return for each applicable corporation and carry forward the total Form N amounts to the appropriate line on Form 6. For purposes of the requirement of s. 71.255 (2) (d), Stats., separate entity items reported on Form N shall be considered filed on a separate return. However, for purposes of determining a combined group member’s net income, tax, interest, underpayment interest, economic development surcharge, and the statute of limitations, the separate entity amounts shall be added to its amounts, if any, computed in the unitary combination.
If a corporation is a member of more than one combined group at the same time, the corporation shall include its separate entity items, if any, in the combined return of only one group.

(e) Amended returns. If a corporation erroneously fails to join in the filing of a combined return, the designated agent shall file an amended combined return adding the corporation and, if a separate return was filed by the corporation, the corporation shall file an amended separate return showing no net income, overpayment, or underpayment, and stating that the corporation has joined in the filing of a combined return and identifying the designated agent of the combined group in which the corporation has been included.

(3) Taxable year of combined return. The taxable year included in a combined return is the combined group’s taxable year as determined in s. 71.255 (8), Stats. For purposes of determining the taxable year and the items includable in the combined group’s taxable year, the following rules apply:

(a) Combined group’s taxable year. If two or more members of the combined group file in a federal consolidated return, the combined group’s taxable year is the taxable year of that federal consolidated return. If no federal consolidated return applies or there is more than one federal consolidated return, the combined group’s taxable year is the taxable year of the designated agent. In any case, s. Tax 2.65 (2) (a) requires that the designated agent’s taxable year shall be the same as the combined group’s taxable year.

(b) Methods for members with differing taxable years. If the taxable year of a combined group member differs from the taxable year of the combined group, the designated agent shall include that member’s net income or loss and apportionment factors in the combined return by using one of the following methods:

Preparing a separate income statement from the member’s books and records for the months included in the combined group’s taxable year and using that income statement to determine the amounts includable in the combined return.
Using the net income or loss for the member’s taxable year that ends during the combined group’s taxable year to determine the amounts includable in the combined return.

(c) Election of method. If the designated agent converts a combined group member’s taxable year to the combined group’s taxable year as described in par. (b) 1. or 2., it shall use the same method for each combined group member subject to the election. Once the designated agent files the first combined return including a member whose taxable year is properly converted, the designated agent may not file an amended return to change the election, except that if the original return was not filed under extension, the designated agent may file an amended return to change the election on or before the end of the automatic seven-month extension period provided in ss. 71.24 (7) or 71.44 (3), Stats., as applicable. The designated agent shall use the same method in each subsequent taxable year unless it obtains written approval from the department to use the other method.

Note: Send written requests for approval to change the election to: Audit Bureau, Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.

(d) Part-year members. If, during a combined group’s taxable year, a corporation ceases to be a member of the combined group or a new corporation becomes a member, the designated agent shall include that corporation’s items attributable to the portion of the taxable year that the corporation was a member in the combined return covering the combined group’s entire taxable year. For the portion of the taxable year when the corporation was not a member of the combined group, the corporation shall file a separate return or file in the combined return of another combined group, as applicable.

(4) Interest, penalties, and statutes of limitations.

(a) Interest. For purposes of computing interest on late payments by or on behalf of combined group members, the following rules apply:

Interest shall be assessed to the designated agent of a combined group based upon the combined tax liability or deficiency shown on the combined return for the combined group’s taxable year. However, the joint and several liability provisions of s. Tax 2.65 (3) (f) do not apply to any interest attributable to separate entity items. If a notice of an interest amount due is attributable to separate entity items of a combined group member other than the designated agent, the designated agent may pay the amount due or may submit a written request to the department to reissue the notice or a portion of the amount assessed to the combined group member responsible for the separate entity items. The designated agent shall submit the written request on or before the due date shown on the notice.

Note: Send written requests to reissue notices relating to separate entity items to: Mail Stop 3-107, Wisconsin Department of Revenue, PO Box 8906, Madison, WI 53708-8906.

An extension filed by the designated agent shall be considered an extension filed by all members of the combined group. However, the extension filed by the designated agent does not apply to affiliated corporations that are not combined group members, even if those corporations will be included in the combined return under the provisions of par. (d) 2.
Interest due to underpayment of estimated taxes shall be computed based on the estimated tax requirements and other provisions described in s. Tax 2.66.
If a corporation erroneously fails to join in the filing of the combined return, all payments, credits, and other amounts collected from the corporation which are properly attributable to the combined group’s taxable year and attributable to a period of time that the corporation was a member of the combined group shall be treated as having been paid by the combined group.

(b) Late filing fees. If a combined group fails to timely file a combined return and the late filing fee under s. 71.83 (3), Stats., applies, the amount of the late filing fee shall be the amount provided in s. 71.83 (3), Stats., regardless of the number of combined group members.

A corporation which erroneously fails to join in the filing of a combined return, but which timely files a separate Wisconsin return or joins in the timely filing of a combined return for another combined group, may not be subject to a penalty for failure to file. In determining whether the return is timely filed, the taxable year of the erroneously filed return shall be used, rather than the taxable year of the combined group with which the corporation should have filed.
A corporation which erroneously fails to join in the filing of a combined return and which fails, without reasonable cause, to timely file a separate Wisconsin return or join in the timely filing of a combined return for another combined group, shall be subject to the penalty computed based on its share of tax required to be reported on the combined return for its proper combined group, including its tax attributable to separate entity items. Except as provided in sub. (2) (d) 2., the members of the combined group shall be jointly and severally liable for the penalty because under s. 71.255 (1) (n), Stats., joint and several liability may apply to penalties and it is the duty of the designated agent to include the corporation in the combined return. The department may send a notice of assessment of the penalty to the designated agent instead of the corporation which was erroneously omitted from the combined return.

(d) Statutes of limitations.

The designated agent’s filing of a combined return shall be considered to be a return filed by each combined group member whose items are included in the combined unitary income reported on that return.
If a combined return includes separate entity items of a corporation that would otherwise be a combined group member but for the water’s edge rules of s. Tax 2.61 (4), the designated agent’s filing of the combined return shall be considered to be a return filed by that corporation.
For purposes of the statute of limitations in s. 71.77 (7) (a), Stats., allowing the department to make an assessment within six years after the filing of a return, the statute of limitations shall be determined for each combined group member separately based on its total net income reported on its return, which is its net income or loss from the unitary combination as included in the combined return, plus its net income or loss from separate entity items. The six-year statute of limitations applies if a combined group member’s total net income reported on its return is less than 75 percent of the net income properly assessable and the tax attributable to the additional income is in excess of $100. The designated agent shall be responsible for any combined group member’s return that is open under the 6-year statute of limitations, subject to the provisions of s. Tax 2.65 (3) (f), even if the designated agent’s return, as included in the combined return, is not open under the six-year statute of limitations.

Note: Section Tax 2.67 interprets ss. 71.24 (1), (1m), and (7), 71.255 (1) (b), (7) (b), (8), and (9), 71.44 (1), (1m), and (3), 71.77, 71.82, and 71.83, Stats.

Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.65 for more information on the duties of the designated agent. See s. Tax 2.66 for more information on combined estimated tax requirements.

History

EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-011: am. (2) (d) 3. Register July 2012 No. 679, eff. 8-1-12; CR 16-046: am. (2) (c) 1., r. (2) (c) 2., 3., am. (2) (c) 4., (d) 1., 3. Register January 2018 No. 745, eff. 2-1-18; CR 22-044: cr. (2) (c) 4. Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 2.82 Nexus {#sec-tax-2.82 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.82}

(1) Background and scope.

(a) Every domestic corporation, one incorporated under Wisconsin’s laws, except those exempt under ss. 71.26 (1) and 71.45 (1), Stats., and every licensed foreign corporation, one not incorporated in Wisconsin, is required to file a complete corporation franchise or income tax return, Form 4, 5S, or 6, regardless of whether or not business was transacted.

(b) A foreign corporation is “licensed” if it has obtained a Certificate of Authority from the department of financial institutions to transact business in this state pursuant to s. 180.1501, Stats. A licensed foreign corporation is presumed to be subject to Wisconsin franchise or income taxes.

(c) An unlicensed foreign corporation is subject to Wisconsin franchise or income taxes if it has nexus with Wisconsin. The purpose of this rule is to provide guidelines for determining what constitutes nexus, that is, what business activities are needed for a foreign corporation to be subject to Wisconsin franchise or income taxes. The rule also explains how nexus applies to a foreign corporation in the context of s. 71.255, Stats., relating to combined reporting, and s. 77.93, Stats., relating to the economic development surcharge.

(2) Definitions. In this section:

(a) “Business location” includes a repair shop, parts department, purchasing office, employment office, warehouse, meeting place for directors, sales office, permanent sample or display room, research facility or a recreational facility for use of employees or customers. A residence of an employee or representative is not ordinarily considered a business location of the employer unless the facts indicate otherwise. Facts that may indicate a residence of an employee or representative is a business location include the following: a portion of the residence is used exclusively for the business of the employer, the employee is reimbursed or paid a flat fee for the use of this space by the employer; the employee’s phone number is listed in the yellow pages or on the Internet under the name of the employer; the employee uses supplies, equipment or samples furnished by the employer; or the space is used by the employee to interview prospective employees, hold sales meetings, or discuss business with customers.

(b) “Loans” include any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of an extension of credit from another. “Loans” include participations, syndications, and leases treated as loans for federal income tax purposes. “Loans” do not include properties treated as loans under section 595 of the Internal Revenue Code prior to its repeal by P.L. 104-188; futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; non-interest bearing balances due from depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; or interests in a real estate mortgage investment conduit or other mortgage-backed or asset-backed security.

(bm) “Regular” and “regularly” mean 15 or more days of activity. Fifteen days of activity means one person for 15 days or 15 persons for one day, or any combination of persons and days that results in at least 15 person-days of activity. “Days of activity” include any day, or portion thereof, upon which business activity took place. “Days of activity” do not include travel days, holidays, or weekends, unless business activities were conducted on those days.

(c) “Representative” includes an employee, independent contractor, or any other person or entity engaged in substantial activities that helped the taxpayer to establish or maintain a market in this state.

Note: Under Tyler Pipe Industries, Inc. v. Washington State Dept. of Revenue, 483 US. 232 (1987), the U.S. Supreme Court held that it made no difference whether the taxpayer’s representatives were classified as independent contractors or employees. Also see Scripto, Inc. v. Carson, 362 U.S. 207 (1960).

(3) Federal limitations on taxation of foreign corporations.

(a) Federal constitutional provisions.

Article I, Section 8 of the U.S. Constitution grants congress the power to regulate commerce with foreign nations and among the several states. States are prohibited from levying a tax which imposes a burden on interstate or foreign commerce. However, this does not mean states may not impose any tax on interstate commerce. A state tax on net income from interstate commerce which is fairly attributable to the state is constitutional. (Northwestern States Portland Cement Co.

v. Minnesota; Williams v. Stockham Valves & Fittings, Inc., 358 U.S. 450, 79 S. Ct. 357.)

Section I of the 14th Amendment protects taxpayers within any class against discrimination and guarantees a remedy against illegal taxation.

(b) Federal Public Law 86-272.

Under Public Law 86-272, a state may not impose its franchise or income tax on a business selling tangible personal property, if the only activity of that business is the solicitation of orders by its salesperson or representative which orders are sent outside the state for approval or rejection, and are filled by delivery from a point outside the state. The activity must be limited to solicitation. If there is any activity which exceeds solicitation, the immunity from taxation under P.L. 86-272 is lost.
This law, enacted by congress in 1959, does not extend to:

a. Those businesses which sell services, real estate or intangibles in more than one state;

b. Domestic corporations; or

c. Foreign nation corporations, that is, those not incorporated in the United States.

If the following activities are the only activities in Wisconsin of a foreign corporation selling tangible personal property, the corporation is not subject to Wisconsin franchise or income taxes under P.L. 86-272:

a. Activity in Wisconsin by employees or representatives soliciting orders for tangible personal property which orders are sent outside this state for approval or rejection.

b. Solicitation activity by non-employee independent contractors, conducted through their own office or business location in Wisconsin.

(4) What constitutes nexus. If a foreign corporation undertakes one or more of the following activities, it is considered to have nexus and shall be subject to Wisconsin franchise or income taxes:

(a) General. Any of the following activities constitute nexus:

Maintenance of any business location in Wisconsin, including any kind of office.
Ownership of real estate in Wisconsin.
Ownership of tangible personal property in Wisconsin, including inventory held by a distributor, consignee, or other non-employee representative, whether or not used to fill orders for the owner’s account, but not including personal property for use in an employee’s or representative’s home, residential office or automobile that is solely limited to conducting the activities protected by P.L. 86-272.
Regular activity in Wisconsin by employees or representatives soliciting orders with authority to approve them.

5m. Regular activity in Wisconsin by employees or representatives performing services related to the sale of tangible personal property. Services related to the sale of tangible personal property may include consulting, design, engineering, construction, installation, and assembly of equipment.

Regular activity in Wisconsin by employees or representatives engaged in purchasing activities, credit investigations, collection of delinquent accounts, or conducting training or seminars for customer personnel in the operation, repair, or maintenance of the taxpayer’s products.

Example: Training Company is a calendar year-end corporation headquartered outside Wisconsin. Training Company does not maintain a business location or have resident employees in Wisconsin. During the year, Training Company sends five employees to Wisconsin for three days to conduct a training seminar related to the operation of machinery that Training Company sold to the taxpayer. Training Company has nexus since its employees conducted activity in Wisconsin for 15 days.

Operation of mobile stores in Wisconsin, such as trucks with driver-salespersons, regardless of frequency, or whether the driver-salesperson is an employee.
Leasing of tangible property in Wisconsin, but not including personal property for use in an employee’s or representative’s home, residential office or automobile that is solely limited to conducting the activities protected by P.L. 86-272.

9m. Licensing of intangible rights for use in Wisconsin.

The sale of other than tangible personal property such as real estate, services and intangibles in Wisconsin.
The performance of services in Wisconsin by employees or representatives, the services of which are unrelated to the sale of tangible personal property.

Example: Repair Company is a calendar year-end corporation headquartered outside Wisconsin. Repair Company does not maintain a business location or have resident employees in Wisconsin. During the year, Repair Company sends four technicians to repair customer equipment located in Wisconsin. Each of the technicians perform repairs in Wisconsin for three days during the year. Repair Company has nexus in Wisconsin since its employees or representatives perform services in Wisconsin. Public Law 86-272 does not apply because services such as repair activities are not a protected activity.

Engaging in substantial activities that help to establish and maintain a market in Wisconsin.

(b) “Doing business in this state”. Additionally, if a corporation has any of the activities that are specifically included in the statutory definition of “doing business in this state” (s. 71.22 (1r), Stats.), the corporation has nexus except where prohibited by P.L. 86-272. Therefore, the following activities constitute nexus in Wisconsin to the extent sub. (3) (b) 3. does not apply:

Issuing credit cards, debit cards, or travel and entertainment cards to customers in Wisconsin.
Regularly selling products or services of any kind or nature to customers in Wisconsin that receive the product or service in Wisconsin.
Regularly soliciting business from potential customers in Wisconsin.
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.
Holding loans secured by real or tangible personal property located in Wisconsin.
Owning, directly or indirectly, a general or limited partnership interest in a partnership that does business in Wisconsin, regardless of the percentage of ownership.
Owning, directly or indirectly, an interest in a limited liability company that does business in Wisconsin, regardless of the percentage of ownership, if the limited liability company is treated as a partnership for federal income tax purposes.

(c) Nexus for entire taxable year. If a corporation has nexus in Wisconsin for any part of its taxable year, it is considered to have nexus in Wisconsin for its entire taxable year, regardless of whether the activity that created the nexus took place throughout the year.

Example: Corporation W is a calendar year corporation that operates five retail stores, one of which is in Wisconsin. The stores constitute a unitary business. Corporation W is not in a combined group. In the year 2014, Corporation W operated one store in Wisconsin. On August 31, 2014, Corporation W sold the Wisconsin store to Corporation Y but continued to operate the other stores outside Wisconsin. Between September 1,2014 and December 31, 2014, Corporation W had no activities that would create nexus in Wisconsin. Corporation W is considered to have nexus in Wisconsin for its entire taxable year. Therefore, on its 2014 Wisconsin Form 4, Corporation W must compute its apportioned share of Wisconsin income based on its apportionable income from all of its stores for the entire year 2014. In addition, the numerator of the sales factor in its apportionment computation must include sales shipped to Wisconsin customers for the entire year 2014.

(d) How to obtain ruling. Paragraph (a) and the statutory definitions summarized in par. (b) as to what activities constitute nexus are not all-inclusive. A ruling may be requested about a particular foreign corporation as to whether it is subject to Wisconsin franchise or income taxes by writing to the Wisconsin Department of Revenue, Audit Bureau, Nexus Unit, P.O. Box 8906, Madison, WI 53708.

Note: Section 71.23 (3), Stats., provides specific activities that do not constitute nexus in Wisconsin even if they exceed the protection of P.L. 86-272.

(5) Nexus for combined group members.

(a) General. For a combined group, nexus is determined for the unitary business as a whole, as provided in s. 71.255 (5) (a), Stats. Therefore, if a member of a combined group has nexus in Wisconsin and that nexus is attributable to the combined group’s unitary business, all members of the combined group have nexus in Wisconsin.

Example: Assume the same facts as the example in sub. (4) (c). In addition, assume Corporation Y is a member of Combined Group XYZ, which reports on a calendar year. Although Group XYZ operated numerous stores outside Wisconsin for the entire year, none of the members of Group XYZ had any nexus-creating activities in Wisconsin until July 1, 2014, when Corporation Y set up a temporary office in Wisconsin in anticipation of the purchase of the store from Corporation W. However, Corporation Z had sales shipped to Wisconsin customers during 2014. Since Corporation Y established nexus in Wisconsin during the year, Group XYZ is considered to have nexus in Wisconsin for its entire taxable year. Therefore, Group XYZ must file a Wisconsin Form 6 for the year 2014. On the combined return, Group XYZ must include its apportionable income for the entire taxable year (from all stores) in the combined unitary income to be apportioned. The Wisconsin share of the combined unitary income for Corporation Y and Corporation Z is then determined as described in s. 71.255 (5), Stats., and s. Tax 2.61 (7). Assuming all of Group XYZ’s Wisconsin sales are attributable to Corporations Y and Z, Corporations Y and Z would be the only corporations in the group with Wisconsin income.

(b) Effect of controlled group election. For a combined group that has made the controlled group election provided in s. 71.255 (2m), Stats., the entire commonly controlled group’s business is deemed to be a single unitary business, and the commonly controlled group becomes a combined group. Therefore, if a combined group has made the controlled group election and at least one member of the combined group has nexus in Wisconsin, all members of the combined group have nexus in Wisconsin.

Note: See s. Tax 2.62 for further discussion of the concept of a unitary business. Also see s. Tax 2.61 (4) (h) for details of how a corporation’s nexus may be affected by the water’s edge rules of combined reporting, and how these water’s edge rules may affect taxation of a corporation’s income from a unitary business.

(6) Nexus for economic development surcharge. If a corporation has nexus under this section, the corporation is considered to be doing business in this state for purposes of s. 77.93, Stats., relating to the economic development surcharge. Therefore, if a corporation, other than a corporation exempt from taxation, has nexus and has at least $4,000,000 of gross receipts from all activities for the taxable year, the corporation is subject to the economic development surcharge. The economic development surcharge applies to each member of a combined group separately.

Note: See s. Tax 2.32 for a description of what constitutes gross receipts for purposes of applying the $4,000,000 threshold.

Examples: 1) Corporation A is incorporated outside Wisconsin and is not a member of a combined group. Corporation A is licensed to do business in Wisconsin, but all of its activities in Wisconsin are protected by P.L. 86-272. Therefore, Corporation A does not have nexus. Corporation A is not subject to the economic development surcharge because it does not have nexus in Wisconsin.

2) Assume the same facts as Example 1, except that Corporation A is in Combined Group ABCD, which consists of Corporations A, B, C, and D. Corporation D has a warehouse and several stores in Wisconsin that are part of the combined group’s common unitary business. Since Corporation D has nexus in Wisconsin, all corporations in the combined group have nexus in Wisconsin. Corporations A, B, and D have sales to Wisconsin customers but Corporation C does not. The gross receipts, Wisconsin income, gross tax, and resulting economic development surcharge for each corporation in the group are as follows:

The Wisconsin income and gross tax are computed using the method described in s. Tax 2.61. Since the economic development surcharge applies to each member of a combined group separately:

• Corporation A is subject to the economic development surcharge because its gross receipts are at least $4,000,000.

• Corporation B is not subject to the economic development surcharge because its gross receipts are less than $4,000,000.

• Corporation C is subject to the minimum $25 economic development surcharge because its gross receipts are at least $4,000,000 and it has no gross tax liability.

• Corporation D is subject to the maximum $9,800 economic development surcharge because its gross tax of $474,000 multiplied by the economic development surcharge rate of 3% exceeds $9,800. The amount in excess of $9,800 is not imposed even though the other members have economic development surcharge liability of less than $9,800.

Note: Section Tax 2.82 interprets ss. 71.22 (1r), 71.23 (1) and (2), 71.255 (5), and 77.93, Stats.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; correction in (3) (b) 1. made under s. 13.93 (2m) (b) 5., Stats., Register, November, 1993, No. 455; EmR0943: emerg. r. and recr. eff. 12-31-09; CR 10-001: r. and recr. Register June 2010 No. 654, eff. 7-1-10; CR 12-011: am. (1) (c), (6) Register July 2012 No. 679, eff. 8-1-12; CR 16-046: am. (1) (a), (4) (c) (Example), (5) (a) (Example) Register January 2018 No. 745, eff. 2-1-18; CR 18-081: cr. (2) (bm), am. (3) (b) 3. a., (4) (a) 3., r. (4) (a) 4., am. (4) (a) 5., cr. (4) (a) 5m., r. (4) (a) 6., am. (4) (a) 7., cr. (4) (a) 7. (example), am. (4) (a) 8., 9., cr. (4) (a) 9m., am. (4) (a) 11., cr. (4) (a) 11 (example), am. (4) (d) Register October 2019 No. 766, eff. 11-1-19; (2) (bm) renum. from (2) (d) under s. 13.92 (4) (b) 1., Stats., and correction in (2) (bm), (3) (b) 1., (4) (a) 3., 9. made under s. 35.17, Stats., Register October 2019 No. 766.

Wis. Admin. Code § Tax 2.85 Penalty for failure to produce records under s. 71.80 (9m), Stats {#sec-tax-2.85 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.85}

(1) General. A person who fails to produce records or documents, as provided under ss. 71.74 (2) and 73.03 (9), Stats., that were requested by the department may be subject to any of the following penalties under s. 71.80 (9m), Stats.:

(a) The disallowance of deductions, credits, exemptions or income inclusion to which the requested records relate.

(b) In addition to any other penalties that the department may impose, a penalty for each violation that is equal to the greater of $500 or 25% of the amount of the additional tax on any adjustment made by the department that results from the person’s failure to produce the records.

(2) Definitions. In this section:

(a) “Disallowance,” “inclusion,” or “adjustment” means that an item is disallowed, included or adjusted through action taken by the department when a proposed assessment or refund or notice of assessment or refund is issued to a taxpayer.

(b) “Records” include both paper and electronic formats. Examples include bills, receipts, invoices, contracts, letters, memos, accounting statements or schedules, general ledgers, journal entries, and board of director’s minutes. “Records” do not include items protected by attorney-client privilege, if the taxpayer provides a brief description or summary of the contents of each record, the date each record was prepared, the person or persons who prepared each record, the person to whom each record was directed, or for whom each record was prepared, the purpose in preparing each record, and how each element of the privilege is met as to each record.

(c) “Records requested were not provided” means that all records requested were not provided to the department within the time specified by the department.

(cm) “Summons request” means a request for records issued by the department pursuant to s. 73.03 (9), Stats.

(d) “Written request for records” includes requests made by letter, e-mail, fax or any other written form.

(e) “Provided” means the records are provided by electronic means or in paper format to the address specified by the department in its written request for records. If the address specified by the department is the person’s location, the records are considered provided on the date the person notifies the department they are available for review at that location.

(3) Procedures. The penalties in this section may be imposed if the records requested were not provided and the department provided the notifications in pars. (a), (b), and (c) regarding the records requested. The number of days established by the department for the person to respond to the record requests should be reasonable based on the facts of each situation.

(a) A first written request for records where the department allowed the person a minimum of 30 days from the date of request for the records to be provided.

(b) After the time period to respond to the first written request has expired as provided in par. (a), a second written request for records where the department allowed the person a minimum of 30 days from the date of request for the records to be provided. This second written request for records shall include a statement explaining that if the requested records are not provided by the date specified, the penalties provided by s. 71.80 (9m), Stats., may be imposed.

(c) After the time period to respond to the second written request has expired as provided in par. (b), a summons request for records where the department allowed the person a minimum of 30 days from the date of receipt of the request for the records to be provided. This summons request shall be prepared on a form prescribed by the department and shall be served:

By certified mail, evidenced by a return receipt signed by the taxpayer or an authorized representative.
By personal service pursuant to sec. 801.11, Stats., if unable to obtain a signature as provided in subd. 1.

Examples: 1) The department issues a first written request for records to Corporation A on September 1, 2016, allowing Corporation A until October 6, 2016, to provide the records requested. Corporation A does not provide the requested records to the department by October 6, 2016. The department issues a second written request for records to Corporation A on October 21, 2016, allowing Corporation A until November 30, 2016, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 71.80 (9m), Stats. Corporation A does not provide the requested records by November 30, 2016. The department mails a summons request for records to Corporation A which is received on December 20, 2016, allowing Corporation A until January 31, 2017, to provide the records requested. Corporation A does not provide the requested records by January 31, 2017. Therefore, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation A not providing the records requested.

2) The department issues a first written request for records to Corporation B on December 21, 2016, allowing Corporation B until January 20, 2017, to provide the records requested. Corporation B does not provide the requested records to the department by January 20, 2017. The department issues a second written request for records to Corporation B on February 8, 2017, allowing Corporation B until March 10, 2017, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 71.80 (9m), Stats. Corporation B does not provide the requested records to the department by March 10, 2017. The department personally serves a summons request for records on Corporation B on March 28, 2017, allowing Corporation B until May 10, 2017, to provide the records requested. Corporation B provides records to the department by May 10, 2017, but the department determines that the taxpayer did not provide some of the records requested by May 10, 2017. Therefore, since the taxpayer did not provide all of the records requested by May 10, 2017, the department may disallow the deductions, credits, or exemptions or include in Wisconsin income the additional income to which the requested records that were not provided relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from the requested records that were not provided.

(4) Waiver of penalties.

(a) The penalties in this section may be waived if the person whose records were requested can show that, under all the facts and circumstances, its response to the written request for records or its failure to respond to the written request for records was reasonable or justified by factors beyond the person’s control. In determining whether the penalties will be waived, the department may consider any of the following factors:

Death of the taxpayer, tax preparer, accountant or other responsible party.
Onset of debilitating illness or injury of the taxpayer, tax preparer, accountant or other responsible party.
Natural disaster such as tornado, flood or fire.
Records that were destroyed due to events beyond control of the taxpayer or other responsible party and not due to neglect.
Any other facts and circumstances that the department believes pertinent.

(b) Providing requested records after the time period required for providing the records has expired, as provided in sub. (3), shall result in a reduction of the penalties provided in sub. (1) (a) and (b) if the department determines that these records support a reduction in the disallowance or inclusion previously made by the department.

Examples: 1) Since Corporation C does not provide the records requested by the date specified in a summons request for records to support interest expense deducted, the department issues a proposed audit report to Corporation C disallowing all the interest expense previously deducted, which represents the penalty provided in s. 71.80 (9m) (a) 1., Stats. Additional tax of $100,000 and the penalty as provided in s. 71.80 (9m) (a) 2., Stats., of $25,000 results in the proposed audit report from disallowing this interest expense. Corporation C provides the records requested 26 days after the department issues the proposed audit report but before the notice of assessment is issued and explains, without any further detail, that they were too busy with other aspects of their business to respond to the three written requests for records by the dates specified. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person’s control. In addition, the records provided do not support a reduction of the interest expense disallowed in the proposed audit report. Therefore, the interest expense adjustment is not modified so the proposed additional tax of $100,000 and the original proposed penalty as provided in s. 71.80 (9m) (a) 2., Stats., of $25,000 remain.

2) Since Mr. Smith does not provide the records requested regarding his business, which primarily receives payments in cash, to support the reported gross receipts by the date specified in a summons request for records, the department issues a notice of assessment to Mr. Smith including an estimated amount into income for unreported receipts, which represents the penalty provided in s. 71.80 (9m) (a) 1., Stats. Additional tax of $60,000, a negligence penalty of $15,000 and the penalty as provided in s. 71.80 (9m) (a) 2., Stats., of $15,000 results in the assessment from including these estimated receipts. Mr. Smith appeals the assessment, provides the records that were requested during the audit, and explains that he forgot to provide the records that were previously requested. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person’s control. However, the records provided show that unreported receipts were only 20% of the amount previously included by the department as estimated unreported receipts. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty as provided in s. 71.80 (9m) (a) 2., Stats., is reduced from $15,000 to $3,000.

3) Assume the same facts as Example 2, except that Mr. Smith explains that he did not previously provide the requested records because his accountant had possession of them and was in the hospital when the records were requested during the audit. In this situation the failure to provide the records requested is reasonable or justified by factors beyond the person’s control. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty as provided in s. 71.80 (9m) (a) 2., Stats., of $15,000 is waived.

History

EmR0929: emerg. cr. eff. 10-19-09; CR 09-087: cr. Register June 2010 No. 654, eff. 7-1-10; correction in (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register June 2010 No. 654; CR 17-018: cr. (2) (cm), am. (3) (intro.), cr. (3) (c), am. (3) (c) (Examples), (4) (b) (Examples) Register September 2019 No. 765, eff. 10-1-19; correction in (4) (b) (Examples) made under s. 13.92 (4) (b) 7., Stats., Register September 2019 No. 765.

Wis. Admin. Code § Tax 2.87 Reduction of delinquent interest rate under s. 71.82 (2) (b), Stats {#sec-tax-2.87 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.87}

(1) Procedures. The secretary may reduce the delinquent interest rate from 18% to 12% per year when the secretary determines the reduction fair and equitable, if the person from whom delinquent taxes are owing:

(a) Requests the reduction in writing, addressed to the Wisconsin Department of Revenue, Compliance Bureau, P.O. Box 8901, Madison, WI 53708.

(b) Clearly indicates why it is fair and equitable for the rate of interest to be reduced. Information regarding one or more of the factors under sub. (2) may be indicated.

(c) Is current in all return and report filings and tax payments for all matters other than the delinquencies for which interest reduction is being sought.

(d) Pays the taxes, reduced amount of interest and any penalties associated with them within 30 days of receiving notice from the department of the reduction.

(e) For combined group members, the designated agent is charged with this responsibility.

Note: See s. Tax 2.65 for rules relating to the designated agent.

(2) Factors for secretary’s consideration. In determining whether an interest rate reduction is fair and equitable, the secretary may consider the following factors:

(a) The taxpayer’s prior record of reporting and payment to the department.

(b) The taxpayer’s financial condition.

(c) Any circumstances which may have prevented payment such as death, imprisonment, hospitalization or other institutionalization.

(d) Any unusual circumstances which may have caused the taxpayer to incur the delinquency or prevent its payment.

(e) Any other factor which the secretary believes pertinent.

(3) Determination not appealable. The secretary’s determination under this rule is not appealable.

Note: Section Tax 2.87 interprets ss. 71.255 (7) (b) and 71.82 (2) (b), Stats.

History

Cr. Register, February, 1979, No. 278, eff. 3-1-79; am. (1) (intro.), Register, September, 1983, No. 333, eff. 10-1-83; CR 10-095: cr. (1) (e) Register November 2010 No. 659, eff. 12-1-10; CR 19-141: am. (1) (a) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.88 Interest rates {#sec-tax-2.88 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.88}

(1) Interest on unpaid taxes which are not delinquent. Unpaid individual income or corporate franchise or income taxes which are not delinquent but which are assessed by the department on or after August 1, 1981 shall bear interest computed at the rate of 12% per year from the due date of the taxes to the date paid or delinquent.

(2) Interest on delinquent taxes. Any individual income or corporate franchise or income tax delinquencies shall include interest at the rate of 1.5% per month from the date on which the taxes became delinquent until the taxes are paid.

(3) Interest on refunds.

(a) Any refund of individual income or corporate franchise or income taxes shall include interest at the rate of 3% per year from the due date of the return to the date paid by the department, except as provided in pars. (b), (c), and (d).

(b) No interest may be allowed on income and franchise taxes if the refund is certified on a refund roll within 90 days of the due date of the return or the date the return was filed, whichever occurs later. This treatment shall apply to a refund of taxes resulting from an overpayment of estimated tax as well as from withheld taxes.

(d) No interest may be allowed on refunds due to a tax credit issued under ss. 71.07 (3q), (3w), (3wm), and (3y), 71.28 (3q), (3w), (3wm), and (3y), and 71.47 (3q), (3w), and (3y), Stats., and subch. VIII of ch. 71, Stats.

(4) Interest on deposit of contested taxes. Any refund of an amount deposited with the department pursuant to s. 71.90 (1), Stats., shall include interest at the rate of 3% per year from the date the funds were deposited to the date refunded.

(5) Extension periods. If an extension of time is granted for filing an individual income or a corporate franchise or income tax return, any taxes owing with the return are subject to interest during the extension period at the rate of 12% per year. However, if the return is not filed or the taxpayer files but fails to pay the tax by the end of the extension period, the taxes owing become delinquent and shall be subject to delinquent interest under sub. (2) from the end of the extension period until paid.

Note: 2013 Wis. Act 20 reduced the rate of interest on refunds of taxes and refunds of the deposit of contested taxes from 9% to 3%. The 3% rate applies to refunds paid on or after July 2, 2013, regardless of the taxable periods to which the refunds pertain.

Note: Section Tax 2.88 interprets ss. 71.03 (7), 71.07 (3q), (3w), (3wm), and (3y), 71.24 (7), 71.28 (3q), (3w), (3wm), and (3y), 71.44 (3), 71.47 (3q), (3w), and (3y), 71.55 (4), 71.82 (1) and (2) (a), and 71.90 (1), Stats.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; r. and recr. (1), (3) and (4), Register, September, 1983, No. 333, eff. 10-1-83; renum. (2) to (4) to be (3), (2) and (5) and am., cr. (4), Register, July, 1989, No. 403, eff. 8-1-89; CR 14-005: am. (3) (a), (4) Register August 2014 No. 704, eff. 9-1-14; CR 16-046: am. (3) (a), cr. (3) (c) Register January 2018 No. 745, eff. 2-1-18; CR 19-141: am. (3) (a), cr. (3) (d) Register September 2020 No. 777, eff. 10-1-20; correction in (3) (d) made under s. 35.17, Stats., Register September 2020 No. 777.

Wis. Admin. Code § Tax 2.89 Estimated tax requirements for short taxable years {#sec-tax-2.89 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.89}

(1) General. Under ss. 71.09 and 71.29, Stats., certain corporations and persons other than corporations shall make estimated tax payments. For short taxable years, estimated tax payments shall be made in accordance with this section.

Note: For taxable years beginning on or after January 1, 1994, and ending before April 1, 1999, estimated tax includes the temporary recycling surcharge under s. 77.93, Stats.

(2) Definitions. In this section:

(a) “Corporation” includes corporations, tax-option (S) corporations, insurance companies, publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code, limited liability companies treated as corporations under the Internal Revenue Code, joint stock companies, associations, common law trusts, regulated investment companies, real estate investment trusts, real estate mortgage investment conduits, nuclear decommissioning trust funds and virtually exempt entities as defined in s. 71.29 (1) (c), Stats.

(b) “Estimated tax payable” means the amount calculated under s. 71.09 (13) or 71.29 (9) or (10), Stats.

(c) “Persons other than corporations” includes individuals, estates, trusts other than those treated as corporations in par. (a), partnerships except publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code and limited liability companies treated as partnerships under the Internal Revenue Code.

(d) “Short taxable year” means a period of less than 12 months.

(3) Number of installment payments required.

(a) For short taxable years, the following number of estimated tax installment payments shall be made:

For periods of one month or less, none.
For periods of 2 to 3 months, one.
For periods of 4 to 6 months, 2.
For periods of 7 to 9 months, 3.
For periods of 10 to 11 months, 4.

(b) Except as provided in par. (c), for purposes of determining the required number of estimated tax installment payments under par. (a), a portion of a month shall be treated as a full month.

(c) If a short taxable year terminates before the end of a month and another taxable year begins at that time, for estimated tax installment purposes the first taxable period shall be treated as ending on the last day of that month and the second taxable period shall be treated as beginning on the first day of the following month.

Note: Refer to the examples of the estimated tax payment requirements for short taxable years involving a portion of a month that follow sub. (7) (b) 4.

(4) Due dates of installment payments for corporations. For short taxable years, corporations, or the designated agent as provided in s. Tax 2.65 (3) (a) 5., shall make estimated tax installment payments on or before the 15th day of each of the following months:

(a) For periods of 2 to 3 months, the last month of the taxable year.

(b) For periods of 4 to 6 months, the 4th and last months of the taxable year.

(d) For periods of 10 to 11 months, the 4th, 6th, 9th and last months of the taxable year.

(5) Due dates of installment payments for persons other than corporations.

(a) Except as provided in pars. (b) and (c), for short taxable years, persons other than corporations shall make estimated tax installment payments on or before the 15th day of each of the following months:

For periods of 2 to 3 months, the first month following the close of the taxable year.
For periods of 4 to 6 months, the 4th month of the taxable year and the first month following the close of the taxable year.
For periods of 7 to 9 months, the 4th and 6th months of the taxable year and the first month following the close of the taxable year.
For periods of 10 to 11 months, the 4th, 6th and 9th months of the taxable year and the first month following the close of the taxable year.

(b) If a person other than a corporation files an income tax return on or before the last day of the first month following the close of the taxable year and pays the full amount computed on that return as payable, that person need not make the last payment of estimated tax.

(c) Instead of making estimated tax installment payments, a farmer or fisher as defined in s. 71.09 (1) (a), Stats., may either pay the estimated tax in full by the 15th day of the first month after the close of the taxable year or file the tax return on or before the first day of the 3rd month following the close of the taxable year and pay the full amount computed on that return as payable.

(6) Computation of estimated tax payable. Corporations and persons other than corporations shall make estimated tax payments equal to the lesser of the following amounts:

(a) Ninety percent of the tax shown on the return for the taxable year or, if no return is filed, 90% of the tax for the taxable year.

(b) For individuals, corporations having less than $250,000 of Wisconsin net income and estates and trusts having less than $20,000 of Wisconsin taxable income for the current taxable year, the tax shown on the return for the preceding taxable year, provided the taxpayer filed a return for the preceding year covering a full 12-month year. When the current year is a short taxable year and the preceding year was a period of 12 months, the tax shown on the return for the preceding taxable year may be prorated based on the number of months in the short taxable year.

Example: Corporation A receives federal approval to change its taxable year from a calendar year to a fiscal year ending on June 30. To make the change, Corporation A files a franchise or income tax return for the period beginning January 1 and ending June 30. On this short-period return, it reports net tax of $8,000. Corporation A’s Wisconsin net income for the current taxable year is less than $250,000. Therefore, its estimated tax payable is the lesser of 90% of the tax shown on its current year return or 100% of the tax shown on its prior year return, provided it had filed a tax return for that year covering a 12-month period. The tax shown on Corporation A’s return for the preceding taxable year, a 12-month period, was $6,000. Corporation A’s estimated tax payable for the current taxable year is $3,000, $6,000 prior year’s tax x 6 months/12 months.

Note: Corporations having Wisconsin net income of $250,000 or more for the current taxable year and estates or trusts having Wisconsin taxable income of $20,000 or more for the current taxable year may not calculate their estimated tax payable under par. (b).

(c) Ninety percent of the tax calculated by annualizing the taxable income earned for the months in the taxable year ending before the due date of the installment. The following special rules apply:

Corporations which determine their Wisconsin net incomes under the apportionment method may compute their annualized income using the apportionment percentage from the return filed for the previous taxable year if the previous year’s return is filed by the due date of the installment for which the income is being annualized and the apportionment percentage on that return is greater than zero. A corporation that has at least $250,000 of Wisconsin net income for the current taxable year may also compute annualized income using the apportionment percentage from the return filed for the previous taxable year if the previous year’s return is filed by the due date of the 3rd installment, the apportionment percentage on that return is greater than zero, and the apportionment percentage used in computing the first 2 installments is not less than the apportionment percentage used on that return.
Entities subject to tax on unrelated business taxable income and trusts and estates shall annualize their incomes for the months in the taxable year ending one month before the installment due date.

(7) Portion of estimated tax payable in each installment. The portion of the estimated tax payable in each installment depends on when the taxpayer determines that the taxable year will be a period of less than 12 months and the number of installment payments required, as follows:

(a) If an event that will terminate the taxable year before the end of the 12th month occurs after the taxpayer has begun making estimated tax payments, the initial estimated tax installment payments shall be based on 25% of the estimated tax payable, with the last payment adjusted for the difference between the estimated tax liability and the amount previously paid.

Examples: 1) Corporation B, which has been filing tax returns on a calendar-year basis, receives federal approval to change its taxable year to a fiscal year ending on July 31. To make the change, Corporation B files a franchise or income tax return for the short taxable year beginning January 1 and ending July 31. Since this is a period of 7 months, Corporation B must make 3 estimated tax payments. Twenty-five percent of the estimated tax shall be paid for each of the installments due March 15 and June 15. The balance of the estimated tax shall be paid on or before July 15. If Corporation B’s estimated tax payable is $80,000, Corporation B must pay $20,000, 25% x $80,000 estimated tax payable, for each of the installments due March 15 and June 15 and $40,000, 50% x $80,000 estimated tax payable, for the installment due July 15.

2) Corporation C, a calendar-year filer, merges into Corporation D on October 6. As a result, Corporation C files its final franchise or income tax return for the short taxable year beginning January 1 and ending October 6. Corporation C must make 4 estimated tax payments, each for 25% of the estimated tax payable. The installments must be paid on or before March 15, June 15, September 15 and October 15. If Corporation C’s estimated tax payable is $100,000, Corporation C must pay $25,000, 25% x $100,000 estimated tax payable, for each installment.

(b) If an event that will result in a taxable year of less than 12 months occurs before the taxpayer has begun making estimated tax payments, installment payments shall be made as follows:

If one installment is due, all of the estimated tax shall be paid at that time.
If 2 installment payments are due, 75% of the estimated tax shall be paid for the first installment and 25% shall be paid for the remaining installment.
If 3 installment payments are due, 50% of the estimated tax shall be paid for the first installment and 25% shall be paid for each of the 2 remaining installments.
If 4 installment payments are due, 25% of the estimated tax shall be paid for each installment.

Examples: 1) Corporation E owns 100% of the stock of Corporation F. The corporations file consolidated federal income tax returns on a calendar-year basis. On March 10, Corporation E sells all of the stock of Corporation F to third parties, severing the affiliated group. For federal purposes, Corporations E and F file a consolidated return for the period from January 1 through March 10. Corporation F files a separate federal return for the period from March 11 through December 31. Since the taxable period for Wisconsin purposes is the same as the federal taxable year, Corporation F must also file 2 short-period Wisconsin returns. For the first taxable year, Corporation F must make one estimated tax installment payment for 100% of the estimated tax liability on or before March 15. For the second short period, Corporation F must make 3 estimated tax installment payments. The first payment for 50% of the estimated tax liability is payable on or before June 15. Since March is the last month of the first short period, April is treated as the first month of the second short period. The second and third payments, each for 25% of the estimated tax, are due on or before September 15 and December 15, respectively. If Corporation F’s estimated tax for the period beginning March 11 and ending December 31 is $150,000, Corporation F must pay $75,000, 50% x $150,000 estimated tax payable, for the first installment and $37,500, 25% x $150,000 estimated tax payable, for each of the remaining 2 installments.

2) Corporation G buys 100% of the stock of Corporation H on August 29. Both corporations compute their incomes on a calendar-year basis. Corporations G and H file a consolidated federal income tax return for the period from August 30 through December 31. Corporation H files a separate federal return for the period from January 1 through August 29. Since the taxable year is the same for Wisconsin and federal purposes, Corporation H must file 2 short-period Wisconsin returns. For the first short taxable year, 3 estimated tax installment payments are required, due on or before March 15, June 15 and August 15. Twenty-five percent of the estimated tax shall be paid for each of the installments due March 15 and June 15 and the balance of the estimated tax shall be paid for the installment due August 15. For the second short period, 2 installments are payable on or before November 15 and December 15. Since August is the last month of the first short period, September is treated as the first month of the second short period. The first installment payment, due November 15 is for 75% of the estimated tax and the payment due December 15 is for 25% of the estimated tax.

(8) Annualized income installment payments. Under ss. 71.09 (13) (d) and 71.29 (9) (c), Stats., taxpayers may compute estimated tax installment payments by annualizing income for the months in the taxable year ending before the installment payment’s due date. Corporations that are subject to a tax on unrelated business taxable income and virtually exempt entities may compute estimated tax installment payments by annualizing income for the months in the taxable year ending before the date one month before the due date for the installment payment. Annualized income installment payments shall be computed as follows:

(a) Computation of annualized income. Taxpayers shall annualize income for the annualization period as follows:

Compute the Wisconsin net income for the annualization period, excluding adjustments which remain constant from period to period, such as net business loss carryforwards and the amortization of adjustments for changes in the method of accounting.
Calculate the annualization factor for the annualization period by dividing the number of months in the taxable year by the number of months in the annualization period.
Multiply the amount computed in subd. 1. by the annualization factor computed in subd. 2.
Subtract from the result in subd. 3. any adjustments excluded from the calculation of Wisconsin net income in subd. 1. which remain constant for each period. Individuals shall also subtract the standard deduction.

Example: Corporation J’s taxable year begins January 1 and ends May 10. It has Wisconsin net income of $200,000 for the period from January 1 through February 28. Corporation J’s annualization factor for that period is 2.5, calculated by dividing the 5 months of the taxable year by the 2 months of the annualization period. The annualized income for that period is $500,000, which is $200,000 Wisconsin net income x 2.5 annualization factor.

(b) Computation of installment payments. Taxpayers shall calculate their estimated tax installment payments based on annualized income for the annualization period as follows:

Determine the gross tax on the amount calculated under par. (a).
Subtract from the gross tax under subd. 1. any allowable tax credits, excluding estimated tax paid.
Multiply the net tax computed in subd. 2. by the applicable percentage from sub. (7).

Example: Corporation K, a calendar year filer, merges into Corporation L on July 14. Corporation K elects the annualized income method for determining whether it paid sufficient estimated tax. Corporation K’s Wisconsin net income is $300,000 for the first 2 months of the taxable year, $1,400,000 for the first 5 months of the taxable year, and $1,800,000 for the first 6 months of the taxable year. Corporation K has $9,000 of tax credits and its net tax due for the year ending July 14 is $135,000. Therefore, Corporation K’s estimated tax payable is $121,500. For Corporation K’s 7-month year, the annualization factors are 3.5 (7 months/2 months), 1.4 (7 months/5 months), and 1.167 (7 months/6 months). Corporation K calculates its required estimated tax payments as follows:

Note: After the end of the taxable year, persons other than corporations shall use Schedule U and corporations shall use Form U to determine whether they have made sufficient estimated tax payments. Taxpayers with short taxable years shall adjust the computations on those forms as provided in this section.

(9) Combined groups. For purposes of estimated tax requirements, a combined group of corporations under s. 71.255 (1) (a), Stats., or a commonly controlled group under s. 71.255 (2m), Stats., shall be treated as if it were a single corporation.

Note: See s. Tax 2.66 for rules relating to the payment of estimated taxes by combined groups.

Note: Section Tax 2.89 interprets ss. 71.09 (9), 71.255 (7), and 71.29 (5), Stats.

Cross References: See s. Tax 2.60 for combined reporting definitions relating to this section. See s. Tax 2.63 for rules relating to the controlled group election under s. 71.255 (2m), Stats. See s. Tax 2.65 for rules relating to the designated agent. See s. Tax 2.66 for rules relating to the payment of estimated taxes by combined groups.

History

Cr. Register, December, 1995, No. 480, eff. 1-1-96; CR 10-095: am. (4) (intro.), cr. (9) Register November 2010 No. 659, eff. 12-1-10; CR 19-141: am. (4) (b) to (d) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.90 Withholding; wages {#sec-tax-2.90 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.90}

(1) The term “wages” means all remuneration for services performed by an employee for an employer unless specifically excepted under s. 71.63, Stats.

(2) The name by which remuneration for services is designated is immaterial. Thus, salaries, fees, bonuses, commissions on sales, commissions on insurance premiums, pensions and retirement pay, and supplemental unemployment benefits are wages within the meaning of the statute if paid as compensation for services performed by the employee for the employee’s employer.

(3) The basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes wages. Thus it may be paid on the basis of piecework, or a percentage of the profits, and may be paid hourly, daily, weekly, monthly or annually.

(4) Generally the medium in which the remuneration is paid is also immaterial. It may be paid in cash or in something other than cash, as, for example, stocks, bonds or other forms of property. However, s. 71.63 (6) (i), Stats., excludes from wages remuneration paid in any medium other than cash for services not in the course of the employer’s trade or business. If services are paid for in a medium other than cash, the fair market value of the thing taken in payment is the amount to be included as wages. If the services were rendered at a stipulated price, in the absence of evidence to the contrary, such price will be presumed to be the fair value of the remuneration received. If a corporation transfers to its employees its own stock as remuneration for services rendered by the employee, the amount of such remuneration is the fair market value of the stock at the time of the transfer.

(5) Remuneration for services, unless the remuneration is specifically excepted by the statute, constitutes wages even though at the time paid the relationship of employer and employee no longer exists between the person in whose employ the services were performed and the individual who performed them.

(7) Amounts paid specifically — either as advances or reimbursements — for traveling or other bona fide ordinary and necessary expenses incurred or reasonably expected to be incurred in the business of the employer are not wages and are not subject to withholding. Traveling and other reimbursed expenses must be identified either by making a separate payment or by specifically indicating the separate amounts where both wages and expense allowances are combined in a single payment.

(8) Amounts of so-called “vacation allowances” paid to an employee constitutes wages. Thus the salary of an employee on vacation, paid notwithstanding the absence from work, constitutes wages.

(9) Any payments made by an employer to an employee on account of dismissal, that is, involuntary separation from the service of the employer, constitutes wages regardless of whether the employer is legally bound by contract, statute or otherwise to make such payments.

(10) Any amount deducted by an employer from the remuneration of an employee is considered to be a part of the employee’s remuneration and is considered to be paid to the employee as remuneration at the time the deduction is made. It is immaterial that any act or law requires or permits such deductions.

(11) The term “wages” includes the amount paid by an employer on behalf of an employee, without deduction from the remuneration of or other reimbursement from the employee, on account of any tax imposed upon the employee by any taxing authority.

(12) The value of any meals or lodging furnished to an employee by an employer is not subject to withholding if the value of the meals or lodging is excludable from the gross income of the employee under the provisions of the Internal Revenue Code, as defined in s. 71.01 (6), Stats.

(13) Ordinarily, facilities or privileges, such as entertainment, medical services, or so-called “courtesy” discounts on purchases furnished or offered by an employer to employees generally, are not considered as wages subject to withholding, if the facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, good will, contentment or efficiency of employees.

(14) Tips or gratuities paid directly to an employee by a customer of an employer, are excepted from withholding only if the tips are non-cash tips or if the cash tips received during the course of a month are less than $20.

(15) Withholding is not required:

(a) Upon amounts paid to an employee by the employee’s employer under a wage continuation plan for a period during which the employee is absent from work on account of personal injuries or sickness if such amounts are exempt from withholding taxation under the Internal Revenue Code, as defined in s. 71.01 (6), Stats.

(b) When, as provided by s. 71.66 (3), Stats., an employee certifies to an employer that the employee incurred no liability for income tax for the preceding taxable year and anticipates not incurring a liability for the current taxable year.

Note: Section Tax 2.90 interprets ss. 71.63 and 71.66 (3), Stats.

History

Cr. Register, January 1963, No. 85, eff. 2-1-63; r. and recr. (12), cr. (15), Register, March, 1966, No. 123 eff. 4-1-66; am. (2), (14) and (15), Register, July, 1978, No. 271, eff. 8-1-78; am. (1), (4), (5), (8), (12), (13) and (15), Register, July, 1989, No. 403, eff. 8-1-89; CR 13-012: r. (6) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 2.91 Withholding; fiscal year taxpayers {#sec-tax-2.91 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.91}

(1) Except as provided in sub. (2), amounts withheld pursuant to ss. 71.64 and 71.67, Stats., in any calendar year shall be allowed as a credit for the taxable year beginning in the calendar year. If more than one taxable year begins in a calendar year, the amount shall be allowed as a credit for the last taxable year beginning in that calendar year.

(2) Any employee who reports income for taxation to the state of Wisconsin on a taxable year other than the calendar year shall be allowed as a credit for the fiscal year amounts withheld by his or her employer in the fiscal year, provided the employer, on or before the end of the first month following the close of the fiscal year, shall voluntarily furnish the employee with 2 legible copies and the department of revenue with one legible copy of a written statement, adapted to the fiscal year, but otherwise consistent with the written statement referred to in ss. 71.65 (1) and 71.71 (1), Stats., and the employee files a copy of the statement along with the fiscal year return.

Note: Section Tax 2.91 interprets ss. 71.64, 71.65 (1), 71.67 and 71.71 (1), Stats.

History

Cr. Register, March, 1963, No. 87, eff. 4-1-66; am. Register, February, 1975, No. 230, eff. 3-1-75; am. Register, July, 1989, No. 403, eff. 8-1-89.

Wis. Admin. Code § Tax 2.92 Withholding tax exemptions {#sec-tax-2.92 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.92}

(1) An employee is required to provide a completed Form WT-4, “Employee’s Withholding Exemption Certificate/New Hire Reporting,” to their employer.

(2) An employee who had incurred no Wisconsin income tax liability for the preceding taxable year and anticipates no liability for a current taxable year shall be exempt from withholding if the employee provides his or her employer with a completed Form WT-4, “Employee’s Withholding Exemption Certificate/New Hire Reporting” which shows a claim for total exemption. For this purpose, a tax liability is “incurred” if the employee had for the preceding year, or anticipates for the current year, a net Wisconsin income tax due, i.e., gross tax less personal exemptions on a Wisconsin return. If an employee is married, the Wisconsin marital property laws for tax computation shall be considered in determining if the employee may claim this exemption.

(3)

(a) Effective April 1, 1979, an employee may enter into a written agreement with his or her employer to withhold a lesser amount of tax than indicated in the withholding tax tables, if the employee determines the lesser amount approximates the employee’s anticipated income tax liability for the year. Form WT-4A, “Wisconsin Employee Withholding Agreement”, shall be used for this purpose and a completed copy of the form shall be sent by the employee to the department within 10 days after it is filed with the employer. If the employee fails to notify the department within the required 10 days, he or she shall be subject to a penalty of $10, as provided by s. 71.83 (1) (a) 5., Stats.

(b) The agreement between the employee and employer shall be renewed each year. For calendar year taxpayers, the agreement expires on April 30 of the year immediately following the year in which it was entered into. For fiscal year taxpayers, the agreement expires 4 months following the close of the fiscal year in which entered into. To renew the agreement, an employee shall provide a new form WT-4A to his or her employer and submit a copy of the completed form to the department as provided in par. (a). If a new form WT-4A is executed before the expiration dates described in this paragraph, it shall supersede the previous agreement.

(c) If the department determines that an agreement is incomplete, incorrect, or would result in an insufficient amount of tax being withheld, the department may void the agreement by notification to the employer and employee.

(d) Section 71.83 (1) (b) 4., Stats., provides that any employee who enters into an agreement with the intent to defeat or evade the proper withholding of tax, shall be subject to a penalty equal to the difference between the amount required to be withheld and the amount actually withheld for the period that the incorrect agreement was in effect.

(e) Under s. 71.83 (2) (a) 5., Stats., any employee who willfully supplies an employer with false or fraudulent information regarding an agreement with the intent to defeat or evade the proper withholding of tax may be imprisoned not more than 6 months or fined not more than $500, plus the costs of prosecution, or both.

Note: Section Tax 2.92 interprets ss. 71.66 and 71.83 (1) (a) 5. and (b) 4. and (2) (a) 5., Stats.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1) and (2), cr. (3), Register, September, 1983, No. 333, eff. 10-1-83; am. (1), (2) and (3) (c), Register, July, 1989, No. 403, eff. 8-1-89; correction in (3) (a), (d), (e) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 22-044: r. and recr. (1), am. (2) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 2.93 Withholding from wages of a deceased employee and from death benefit payments {#sec-tax-2.93 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.93}

(1) General. Section 71.64 (1) (a), Stats., requires employers to withhold Wisconsin income tax from payments of wages “to an employee”. Various types of payments are made to the estate or to beneficiaries of a deceased employee which resulted from the deceased person’s employment. The department shall follow the federal internal revenue service’s policy in determining whether withholding of income tax is required from these payments.

(2) Payments subject to withholding. An uncashed check originally received by a decedent prior to the date of death and reissued subsequently to the decedent’s personal representative shall be subject to withholding of Wisconsin income tax.

(3) Payments not subject to withholding. The following types of payments to a decedent’s personal representative or heir shall not be subject to withholding of Wisconsin income tax:

(a) Payments representing wages accrued to the date of death but not paid until after death.

(b) Accrued vacation and sick pay.

(d) Death benefits such as pensions, annuities and distributions from a decedent’s interest in an employer’s qualified stock bonus plan or profit sharing plan, as provided in s. 71.63 (6) (j), Stats.

Note: Section Tax 2.93 interprets ss. 71.63 (6) (j) and 71.64 (1) (a), Stats.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (1) and (3) (d), Register, July, 1989, No. 403, eff. 8-1-89.

Wis. Admin. Code § Tax 2.935 Reduction of delinquent interest rate under s. 71.82 (2) (d), Stats {#sec-tax-2.935 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.935}

(a) Requests the reduction in writing, addressed to the Wisconsin Department of Revenue, Compliance Bureau, P.O. Box 8901, Madison, WI 53708.

(b) Clearly indicates why it is fair and equitable for the rate of interest to be reduced. Information regarding one or more of the factors under sub. (2) may be indicated.

(c) Is current in all return and report filings and tax payments for all matters other than the delinquencies for which interest reduction is being sought.

(d) Pays the withholding taxes, reduced amount of interest and any penalties associated with them within 30 days of receiving notice from the department of the reduction.

(2) Factors for secretary’s consideration. In determining whether an interest rate reduction is fair and equitable, the secretary may consider the following factors:

(a) The taxpayer’s prior record of reporting and payment to the department.

(b) The taxpayer’s financial condition.

(c) If the taxpayer is a natural person, any circumstances which may have prevented payment such as death, imprisonment, hospitalization or other institutionalization.

(d) Any unusual circumstances which may have caused the taxpayer to incur the delinquency or prevent its payment.

(e) Any other factor which the secretary believes pertinent.

(3) Determination not appealable. The secretary’s determination under this rule is not appealable.

Note: Section Tax 2.935 interprets s. 71.82 (2) (d), Stats.

History

Cr. Register, February, 1979, No. 278, eff. 3-1-79; am. (1) (intro.), Register, September, 1983, No. 333, eff. 10-1-83; CR 19-141: am. (1) (a) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.94 Tax-sheltered annuities {#sec-tax-2.94 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.94}

(1) General.

(a) Payments for a tax-sheltered annuity purchased for an employee by a public school system or by an exempt educational, charitable or religious organization, which are excludable from the employee’s gross income in the year of payment under section 403 (b) of the Internal Revenue Code, are also excludable in the year of payment for Wisconsin income tax purposes.

Note: The exclusion from gross income as provided in sub. (1) (a) is effective January 1, 1965, when Wisconsin adopted the Internal Revenue Code as the basis for computing Wisconsin taxable income. Payments prior to January 1, 1965, were taxable for Wisconsin income tax purposes.

(b) All benefits paid under tax sheltered annuity contracts, including withdrawals, death benefits or annuities, are included in federal taxable income when received. The Wisconsin treatment is described in subs. (2) and (3).

(2) Milwaukee city and county employee and state teachers retirement systems. Normal retirement benefits received from systems enumerated in s. 71.05 (1) (a), Stats., are exempt as provided by that section. The exemption is limited to payments from the accounts of those persons who were members of any of the systems on December 31, 1963, or who were retired from any of the systems on or before December 31, 1963. However, benefits received from tax-sheltered annuity deposits described in sub. (1) administered by these systems do not qualify for the exclusion from Wisconsin taxable income provided by s. 71.05 (1) (a), Stats. Tax-sheltered annuity benefits shall be included in gross income for Wisconsin income tax purposes as they are for federal income tax purposes, except as provided in sub. (3).

(3) State teachers retirement system.

(a) Tax-sheltered annuity benefits received by retired teachers on and after January 1, 1974, shall be included in taxable income. No subtraction modification from federal adjusted gross income may be allowed, except as provided in par. (b).

(b) If a school system purchased a tax-sheltered annuity for an employee prior to January 1, 1965, and the employee paid a Wisconsin income tax on the tax-sheltered annuity deposit which was used to pay the 1964 annuity premium, a subtraction modification under s. 71.05 (6) (b) 3., Stats., shall be allowed for the tax-sheltered annuity benefits received on or after January 1, 1974, which are included in federal adjusted gross income and upon which the employee previously paid a Wisconsin income tax. The allowable subtraction modification is the amount of deposit on which the Wisconsin tax was previously paid less that portion, if any, of the tax-sheltered annuity benefits excludable from Wisconsin taxable income because of receipt prior to January 1, 1974.

Examples: In each example below, assume the employee is a taxpayer who files tax returns on a calendar year basis.

1) An employee made a deposit of $200 for the purchase of a tax-sheltered annuity in 1964, and this amount was included in Wisconsin taxable income. When the employee retires after December 31, 1973, a subtraction modification under s. 71.05 (6) (b) 3., Stats., is permitted for the first $200 of tax-sheltered annuity benefits received. All subsequent benefits are taxable with no subtraction modification allowed.

2) An employee made a deposit of $300 for the purchase of a tax-sheltered annuity in 1964, and this amount was included in Wisconsin taxable income. The employee retired prior to January 1, 1974, and $120 of the benefits received were not included in Wisconsin taxable income. A subtraction modification under s. 71.05 (6) (b) 3., Stats., is permitted for the next $180 ($300 - $120) received after December 31, 1973. All subsequent benefits are taxable with no subtraction modification allowed.

3) An employee made a deposit of $160 for the purchase of a tax-sheltered annuity in 1964, and this amount was included in Wisconsin taxable income. The employee retired prior to January 1, 1974, and treated $200 of the benefits as nontaxable for Wisconsin income tax purposes. All the benefits received after December 31, 1973, are taxable with no subtraction modification allowed.

Note: Section Tax 2.94 interprets s. 71.05 (1) (a), Stats.

History

Cr. Register, April, 1978, No. 268, eff. 5-1-78; r. (1) (a) and (3) (b), renum. (1) (b), (c) and (3) (c) to be (1) (a), (b) and (3) (b) and am. (a) and (3) (b), am. (2) and (3) (a), Register, June, 1991, No. 426, eff. 7-1-91.

Wis. Admin. Code § Tax 2.95 Reporting of installment sales by natural persons and fiduciaries {#sec-tax-2.95 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.95}

(1) General. The Wisconsin tax treatment of installment sales by natural persons and fiduciaries is determined under the Internal Revenue Code in effect under s. 71.01 (6), Stats. Installment sales may be made of either real or personal property. Because for Wisconsin purposes, at the time of the sale, the seller may be either a resident or nonresident, and the property may be realty or personalty, tangible or intangible, and may be located within or without Wisconsin, special situations that are not addressed in the Internal Revenue Code may arise which affect the reporting of the sale.

(2) Situs of income. Under s. 71.04 (1) (a), Stats., all income or loss of resident individuals shall follow the residence of the individual. A nonresident’s income or loss derived from the sale of real property or tangible personal property follows the situs of the property. Interest income of a nonresident and income from the sale of intangible personal property follows the individual’s residence.

(3) Taxation of proceeds from installment sale of intangible personal property.

(a) Resident seller. If the seller is a Wisconsin resident, the portions of each installment payment that represent gain and interest income from the sale which are received while the seller is a resident of this state are taxable by Wisconsin. If the resident seller abandons Wisconsin domicile and establishes residence in another state, neither the gain nor interest payments received while a nonresident is taxable by Wisconsin.

(b) Nonresident seller. If the seller is not a Wisconsin resident, the portions of each installment payment that represent gain and interest income from the sale are not taxable by Wisconsin. If the seller subsequently becomes a Wisconsin resident after the sale, the portion of each installment payment received after becoming a Wisconsin resident representing gain is not taxable by Wisconsin, but the portion representing interest on the installment note is taxable by Wisconsin.

(4) Taxation of proceeds from installment sale of real property or tangible personal property. Upon the sale of real property or tangible personal property reported under the installment method:

(a) Wisconsin property.

If the property is located in Wisconsin and the seller is a Wisconsin resident, the portion of each installment payment that represents gain and interest income from the sale is taxable by Wisconsin.
If the property is located in Wisconsin and the seller is not a Wisconsin resident, the portion of each installment payment that represents gain is taxable by Wisconsin. Interest income of a nonresident is not taxable by Wisconsin.

(b) Out-of-state property. For property located outside Wisconsin which is sold in taxable year 1975 or thereafter:

If the sale occurs while the seller is a Wisconsin resident and the seller is a Wisconsin resident at the time installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are taxable by Wisconsin. However, if the seller no longer is a Wisconsin resident when installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are not taxable by Wisconsin.
If the sale occurs while the seller is not a Wisconsin resident and the seller is a Wisconsin resident at the time installment payments are received, the portion of each of the installment payments that represents gain is not taxable by Wisconsin, but interest income from the sale is taxable. However, if the seller is not a Wisconsin resident at the time installment payments are received, the portions of each of these installment payments that represent gain and interest income from the sale are not taxable by Wisconsin.

Note: For taxable years prior to 1975, s. 71.07 (1), Stats., provided that for Wisconsin income taxation purposes, income or loss derived from the sale of real property or tangible personal property followed the situs of the property. Interest income and income or loss from the sale of intangible personal property followed the individual’s residence. Therefore, if real property or tangible personal property which was located outside Wisconsin was sold on the installment method prior to taxable year 1975:

1) The portion of each installment payment that represents gain is not taxable by Wisconsin regardless of whether the seller is a resident or nonresident of Wisconsin at the time payments are received, regardless of whether the payments are received in 1975 or in any subsequent year.

2) The portion of each installment payment that represents interest income is taxable by Wisconsin if the seller is a Wisconsin resident at the time payments are received. If the seller is a nonresident of Wisconsin at the time payments are received, the interest portion is not taxable by Wisconsin.

(5) Taxation of proceeds from sale of installment obligation. If the sale of an installment obligation, i.e., an individual’s right to unpaid installments from the sale of property, occurs while the seller is a Wisconsin resident, gain or loss on the sale is taxable by Wisconsin. Internal Revenue Code section 453B provides that any gain or loss resulting from the disposition of an installment obligation shall be considered as resulting from the sale or exchange of the property in respect of which the installment obligation was received. Therefore, if the sale of an installment obligation occurs while the seller is not a Wisconsin resident, gain or loss on the sale is taxable by Wisconsin where the installment obligation resulted from the sale of real property or tangible personal property located in Wisconsin.

Example: In 2016 an Illinois resident sells Wisconsin real estate for $140,000. The adjusted basis of the property is $70,000 which results in a gross profit percentage of 50%. The seller receives a down payment of $40,000 and an installment note of $100,000 for the balance. In 2017, after receiving a $60,000 payment on the principal plus interest of $4,000, the installment obligation is sold for $45,000. The seller’s Wisconsin taxable income from these transactions is as follows:

Note: Section Tax 2.95 interprets ss. 71.01 (6) and 71.04 (1) (a), Stats.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; r. and recr. (2) and (5) (b) 2.a. and b., am. (4) (a) and (b), (5) (b) 1.a., Register, September, 1983, No. 333, eff. 10-1-83; r. and recr. (1), r. (2), (3) (a), 5. (b) 1. (intro.), a. and b., renum. (3) (b) to be (2) and am., renum. (4) to be (3) and am., renum. (5) (intro.) (a) to be (4) (intro.) (a.), renum. (5) (b) 2. (intro.) a. and b. to be (4) (b) (intro.) 1. and 2. and am., renum. (6) to be (5) and am., Register, March, 1991, No. 423, eff. 4-1-91; CR 19-141: am. (5) (Example) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.955 Credit for taxes paid to other states {#sec-tax-2.955 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.955}

(1) Definition. In this section, “state” means the 50 states of the United States and the District of Columbia, but does not include the commonwealth of Puerto Rico or the several territories organized by Congress.

(2) Credits allowable.

(a) Except as provided in subs. (2m) and (3), an income tax credit may be claimed by a Wisconsin resident individual, estate, or trust for any net minimum tax or income tax paid to another state by the resident upon income of the individual, estate or trust taxable by that state.

(b) Except as provided in subs. (2m) and (3), an income tax credit may be claimed by a Wisconsin resident shareholder, partner, or member in a tax-option (S) corporation, partnership, or limited liability company for any net minimum tax, income tax, or franchise tax paid by that shareholder, partner, or member to another state on or measured by income of the tax-option (S) corporation, partnership, or limited liability company.

(c) Except as provided in subs. (2m) and (3), an income or franchise tax credit may be claimed by a tax-option (S) corporation, partnership, or limited liability company which makes an election to be taxed at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats., for any net minimum tax, income tax, or franchise tax paid by that entity to another state upon income of the entity and net minimum tax, income tax, or franchise tax paid by that entity to another state upon income of the entity on behalf of its Wisconsin resident shareholders, partners, and members on a combined or composite return filed with the other state.

(2m) Limitation.

(a) The credit may only be allowed if the income taxed by the other state is also considered income for Wisconsin tax purposes.

(b) The credit may not exceed the net tax paid to Wisconsin on income that is taxable to both Wisconsin and the other state.

(c) The limitation in par. (b) does not apply to income that is taxable to both Wisconsin and to Minnesota, Iowa, Illinois, or Michigan.

(3) Credits not allowed. An income tax credit may not be allowed for:

(a) Income tax paid to Illinois, Indiana, Kentucky, or Michigan on personal service income earned in these states included under a reciprocity agreement.

Note: Refer to s. Tax 2.02 for information concerning reciprocity.

(b) Minimum tax, income tax, or franchise tax paid to another state on income not considered taxable income for Wisconsin tax purposes.

(d) Income tax paid to a county, city, village, town or foreign country.

(e) Minimum tax, income tax, or franchise tax paid to another state by a Wisconsin resident individual on income derived from a tax-option (S) corporation, partnership, or limited liability company that elects to be taxed on the income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats.

Example: A Wisconsin resident shareholder in a tax-option (S) corporation pays income tax to Iowa on her proportionate share of income from the corporation that is reportable and taxable on both her Wisconsin and Iowa income tax returns for the same taxable year. The tax-option (S) corporation elects to be taxed at the entity level under s. 71.365 (4m) (a), Stats., and files and pays Wisconsin franchise tax. The Wisconsin resident shareholder may not claim a credit for net income tax paid to Iowa since the income from the tax-option (S) corporation is not taxable on her Wisconsin income tax return.

(f) A tax-option (S) corporation, partnership, or limited liability company electing to be taxed on income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats., if the shareholder, partner, or member pays the tax to the other state on their proportionate share of income from the entity.

Example: A partnership elects to be taxed on income at the entity level under s. 71.21 (6) (a), Stats., and pays Wisconsin income tax on income that is also taxable to Iowa for the same taxable year. A Wisconsin resident partner files and pays Iowa income tax on his proportionate share of income from the partnership. The partnership may not claim a credit for tax paid to Iowa since the partnership did not pay the Iowa income tax.

(4) How to claim a credit. The amount of income tax credit claimed shall be entered on the line provided for net income tax paid to other states on Wisconsin income tax return Form 1, Form 1NPR, Form 2, or for tax-option (S) corporations and partnerships, Schedule 5S-ET or 3-ET. The credit may not exceed the Wisconsin net tax. To support the credit claimed, the following information shall be submitted with Wisconsin Form 1, Form 1NPR, Form 2, Form 3, or Form 5S:

(a) For a Wisconsin resident individual, estate, or trust, attach copies of the other state’s income tax return and the wage statements, if any, to the Wisconsin income tax return.

(b) For a Wisconsin resident shareholder in a tax-option (S) corporation, the federal subchapter S status of which is recognized by the other state, partner in a partnership, or member in a limited liability company:

If a Wisconsin resident shareholder, partner, or member files an individual income tax return with that state, submit a copy of the other state’s income tax return with the Wisconsin income tax return.
If the corporation, partnership, or limited liability company files a combined or composite return with that state on behalf of its shareholders, partners, or members who are nonresidents of that state and pays the tax on their proportionate share of the income earned there, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 or 3K-1 on which is shown the shareholder’s, partner’s, or member’s share of tax paid to that state, or a letter as provided in par. (d).
If the corporation, partnership, or limited liability company files a corporate or partnership income or franchise tax return with that state and pays tax on or measured by income earned there that is attributable to its shareholders, partners, or members who are nonresidents of that state, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 or 3K-1 on which is shown the shareholder’s, partner’s, or member’s share of tax paid to that state, or a letter as provided in par. (d).

(c) For a Wisconsin resident shareholder in a tax-option (S) corporation, the federal subchapter S status of which is not recognized by the other state, if the corporation pays an income or franchise tax on or measured by the income earned there, submit with the Wisconsin income tax return either a copy of the Wisconsin Schedule 5K-1 on which is shown the shareholder’s share of tax paid to that state, or a letter as provided in par. (d).

(d) If the tax-option (S) corporation, partnership, or limited liability company is not subject to Wisconsin’s income or franchise tax, a Wisconsin resident shareholder, partner, or member shall submit with the Wisconsin income tax return a letter provided by the corporation, partnership, or limited liability company in lieu of Wisconsin Schedule 5K-1 or 3K-1 as required in pars. (b) 2. and 3. and (c). The letter shall include a schedule showing the shareholder’s, partner’s, or member’s proportionate share of the items of income taxable by that state, the adjusted gross income, and the net tax paid.

(e) For a tax-option (S) corporation, partnership, or limited liability company which makes an election to be taxed on income at the entity level under s. 71.21 (6) (a) or 71.365 (4m) (a), Stats.:

If the corporation, partnership, or limited liability company files a corporate or partnership income or franchise tax return with another state, submit a copy of the other state’s income or franchise tax return with Wisconsin Form 3 or 5S.
If the corporation, partnership, or limited liability company files a combined or composite return with another state on behalf of its shareholders, partners, or members who are nonresidents of that state and pays tax on their proportionate share of the income taxable to the other state, submit a copy of the other state’s combined or composite income or franchise tax return with Wisconsin Form 3 or 5S.

(5) Year in which to claim income tax credit. The credit for income tax paid to another state shall be claimed on the Wisconsin return for the year in which the out-of-state income is considered taxable Wisconsin income.

Example: A Wisconsin resident receives income of $4,000 in 2018 from rental property located in Iowa. The person files a 2018 declaration of estimated tax of $200 with Iowa, with $150 of estimated tax payments being made in 2018 and the fourth quarter payment of $50 being made in January 2019. The Iowa income of $4,000 is reported as income on the 2018 Iowa and Wisconsin returns. The 2018 Iowa income tax return shows the following:

2018 Iowa Return

Iowa Rental Income $4,000

Iowa Net Tax $ 185

Estimated Tax Payments 200

Refund $ 15

The taxpayer may claim a credit for net income tax paid to other states of $185 on the 2018 Wisconsin return, even though a part of the tax was paid in 2019.

Note: Section Tax 2.955 interprets ss. 71.07 (7), 71.08 (5), 71.21 (6) (a), and 71.365 (4m) (a), Stats.

History

Cr. Register, December, 1978, No. 276, eff. 1-1-79; am. (4) (b), Register, January, 1981, No. 301, eff. 2-1-81; r. (2) (a) and (b), (3) (b), am. (2) (c), (3) (d) and (4), renum. (3) (c) to be (3) (b), r. and recr. (5), Register, September, 1983, No. 333, eff. 10-1-83; am. (1), (2), (3) (a) and (b), (4) (intro.), renum. (3) (cv) to be (3) (d), cr. (2) (b), (3) (c), (4) (c) and (d), r. and recr. (4) (a) and (b), Register, June, 1990, No. 414, eff. 7-1-90; am. (3) (intro.), (a), (4) (b) 2., 3., (c) and (d), Register, April, 1993, No. 448, eff. 5-1-93; CR 17-019: am. (3) (a), cr. (4) (e), (f) Register June 2018 No. 750 eff. 7-1-18; correction in (4) (f) made under s. 35.17, Stats., Register June 2018 No. 750; CR 19-141: am. (2), cr. (2m), am. (4) (intro), (b) 2., 3., (c), (d), (5) (Example) Register September 2020 No. 777, eff. 10-1-20; CR 20-081: am. (2) (b), cr. (2) (c), am. (3) (b), cr. (3) (e), (f), am. (4) (intro.), (b) to (d), r. and recr. (4) (e), r. (4) (f) Register July No. 787, eff. 8-1-21; CR 21-085: am. (5) (Example) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 2.957 Relocated business credit or deduction {#sec-tax-2.957 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.957}

(1) Purpose. The purpose of this section is to prescribe the method by which the percentage of the workforce payroll of a business and the dollar amount of wages paid to such workforce moved to this state during a taxable year shall be determined for purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats.; provide examples of actions that may indicate a business has relocated to this state from another state or country; and limit the deduction provided for in s. 71.05 (6) (b) 47. am., b., and c., Stats.

Note: Sections 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., were repealed by 2021 a. 127.

(2) Definitions. In this section:

(a) “Business” means any organization or enterprise operated for profit, including a sole proprietorship, partnership, firm, business trust, joint venture, syndicate, corporation, limited liability company, or association.

(b) “Doing business in this state” has the meaning given in s. 71.22 (1r), Stats.

(d) “Taxable year” has the meaning given in ss. 71.01 (12), 71.22 (10), and 71.42 (5), Stats.

(e) “Wages” has the meaning given in section 3121 (a) of the Internal Revenue Code.

(3) Relocation to this state. For purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., actions that may indicate a business has relocated to this state from another state or country include the following:

Note: Sections 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., were repealed by 2021 a. 127.

(a) Registering with the department, as provided in s. 73.03 (50), Stats.

(b) Registering to do business in Wisconsin with the department of financial institutions.

(4) Doing business in this state. For purposes of ss. 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., doing business in this state for any portion of a taxable year means doing business in this state for the entire taxable year, as provided in s. 71.22 (1r), Stats.

Note: Sections 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., were repealed by 2021 a. 127.

(5) Workforce payroll. For purposes of ss. 71.05 (6) (b) 47. a., 71.28 (9s) (a) 2., and 71.47 (9s) (a) 2., Stats., the determination as to whether 51% or more of the workforce payroll of a business has moved to this state during a taxable year shall be made using a fraction, the numerator of which is the total amount of wages paid by the business during the taxable year to employees of the business who are residents of this state, and the denominator of which is the total amount of wages paid by the business during the taxable year to all employees of the business.

Note: Sections 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., were repealed by 2021 a. 127.

Example: During the taxable year in which Business A begins doing business in Wisconsin, Business A pays $6,000,000 of wages to employees of Business A who are residents of Wisconsin and $10,000,000 of total wages to all employees of Business A. Sixty (60) percent of the workforce payroll of Business A moved to Wisconsin during the taxable year (6,000,000/10,000,000).

(6) Workforce wages. For purposes of ss. 71.05 (6) (b) 47. a., 71.28 (9s) (a) 2., and 71.47 (9s) (a) 2., Stats., the determination as to whether at least $200,000 of wages paid to the workforce of a business has moved to this state during a taxable year shall be made using the total amount of wages paid by the business during the taxable year to employees of the business who are residents of this state.

Note: Sections 71.05 (6) (b) 47., 71.28 (9s), and 71.47 (9s), Stats., were repealed by 2021 a. 127.

Example: During the taxable year in which Business B begins doing business in Wisconsin, Business B pays $250,000 of wages to employees of Business B who are residents of Wisconsin. Wages of $250,000 paid to the workforce of Business B moved to Wisconsin during the taxable year.

(7) Limitations on credit and deduction.

(a) No modification may be made under s. 71.05 (6) (b) 47. am., b., or c., Stats., if the amount otherwise eligible for the modification is less than zero.

Note: Section 71.05 (6) (b) 47., Stats., was repealed by 2021 a. 127.

(b) The credit or deduction under this section may not be claimed by a business that relocates to Wisconsin in a taxable year beginning after December 31, 2013.

Example: Partner B determines the amount otherwise eligible for the modification under s. 71.05 (6) (b) 47. b., Stats., is a loss of $5,000. Partner B may not make a modification under s. 71.05 (6) (b) 47. b., Stats.

Note: Section 71.05 (6) (b) 47., Stats., was repealed by 2021 a. 127.

History

EmR1104: emerg. cr. eff. 4-7-11; CR 11-023: cr. Register November 2011 No. 671, eff. 12-1-11; CR 14-005: am. (7) (title), renum. (7) to (7) (a), cr. (7) (b) Register August 2014 No. 704, eff. 9-1-14.

Wis. Admin. Code § Tax 2.96 Extensions of time to file corporation franchise or income tax returns {#sec-tax-2.96 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.96}

(1) Due dates.

(a) General. Except as provided in pars. (am) and (b), corporation franchise or income tax returns are due on or before the 15th day of the 4th month following the close of a corporation’s taxable year unless an extension of time for filing has been granted.

(am) For tax exempt corporations with unrelated business taxable income, the franchise or income tax return is due on or before the 15th day of the 5th month following the close of the corporation’s taxable year unless an extension of time for filing has been granted.

(b) Short-period returns. Corporation franchise or income tax returns for periods of less than 12 months are due on or before the federal due date.

(2) Extensions.

(a) Automatic extension. For corporation franchise or income tax returns, an automatic extension is allowed for a period of 7 months or until the original due date of the corporation’s corresponding federal return, whichever is later. If any extension is obtained for federal purposes, that extension also applies for Wisconsin purposes and is further extended for another 30 days after the federal due date. A copy of federal extension form 7004, or other federal extension form, if applicable, shall be attached to any Wisconsin franchise or income tax return filed under extension, even if the extension was not requested for federal purposes.

(b) Combined returns. For corporations required to use combined reporting under s. 71.255, Stats., any extension granted to the designated agent of the combined group is considered granted to each corporation in the combined group.

(c) Estimated tax payment. A taxpayer who desires to minimize interest charges during the extension period may pay the estimated tax liability on or before the original due date of the franchise or income tax return. The estimated tax liability includes the economic development surcharge imposed under s. 77.93, Stats.

Note: See s. Tax 2.66 for rules relating to the payment of estimated taxes by combined groups.

(3) Interest charges and late filing fees.

(a) Regular interest. Except as provided in par. (b), additional tax due with the complete return and the economic development surcharge imposed under s. 77.93, Stats., which are not paid by the original due date are subject to interest at 12% per year during the extension period and 1 1/2% per month from the end of the extension period until the date of payment.

(b) Delinquent interest. If 90% of the tax shown on the return is not paid by the unextended due date of the return, the difference between that amount and the estimated taxes paid along with any interest due is subject to interest at 1 1/2% per month until paid regardless of any extension granted for filing the return. The tax shown on the return includes the economic development surcharge imposed under s. 77.93, Stats.

Note: Section Tax 2.96 interprets ss. 71.24 (7), 71.255 (7), and 71.44 (3), Stats.

Cross Reference: See s. Tax 2.60 for combined reporting definitions relating to this section. See s. Tax 2.65 for rules relating to the designated agent. See s. Tax 2.66 for rules relating to the payment of estimated taxes by combined groups. See s. Tax 2.67 for rules relating to the filing of a combined return.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (1), (2) (a) and (c), (3) (a) and (c), (4) and (5), Register, September, 1983, No. 333, eff. 10-1-83; am. (1), (2) (a) and (b), (4) and (5), r. (2) (c), renum. (2) (d) to be (2) (c), Register, February, 1990, No. 410, eff. 3-1-90; r. and recr. Register, December, 1995, No. 480, eff. 1-1-96; CR 10-095: am. (1) (a), (3) (a), (b), cr. (1) (am), r. and recr. (2), r. (4) Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (2) (c), (3) (a) to (c) Register July 2012 No. 679, eff. 8-1-12; CR 19-141: am. (1) (a) Register September 2020 No. 777, eff. 10-1-20.

Wis. Admin. Code § Tax 2.98 Disaster area losses {#sec-tax-2.98 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.98}

(1)

(a) Hurricanes, fires, storms, floods, and other similar casualties may cause persons to suffer losses from damage to property used in a trade or business or for income-producing purposes for which insurance coverage is nominal or nonexistent. Losses sustained from casualties of this kind may be deductible on a federal and a Wisconsin income tax return.

(b) If a taxpayer sustains a casualty loss from a disaster in an area subsequently determined by the president of the United States to warrant federal assistance, section 165 (i) of the Internal Revenue Code gives taxpayers the election to deduct the loss on the return for the current tax year or on the return for the immediately preceding tax year.

(2)

(a) The Wisconsin income tax treatment is determined under the federal Internal Revenue Code in effect under s. 71.22 (4), Stats., for corporations and s. 71.01 (6), Stats., for individuals.

(b) If a corporation, designated agent of a combined group, or an individual desires to make the election after having filed a Wisconsin income tax return for the preceding taxable year, the casualty loss may be claimed by filing an amended Wisconsin return for that year.

History

Cr. Register, April, 1978, No. 268, eff. 5-1-78; r. (2), renum. (3) to be (2) and am. (2) (a) 1. and (b), Register, September, 1983, No. 333, eff. 10-1-83; am. (1) (a), r. (2) (b), renum. (2) (a) 1. and 2. to be (2) (a) and (b) and am., Register, February, 1990, No. 410, eff. 3-1-90; CR 10-095: am. (2) (b) Register November 2010 No. 659, eff. 12-1-10; CR 13-012: am. (1) (b) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 2.986 Registration of a business under s. 73.03 (69), Stats {#sec-tax-2.986 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.986}

(1) Purpose. This section establishes the method of valuing property and the registration deadline for purposes of s. 73.03 (69), Stats.

(2) Definition. In this section, “doing business in this state” has the meaning given in s. 71.22 (1r), Stats.

(3) Method of valuing property. For purposes of s. 73.03 (69) (b) 2., Stats., real and tangible personal property owned by the business shall be valued at its original cost and real and tangible personal property rented by the business shall be valued at an amount equal to the annual rental paid by the business, less any annual rental received by the business from sub-rentals, multiplied by 8.

(4) Registration deadline.

(a) Except as provided in par. (b), a business shall register with the department under s. 73.03 (69), Stats., on or before the close of the calendar year for which the business desires registration. A business may not be registered for a calendar year if the registration is not within the time provided in this subsection.

(b) A business that desires registration for the calendar year in which it begins doing business in this state shall register with the department during the following calendar year.

Example: Business A begins doing business in Wisconsin on March 8, 2014. Business A must register with the department for calendar year 2014 between January 1, 2015, and December 31, 2015.

History

CR 14-005: cr. Register August 2014 No. 704, eff. 9-1-14.

Chapter Tax 3 INCOME TAXATION, DEDUCTIONS FROM GROSS INCOME, EXCLUSIONS AND EXEMPTIONS

(1) Scope. This section provides further interpretation and explanation relating to the addition and subtraction modifications and disclosure provisions in ch. 71, Stats. In general, the addback statutes provide that a taxpayer shall modify federal income to add back interest, rental, and intangible expenses and management fees that are directly or indirectly paid, accrued, or incurred to a related entity or related person. If certain tests are satisfied, the taxpayer may subsequently deduct the expenses. The addback statutes also impose a disclosure requirement for related entity expenses. Notwithstanding a taxpayer satisfying the tests allowing the deductions of related entity expenses, the department has express authority to reallocate a taxpayer’s income, deductions, credits, or allowances to prevent tax evasion or to clearly reflect income. The department also has express authority to disregard transactions that lack economic substance.

(2) Definitions. In this section:

(a) “Addback” means the addition and subtraction modifications and disclosure requirement required by ss. 71.05 (6) (a) 24. and (b) 45., 71.26 (2) (a) 7. and 8., 71.34 (1k) (j) and (k), 71.45 (2) (a) 16. and 17., and 71.80 (23), Stats. Where applicable, “addback” also refers to subtraction modification to a related entity pursuant to ss. 71.05 (6) (b) 46., 71.26 (2) (a) 9., 71.34 (1k) (L), and 71.45 (2) (a) 18., Stats.

(b) “Aggregate effective tax rate,” for a related entity, is the sum of its effective tax rates for each state, U.S. possession, or foreign country where it is engaged in business. In determining whether a related entity is engaged in business in a state, U.S. possession, or foreign country, the legal standard set forth under s. 71.22 (1r), Stats., shall apply to such other jurisdiction for purposes of applying the addback provisions.

(c) “Captive insurance company,” for purposes of applying the addback provisions, means an insurer that issues any policy of insurance or reinsurance with respect to which the person insured is related under section 267 or 1563 of the Internal Revenue Code.

(d) “Captive REIT” means a real estate investment trust other than a qualified real estate investment trust under s. 71.22 (9ad), Stats.

(e) “Combined unitary income” has the meaning given in s. Tax 2.60 (2) (e).

(f) “Effective tax rate”, for a particular jurisdiction for a related entity, means the maximum tax rate imposed by that jurisdiction multiplied by the related entity’s apportionment percentage, if any, computed for that particular jurisdiction.

(g) “Intangible expense” has the meaning given in s. 71.01 (5n), 71.22 (3g), 71.34 (1c), or 71.42 (1sg), Stats., as applicable.

(h) “Intangible property” has the meaning given in s. 71.01 (5p), 71.22 (3h), 71.34 (1d), or 71.42 (1sh), Stats., as applicable.

(i) “Interest expense” has the meaning given in s. 71.01 (5s), 71.22 (3m), 71.34 (1e), or 71.42 (1t), Stats., as applicable.

(j) “Management fees” has the meaning given in s. 71.01 (7v), 71.22 (6d), 71.34 (1h), or 71.42 (3c), Stats., as applicable.

(k) “Pass-through entities” include tax-option (S) corporations, partnerships, limited liability companies treated as partnerships, estates, and trusts.

(L) “Rental expenses” or “rent expenses” has the meaning given in s. 71.01 (9an), 71.22 (9an), 71.34 (1r), or 71.42 (4n), Stats., as applicable.

(m) “Related entity” or “related entities” has the meaning given in s. 71.01 (9am), 71.22 (9am), 71.34 (1p), or 71.42 (4m), Stats., as applicable. The terms include related individuals. In determining relatedness under section 267 of the Internal Revenue Code, section 267 (b) controls, which defines relationships through which taxpayers would be considered related for purposes of disallowing losses or deductions on transactions between related taxpayers. Section 707 (b) of the Internal Revenue Code, incorporated by reference into section 267, applies in determining whether partnerships and limited liability companies treated as partnerships and their respective partners are related. The stock attribution rules of section 318 (a) of the Internal Revenue Code otherwise apply for purposes of establishing indirect stock ownership and thereby determine related entities.

Examples: The following relationships involving partnerships and limited liability companies (LLC) constitute related entities:

1. A partnership and a partner who holds a direct or indirect capital or profits interest in that partnership of more than 50%.

2. An LLC and a member who holds a direct or indirect interest in that LLC of more than 50%.

3. Two partnerships or LLCs if a single partner or member owns, directly or indirectly, more than 50% of both entities.

(n) “Related entity expenses” means interest, rent, or intangible expenses, and management fees, either as an individual expense type or a combination of expense types in a transaction or series of transactions whether paid, accrued, or incurred directly or indirectly.

Examples: 1) Corporation A is the parent company of Corporation B and Corporation C, which are related entities. B owns intangible property that C uses in its manufacturing process. C incurs a royalty expense as a result. A purchases the goods from C that A will hold and sell as inventory. This increased cost due to the royalty is reflected in A’s cost of goods sold. The royalty portion of the cost of goods sold represents an indirect related entity expense that must be added back to A’s income.

2) Corporation A, Corporation B, Corporation C, and Corporation D are related entities. A and D have nexus in Wisconsin, but B and C do not. B is not subject to tax in any state. Previously, D owned intangible property which A used in operating its business. In a series of transactions, D transfers the intangible property to B. B then licenses the intellectual property to C, the inventory purchasing company. A purchases the inventory from C. The royalty portion of A’s cost of goods sold represents an indirect related entity expense that must be added back to A’s income.

3) Corporation O, Corporation H, and Corporation S are related entities. O, the operating company, transfers various items of intangible property to H in conformity with section 351 of the Internal Revenue Code. H enters into an agreement with S that will allow S to license H’s intangible property. S and O are related entities. S licenses the intangible property to O whereby O pays fees to S based on a percentage of sales. The intangible expense between O and S is a related entity expenses that must be added back to O’s income.

(3) Addition modification.

(a) General. A corporation, individual, or pass-through entity shall modify federal income for Wisconsin purposes so that related entity expenses that were paid, accrued, or incurred to a related entity are added back to income.

(b) Taxpayers required to modify income. The addition modification applies to any individual, corporation, or pass-through entity that has deducted or excluded under the Internal Revenue Code any amounts for related entity expenses that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

(c) Interest expense. Interest expenses include interest expenses otherwise deductible under section 163 of the Internal Revenue Code and otherwise deductible in the computation of Wisconsin adjusted gross income or Wisconsin net income. Expenses deductible as interest expenses under section 163 of the Internal Revenue Code include:

Interest paid or accrued within the taxable year on indebtedness.
Original issue discount.
Non-separately stated interest included in carrying charges for installment purchases.
Redeemable ground rents, excluding amounts paid in redemption.
Premiums paid or accrued for mortgage insurance.

Example: Taxpayer A and Taxpayer B are related and A paid, accrued, or incurred $3,000 of original issue discount to B. Taxpayer C and Taxpayer D are related and C paid, accrued, or incurred $3,000 of interest that have been capitalized under section 263A of the Internal Revenue Code. Taxpayer E and Taxpayer F are unrelated and E has paid, accrued, or incurred $100,000 of indebtedness interest to F. A is required to add back $3,000 to its income since it paid, accrued, or incurred this amount to a related entity and it is the type of interest expense deductible under section 163 of the Internal Revenue Code. C is not required to add back $3,000 to its income since this type of interest is not the type of interest that is deductible under section 163 of the Internal Revenue Code. E is not required to add back $100,000 since the addback provisions do not apply to unrelated taxpayers.

(d) Rental expense.

Rent expenses include expenses otherwise deductible in computing Wisconsin adjusted gross income or Wisconsin net income which are attributable to, for the use of, or for the right to use, real property, including the following:

a. Tangible personal property affixed to real property if the owner of the tangible personal property is the same as or related to the owner of the real property.

b. Services rendered in connection with rented real property if the owner of the property is the same as or related to the entity providing the service.

For purposes of the addition modification, the method used to compute the expense and the manner in which it is reported for financial accounting purposes are immaterial.

Example: Amounts paid under capital leases might not be called “rent expenses” in the financial accounting records of a taxpayer, but these expenses are considered “rent expenses” for purposes of the addition modification.

(e) Management fees.

Other than services provided by the taxpayer’s own employees, management fees include expenses and costs otherwise deductible in computing Wisconsin adjusted gross income or Wisconsin net income for the purchase or retention of services, including services that pertain to any of the following:

a. Accounts receivable or payable.

b. Employee benefit plans.

c. Insurance, including self-insurance.

d. Legal matters.

e. Payroll.

f. Data processing.

g. Purchasing.

h. Taxation.

i. Financial matters.

j. Securities.

k. Accounting.

L. Reporting or compliance matters.

m. Activities similar to those described in this subd. 1. a. to L.

Subdivision 1. a. to m. are in no way intended to and should not be construed as limiting the scope of the activities subject to this paragraph.

(f) Intangible expenses.

Intangible expenses include any of the following expenses to the extent they would otherwise be deductible in the computation of Wisconsin adjusted gross income or Wisconsin net income:

a. Royalty, patent, technical, and copyright fees.

b. Licensing fees.

c. Losses related to, or incurred in connection directly or indirectly with, factoring transactions or discounting transactions.

d. Amortization expenses.

e. Other expenses, losses, or costs for, related to, or directly or indirectly in connection with acquiring, using, maintaining, managing, owning, selling, exchanging, or disposing of intangible property.

For a taxpayer purchasing amortizable intangible property from a related entity, the amortization expenses on that property are intangible expenses subject to the addition modification. This also applies to any other amortizable intangible expenses paid, accrued, or incurred between a taxpayer and a related entity.

(4) Subtraction modification.

(a) General. Related entity expenses paid, accrued, or incurred to a related entity may be deducted to the extent such expenses meet the requirements of s. 71.80 (23) (a), Stats., and this subsection.

(b) Requirements.

Section 71.80 (23) (a), Stats., provides that if a taxpayer added back related entity expenses, the taxpayer may then deduct such expenses if the taxpayer meets the requirements under s. 71.80 (23) (a) 3., Stats. The taxpayer shall establish it meets the requirements under s. 71.80 (23) (a) 3., Stats., by clear and convincing evidence. The taxpayer shall meet all of the following requirements:

a. The primary motivation for the transaction was one or more business purposes other than the avoidance or reduction of state income or franchise taxes.

b. The transaction changed the economic position of the taxpayer in a meaningful way apart from tax effects.

c. The expense was paid, accrued, or incurred using terms that reflect an arm’s length relationship.

This paragraph is the primary test for establishing whether related entity expenses may be deducted. The tests in pars. (d) and (e) are indicators that the test under this paragraph may have been met.

(c) Factors indicating requirements are not met. Factors indicating that the related entity expense does not meet the requirements under par. (b) include:

There was no actual transfer of funds from the taxpayer to the related entity.

Example: A book or journal entry alone is not considered an actual transfer of funds.

There was an actual transfer of funds, then the funds were substantially returned to the taxpayer, either directly or indirectly. Such return need not be immediate in order for this factor to be applicable.
If the transaction was entered into on the advice of a tax advisor, regardless of whether a client relationship exists or existed at the time of the advice, the advisor’s fee was determined by reference to the tax savings. “Tax advisor” includes a “material advisor” under s. 71.81 (1) (b), Stats.
The related entity does not regularly engage in similar transactions with unrelated parties on terms substantially similar to those of the subject transaction.
The transaction was not entered into at terms comparable to an arm’s length transaction as determined by Treas. Reg. section 1.482-1(b).
There was no reasonable expectation of profit from the transaction apart from the tax benefits.
The transaction resulted in the improper matching of income and expenses.
The expense for the transaction was accrued under Financial Accounting Standards Board Interpretation number 48. For purposes of this section, this factor applies to both income and franchise taxes.

Note: Financial Accounting Standards Board Interpretation number 48 is available on the Financial Accounting Standards Board’s web site at www.fasb.org.

If the related entity expense is a rental expense, the rent was paid, accrued, or incurred to a captive real estate investment trust.
If the related entity expense is an interest expense, additional factors specific to interest expenses include any of the following:

a. The taxpayer is not sufficiently capitalized or has no reasonable expectation to make payment on the debt underlying the interest expense.

b. There is no written contract underlying the interest expense.

c. There is a contract, but the contract does not reflect an interest obligation resulting from an arm’s length transaction.

d. The interest is attributable to an unpaid charge that is not an allowable expense, a loan from a captive insurance company, a dividend note, a loan from a related entity with net business loss carryforwards or net operating loss carryforwards, or a loan from a related entity that is an intermediary set up in a jurisdiction that imposes no corporate-level income or franchise tax.

(d) Related entity acts as a conduit.

‘Requirements.’ Section 71.80 (23) (a), Stats., provides that if a taxpayer added back related entity expenses, the taxpayer may then deduct such expenses if the taxpayer meets the requirements under s. 71.80 (23) (a) 1., Stats. The taxpayer shall establish it meets the requirements under s. 71.80 (23) (a) 1., Stats., by clear and convincing evidence. The taxpayer shall meet all of the following requirements:

a. The related entity to which the taxpayer paid, accrued, or incurred related entity expenses during the taxable year directly or indirectly paid, accrued, or incurred such amounts in the same taxable year to a person who is not a related entity. In this subdivision, “taxable year” means the taxable year of the taxpayer claiming the deduction for related entity expenses paid, accrued, or incurred to the related entity. The department will consider such expenses the related entity pays, accrues, or incurs to an unrelated entity by the unextended due date of the taxpayer’s income or franchise tax return to be paid, accrued, or incurred within the taxpayer’s “taxable year.” However, such expenses that occur after the end of the taxpayer’s taxable year may not then be counted again as occurring in the subsequent taxable year.

b. Except as provided in subd. 2., the related entity to which the taxpayer paid, accrued, or incurred such expenses is a holding company or a direct or indirect subsidiary of a holding company, as defined in 12 USC 1841(a) or (l) or 12 USC 1467a(a)(1)(D).

‘Investments of a bank, subsidiary, or affiliate.’ Related entity expenses may not satisfy the test in subd. 1. b. when such expenses are paid, accrued, or incurred directly or indirectly to an entity that is organized under the laws of another jurisdiction and that primarily holds and manages investments of a bank, subsidiary, or affiliate, unless the related entity expenses satisfy the provisions in subd. 1. a.
‘Interest on acquisition of stock.’ As specifically provided under s. 71.80 (23) (a) 1., Stats., interest expense paid, accrued, or incurred in connection with any debt incurred to acquire taxpayer’s assets or stock under section 368 of the Internal Revenue Code may not satisfy the test under this paragraph.

Example: Corporation A borrows money from Corporation B. No portion of the debt was used to acquire A’s own stock or assets under section 368 of the Internal Revenue Code. In order to obtain the funds to loan to A, B borrows money from Bank C. A is a calendar year taxpayer, while B is on a fiscal year beginning July 1 and ending June 30. During the calendar year 2008, A accrued $100,000 of interest expense attributable to the loan from B. In turn, B accrued $90,000 of interest expense attributable to the loan from C during that same time period of January 1, 2008, through December 31, 2008. During the period of January 1, 2009, through March 15, 2009, B accrued $10,000 of interest expense to C.

‘Allocation of expense paid to unrelated entity.’ If less than 100 percent of the total related entity expenses paid, accrued, or incurred to the related entity from the taxpayer and all other related entities is paid, accrued, or incurred to an unrelated entity, a pro rata share of the taxpayer’s related entity expenses is considered to satisfy the test under subd. 1. a.

Example: Taxpayer A made a $200,000 interest payment to Taxpayer B. No portion of the underlying debt was used to acquire the taxpayer’s own stock or assets under section 368 of the Internal Revenue Code. B received a total of $800,000 of related entity interest income during A’s taxable year. Of this amount, $200,000 was from A and $600,000 from other related entities. In A’s taxable year, B paid $400,000 of interest expense to unrelated entities. In this case, $100,000 (($200,000/$800,000) x $400,000) of the interest A paid to B would be considered paid, accrued, or incurred to unrelated entities in A’s taxable year.

(e) Related entity included income in tax base.

‘Requirements.’ Section 71.80 (23) (a), Stats., provides that if a taxpayer added back related entity expenses, the taxpayer may then deduct such expenses if the taxpayer meets the requirements under s. 71.80 (23) (a) 2., Stats. The taxpayer shall establish it meets the requirements under s. 71.80 (23) (a) 2., Stats., by clear and convincing evidence. The taxpayer shall meet all of the following requirements:

a. The related entity was subject to tax on, or measured by, its net income or receipts in this state or any state, U.S. possession, or foreign country.

b. The related entity’s tax base in such state, U.S. possession, or foreign country included the income received from the taxpayer corresponding to the related entity expenses.

c. The related entity’s aggregate effective tax rate applied to such income or receipts was at least 80 percent of the taxpayer’s aggregate effective tax rate.

d. The related entity is not a real estate investment trust under section 856 of the Internal Revenue Code, other than a qualified real estate investment trust.

‘Differing taxable years.’ For both the taxpayer and the related entity, compute the aggregate effective tax rate for the taxable year that included the transaction date. If the related entity is on a taxable year that ends after the taxpayer’s taxable year, the aggregate effective tax rate shall be determined as follows:

a. If in the related entity’s most recently ended taxable year the related entity was subject to a tax on or measured by net income or receipts in a state, U.S. possession, or foreign country, the related entity’s aggregate effective tax rate shall be computed based on the related entity’s most recently ended taxable year.

b. If the related entity was not subject to such tax for its most recently ended taxable year, the related entity shall modify the computation of the aggregate effective tax rate as provided in subd. 2. c.

c. The related entity uses 100 percent as the related entity’s apportionment percentage and the related entity uses the statutory tax rate of the state where the related entity is incorporated, organized, formed, or, if the related entity is an individual, where the individual resides.

‘Items not includable in aggregate effective tax rate.’ The following are not included in the computation of the aggregate effective tax rate:

a. If the related entity expense was paid, accrued, or incurred to a pass-through entity, any tax rate that is imposed at the shareholder, partner, member, or beneficiary level rather than at the pass-through entity level for that state, U.S. possession, or foreign country.

b. If the related entity is a pass-through entity, only taxes imposed at the entity level that are on or measured by net income or receipts may be included in the pass-through entity’s effective tax rate for a particular jurisdiction. A pass-through entity’s aggregate effective tax rate cannot include taxes imposed against the entity’s shareholders, partners, members, or beneficiaries. If a pass-through entity elects to file a composite return in a jurisdiction on behalf of some or all of its shareholders, partners, members, or beneficiaries, the tax rate applicable to that composite return cannot be included in the entity’s effective tax rate for that jurisdiction.

c. The tax rate of any jurisdiction where the taxpayer files with the related entity or the related entity files with another entity a combined or consolidated report or return if the report or return results in eliminating the tax effects of transactions, directly or indirectly, between either the taxpayer and the related entity or between the related entity and another entity.

‘Items includible in aggregate effective tax rate.’ The following are included in the computation of the aggregate effective tax rate:

a. Withholding taxes, such as the one imposed by s. 71.775, Stats., paid on income distributable to owners or beneficiaries of the pass-through entity, may be considered entity-level taxes if the state, U.S. possession, or foreign country imposes the withholding as a tax on the income of the pass-through entity.

b. The Wisconsin economic development surcharge, which is imposed on tax-option (S) corporations pursuant to s. 77.93 (1), Stats.

‘Dividends paid deduction.’ If the related entity is not taxed on some or all of its income in a state, U.S. possession, or foreign country because the entity is eligible for a dividends paid deduction under the laws of that jurisdiction, the amount of income considered to be included in its tax base in that jurisdiction is the amount of income after applying the dividends paid deduction. If the dividends paid deduction is less than 100 percent of the related entity’s total income, a pro rata share of its income from the transaction is deemed to be excluded from its tax base in that jurisdiction.
‘Related entity has loss or credit carryforwards.’ For purposes of applying the test under par. (e), the related entity’s aggregate effective tax rate is computed without regard to loss carryforwards or credit carryforwards. If the related entity has no tax liability in a particular state, U.S. possession, or foreign country because of its loss or credit carryforwards, the related entity’s effective tax rate in that jurisdiction still remains that jurisdiction’s maximum statutory tax rate multiplied by the related entity’s apportionment percentage in that jurisdiction.

Example: Taxpayer A makes a $500,000 interest payment to Corporation C, a related corporation. Corporation C has no other income and is engaged in business only in State X. Corporation C has a $1,000,000 loss carryforward in State X and uses this carryforward to offset the $500,000 related entity interest income from Taxpayer A. Therefore, Corporation C owes no tax to State X. State X has a maximum corporation income tax rate of 6.2%. Corporation C’s aggregate effective tax rate would be 6.2%.

(5) Disallowed related entity expenses.

(a) General. A related entity may subtract income that corresponds to related entity expenses if such expenses are disallowed to the taxpayer.

(b) Subtraction for disallowed expenses. Except as provided in par. (f), if a taxpayer cannot deduct a related entity expense it paid, accrued, or incurred to a related entity because the expense did not meet one of the tests under sub. (4), the related entity may subtract the income that corresponds to the expense that was disallowed to the taxpayer.

(c) Form required to substantiate income exclusion. Unless otherwise provided by the department, both the taxpayer and the related entity shall complete the form prescribed by the department to substantiate the income exclusion. The related entity shall file the completed form prescribed by the department with its Wisconsin income or franchise tax return on which it is claiming the subtraction from income. If the related entity is not doing business in Wisconsin, neither the taxpayer nor the related entity has to complete the form prescribed by the department to substantiate the income exclusion.

(d) Expense below disclosure threshold. Except as provided in par. (e), the subtraction from income provided in this subsection may apply even if the disallowed related entity expense was below the threshold of $100,000 under sub. (7) (b) 3.

(e) Related entity income exclusion limitation. A taxpayer may not use the form prescribed by the department to disallow related entity expenses to claim a related entity expense if all of the following conditions apply:

The primary motivation for the transaction was one or more business purposes other than the avoidance or reduction of state income or franchise taxes.
The transaction changed the economic position of the taxpayer in a meaningful way apart from tax effects.
The expenses were paid, accrued, or incurred using terms that reflect an arm’s length relationship.

(f) Evasion of taxes and distortion of income. A taxpayer meeting the criteria to deduct related entity expenses under s. 71.80 (23), Stats., but fails, whether intentionally or not, to disclose such related entity expenses as prescribed, the department at its discretion may disallow the corresponding income exclusion to the related entity and allow the expense to the taxpayer.

Example: Taxpayer A and Taxpayer B are related entities. A’s net income for the year is $50,000 and B’s net income is $750,000. A incurred $100,000 in interest expenses to B. Realizing there is a benefit to not disclosing the related entity expenses, A reports $150,000 in net income, and B reports $650,000 in net income. The department may disallow the interest income exclusion to B and allow the interest expense to A. As a result, A must report $50,000 of net income and B must report $750,000 of net income.

(6) Miscellaneous rules.

(a) Combined groups.

As provided in s. Tax 2.61 (6) (a) 6., for related entity expenses paid, accrued, or incurred between combined group members, including pass-through entities owned by those members to the extent of their distributive shares of income, the addition modifications for related entity expenses under ss. 71.26 (2) (a) 7. and 71.45 (2) (a) 16., Stats., are not required to the extent the recipient of the income includes the income in the combined unitary income. The provisions under s. Tax 2.61 (6) (a) 6. only apply to corporations that are combined group members at the time of the transactions resulting in related entity expenses.
The addition modifications for addbacks are required in cases where related entity expenses are included in combined unitary income but the corresponding income is or was not included in the combined unitary income. To illustrate, without limiting the application of this subdivision in any way, a related entity expense paid, accrued, or incurred to a related entity that is not a combined group member is subject to the addback provisions. Likewise, a related entity expense paid, accrued, or incurred to a combined group member that excluded the corresponding income from the combined unitary income is subject to the addback provisions.

(b) Pass-through entities. Shareholders of a tax-option (S) corporation, members of a limited liability company treated as a partnership, partners of a general or limited partnership, and beneficiaries of trust and estates need not make an addition modification to their respective incomes in cases where their respective schedules K-1 report the related entity expenses as fully deductible.

(c) Disregarded entities. Transactions resulting in related entity expenses between an entity that is disregarded for Wisconsin income and franchise tax purposes and its owner need not be reported and disclosed.

(d) Individual itemized deduction credit. An individual who has paid, accrued, or incurred related entity expenses is not required to disclose such expenses on a form prescribed by the department if the individual reports the expenses as part of the individual’s itemized deduction credit under s. 71.07 (5), Stats. An individual wishing to treat related entity expenses as business expenses shall disclose such expenses on a form prescribed by the department as applicable.

(e) Taxpayers subject to apportionment. If a taxpayer is subject to apportionment, the taxpayer shall report and disclose the amounts that are required to be added back before apportionment. For purposes of determining the threshold amount of $100,000 under sub. (7) (b) 3., the taxpayer shall use the apportioned amounts. However, the taxpayer shall not multiply by the apportionment percentage those amounts of related entity expenses added back to income that are not attributable to apportionable income. The apportionment percentage shall be recomputed after any addbacks.

(7) Administration and compliance.

(a) Authority to distribute or disregard. Notwithstanding the modifications provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17., Stats., the department has express authority under ss. 71.30 (2) and 71.80 (1) (b), Stats., to distribute, apportion, or allocate income, deductions, credits, or allowances between or among related entities in order to prevent evasion of taxes or to clearly reflect the income of the entities. Additionally, the department has express authority under ss. 71.30 (2m) and 71.80 (1m), Stats., to disregard transactions between related entities if those transactions lack economic substance. This authority is also applicable to the modifications under ss. 71.05 (6) (b) 46., 71.26 (2) (a) 9., 71.34 (1k) (L), and 71.45 (2) (a) 18., Stats.

(b) Timely disclosure.

A taxpayer with related entity expenses shall disclose such expenses on or before the extended due date of the return for the year in which the expenses are reported. The department is authorized to disallow related entity expenses, even if the expenses meet the conditions in s. 71.80 (23) (a), Stats., and sub. (4) for failure to timely disclose such expenses. The form prescribed by the department to disclose related entity expenses shall not be accepted by the department if filed with an amended return after the extended due date. Failure to disclose or untimely disclosure by a taxpayer subjects the taxpayer and related entities to the provisions of sub. (5) (f).
A pass-through entity is responsible for timely disclosing related entity expenses on a form prescribed by the department. The shareholder, partner, member, or beneficiary is not responsible for disclosing related entity expenses if such expenses are passed through to them. A shareholder, partner, member, or beneficiary having related entity expenses independent of those passed through to them shall disclose such expenses on a form prescribed by the department as applicable.
A taxpayer is not required to disclose related entity expenses on a separate form prescribed by the department if the total interest, rent, and intangible expenses and management fees paid, accrued, or incurred to all related entities reduces the taxpayer’s net income by a total amount that is equal to or less than $100,000. If the taxpayer has related entity expenses that reduce the taxpayer’s net income by more than a total of $100,000, the taxpayer shall file and disclose such expenses on a form prescribed by the department. For multistate taxpayers, the $100,000 threshold is determined after applying the Wisconsin apportionment percentage. If the taxpayer is a pass-through entity, the $100,000, threshold is determined at the entity level. The fact that a taxpayer’s total related entity expenses do not surpass the $100,000 threshold amount does not preclude the department from enforcing the addback provisions against the taxpayer.

History

CR 10-095: cr. Register November 2010 No. 659, eff. 12-1-10; correction in (2) (m) and renumbering of (2) (h) and (i) made under s. 13.92 (4) (b) 1. and 7., Stats., Register November 2010 No. 659; CR 12-011: am. (4) (e) 4. b. Register July 2012 No. 679, eff. 8-1-12; CR 14-005: am. (4) (e) 4. b. Register August 2014 No. 704, eff. 9-1-14; CR 17-019: am. (7) (b) 1., Register June 2018 No. 750 eff. 7-1-18.

Wis. Admin. Code § Tax 3.02 Pass-through entity withholding {#sec-tax-3.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.02}

(1) Purpose. This section provides additional guidance with respect to the treatment of withholding tax for pass-through entities.

(2) Credit for nonresident entertainer, lottery, and pari-mutuel withholding. A pass-through entity may elect to allocate nonresident entertainer, lottery, and pari-mutuel withholding to its nonresident partners, members, shareholders, or beneficiaries, but only to the extent the income subject to withholding is allocated to those partners, members, shareholders, or beneficiaries. A pass-through entity may credit amounts withheld under ss. 71.64 (5) and 71.67 (4) and (5), Stats., or amounts paid or deposited under s. 71.80 (15) (b) or (c), Stats., against the withholding amounts required under s. 71.775 (2), Stats., to such extent, in the manner and form prescribed by the department.

Example: Basement Rockers is a four-member rock band. Basement Rockers is a tax-option (S) corporation and its four rock stars are the corporation’s shareholders. They are nonresidents of Wisconsin. The band plays in three different venues in Wisconsin during the taxable year and each venue pays the band $10,000. For Venue 1, neither a surety bond is filed nor cash deposited. The venue withholds 6% and immediately pays the amount withheld to the department. For Venue 2, a bond is not filed, cash is not deposited, and no amounts are withheld. For Venue 3, Basement Rockers files a surety bond for 6% of the total contract price. Basement Rockers may only elect to allocate to its shareholders the amounts for Venue 1 and Venue 3.

History

CR 10-095: cr. Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 3.03 Dividends received deduction — corporations {#sec-tax-3.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.03}

(1) Purpose. This section clarifies the deduction from gross income allowed to corporations for dividends received. Dividends may be deductible due to the recipient’s ownership of the payer corporation, as provided in sub. (3).

(2) Definition. “Dividends received” means gross dividends minus taxes on those dividends paid to a foreign nation and claimed as a deduction under ch. 71, Stats.

Note: Refer to s. 71.26 (3) (j), Stats.

(3) Dividends deductible due to ownership. A corporation may deduct from gross income 100 percent of the dividends received from a payer corporation during a taxable year if both of the following occur:

(a) The dividends are paid on common stock of the payer corporation.

(b) The corporation receiving the dividends owns directly or indirectly during the entire taxable year in which the dividends are received at least 70 percent of the total combined voting stock of the payer corporation.

Note: 1) Refer to s. 71.26 (3) (j), Stats.

2) Only cash dividends were deductible by the recipient in taxable years 1980 through 1986. This limitation was eliminated by 1987 Wis. Act 27.

3) For taxable years 1980 through 1983 the deduction was limited to 50% of the dividends received.

4) For the taxable year 1984 the deduction was limited to 75% of the dividends received.

5) For taxable years 1985 and thereafter the deduction equals 100% of the dividends received.

6) For taxable years beginning before January 1, 1993, the corporation receiving the dividends was required to own directly or indirectly during the entire taxable year in which the dividends were received at least 80% of the total combined voting stock of the payer corporation. The percentage of ownership requirement was changed from 80% to 70% by 1993 Wis. Act 16.

(4) Limitation on deduction. The deduction under sub. (3) may not exceed the dividend received and included in gross income for a taxable year.

(5) Dividends includable in gross income. All dividend income shall be included in full in gross income on the franchise or income tax return of the recipient, whether or not certain dividends are deductible.

(6) Combined Groups. The dividends elimination provisions of s. Tax 2.61 (6) (e) only apply to the extent that the dividends received deduction under this section and s. 71.26 (3) (j) or 71.45 (2) (a) 8., Stats., do not apply.

Note: This section interprets ss. 71.22 (4), 71.255 (4) (f), 71.26 (2) and (3) (j), 71.42 (2) and 71.45 (2) (a) 8., Stats.

History

1-2-56; am. Register, September, 1964, No. 105, eff. 10-1-64; am. (1), Register, March, 1966, No. 123, eff. 4-1-66; am. Register, February, 1975, No. 230, eff. 3-1-75; cr. (5), Register, July, 1978, No. 271, eff. 8-1-78; r. and recr. Register, June, 1990, No. 414, eff. 7-1-90; r. and recr. Register, December, 1995, No. 480, eff. 1-1-96; CR 10-095: cr. (6) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 3.04 Subtraction for military pay received by members of a reserve component of the armed forces {#sec-tax-3.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.04}

(1) Purpose. This section limits the application of the phrase “called ... into special state service authorized by the federal department of defense under 32 USC 502 (f), that is paid to the person for a period of time during which the person is on active duty” as used in s. 71.05 (6) (b) 34., Stats., as created by 2003 Wis. Act 183.

(2) Limitation on subtraction. A person who is a member of a reserve component of the U.S. armed forces, who is serving on active duty or full-time duty in the active guard reserve program under 32 USC 502 (f), does not qualify for the subtraction.

History

Emerg. cr. eff. 9-17-04; CR 04-116: cr. Register March 2005 No. 591, eff. 4-1-05.

Wis. Admin. Code § Tax 3.05 Job creation deduction {#sec-tax-3.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.05}

(1) Purpose. The purpose of this section is to clarify certain terms as they apply to the job creation deduction under ss. 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats.; define “employee,” “full-time equivalent employee,” and “gross receipts”; prescribe the methods by which the average employee count is computed for purposes of determining the amount of the deduction; and clarify how the deduction applies to partnerships, limited liability companies, tax-option corporations, and professional employer organizations.

(2) Definitions. In this section and in ss. 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats.:

(a) “Commonly controlled group” has the meaning given in s. 71.255 (1) (c), Stats.

(b) “Employee” has the meaning given in section 3121 (d) of the Internal Revenue Code.

(c) “Full-time equivalent employee” means an employee who is a resident of this state, is employed in a regular, nonseasonal job, and who, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays.

(d) “Gross receipts” means gross sales, gross premiums earned, gross dividends, gross interest income, gross rents, gross royalties, the gross sales price from the disposition of capital assets and business assets, gross income from pass-through entities, and all other receipts that are included in gross income, other than life insurance income, before apportionment for Wisconsin franchise or income tax purposes.

(e) “Person” has the meaning given in ss. 71.01 (9), 71.22 (9), and 71.42 (4), Stats.

(f) “Related entity” has the meaning given in ss. 71.01 (9am), 71.22 (9am), and 71.42 (4m), Stats.

(g) “Taxable year” has the meaning given in ss. 71.01 (12), 71.22 (10), and 71.42 (5), Stats.

(3) Amount of deduction. Sections 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats., provide for an income and franchise tax deduction, prior to January 1, 2015, in an amount equal to the increase in the number of full−time equivalent employees employed by the taxpayer in this state during the taxable year, multiplied by $4,000 for a business with gross receipts of no greater than $5,000,000 in the taxable year or $2,000 for a business with gross receipts greater than $5,000,000 in the taxable year.

(4) Average employee count. The average employee count for purposes of determining the increase in the number of full-time equivalent employees employed by the taxpayer in this state for a taxable year shall be computed using one of the following methods:

(a)

Except as provided in subd. 2., for a taxable year during which the taxpayer is required, under ch. 108, Stats., to file quarterly unemployment insurance wage reports with the department of workforce development, the average employee count shall be computed using the average number of full-time equivalent employees employed by the taxpayer in this state from the claimant’s quarterly wage reports required to be filed during the taxable year. An amount computed under this subdivision shall be rounded to the nearest whole number.

Example: For Taxpayer A’s taxable year beginning August 1, 2011 and ending July 31, 2012, Taxpayer A uses the number of full-time equivalent (FTE) employees employed in Wisconsin from the quarterly wage reports required to be filed October 31, 2011, January 31, 2012, April 30, 2012, and July 31, 2012 to compute the average employee count. The information from the reports filed is as follows:

The average employee count in this example is 40, the sum of the full-time equivalent employees employed in Wisconsin reported (160) divided by the number of reports filed (4).

If only one quarterly wage report is required to be filed during the taxable year, the average employee count shall be the number of full-time equivalent employees employed by the taxpayer in this state from that report.
For purposes of computing the average employee count under this paragraph, the number of full-time equivalent employees employed in this state does not include any employee who worked for a related person or related entity of the taxpayer or member of the same commonly controlled group as the taxpayer at any time during the 12 months prior to the due date of the quarterly wage report from which the number is derived.

(b)

Except as provided in subds. 2. and 3., for a taxable year during which a taxpayer is not required under ch. 108, Stats., to file quarterly unemployment insurance wage reports with the department of workforce development, the average employee count shall be computed using the average number of full-time equivalent employees employed by the taxpayer in this state on January 31, April 30, July 31, and October 31 within the taxable year. A January 31, April 30, July 31, or October 31 that does not occur within the taxable year is disregarded for purposes of the computation under this subdivision. An amount computed under this subdivision shall be rounded to the nearest whole number.

Example 1) For Taxpayer B’s taxable year beginning July 1, 2011, and ending June 30, 2012, the number of full-time equivalent employees employed by Taxpayer B in this state on July 31, 2011, October 31, 2011, January 31, 2012, and April 30, 2012, are used to compute the average employee count.

Example 2) To compute the average employee count for Taxpayer C’s short-period taxable year beginning March 15, 2011, and ending December 31, 2011, Taxpayer C divides the sum of the number of full-time equivalent employees employed by Taxpayer C in this state on April 30, 2011, July 31, 2011, and October 31, 2011, by three.

If only one of the dates, January 31, April 30, July 31, and October 31 occur within a taxable year, the average employee count shall be the number of full-time equivalent employees employed by the taxpayer in this state on that date.
If none of the dates January 31, April 30, July 31, or October 31, occurs within a taxable year, the average employee count shall be the number of full-time equivalent employees employed by the taxpayer in this state on the last day of the taxable year.
For purposes of computing the average employee count under this paragraph, the number of full-time equivalent employees employed in this state does not include any employee who worked for a related person or related entity of the taxpayer or member of the same commonly controlled group as the taxpayer at any time during the 12 months prior to the date on which the number is derived.

(5) Partnerships, limited liability companies, and tax-option corporations. Partnerships, limited liability companies, and tax-option corporations may not claim the job creation deduction under ss. 71.05 (6) (b) 47m., 71.26 (1) (h), or 71.45 (1) (c), Stats., but the eligibility for, and the amount of, the deduction shall be based on the increase in the number of full-time equivalent employees employed by the partnership, limited liability company, or tax-option corporation in this state and the gross receipts of the partnership, limited liability company, or tax-option corporation. A partnership, limited liability company, or tax-option corporation shall compute the amount of deduction that each of its partners, members, or shareholders may claim and shall provide that information to each of them.

Example: Partnership C has two equal partners, Individual D and Individual E. Individual D and Individual E are both Wisconsin residents. For its 2011 taxable year, Partnership C computes $450,000 of ordinary business income for federal income tax purposes and a job creation deduction of $40,000. Partnership C reports the following amounts to both Individual D and Individual E:

(6) Professional employer organizations. The provisions of s. 202.24 (4) (b), Stats., apply to this section and ss. 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats.

Example: Company F, a professional employer organization, hires Employee G to perform services in Wisconsin for Taxpayer H, a client of Company F. For purposes of determining the job creation deduction, Employee G is considered to be an employee solely of Taxpayer H.

History

EmR1105: emerg. cr. eff. 4-7-11; CR 11-024: cr. Register November 2011 No. 671, eff. 12-1-11; CR 14-005: am. (6) Register August 2014 No. 704, eff. 9-1-14; CR 17-019: am. (3), Register June 2018 No. 750 eff. 7-1-18; correction in (2) (f) made under s. 35.17, Stats., Register December 2024 No. 828.

Wis. Admin. Code § Tax 3.085 Retirement plan distributions {#sec-tax-3.085 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.085}

(1) Nonresidents. Employee annuity, pension, profit-sharing or stock bonus plan distributions, including self-employed retirement plan distributions, and distributions from qualified deferred compensation plans under ss. 401 (k), 403 (b) and 457 of the internal revenue code received by a person while a nonresident of Wisconsin shall be exempt from the Wisconsin income tax, regardless of whether any of these distributions may be attributable to personal services performed in Wisconsin.

(2) Residents. Employee annuity, pension, profit-sharing or stock bonus plan distributions, including self-employed retirement plan distributions, and distributions from qualified deferred compensation plans under ss. 401 (k), 403 (b) and 457 of the internal revenue code received by a person while a resident of Wisconsin shall be subject to the Wisconsin income tax, regardless of whether any of these distributions may be attributable to personal services performed outside of Wisconsin.

Note: This section interprets s. 71.04 (1) (a), Stats.

History

Cr. Register, March, 1978, No. 267, eff. 4-1-78; am. Register, June, 1990, No. 414, eff. 7-1-90.

Wis. Admin. Code § Tax 3.095 Income tax status of interest and dividends received from government and other securities by individuals and fiduciaries {#sec-tax-3.095 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.095}

(1) Purpose. This section lists federal, state, municipal and other government securities, and certain nongovernment securities, and specifies whether interest and dividends payable on those securities are exempt from or subject to the Wisconsin income tax on individuals and fiduciaries. The lists are not all-inclusive.

Note: Information regarding the income tax status of interest and dividends received from securities not listed in this section may be obtained by writing to Wisconsin Department of Revenue, Technical Services Staff, P.O. Box 8933, Madison, WI 53708-8933.

(2) Definitions. In this section:

(a) “CHAP” means “Community Housing Alternatives Program.”

(b) “Federal securities” means only securities which are direct and primary obligations of the United States and securities the interest on which federal law prohibits states from taxing. Federal securities do not include securities for which the United States is merely a guarantor and, therefore, has an obligation which is secondary and contingent to that of the issuer of the security.

(c) “Public housing agency” means any state, county, municipality or other governmental entity or public body, or agency or instrumentality thereof, which is authorized to engage in or assist in the development or operation of lower income housing, under 42 USC 1437a (b) (6).

(d) “WHEDA” means “Wisconsin Housing and Economic Development Authority.”

(e) “WHEFA” means “Wisconsin Health and Educational Facilities Authority.”

(3) General.

(a) Under s. 71.05 (6) (a) 1., Stats., interest income which is subject to the Wisconsin income tax on individuals and fiduciaries, but which is not included in federal adjusted gross income, shall be added to federal adjusted gross income in computing Wisconsin taxable income.

Note: Section 71.05 (1) (a) 1., 1985 Stats., was amended by 1987 Wis. Act 27, to provide for the addition to federal adjusted gross income, of any interest not included in federal adjusted gross income which is not specifically exempted from state taxation. This change applies only to securities issued after January 28, 1987. Prior to enactment of 1987 Wis. Act 27, the addition applied only to interest excluded from federal adjusted gross income solely by s. 103 of the internal revenue code. Section 71.05 (1) (a) 1., 1985 Stats., was renumbered s. 71.05 (6) (a) 1., Stats., by 1987 Wis. Act 312, effective January 1, 1989.

(b) Under s. 71.05 (6) (b) 1., Stats., interest and dividend income which is included in federal adjusted gross income but which is by federal law exempt from state income taxation, shall be subtracted from federal adjusted gross income in computing Wisconsin taxable income.

(4) Exempt securities. Interest and dividends payable on the following securities shall be exempt from the Wisconsin income tax on individuals and fiduciaries:

(a) State, municipal and other government securities exempt from Wisconsin income tax.

District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to s. 103 of the internal revenue code.
Higher education bonds issued by the state of Wisconsin, s. 71.05 (6) (a) 1., Stats.
Public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to s. 103 of the internal revenue code.
Public housing authority bonds issued by municipalities located in Wisconsin, s. 66.1201 (14) (a), Stats.
Redevelopment authority bonds issued by municipalities located in Wisconsin, s. 66.1333 (5) (a) 4. c., Stats.
Stripped general obligation bond certificates attributable to certain District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation under section 1286 of the internal revenue code and D.C. Code Ann. 47-332.

Note: Stripped general obligation bond certificates meeting the criteria of subd. 6. include Stripped Tax-Exempt Participations, or‘STEPS.’

Virgin Island Housing Authority bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to section 103 of the internal revenue code.
WHEDA bonds issued on or prior to January 28, 1987, except business development revenue bonds, economic development revenue bonds and CHAP housing revenue bonds issued by WHEDA.
WHEDA bonds issued under s. 234.65, Stats., to fund an economic development loan to finance construction, renovation or development of property that would be exempt under s. 70.11 (36), Stats.
Wisconsin Housing Finance Authority bonds, 42 USC 1437i (b).
WHEDA bonds or notes issued under s. 234.08 or 234.61, Stats., on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects.
Bonds or notes issued by a local exposition district created under subch. II of ch. 229, Stats.
Bonds or notes issued by a local professional baseball park district created under subch. III of ch. 229, Stats.
Bonds or notes issued by a local professional football stadium district created under subch. IV of ch. 229, Stats.
Bonds or notes issued by a local cultural arts district created under subch. V of ch. 229, Stats.
Bonds or notes issued by the Wisconsin Aerospace Authority.
Wisconsin Health and Educational Facilities Authority bonds or notes issued under s. 231.03 (6), Stats., on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in s. 231.01 (5), Stats., to fund the acquisition of information technology hardware or software.
Bonds or notes issued by a commission created under s. 66.0304, Stats., if any of the following applies:

a. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and WHEDA has the authority to issue its bonds or notes for the project being funded.

b. The bonds or notes are used by a health facility, as defined in s. 231.01 (5), Stats., to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded.

c. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s. 66.1201, 66.1333, or 66.1335, Stats.

WHEDA bonds or notes, if the bonds or notes are issued to provide loans to a public affairs network under s. 234.75 (4), Stats.
WHEFA bonds or notes, if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued and the interest income received from the other bonds or notes is exempt from taxation under subch. I of ch. 71, Stats.

Note: Under par. (a), interest and dividends payable on certain securities issued on or before January 28, 1987, is exempt from Wisconsin income tax. This is because prior to enactment of 1987 Wis. Act 27, which amended s. 71.05 (1) (a) 1., 1985 Stats., effective with securities issued after January 28, 1987, no modification was provided to add to federal adjusted gross income interest and dividends which were excludable from federal adjusted gross income for any reason other than or in addition to s. 103 of the internal revenue code. Section 71.05 (1) (a) 1., 1985 Stats., was renumbered s. 71.05 (6) (a) 1., Stats., by 1987 Wis. Act 312, effective January 1, 1989.

Bonds or notes issued by a sponsoring municipality to assist a local exposition district created under subch. II of ch. 229, Stats.

(b) Federal securities exempt from Wisconsin income tax.

Armed Services Housing Mortgage Insurance debentures, 12 USC 1748b (f).
Bank for Cooperative debentures, 12 USC 2134.
Bank repurchase agreements for U.S. Government treasury bills, notes and bonds, if interest is paid by the federal government directly to the taxpayer.
Commodity Credit Corporation bonds, 15 USC 713a-5.
Commonwealth of Puerto Rico public improvement bonds, 48 USC 745.
Farm Credit System Financial Assistance Corporation notes, bonds and debentures, 12 USC 2278b-10 (b).
Federal Deposit Insurance Corporation bonds, 12 USC 1825.
Federal Farm Credit Banks Consolidated Systemwide Securities, 12 USC 2023.
Federal Home Loan Bank bonds, debentures and notes, 12 USC 1433.
Federal Housing Authority debentures, 12 USC 1710 (d) and 1747g (g).
Federal Intermediate Credit Bank debentures, 12 USC 2023.
Federal Land Bank Association bonds, notes and debentures, 12 USC 2098.
Federal Land Bank bonds, 12 USC 2055.
Federal Reserve Bank dividends, 12 USC 531.
Federal Savings and Loan Insurance Corporation bonds, 12 USC 1725 (e).
Financial Assistance Corporation bonds, notes and debentures, 12 USC 2278b-10 (b).
Financing Corporation obligations, 12 USC 1441.
General Insurance Fund debentures issued to acquire housing projects, 12 USC 1747g (g).

18e. General Insurance Fund debentures issued under the National Defense Housing Insurance, 12 USC 1750c (d).

18m. General Insurance Fund debentures issued under the Neighborhood Conservation Housing Insurance, 12 USC 1715k (h) (7).

18s. General Insurance Fund debentures issued under the Rental Housing Insurance, 12 USC 1713 (i).

General Insurance Fund debentures issued under the War Housing Insurance Law, 12 USC 1739 (d).
General Services Administration Public Building Trust Participation certificates, 31 USC 3124.
Guam bonds, 48 USC 1423a.

21g. National Credit Union Central Liquidity Facility, 12 USC 1795k (b).

21r. Northern Mariana Islands, 48 USC 1801 and s. 607 (a) of the Covenant to Establish a Commonwealth of the Northern Mariana Islands.

Industrial Development bonds of East Samoa, 48 USC 1670.
Panama Canal Zone bonds, 31 USC 743-745.
Production Credit Association obligations, 12 USC 2077.
Proprietary zero-coupon certificates, 31 USC 3124.

Note: Proprietary zero-coupon certificates include CATS, TIGRs, Cougars, ETRs, Lions, STARs, Zebras, etc.

Puerto Rico Aqueduct and Sewer Authority revenue bonds, 48 USC 745.
Puerto Rico Electric Power Authority electric revenue bonds, 48 USC 745.
Puerto Rico Electric Power Authority power revenue bonds, 48 USC 745.
Puerto Rico Highway Authority revenue bonds, 48 USC 745.
Puerto Rico Industrial Development Company bonds, 48 USC 745.
Puerto Rico Municipal Finance Agency 1974 Series A bonds, 48 USC 745.
Puerto Rico Ports Authority revenue bonds, 48 USC 745.
Puerto Rico Public Buildings Authority public education and health facility bonds, 48 USC 745.
Puerto Rico Public Buildings Authority revenue bonds, 48 USC 745.
Puerto Rico Telephone Authority revenue bonds, 48 USC 745.
Puerto Rico Water Resource Authority Series B debentures, 48 USC 745.
Resolution Funding Corporation bonds, 12 USC 1441b (f) (7).
Student Loan Marketing Association obligations, 20 USC 1087-2 (L).
Tennessee Valley Authority bonds, 16 USC 831n-4 (d).
Territory of Hawaii bonds.
Territory of Puerto Rico bonds, 48 USC 745.
United States Postal Service bonds, 39 USC 2005.
United States savings bonds, 31 USC 3124.
United States Treasury bills and notes, 31 USC 3124.
University of Puerto Rico university system revenue bonds, 48 USC 745.
Virgin Islands general obligation bonds, 48 USC 1574 (b) (ii) (A).
Virgin Islands Public Improvement bonds, 48 USC 1574 (b) (i).

(5) Taxable securities. Interest and dividends payable on the following securities shall be subject to the Wisconsin income tax on individuals and fiduciaries:

(a) Taxable state and municipal government securities.

District of Columbia Development Land Agency bonds, 42 USC 1452.
District of Columbia general obligation bonds issued after January 28, 1987, D.C. Code 47-33.
Municipal bonds.
Public housing agency bonds issued after January 28, 1987, and by agencies located outside Wisconsin. Public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest from the bonds qualifies for exemption from federal income taxation solely because of section 103 of the internal revenue code.
Robert F. Kennedy Stadium bonds, D.C. Code 2-1720 et seq.
Transit bonds of the Washington Metropolitan Area Transit Authority.
Wisconsin Health Education Assistance Loan revenue obligation bonds, s. 39.374, Stats.
WHEDA bonds issued after January 28, 1987, and all business development revenue bonds, economic development revenue bonds and CHAP housing revenue bonds issued by WHEDA, regardless of when issued, unless specifically exempt by law, ch. 234, Stats.

(b) Other taxable securities.

Asian Development Bank bonds, 22 USC 285h.
College Construction Loan Insurance Association obligations, 20 USC 1132.
Environmental Financing Authority obligations, 33 USC 1281.
Export-Import Bank of the United States debentures, 12 USC 635.
Farmer’s Home Administration insured notes, 7 USC 1928 and 1929.
Federal Assets Financing Trust participation certificates, 12 USC 1717 (c).
Federal Financing Bank bonds, 12 USC 2288.
Federal Home Loan Bank dividends, 12 USC 1426 and 1436.
Federal Home Loan Mortgage Corporation obligations, 12 USC 1455.
Federal National Mortgage Association certificates, 12 USC 1718.

Note: In 1968, the Federal National Mortgage Association became 2 separate corporations. One corporation retained the original name and the other is known as the Government National Mortgage Association.

Federal National Mortgage Association dividends, 12 USC 1719.
Government National Mortgage Association, or Ginnie Mae, bonds, 12 USC 1721.
HUD/New Communities Program obligations, 12 USC 1701g-5a.
Insured Merchant Marine bonds, 46 USC 1273.
Inter-American Development Bank securities, 22 USC 283h.
Interest paid on deposits in any federal bank or agency.
International Bank for Reconstruction and Development bonds, also known as World Bank bonds, 22 USC 286k-1.

17m. National Consumer Cooperative Bank, 12 USC 3017 (c).

Rural Telephone debentures, 7 USC 947 (a).
Small Business Administration notes, 15 USC 633.
Small Business Investment Company debentures, 15 USC 683 and 687.
Tennessee Valley Authority bonds, 16 USC 831n-3.
Virgin Islands Housing Authority bonds issued after January 28, 1987, 48 USC 1408a.
World Bank bonds, also known as International Bank for Reconstruction and Development bonds, 22 USC 286k-1.

Note: This section interprets s. 71.05 (6) (a) 1. and (b) 1., Stats.

History

Cr. Register, August, 1976, No. 248, eff. 9-1-76; emerg. cr. (1) (g) to (i), am. (2) (intro.), r. (2) (b), (h) and (j), eff. 7-31-87; r. and recr. Register, April, 1988, No. 388, eff. 5-1-88; emerg. am. (3) (intro.) and (c), cr. (3) (g), r. and recr. (4) (b), eff. 1-1-89; am. (2) (intro.), (3) (intro.), (c), (f), (4) (intro.) and (b), cr. (4) (c) to (f), Register, August, 1989, No. 404, eff. 9-28-89; cr. (1) (a), (b), (f), (g), (i), (q), (r) and (v), (2) (a), (d), (f), (g), (m), (o), (p) to (u), (w), (zh), (zq) and (zr), (4) (b) and (e); renum. (1) (a) to (n), (2) (a) to (zb), (4) (a), (b), (d) and (e) to be (1) (c) to (e), (h), (j) to (p), (s) to (u), (2) (b), (c), (e), (h) to (l), (n), (v), (x) to (zd), (zf), (ze), (zg), (zi) to (zp), (4) (d), (h), (g) and (a) and am. (1) (p), Register, June, 1991, No. 426, eff. 7-1-91; r. and recr. Register, January, 1994, No. 457, eff. 2-1-94; corrections in (4) (a) 4. and 5. made under s. 13.93 (2m) (b) 7., Stats., Register October 2002 No. 562; CR 12-011: r. (4) (a) 9., cr. (4) (a) 12. to 20. Register July 2012 No. 679, eff. 8-1-12; CR 14-005: cr. (2) (e), (4) (a) 21. Register August 2014 No. 704, eff. 9-1-14; CR 17-019: cr. (4) (a) 22., Register June 2018 No. 750 eff. 7-1-18; CR 19-096: am. (4) (a) (title), (b) (title), 8., 11., 12., 16, cr. (4) (b) 18e., 18m., 18s., 21g., 21r., am. (4) (b) 24., 38., (5) (b) 1., 12., 13., 15., 17., cr. (5) (b) 17m., am. (5) (b) 22., 23. Register April 2020 No. 772, eff. 5-1-20.

Wis. Admin. Code § Tax 3.096 Interest paid on money borrowed to purchase exempt government securities {#sec-tax-3.096 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.096}

(1) Any amount of distributable and nondistributable interest or dividend income which is by federal law exempt from the Wisconsin income tax shall be reduced by any related expense before it is claimed as a subtraction modification on a Wisconsin fiduciary income tax return.

(2) Interest expense is a “related expense” if it is incurred to purchase securities producing exempt interest or dividend income and if it is deducted in computing Wisconsin taxable income.

(3) Interest expense is not a “related expense” if it is incurred to purchase securities producing exempt interest or dividend income but is not deducted in computing Wisconsin taxable income (for example, because the taxpayer elects the standard rather than to itemize deductions).

History

Cr. Register, January, 1977, No. 253, eff. 2-1-77; am. (1), Register, June, 1990, No. 414, eff. 7-1-90.

Wis. Admin. Code § Tax 3.098 Railroad retirement supplemental annuities {#sec-tax-3.098 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.098}

Railroad retirement supplemental annuities paid under 45 USC 231m are exempt from the Wisconsin taxable income of their recipients.

Note: 1) The Railroad Retirement Act of 1974 as amended by P.L. 98-76 (45 USC s. 231m), effective August 12, 1983, provides that:

“(a) Except as provided in subsection (b) of this section and the Internal Revenue Code of 1954 [26 USCS §§ 1 et seq.], notwithstanding any other law of the United States, or of any State . . . no annuity or supplemental annuity shall be . . . subject to any tax. . . .

(b) (1) This section shall not operate to exclude the amount of any supplemental annuity paid to an individual under section (2) (b) of this Act [45 USCS § 231a (b)] from income taxable pursuant to Federal income tax provisions of the Internal Revenue Code of 1954 [26 USCS §§ 1 et seq.]”

2) 45 USCS. s. 231m prohibits states from taxing railroad retirement supplemental annuity payments. Taxpayers may make a modification to federal adjusted gross income to remove this income in computing Wisconsin adjusted gross income.

Note: This section interprets s. 71.05 (6) (b) 3., Stats.

History

Cr. Register, January, 1977, No. 253, eff. 2-1-77; am. Register, July, 1989, No. 403, eff. 8-1-89.

Wis. Admin. Code § Tax 3.10 Commercial loan income exemption {#sec-tax-3.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.10}

(1) Purpose. This section clarifies the commercial loan income exemption under ss. 71.05 (1) (i) and 71.26 (1) (i), Stats., and prescribes how the $5,000,000 loan limitation is computed.

(2) Definitions. In this section and in ss. 71.05 (1) (i) and 71.26 (1) (i), Stats.:

(a) “Agricultural purpose” means the preparation of plant or animal products for use in a business or for sale or distribution to markets. “Agricultural purpose” includes agriculture, horticulture, viticulture, dairy, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products thereof, and all products raised or produced on farms and any processed products thereof. “Agricultural purpose” does not include fishing preserves, recreational uses, or personal uses.

(b) “Business purpose” means activities undertaken for an industrial, commercial, or professional purpose. “Business purpose” does not include any of the following:

Investment in stocks, bonds, and other securities or ownership interests in entities including the borrower’s own stock or ownership interests, unless such assets are regularly held for sale in a trade or business.
Personal or consumer expenditures.
The purchase, expansion, or improvement by an owner of a one- to four-unit residential facility if such owner or their parent or child uses all or a portion of the facility as their personal residence.
Activities conducted by any unit of government or any agency or instrumentality of one or more units of government.
Activities conducted by nonprofit organizations, unless one of the following apply:

a. The commercial loan proceeds are used in this state for activities in which the nonprofit organization reports unrelated business taxable income on Form 990-T to the federal department of the treasury.

b. The nonprofit organization has over 50 full-time employees in the calendar year immediately preceding the calendar year in which the commercial loan is issued, and the loan proceeds are used in this state for activities regularly conducted by such employees.

(c) “Commercial domicile” means the location where the greatest number of the business’s employees have their office or their base of operations from which they regularly work and are directed or controlled.

(d) “Commercial loan” means a loan issued to a borrower and the proceeds of which are used primarily for a business or agricultural purpose in this state.

(e) “Financial institution” means a financial institution, as defined in s. 69.30 (1) (b), Stats., that is authorized to do business under state or federal laws relating to financial institutions and is one of the following:

A bank, as defined under 12 USC 1841(c), including a national bank organized and existing as a national bank association pursuant to provisions of 12 USC ch. 2 and a state bank organized and operating under ch. 221, Stats., or a comparable law in another state.
A savings bank organized under ch. 214, Stats., or a comparable law in another state.
A savings and loan association organized and operating under ch. 215, Stats., or a comparable law in another state; or organized according to federal law.
Any credit union to the extent not exempt under ss. 71.26 (1) (a), and 186.113 (20), Stats.

(f) “Income” means all income, including interest, fees, and penalties, derived from a commercial loan. “Income” does not include income derived from persons other than the borrower of the commercial loan, including income derived from the sale of a commercial loan or income derived from another financial institution for a loan participation agreement.

(g) “Loan” means money given in exchange for an obligation to pay back such money that results from direct negotiation between a financial institution and a borrower. “Loans” do not include unsecured open-end lines of credit such as credit cards and other unsecured revolving credit plans and letters of credit; conversions; sales or leases of property; futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including credit card relationships; non-interest bearing balances; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interest in a real estate mortgage investment conduit, or other mortgage-backed or asset-backed security; and other similar items.

(h) “Located in this state” means a person, including a natural person or fiduciary, who has a fixed business location in this state such as a commercial office, warehouse, or manufacturing facility.

(i) “Primarily” means the loan proceeds are used 75 percent or more for a business or agricultural purpose in this state.

(j) “Residing in this state” means any of the following, determined for the person’s taxable year in which the loan origination occurs:

A natural person or fiduciary who is a resident of this state as determined under s. 71.01(1n) or 71.14, Stats.
A person whose commercial domicile of their business or agricultural activity is in this state.

(3) Qualifying borrowers. In order for a commercial loan to qualify for the exemption in ss. 71.05 (1) (i) and 71.26 (1) (i), Stats., the loan must be provided to a person residing or located in this state.

(4) Proceeds used in this state. In order for a commercial loan to qualify for the exemption in ss. 71.05 (1) (i) and 71.26 (1) (i), Stats., the loan proceeds must be used primarily for a business or agricultural purpose in this state.

Example: Financial Institution A issues a loan to Business B for $4,000,000. Business B uses $3,000,000 of the loan proceeds to expand their manufacturing facility in Wisconsin and $1,000,000 to renovate their headquarters office in Illinois. The loan is used primarily for a business purpose in Wisconsin since 75% of the loan proceeds ($3,000,000 / $4,000,000) were used to expand the Wisconsin facility.

(5) Commercial loan limitation. In order for a commercial loan to qualify for the exemption in ss. 71.05 (1) (i) and 71.26 (1) (i), Stats., the commercial loan must be $5,000,000 or less. All of the following apply to the $5,000,000 limitation:

(a) General.

The original full amount of the loan obligation is used to determine the $5,000,000 limitation. In the case of secured open-end lines of credit and other secured revolving credit plans and letters of credit, the full amount of the loan obligation is the maximum amount of credit available to the borrower at any one time.
Costs and fees rolled into the loan are included as part of the original loan obligation.
Charge-offs or amounts not expected to be recoverable from a borrower do not reduce the original loan obligation.

Example 1) A borrower is issued a commercial loan with an obligation of $4,900,000 and incurs costs and fees of $150,000 on that loan. The borrower does not pay the $150,000 up front but instead rolls the amount into the loan. Since the loan obligation and costs and fees equal an original loan obligation of $5,050,000, income from the loan does not qualify for the exemption.

Example 2) A bank lends a borrower $6,000,000 on an original commercial loan but charges off $2,000,000 and keeps track of the charged-off balance. Since the original borrowed obligation is $6,000,000, income from the loan does not qualify for the exemption.

(b) Commercial loan refinancing. A commercial loan that is refinanced is considered a new original loan obligation and the $5,000,000 limitation is computed based on the facts contained in the refinanced loan documentation.

(c) Loan participation and assignment. A commercial loan with an original loan obligation over $5,000,000 to a single borrower does not qualify for the exemption, regardless of whether the loan is sold or assigned, in whole or in part, to another financial institution for $5,000,000 or less. A financial institution that acquires a commercial loan through a purchase, assignment, or participation agreement may not exempt the income derived from the acquired loan if the original loan obligation is more than $5,000,000.

Example 1) Bank A issues a commercial loan of $7,000,000. Bank B purchases a loan participation of $3,000,000 in the commercial loan. The income derived from the commercial loan does not qualify for the exemption for Bank A or Bank B because the original loan obligation is over $5,000,000.

Example 2) Assume the same facts as Example 1, except that $3,000,000 of the original loan obligation is assigned by Bank A to Bank B. The income derived from the commercial loan does not qualify for the exemption for Bank A or Bank B because the original loan obligation is over $5,000,000.

Example 3) A commercial loan of $5,000,000 is issued by Bank A. Bank B purchases a loan participation of $3,000,000 in the commercial loan from Bank A. The income derived from the commercial loan may qualify for the exemption for Bank A and Bank B because the original loan obligation was for $5,000,000 or less.

(d) Loan syndication. If one or more financial institutions enter a loan syndication where both financial institutions will be originating the loans, the total loan amount provided to the borrower is used to determine the original loan obligation, not each financial institution’s portion of the syndicated loan. If the original loan obligation is $5,000,000 or less, each financial institution may qualify for the exemption in proportion to the financial institution’s interest in the syndicated loan.

Example: Four financial institutions pool their resources to fund a loan syndication to a borrower for a total original loan obligation of $20,000,000. Although each financial institution funds $5,000,000 of the loan, income derived from the $20,000,000 loan does not qualify for the exemption.

(e) Aggregating multiple commercial loans. All of the following apply to aggregating multiple commercial loans:

A financial institution may not create separate commercial loan agreements for $5,000,000 or less for a borrower that seeks a commercial loan over $5,000,000, including refinancing a single loan into separate loans.
A financial institution may have multiple qualifying commercial loans of $5,000,000 or less with the same borrower if the loans are obtained for a different use and qualifying purpose.
A commercial loan over $5,000,000 does not qualify, regardless of whether a portion of the loan is used for purposes outside this state.

Example: A commercial loan is issued for $15,000,000 and 33% or $4,950,000 of the proceeds are used for a business purpose in Wisconsin and 67% outside Wisconsin. The income derived from the commercial loan does not qualify for the exemption because the original loan obligation is over $5,000,000.

(6) Record keeping.

(a) A financial institution shall keep electronic records in easily accessible and usable form to substantiate the exemption from income for each loan, including electronic data that can be queried and analyzed for each of the following data elements:

Borrower’s legal name.
Borrower’s state of residence.
Loan ID number.
Name of originating underwriter of the loan if someone other than the financial institution.
Loan origination date.
Original loan obligation amount, including costs and fees rolled into the loan obligation.
Detailed description of the purpose of the loan, including whether there is more than one purpose, and where the loan proceeds will be used.

(b) Financial institutions shall keep records to substantiate whether the borrower is a person who is a resident of this state, such as tax returns and trust agreements.

(c) A financial institution shall keep the records described in pars. (a) and (b) for as long as any period of limitation for assessment for the taxable year in which the exemption is claimed has not expired under ss. 71.76 and 71.77, Stats. If the taxable year results in a net loss, the records described in pars. (a) and (b) shall be kept for as long as the period of limitation for assessment for the taxable year in which the loss carryforward is used, as described in ss. 71.05 (8) (b) 1. and 71.26 (4) (a), Stats., has not expired.

History

EmR2404: emerg. cr., eff. 3-18-24; CR 24-038: cr. Register March 2026 No. 843, eff. 4-1-26; correction in (2) (e) (intro.), 1. made under s. 35.17, Stats., create (5) (e) (title) under s. 13.92 (4) (b) 2., Stats., Register March 2026 No. 843.

Chapter Tax 4 MOTOR VEHICLE AND GENERAL AVIATION FUEL TAXATION

Wis. Admin. Code § Tax 4.001 Motor vehicle, alternate fuels, and general aviation fuel tax return and refund claim forms {#sec-tax-4.001 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.001}

(1) Forms. The department shall provide official forms for filing motor vehicle, alternate fuels, and general aviation fuel tax returns and refund claims. Except as approved by the department, tax returns and refund claims may only be filed using these official forms.

Note: The official forms for filing motor vehicle, alternate fuels, and general aviation fuel tax returns and refund claims are available on the department’s web site at https://www.revenue.wi.gov/Pages/Form/excise-Home-f.aspx.

(2) Filing returns.

(a) Forms filed with the department shall be submitted as prescribed by the department or by one of the following means:

Mailing them to the address specified by the department on the forms or in the instructions.
Delivering them to the department or to the destination that the department prescribes.
Filing them electronically by means prescribed by the department.

(c) The secretary of revenue may waive the requirement to file electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

Requests the waiver in writing.

Note: Written requests should be e-mailed to DORExciseTaxpayerAssistance@wisconsin.gov, faxed to (608) 261-7049, or addressed to Mandate Waiver Request, Wisconsin Department of Revenue, Mail Stop 5-107, PO Box 8900, Madison WI 53708-8900.

Clearly indicates why the requirement causes an undue hardship.

(d) In determining whether the requirement to file electronically causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the internet.

Any other factor that the secretary determines is pertinent.

Note: Section Tax 4.001 interprets ss. 78.005 (6m), 78.39 (4m), and 78.55 (2r), Stats.

History

CR 10-093: cr. Register November 2010 No. 659, eff. 12-1-10; CR 21-085: am. (2) (a) (intro.), r. (2) (b) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 4.01 Portable motor equipment {#sec-tax-4.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.01}

Portable motor equipment attached to any motor vehicle shall have a separate fuel tank, and detailed records shall be kept of the gallonage consumed in the motor of portable equipment.

Note: This section interprets s. 78.75, Stats.

History

1-2-56; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.02 Resellers’ personal claims for refund {#sec-tax-4.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.02}

Motor vehicle fuel resellers who make personal claims for refund of tax paid on gallonage used for tax-exempt purposes shall make out an original invoice to themselves for each sale in the same manner as to any other customer. In addition the claim shall be supported by paid invoices from the company from whom the motor vehicle fuel was originally purchased.

Note: This section interprets s. 78.75, Stats.

History

1-2-56; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.03 Public highways closed to public travel {#sec-tax-4.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.03}

Motor vehicle fuel used in connection with the construction, repair and maintenance of the public highways may not be construed as used on a public highway when it is being used on a highway entirely closed to public travel.

Note: This section interprets s. 78.75, Stats.

History

1-2-56; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.05 Taxicabs {#sec-tax-4.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.05}

(1) Definition. In this section, “taxicab” means a motor vehicle having a passenger carrying capacity of fewer than 15 persons, held for public hire, at designated places, charging passengers upon a time or distance basis, and carrying passengers to designations without following any fixed routes. “Taxicab” does not include any of the following:

(a) Motor vehicles rented to be driven by the renter or the renter’s agent.

(b) Motor vehicles operated primarily as funeral cars.

(c) Motor vehicles of car pools and van pools operated by private individuals, nonprofit organizations or city, state or federal governments.

(d) Motor vehicles operated primarily as ambulances.

(e) Motor vehicles operated primarily for transporting property.

(f) Motor vehicles not designated “Vehicle has or will be used for public transportation (taxi)” on the motor vehicle registration form, form MV-1, filed with the department of transportation.

Examples: 1) A rent-a-car does not qualify as a taxicab.

2) A limousine with driver that holds 8 people is hired by a wedding party to transport them throughout a city on a per hour basis. The limousine is considered a taxicab.

(2) General. A person who uses motor vehicle fuel or alternate fuel in operating a taxicab for the transportation of passengers and has paid a tax on the fuel under ch. 78, Stats., may file a claim for refund of the tax paid with the department, provided the claim is for tax on 100 gallons or more.

Note: This section interprets s. 78.75 (1m) (a) 1., Stats.

History

Cr. Register, September, 1991, No. 429, eff. 10-1-91; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.10 Motor vehicle fuel tax liability {#sec-tax-4.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.10}

(1) Purpose. This section clarifies the tax liability on all sales of motor vehicle fuel produced, refined, blended, manufactured or imported into Wisconsin.

(2) Definition. In this section, “position holder” has the meaning specified in the federal internal revenue service regulations, 26 CFR 48.4081-1 (m).

(3) Imposition. The tax on all motor vehicle fuel, either gasoline or undyed diesel fuel, shall be paid to the department by suppliers required to be licensed with the department, as follows:

(a) Fuel withdrawn from a Wisconsin marine terminal or pipeline terminal. The motor vehicle fuel tax on gasoline and undyed diesel fuel withdrawn from a Wisconsin marine terminal or pipeline terminal shall be paid by the position holder.

(b) Imported fuel. Gasoline and undyed diesel fuel imported into Wisconsin is subject to the motor vehicle fuel tax and shall be paid by the supplier when either of the following conditions applies:

The product is placed into a transport truck whose destination is a Wisconsin location other than a pipeline terminal or refinery. The bill of lading prepared by the out-of-state terminal operator shall clearly indicate Wisconsin as the destination state. The tax shall be paid by the position holder at the out-of-state terminal.
The product is transported across the state line by a supplier from an out-of-state bulk plant in a transporting vehicle. The sales invoice shall clearly indicate Wisconsin as the destination state and that the tax shall be paid by the supplier.

(c) Blending components. Any product that is not a motor vehicle fuel and is blended as a component part of motor vehicle fuel other than at a refinery, marine terminal, pipeline terminal or place of manufacture is subject to tax at the time and place of blending. The tax on the component part shall be paid by the person who owns the motor vehicle fuel when blending is completed.

Note: This section interprets s. 78.07, Stats.

History

Emerg. cr. eff. 4-1-94; cr. Register, November, 1994, No. 467, eff. 12-1-94; CR 16-064: am. (3) (b) 2. Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 4.11 Tax exemption for dyed diesel fuel {#sec-tax-4.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.11}

(1) Purpose. This section clarifies the tax exemption provided to suppliers required to be licensed by the department when a dye has been added to diesel fuel.

(2) General.

(a) All fuel dyed in accordance with the federal internal revenue service temporary regulations, 26 CFR 48.4082-1T, 2T, 3T and 4T, is treated as destined for exempt use and is exempt from the motor vehicle fuel tax.

(b) Dyed diesel fuel shall only be used for exempt purposes.

Examples: 1) Diesel fuel used as heating oil has an exempt purpose.

2) Diesel fuel used for nonhighway use has an exempt purpose.

3) Diesel fuel used in trains has an exempt purpose.

Note: This section interprets s. 78.01 (2p), Stats.

History

Emerg. cr. eff. 4-1-94; cr. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.12 Uncollected motor vehicle fuel taxes and repossessions {#sec-tax-4.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.12}

(1) Purpose. This section clarifies when and how a supplier required to be licensed by the department may recover the motor vehicle fuel tax from the department when a purchaser is unable to pay the tax to the supplier. This section also clarifies when and how a wholesaler distributor may recover the motor vehicle fuel tax from the department when the wholesaler distributor is unable to collect the tax from another wholesaler distributor or a retail dealer.

(2) Statutes. Under s. 78.01 (2s), Stats., a supplier is not liable for the tax on motor vehicle fuel when the supplier is unable to recover the tax from a purchaser. With proper documentation, the supplier may claim a tax deduction on a later remittance of taxes. A wholesaler distributor may file a refund claim with the department to recover the tax on uncollectable accounts covering sales to other wholesaler distributors and retail dealers.

(3) Procedure.

(a) Tax imposed. A supplier shall pay the motor vehicle fuel tax to the department by the 15th day of the month after the month in which the fuel is received, as described in s. 78.07, Stats., irrespective of whether the sale is for cash or credit.

(b) Bad debts.

‘Deduction from measure of tax.’ A supplier is relieved from the liability for motor vehicle fuel tax on accounts which have become worthless and which have met the requirements to be charged off for income or franchise tax purposes. The bad debt tax deduction shall be reported and claimed on the supplier’s monthly tax report for the month in which the account becomes worthless. However, if a supplier is out of business when the account becomes worthless, a bad debt deduction may be claimed on the last return filed by that business or through a refund claim filed with the department. A wholesaler distributor may claim a bad debt tax deduction for the amount of tax liability for motor vehicle fuel tax on sales to other wholesaler distributors or retail dealers on accounts which have become worthless and which have met the requirements to be charged off for income or franchise tax purposes by filing a refund claim with the department. A claim for refund relating to a worthless account must be filed within 4 years of the 15th day of the 4th month following the close of the supplier’s or wholesaler distributor’s calendar or fiscal year within which the account becomes worthless.

Examples: 1) An account of a supplier who is still in business becomes worthless and meets the requirements to be charged off for income or franchise tax purposes on January 10, 2011. The supplier may claim a bad debt deduction on the motor vehicle fuel tax return, form MF-002, filed for the month of January 2011, even though the bad debt deduction may not be claimed for income or franchise tax purposes until the 2011 income or franchise tax return is filed in 2012.

2) Assume the same facts as in Example 1, except the account is that of a wholesaler distributor. Irrespective of when the wholesaler distributor files the income or franchise tax return on which the bad debt deduction is claimed, the wholesaler distributor may file a claim for refund to recover the uncollected motor vehicle fuel tax any time between January 10, 2011 and April 15, 2016.

‘Recovery of bad debts charged off.’ If a bad debt deduction has been claimed by a supplier or wholesaler distributor for an account found worthless and charged off and the account is thereafter in whole or in part collected by the supplier or wholesaler distributor, the bad debt deduction shall be repaid to the department. A supplier shall report the amount so collected in the first tax report, form MF-002, filed after the collection, and the tax on the amount collected shall be paid with the report. A wholesaler distributor shall file a corrected refund claim and pay the tax collected within 30 days of collection.
‘Amount deductible.’

a. A deduction may only be claimed for the unpaid amount of tax on an account found worthless and charged off. The total amount charged off may include the cost of the fuel, interest, financing or insurance costs in addition to the tax amount. To determine the unpaid amount of tax to be deducted, all payments and credits to the account shall be prorated to the various components of the total amount that the purchaser contracted to pay.

Example: At the time when the tax rate is 30.9¢ per gallon, Supplier A sells 8,000 gallons of gasoline to Company B. Company B has an agreement with Supplier A to delay payment of the tax. The amount of the contract is $12,942, consisting of tax, $2,472, and the cost of fuel, $10,470. Company B defaults and discontinues operations, leaving a balance due Supplier A of $2,100, which includes interest of $200 not included in the contract amount. The deductible tax loss is $363, computed as follows:

b. No deduction may be allowed for expenses incurred by a supplier or wholesaler distributor in attempting to collect any account receivable, or for that portion of a debt recovered that is reclaimed by or paid to a third party as compensation for services rendered in collecting the account.

‘Special situations.’ A purchaser of receivables may not claim a bad debt deduction for the motor vehicle fuel tax on receivables that subsequently become worthless.
‘Repossessions.’ When motor vehicle fuel is repossessed a tax deduction may be allowed only to the extent that the supplier or wholesaler distributor sustains a net loss upon which tax was paid.

(c) Tax rate change. If a deduction for uncollectible tax is claimed in a period when the tax rate is different from the tax rate in effect when the tax was reported on the tax report, an adjustment to the gallons claimed shall be made to compensate for the tax rate differential. The number of gallons to claim is computed by dividing the old tax rate by the new tax rate and multiplying that percentage by the gallons sold.

Example: If tax was reported on an 8,000 gallon sale when the tax rate was 23.2¢ per gallon and a deduction was taken at a 24¢ rate, only 7,733 gallons may be claimed on the monthly supplier’s tax report; [23.2 24] x 8,000 = 7,733.

Note: This section interprets ss. 78.01 (1) and (2s) and 78.68 (10), Stats.

History

Emerg. cr. 4-1-94; cr. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.50 Assignment, use and reporting of document number {#sec-tax-4.50 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.50}

Each shipment, transfer, purchase or sale of a petroleum product which is reportable to the department in accordance with ch. 78, Stats., shall bear a “document number.” In this section “document number” means the number provided for in subs. (1) through (4), as follows:

(1) Assignment. Except as provided in sub. (4), the assignment of a document number shall originate with and be assigned by the refiner, terminal operator or place of manufacture where the fuel is loaded. All subsequent transactions, invoices and reports regarding each respective shipment shall use and make reference to this number.

(2) Railway tank car shipments. On all railway tank car shipments the tank car initials and number shall become the document number.

(3) Truck transport shipments. On all truck transport shipments the manifest number shall become the document number.

(4) Other shipments. On all other types of shipments, which do not originate at a refinery, terminal or place of manufacture, the shipper shall assign the invoice number as the document number. An invoice number may not be assigned by a shipper as the document number in any case where tank car initials and number or a truck transport manifest number is involved.

Note: This section interprets ss. 78.77, Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; renum. to be (intro.) and am., cr. (1), (2), (3) and (4), Register, June, 1983, No. 330, eff. 7-1-83; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.51 Measuring withdrawals {#sec-tax-4.51 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.51}

All withdrawals of motor vehicle fuel from Wisconsin refineries, marine terminals or pipeline terminals shall be measured in liquid gallons by accurate meters; however, it is not necessary to meter withdrawals into railway tank cars.

Note: This section interprets ss. 78.12, Stats.

History

1-2-56; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.52 Separate schedules {#sec-tax-4.52 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.52}

Separate schedules shall be filed for each Wisconsin refinery, marine terminal or pipeline terminal.

Note: This section interprets ss. 78.12, Stats.

History

1-2-56; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.53 Certificate of authorization {#sec-tax-4.53 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.53}

(1) Statutes. An alternate fuel dealer may be authorized by an alternate fuel user, if the alternate fuel dealer agrees, to report and pay the tax on alternate fuel delivered into a bulk storage facility of the user. The user then is not required to obtain an alternate fuel license from the department.

(2) General.

(a) A certificate of authorization, form MF-207, may be executed by a purchaser of alternate fuel to request a supplier of alternate fuel to bill the purchaser for both the alternate fuel and the alternate fuel tax.

(b) A certificate of authorization executed by a supplier of alternate fuel indicates the supplier’s acceptance of the purchaser’s request to bill the alternate fuel tax on bulk deliveries and remit it to the department.

(3) Effect of certificates.

(a) If a purchaser and seller of alternate fuel agree that the seller will collect the alternate fuel tax from the purchaser and remit it to the department, the purchaser is not required to obtain an alternate fuel license from the department nor to submit monthly reports of tax liability.

(b) The supplier shall compute the monthly tax liability by adding the number of gallons of alternate fuel placed in storage facilities where purchasers have executed certificates of authorization to the number of gallons of alternate fuel placed in fuel supply tanks of motor vehicles.

Note: Blank certificates of authorization, form MF-207, may be obtained on the department’s website at https://www.revenue.wi.gov/DORForms/mf-207.pdf.

Note: This section interprets ss. 78.40 (1), 78.47 and 78.49 (3), Stats.

History

Cr. Register, December, 1980, No. 300, eff. 1-1-81; emerg. am. eff. 4-1-94; am. Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.54 Security requirements {#sec-tax-4.54 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.54}

(1) General. Under ss. 78.11, 78.48 (9) and 78.57 (9), Stats., the department may require motor vehicle fuel, alternate fuel and general aviation fuel taxpayers to deposit security with the department. This security may be required before or after the fuel tax license is issued. The amount of security determination shall be made by the department. If any person fails or refuses to place the security, the department may refuse to issue the license or may revoke the license.

(2) Factors for department’s consideration.

(a) In determining whether security shall be required and the amount of security to be required, the department shall consider all relevant factors, including:

Evidence of adequate financial responsibility. The evidence may include a person’s assets and liabilities, liquidity of assets, estimated expenditures and potential fuel tax liability.
The person’s prior record of filing tax returns and paying taxes of any kind with the department.
Type of entity making the sales of motor vehicle fuel, alternate fuel and general aviation fuel.

Example: A sole proprietor or partner having nonbusiness financial resources may be a better risk than a corporation having limited assets.

(b) Although the individual factors listed in par. (a) shall be considered in determining security requirements, each case shall be determined on its merits as evaluated by the department. Protection of the fuel tax revenues shall be the major consideration in determining security requirements. However, due consideration shall be given to reasonable evidence that security is not necessary.

(c) In instances in which the department determines security in excess of $1,000 is required, notification of this requirement shall include a written statement clearly describing the reasons for the requirement and a description or calculation showing how the amount of the security requirement was determined.

(3) Types of security. Acceptable types of security include noninterest-bearing cash, certified check, money order, or surety bonds issued by authorized underwriters.

(4) Determination of amount.

(a) If security is required, the amount shall be equal to the depositor’s average quarterly Wisconsin fuel tax liability increased to the next highest even $100 amount, unless the department determines under sub. (2) that for good cause a higher amount is appropriate. The estimate of the depositor’s average quarterly fuel tax liability shall be based on whichever of the following the department considers most appropriate in the circumstances:

The depositor’s previous fuel tax liability.
The depositor’s predecessor’s fuel tax liability.
The estimated tax liability shown on the application for a license.
Other factors, such as the department’s estimate of tax liability based on its experience with other similar activities.

(b) If at the time of the security review the person has an outstanding fuel tax delinquency, the delinquent amount shall be added to the estimated average quarterly fuel tax liability and the sum of the two shall be the amount of security required.

(5) Return of deposit.

(a) Any security deposited shall be returned to the taxpayer if the taxpayer has, for 24 consecutive months, complied with all the requirements of ch. 78, Stats.

(b) The 24-month compliance requirement described in par. (a) shall begin on the day the deposit is received by the department.

(c) Within 30 days after the conclusion of the 24-month period described in par. (a), the department shall review the taxpayer’s compliance record. If the taxpayer has complied with ch. 78, Stats., the department shall within 60 days after the expiration of the 24-month period certify the deposit for refund.

(d) Compliance with ch. 78, Stats., means that:

Fuel tax reports are timely filed.
All payments are made when due.
No penalties due to negligence or fraud are assessed for filing periods within the 24-month compliance period.
No assessment of additional tax, interest or other charges for filing periods within the 24-month compliance period is unpaid at the end of the period.
No delinquencies of fuel tax, interest or other charges imposed under ch. 78, Stats., exist with the department.

(e) If a taxpayer does not meet the compliance requirements set forth in par. (d), the deposit shall be retained by the department until the taxpayer is in compliance for 24 consecutive months from the date of the latest incident of noncompliance.

Note: This section interprets ss. 78.11, 78.48 (9) and 78.57 (9), Stats.

History

Cr. Register, September, 1991, No. 429, eff. 10-1-91; emerg. am. (1), (2) (a) (intro.) and 3., (b), (3) (b), (4) (a) (intro.), (5) (b), (c), (d) 3. to 5., eff. 4-1-94; am. (1), (2) (a) (intro.) and 3., (b), (3) (b), (4) (a) (intro.), (5) (b), (c), (d) 3. to 5., Register, November, 1994, No. 467, eff. 12-1-94; CR 22-044: am. (2) (c), consol. (3) (intro.) and (a) and renum. to (3) and am., r. (3) (b) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 4.55 Ownership and name changes {#sec-tax-4.55 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.55}

(1) General. Under ss. 78.10 (6), 78.48 (6) and 78.57 (6), Stats., a fuel tax license is not transferable to another person or to another place of business. This section clarifies when a change in ownership or name of a business requires a new fuel tax license.

(2) Ownership change.

(a) When there is a change in ownership of a business, the new owner shall apply for a new license using form MF-100, except as provided in par. (c). The new owner shall notify the department no later than 10 days prior to the change. Security may be required as provided in s. Tax 4.54.

Note: Form MF-100 is available on the department’s web site at www.revenue.wi.gov.

(b) A new license shall be obtained when there is a change in the type of ownership of a sole proprietorship, partnership, corporation or other form of ownership, except as provided in par. (c).

Examples: A new license is required if: 1) A sole proprietorship or partnership incorporates.

2) A sole proprietorship is sold to a different sole proprietor.

3) A sole proprietorship becomes a partnership.

4) A partner in a partnership leaves the partnership or a partner is added to the partnership.

5) The federal employer identification number of a business changes.

A corporation is merged with another corporation, the merged corporation ceases to exist, and the surviving corporation does not have a valid license.
The federal employer identification number of a corporation changes.

(3) Name change.

(a) A licensee shall notify the department of a name change at least 10 days prior to the change and the licensee shall retain the same license number.

(b) A rider, verifying the name change, such as one filed by a licensee’s insurance company at the request of the licensee, shall be submitted to the department. If no security is on file or a rider is not filed with the department, new security shall be deposited under the new name, as required under s. Tax 4.54, and any old security shall be returned to the licensee.

Note: This section interprets ss. 78.10 (6), 78.48 (6) and 78.57 (6), Stats.

History

Cr. Register, September, 1991, No. 429, eff. 10-1-91; emerg. am. (2) (b), eff. 4-1-94; am. (2) (b), Register, November, 1994, No. 467, eff. 12-1-94.

Wis. Admin. Code § Tax 4.65 Motor vehicle fuel tax refunds to vendors and tax deductions for suppliers {#sec-tax-4.65 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.65}

(1) Scope. This section applies to suppliers required to be licensed by the department, wholesaler distributors and retail dealers who sell motor vehicle fuel to customers for exempt purposes on which the tax was paid. Registered vendors may file refund claims with the department. Suppliers may claim deductions on their monthly reports. The claim for refund and the deduction claimed may be investigated by the department and adjusted within 4 years after the date of filing.

(2) Statutes. Under s. 78.01 (2r), Stats., the ultimate consumer who purchases fuel for an exempt purpose shall assign his or her claim for a refund or deduction on the tax paid on undyed diesel fuel and gasoline to the person from whom the ultimate consumer purchased the fuel.

(3) Procedures.

(a) Vendors, other than suppliers licensed with the department, shall register with the department, using form MF-112, to expedite the processing of a tax refund claim.

(b) Persons making exempt sales shall prepare and provide the customer with a sales invoice. A properly prepared legible invoice shall include the following information:

Name and address of seller.
Date of sale.
Name and address of purchaser.
Product sold.
Number of gallons.
Price per gallon.
A statement that no Wisconsin motor vehicle fuel tax is included in the price per gallon figure.

(c) The customer shall provide the vendor with an exemption certificate when purchasing undyed diesel fuel and gasoline which will be consumed by that customer for an exempt purpose as defined in s. 78.01 (2) and (2m), Stats. A purchaser of undyed diesel fuel and gasoline for an exempt use shall provide the seller with a properly completed exemption certificate, form MF-209, prior to the tax-exempt purchase.

(d) Claims shall be made and filed upon forms prescribed and furnished by the department, form MF-012.

(e) The penalties provided in s. 78.73, Stats., for filing a false or fraudulent claim apply to all refund claimants.

(f) Refunds under s. 78.01 (2r), Stats., shall be of tax only and may not include interest.

Note: Copies of vendor registration form MF-112, exemption certificate form MF-209, and refund claim form MF-012 are available on the department’s web site at www.revenue.wi.gov.

Note: This section interprets ss. 78.01 (2r), Stats.

History

Emerg. cr. eff. 4-1-94; cr. Register, November, 1994, No. 467, eff. 12-1-94; CR 16-046: am. (3) (c) Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 4.75 Payment of motor vehicle fuel tax {#sec-tax-4.75 omnilex-key=us-wi-regs-official--agency-tax--Tax 4.75}

(1) Scope. This section applies to wholesaler distributors who have exercised their option to delay tax payment to suppliers required to be licensed by the department.

(2) Statutes. Under s. 78.12 (5), Stats., the wholesaler distributor has the option to pay the motor vehicle fuel tax under normal credit arrangements or to delay paying the tax to the supplier until the date that the tax is due to the department. A wholesaler distributor who makes delayed payments shall make the payment by electronic funds transfer to the supplier. If a wholesaler distributor fails to make timely payments, the supplier may terminate the right of the wholesaler distributor to make delayed payments. Each supplier shall notify the department of each wholesaler distributor who makes delayed payments of the tax.

(3) Procedures.

(a) Suppliers shall notify the department of the following:

Name, address and federal employer identification number, or FEIN, of all wholesaler distributors who elect to delay tax payment.
Name of any wholesaler distributor who fails to make timely delayed tax payments. The supplier shall notify the department via email or phone within 5 days after the due date of the tax to the department.

Note: The email address or phone number by which to notify the department is DORExciseTaxpayerAssistance@wisconsin.gov or (608) 266-6701.

(b) Wholesaler distributors shall do the following:

Notify suppliers of their intent to delay tax payment.
Submit tax payments to suppliers via electronic funds transfer.
Submit security to the department if required.

Maintain a listing of the names, addresses and FEINs of all wholesaler distributors eligible to delay tax payment based on information received from suppliers.
Require security from wholesaler distributors who have defaulted in making delayed tax payments and who wish to continue the delayed tax payment plan.

Note: This section interprets s. 78.12 (5), Stats.

History

Emerg. cr. eff. 4-1-94; cr. Register, November, 1994, No. 467, eff. 12-1-94; CR 21-085: am. (3) (a) 2. Register August 2022 No. 800, eff. 9-1-22.

Chapter Tax 6 PUBLIC UTILITY TAXATION

Wis. Admin. Code § Tax 6.02 Returns for public utilities {#sec-tax-6.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 6.02}

Forms that are used in the administration of the various taxes levied according to ch. 76, Stats., may be obtained from the Wisconsin Department of Revenue, Division of State and Local Finance, P.O. Box 8971, Madison, WI 53708-8971.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; r. and recr. Register, January, 1989, No. 397, eff. 2-1-89; CR 13-037: am. Register February 2014 No. 698, eff. 3-1-14.

Wis. Admin. Code § Tax 6.40 Waste treatment facilities - industrial/utility {#sec-tax-6.40 omnilex-key=us-wi-regs-official--agency-tax--Tax 6.40}

(1) Statute. The exemption for a waste treatment facility otherwise taxable under s. 76.13, Stats., is contained in s. 76.025 (1), Stats.

(2) Approval.

(a) Requests for approval by public utilities subject to taxation under s. 76.13, Stats., for each waste treatment facility shall be made by completing the form entitled “Report of Exempted Waste Treatment Facility-Utility”. All actual costs of purchase or construction of the facility must be reflected on this form. The completed form is due January 15 of each year and is to be filed annually except in years subsequent to purchase or construction where no capital changes have occurred to the waste treatment facility, in which case a summary sheet may be submitted for these facilities. For good cause shown upon application by the applicant, the department may grant an extension of time not exceeding 120 days in which to file the application form.

(b) The completed form “Report of Exempted Waste Treatment Facility-Utility” should be sent to the Division of State and Local Finance.

Note: The address for mailing the application form is Wisconsin Department of Revenue, Division of State and Local Finance, PO Box 8971, Madison WI 53708-8971.

(c) Tentative approval for sales tax purposes may be obtained from the department by applying to the department at any time prior to January 15. Qualifying for the exemption under s. 70.11 (21) (am), Stats., will result in qualifying for the exemption under s. 77.54 (26), Stats. The request for a tentative approval should include all of the following:

A complete description of the function and operation of the facility.
A statement as to why the facility meets the definition of a waste treatment facility under sub. (3).
The estimated costs of all components of the facility.

(d) The approval of a waste treatment facility pursuant to par. (a) or (c), constitutes approval of the function of the facility only. The components and costs of the facility are subject to verification by the department and local units of government. Also, any approval is subject to the department verifying that the actual operation of the facility is consistent with the description provided in the request for exemption.

(3) Industrial waste treatment facility exemption.

(a) The words “waste,” “treatment” and “facility” are deemed to have the following meanings:

“Facility” means tangible property that is built, constructed or installed as a unit so as to be readily identifiable as directly performing a waste treatment function.
“Treatment” means removing, altering or storing waste.
“Waste” means that which is left over as superfluous, discarded or fugitive material. In addition, “industrial wastes” is defined by reference to s. 281.01 (5), Stats., as including liquid or other wastes resulting from any process of industry, manufacture, trade, business or the development of any natural resource. “Air contaminant” is defined by reference to s. 285.01 (1), Stats., as dust, fumes, mist, liquid, smoke, other particulate matter, vapor, gas, odorous substances or any combination thereof but shall not include uncombined water vapor.
“Waste treatment facility” means tangible property that is built, constructed or installed as a unit so as to be readily identifiable as directly removing, altering or storing leftover, superfluous, discarded or fugitive material.

(b) The exemption for industrial waste treatment facilities does not extend to “unnecessary siltation resulting from operations such as the washing of vegetables or raw food products, gravel washing, stripping of lands for development of subdivisions, highways, quarries and gravel pits, mine drainage, cleaning of vehicles or barges or gross neglect of land erosion” as provided in s. 281.01 (7), Stats.

(c) The exemption for industrial waste treatment facilities does not apply to conversion of an industrial furnace from one type of fuel to another type of fuel, or to the increased height of a smoke stack to diffuse emissions over a wide area or increments to property held for the production of income but which may be indirectly related to pollution abatement. However, the installation of a scrubber or electrostatic precipitator in a smoke stack could qualify for exemption.

(d) The exemption for industrial waste treatment facilities does not apply to monitoring equipment that is not a component or integral part of a waste treatment facility.

Note: Section Tax 6.40 interprets s. 76.025 (1), Stats.

History

Cr. Register, July, 1979, No. 283, eff. 8-1-79; r. (3) (d), Register, March, 1980, No. 291, eff. 4-1-80; r. (1) (b), cr. (2) (c) and (d), am. (3) (a) 1. and (b), Register, January, 1989, No. 397, eff. 2-1-89; CR 02-053: am. (2) (b), (3) (a) 2., 4., (b) and (c), renum. (3) (a) 1. and 3. to be (3) (a) 3. and 1. and am., cr. (3) (d) Register November 2002 No. 563, eff. 12-1-02; corrections in (1) and (3) made under s. 13.93 (2m) (b) 7., Stats., Register November 2002 No. 563; correction in (2) (c) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register March 2013 No. 687; CR 13-037: am. (2) (a), (b) Register February 2014 No. 698, eff. 3-1-14.

Wis. Admin. Code § Tax 6.50 Full market value {#sec-tax-6.50 omnilex-key=us-wi-regs-official--agency-tax--Tax 6.50}

(1) General.

(a) The entire operating property of any company enumerated in s. 76.02, Stats., shall be valued together as a unit at full market value unless, in the opinion of the department, any of the property is so segregated that a separate assessment is warranted. The department shall apply recognized appraisal methods in determining full market value. The cost, stock and debt, and capitalized income indicators of value and reasonable variations shall be applied by the department in accordance with the general principles set forth in subs. (4) to (6).

(b) Indicators of value other than those enumerated in sub. (2) (g) 1. to 3. which result from recognized appraisal methods may be used by the department after due promulgation of general principles of application for the indicators of value by amendment to this rule.

(c) In determining the full market value of the operating property of any company enumerated in s. 76.02, Stats., the department shall not be limited to the method of accounting for legitimate business purposes used by the taxpayer but the department shall give due consideration to generally accepted accounting principles and regulated accounting practices in applying recognized appraisal methods. Whenever accounting principles and practices are not accepted by the department it shall provide an explanation to the company in writing setting forth the reasons for unacceptance and an explanation of any adjustments made.

(2) Definitions. In this section:

(a) “Discount rate or capitalization rate” is that rate of interest which is the most probable rate of return to be expected to prevail in the industry for companies of comparable risk at the time of assessment. This market rate of capitalization is a composite of rates which the market indicates that investors demand as interest for secured capital, bonds and equipment trust certificates, or other evidences of value, and rates which the market indicates as necessary to attract equity capital, common and preferred stock. The final capitalization rate used may not be lower than the rate or cost of bonded debt nor higher than the cost of raising equity capital. The discount or capitalization rate may be derived by the band of investment method, summation method or the comparative method. Any one of these methods or any combinations of, may be used by the department in deriving the appropriate capitalization rate, provided, however, that the department provides the company with documentation as to the method or combination used and the reasons for use of the method or methods.

(b) “Going concern value” is the enhanced value of assets due to their existence within an operating business that is expected to continue its operation in the foreseeable future with no intention or necessity of liquidation or the material alteration of the scale of operation.

(c) “Method of accounting” is a system of recording and summarizing business and financial transactions in books of account and analyzing, verifying and reporting the results, usually for a period of one year or less. The results of accounting methods which are prescribed by regulatory bodies and generally accepted accounting principles may not be synonymous with the results of valuation methods.

(d) “Operating property” is real and personal property including all rights, franchises and privileges used in and necessary to conduct the business of the enterprise subject to taxation under s. 76.02, Stats.

(e) “Present worth” is the value today of something to be received in the future. It is calculated by a discounting process that takes into consideration the time-interest concept of money by the application of a present worth factor.

Example: If a cash benefit of $1,000 is to be received some years hence, the value today of such benefit is equal to $1,000 multiplied by the appropriate present worth factor.

(f) “Present worth factor” is that ratio, expressed as a decimal equivalent, as shown in a compound interest table at a specific interest or discount rate for the appropriate period.

(g) “Recognized appraisal or valuation method” is the mode of inquiry employed in estimating or predicting the price in terms of money a property may bring in a competitive and open market under all conditions requisite to a fair sale and include:

The method whereby the investment expenditure required to purchase the land or land rights, materials, labor and services necessary to bring a new property into existence is estimated and which is commonly referred to in appraisal and valuation literature as the cost method. Indicators of value within the cost method include:

a. Historical cost of the property when first put into use.

b. Original book cost of the property to the present owner.

c. Reproduction cost to currently reproduce the same kind of property.

d. Replacement cost to currently replace the property with its functional equivalent.

The method whereby the investment expenditure required to purchase an existing property is estimated and which is commonly referred to in appraisal and valuation literature as the market method. Where there are few unit sales, value under the market method shall be computed by using the stock and debt indicator of value. Indicators of value within the market method include:

a. Sale of the subject or comparable property by acquisition or merger.

b. Sale of the debt and equity interest of the subject or comparable enterprise as a proxy for the market value of the property presented on the balance sheet. This indicator is commonly referred to in appraisal and valuation literature as the stock and debt indicator.

The method whereby the investment expenditure required to purchase the anticipated future benefits resulting from the operation of the property is estimated and which is commonly referred to in appraisal and valuation literature as the capitalized income method. Indicators of value within the capitalized income method include:

a. The capitalization of the estimated future income to the present owner or to a prospective purchaser. The estimated future income is that income which remains after book depreciation and federal tax expenses actually paid have been subtracted.

b. The discounted or the present value of the estimated future cash flow to the present owner or to a prospective purchaser. The estimated future cash flow is that cash flow which remains after the asset replacement expenditures and the federal income taxes paid have been subtracted.

(h) “Unit valuation” is the appraisal as a whole of an integrated property operated as a going concern without any reference to the value of its component parts.

(3) Derivation of indicators of value. In principle each recognized appraisal method shall as near as possible follow a logic which is separate and unique and the department will attempt to apply the various appraisal methods in a manner which maximizes the uniqueness of each method.

(4) Cost indicators of value.

(a) In determining cost indicators, the department may consider 4 kinds of cost described as follows:

Historical cost of the property when first put in service;
Original cost of the property to the present owner;
Reproduction cost to currently reproduce the property; and
Replacement cost to currently replace the property with its functional equivalent.

(b) The department shall make adequate and reasonable allowances for loss of value due to all causes including physical depreciation, functional and economic obsolescence, regulatory required write-offs and utility plant acquisition adjustments. The cost indicator for regulated public utilities shall recognize that an asset’s value generally is limited by its value for ratemaking purposes. The cost indicator shall include construction work in-progress regardless of the treatment for ratemaking purposes.

(5) Stock and debt indicators of value.

(a) Stock and debt indicators are determined by the application of the general financial appraisal principle that the market value of the debt and equity interests of the enterprise are equal to the market value of the assets presented on the balance sheet. Stock and debt indicators determine the value of a company’s assets by appraising the value of the shareholders’ equity and liabilities of the company, such as current liabilities, long-term debt, reserves and deferred credits. Appropriate reductions shall be made for nonoperating property of the company. The department may consider the following ratios to eliminate nonoperating properties:

Nonoperating book value to total book value, or
Nonoperating income to total income.
Nonoperating market value to total market value.

(b) The department shall also make required adjustments for nontaxable properties as set forth in sub. (4).

(6) Capitalized income indicators of value. Capitalized income indicators are determined by the application of the general appraisal principle that the full market value of operating property is the present worth of anticipated future benefits to be derived from ownership of the property. Future benefits are the summation of the positive and negative cash flows which a fully informed person is warranted in assuming will be produced by operations of the property as a going concern. The department shall reflect earnings limitations imposed upon regulated utilities in this determination.

(7) Correlations of indicators of value.

(a) The validity of a determination of value may be measured against the supporting evidence and documented data from which the determination of value was derived. Accordingly the department shall consider and weigh, in its best judgment any or all available indicators of full market value enumerated in sub. (2) (g) 1. to 3. In this correlation process it shall consider the following:

The speculative nature of estimates used in developing the indicators of value and the degree of reliability of each of the indicators of value.
The consistency of weighting indicators of value from year to year.
Uniformity of assessments within taxpayer classifications.
Buyer’s and seller’s viewpoints.
The reasonableness of the correlated full value market estimate when compared to:

a. Actual sales of comparable properties in an arm’s-length transaction between independent parties;

b. Rate base;

c. Other states’ correlated estimates of full market value of the same company adjusted for differences in state law;

d. Net salvage value;

e. Additional evidence of full market value submitted by the company or the department;

f. Value asserted in prospectus; and

g. All other facts obtainable bearing on the value of the property collectively.

(b) In the case of regulated utilities, a sale is comparable only if there is the sale of an entire operation capable of functioning independently and the parties thereto are subject to regulatory policies similar to those of Wisconsin.

(8) Requests for documentation. Upon written request the department shall provide to the company copies of its computational worksheets used in determining full market value.

(9) Correction of errors. Errors which are agreed to be palpable or computational and which are discovered after issuance of the assessment shall be adjusted by the department in the next subsequent assessment year and the department shall provide the company with evidence of such adjustment.

Note: This section interprets s. 76.07 (5), Stats.

History

Cr. Register, November, 1983, No. 335, eff. 12-1-83; CR 13-037: am. (4) (b) Register February 2014 No. 698, eff. 3-1-14.

Chapter Tax 7 ALCOHOL BEVERAGE REGULATION

Subchapter I General Provisions

Wis. Admin. Code § Tax 7.01 Authority and purpose {#sec-tax-7.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.01}

This chapter is promulgated pursuant to ss. 125.01, 125.025, 125.03, and 227.11 (2) (a), Stats., and is in furtherance of the division’s responsibility to ensure public health and welfare and economic stability. This chapter provides clarity in the administration of alcohol beverage laws under the division’s mission to ensure fair, active, and consistent enforcement of alcohol beverage laws.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.02 Definitions {#sec-tax-7.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.02}

Unless otherwise provided, the words and phrases in this chapter have the same meanings as provided in s. 125.02, Stats. In this chapter:

(1) “Applicant” means a person that has submitted a complete application for a license, permit, or authorization issued under ch. 125, Stats., to the appropriate issuing authority.

(5) “Day” means a calendar day.

(6) “Distilled spirit” means an intoxicating liquor but does not include wine.

(9) “Division” means the division of alcohol beverages.

(14) “Producer” means a brewer holding a permit under s. 125.29, Stats., a manufacturer or rectifier holding a permit under s. 125.52, Stats., or a winery holding a permit under s. 125.53, Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.03 Criminal background check fees {#sec-tax-7.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.03}

(1) Pursuant to s. 125.04 (5), Stats., the division will run a criminal background check on each permit applicant, including each individual subject to a criminal background check under sub. (4).

(2) At the time of application, an applicant shall submit payment to the division equal to the fee under s. 165.82 (1) (am), Stats., multiplied by the number of individuals subject to a criminal background check under sub. (4).

(3) The division may waive criminal background check fees for an individual if the division has completed a criminal background check on that individual within the previous 6 months.

(4) For purposes of subs. (1) and (2), all of the following individuals associated with a permit application are subject to a criminal background check:

(a) An individual applicant, sole-proprietor, and each partner of a partnership.

(b) Each member or manager of a limited liability company, and the company’s agent designated under s. 125.04 (6), Stats.

(5) The criminal background check fee described in this section is in addition to any other fee authorized under ch. 125, Stats. The criminal background check fee described in this section will not be refunded for any reason, including the denial or nonrenewal of an application or permit.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (4) (intro.), (c) made under s. 35.17, Stats., Register December 2025 No. 840.

Wis. Admin. Code § Tax 7.035 Qualifications for and issuance of licenses and permits {#sec-tax-7.035 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.035}

(1) Definitions. In this section:

(a) “Date the license was granted” means the date a municipal issuing authority approved a license to be issued.

(b) “Date the license was issued” means the date a municipal official provided a license certificate document to the licensee.

(2) Qualifications.

(a) For purposes of s. 125.04 (5) (a) 2., Stats., continuous residency shall be established at least 90 days prior to the date of submission of a complete application for a license or permit and shall be maintained for as long as the license or permit is held by the person.

(b) Notwithstanding s. 125.04 (5) (a) 4., Stats., unless an applicant is required under ch. 77, Stats., to obtain a seller’s permit, a seller’s permit may not be required for the sole purpose of complying with s. 125.04 (5) (a) 4., Stats.

(c) The qualification requirements for a corporation or limited liability company under s. 125.04 (5) (c), Stats., also apply to a related or affiliate business entity within the ownership structure of the applicant, including an individual or person who is an officer or director, or member or manager.

(3) Limited liability companies.

(a) Pursuant to s. 125.02 (14), Stats., an applicant that is a single-owner limited liability company disregarded as a separate entity under ch. 71, Stats., may apply for the license or permit under either the limited liability company or the single-owner.

(b) The person named as the applicant on the application form shall be issued the license or permit, if granted by the issuing authority.

(c) Whenever the person named as the applicant under par. (b) is an individual, the standards under s. 125.04 (5) (a), Stats., apply rather than those under s. 125.04 (5) (c), Stats.

(4) License document requirements.

(a) Retail license certificates issued by a municipality to a licensee shall include all the following information:

The municipality that issued the license.
The county where the licensed premises is located.
A particular description of the licensed premises as provided in s. Tax 7.20 (4).
Whenever a license is issued to a sole proprietor, the name of the individual to whom the license is issued.
Whenever a license is issued to a partnership, the name of the partnership to whom the license is issued and the name of every partner.
Whenever a license is issued to a corporation, limited liability company, association, club, or other business organization, the name of the entity to whom the license is issued, and the name of the agent appointed under s. 125.04 (6), Stats.
Subject to par. (b), whether the license is a Class “A”, “Class A”, Class “B”, “Class B”, or “Class C” license.
The type of alcohol beverages authorized for sale.
The amount of the fee paid by the licensee for the license.
The date the license was granted by the municipal governing body.
The date the license was issued by the municipality.
The commencement date and the expiration date of the license.
The signature of the municipal official authorized by the municipal governing body to act as signatory.

(b) Whenever a person holds two types of licenses for the same premises, a municipality may issue a single retail license certificate that includes the information for both license types.

History

CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (3) (c), (4) (a) 12. made under s. 35.17, Stats., Register December 2025 No. 840.

Wis. Admin. Code § Tax 7.04 Permits and fees {#sec-tax-7.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.04}

(1) Unless otherwise provided under this chapter or ch. 125, Stats., an alcohol beverage permit shall be issued biennially and shall expire on the same date as the business tax registration certificate issued to the business under s. 73.03 (50), Stats.

(2)

(a) Whenever an alcohol beverage permit requires a premises, no person may be issued the alcohol beverage permit unless the person is the owner or the lessee, or has written permission from the owner for use of the premises described in the permit application. The applicant shall have, and each permittee shall maintain, complete control over the premises described in the permit application, which is not shared by another person.

(b) An application for a production permit who is a contract producer under s. 125.21 (3), Stats., shall specify on the permit application the premises for which the contract producer has complete control. An applicant for a production permit who is a recipe producer under s. 125.21 (3), Stats., may not be required to specify a premises on the permit application.

(3)

(a) Every alcohol beverage permit shall be issued for a fixed premises describing land or buildings.

(b) Every application for a permit shall include a premises description that describes the land or buildings, or both, to be permitted, including a detailed description of the rooms within such buildings.

(d) The provisions in this subsection do not apply to permits issued under s. 125.175, 125.22, 125.24, 125.27 (2), 125.51 (5) (c), or 125.65, Stats.

(4) An alcohol beverage permit issued to a person for an out-of-state premises may be transferred to any other out-of-state premises that is approved by the division. An application for the transfer of a permit shall be made on the form prescribed by the division.

Note: The application form for alcohol beverage permit transfers is available on the division’s website at https://www.revenue.wi.gov/Pages/Form/AlcoholBeveragePermit.aspx.

(5) Whenever an applicant for an alcohol beverage permit has an existing business tax registration certificate, the division may prorate the permit issuance fee based upon the number of months, or fraction thereof, remaining in the business tax registration cycle.

(6) Whenever a permittee surrenders their permit prior to its expiration, or if a permit is revoked or suspended by the division, the permit issuance or renewal fee shall not be refunded.

(7) Whenever a permit is not renewed, or an application for a permit is withdrawn or denied prior to issuance, an issuance or renewal fee identified in this section shall be returned or refunded to the permittee or applicant.

(8) An alcohol beverage permit issuance and renewal fee shall be determined in accordance with Table 7.04 and shall be paid by the applicant. An alcohol beverage permit issuance and renewal fee shall be paid in addition to both the business tax registration fee under s. 73.03 (50), Stats., and the fees described in s. Tax 7.03.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.05 Wine collectors {#sec-tax-7.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.05}

(1) Purpose. The purpose of this section is to set forth the requirements for the registration and sales activities of wine collectors.

(2) Definitions. For purposes of this section and ss. 125.02 (23) and 125.06 (11m), Stats., “wine collector” means an individual who collects and holds or intends to collect and hold producer-sealed bottles or containers of wine and is registered with the division as a collector of wine.

Note: Wine collector registrations may be addressed to Division of Alcohol Beverages, PO Box 8934, Madison, Wisconsin 53708-8934.

(3) Wine sales by wine collectors.

(a) A wine collector may sell to any other wine collector producer-sealed bottles or containers of wine held by the selling wine collector for at least 8 years, if the selling wine collector files a written notice of the sale with the division at least 30 days prior to the sale. The notice of sale shall contain all of the following information:

The date and location of the sale.
The date the wine was originally purchased by the selling wine collector.
A description of the transaction, including the quantity and price of the wine to be sold.
The name and address of an agent, consignee, lienor, or broker contracted to sell the wine by the selling wine collector, and a copy of any contract entered into between the selling wine collector and the agent, consignee, broker, or lienor.

(b) No more than one sale in any 12-month period shall be conducted by a wine collector under this subsection.

(c) A wine collector conducting a sale under this subsection shall provide purchase invoices or any other information as requested by the division to verify that the requirements described in s. 125.06 (11m), Stats., have been met.

(4) Electronic filing. A wine collector shall file the notice of sale required under sub. (3) (a) by emailing the division.

Note: A notice of sale may be emailed to DORAlcohol@wisconsin.gov.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.06 Responsible beverage server training course standards {#sec-tax-7.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.06}

(1) Purpose. The purpose of this section is to set forth minimum standards and requirements for division approval of a responsible beverage server training course pursuant to ss. 125.17 (6) (a) and 125.175 (4) (a), Stats. An approved course shall maintain the standards and requirements set forth under this section. The division may immediately revoke the approval of a course not maintaining such standards and requirements.

(2) General requirements.

(a) In addition to par. (b) and sub. (3), to obtain and maintain approval by the division, a responsible beverage server training course shall contain all of the following:

Tobacco, cigarette, and nicotine seller information that is approved by the Wisconsin Department of Health Services pursuant to s. 134.66 (2m), Stats.
Original content, except course creators are encouraged to extensively quote and paraphrase Wisconsin statutes, administrative rules, and guidance documents posted on the division’s website. A course provider may not copy, paraphrase, or reproduce content from another course or from any other 3rd party without express approval from the owner of the content. If using materials hosted on or produced by a 3rd-party platform, the course provider is accountable for the content and continuous availability.
Instructional narrative and interactive components throughout.
A citation to a reputable source such as a scholarly journal, government agency report, or similar verifiable source whenever using a statistic or anything posing or presented as a fact.
An exam that is comprehensive of the course material, including questions that specifically relate to Wisconsin statutes or administrative rules. Exam questions shall be rigorous enough that correct answers are not easily identified or answered by guessing. The successful passing threshold for the exam shall be at least 80 percent. The exam shall provide students with one opportunity to retake the test if they did not pass on their first attempt. After the completion of the exam, whether passing or failing, each student shall receive content domain scoring results reported and categorized by general course topics.
An approximate time of 4 hours or longer to complete.

(b) Each course shall provide a certificate of completion to students that successfully complete the course. The certificate of completion shall contain all of the following:

The full name of the approved course provider, not the parent company or any other name.
A statement reading, “This certificate represents the successful completion of an approved Wisconsin Division of Alcohol Beverages Responsible Beverage Server Course in compliance with secs. 125.04 (5) (a) 5., 125.17 (6), and 134.66 (2m), Wis. Stats.”

(3) Course content.

(a) The course shall contain the primary elements of the booklet required under s. 125.045, Stats., as determined by the division. Courses shall also review all key points of this chapter and ch. 125, Stats., as determined by the division.

(b) The course shall have curriculum covering the importance of responsible alcohol beverage service, the effects of alcohol beverages on the body, levels of intoxication, and techniques for controlling over-consumption and preventing intoxication.

(c) The course shall provide instruction on verifying the identity and age of individuals. The course shall have a direct link and specific reference to the verification of identity and age section of the booklet required under s. 125.045, Stats.

(d) The course shall discuss business practices expected of retailers of alcohol beverages, including licensing and permitting requirements, the requirement to hold a Wisconsin seller’s permit, and registration with the federal alcohol and tobacco tax and trade bureau.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (2) (a) 4. made under s. 35.17, Stats., Register December 2025.

Wis. Admin. Code § Tax 7.07 Label requirements {#sec-tax-7.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.07}

(1) No person may sell a fermented malt beverage in this state unless the fermented malt beverage is labeled in accordance with federal regulations under 27 CFR Part 7 or 25, whichever is applicable to the type of alcohol beverage. Copies are on file at the division of alcohol beverages and the legislative reference bureau.

(2) Pursuant to s. 125.68 (9), Stats., no person may sell intoxicating liquor in this state unless the intoxicating liquor is labeled in accordance with federal regulations under 27 CFR Part 4, 5, 24, or 25, whichever is applicable to the type of alcohol beverage. Copies are on file at the division of alcohol beverages and the legislative reference bureau.

(3) This section does not apply to any of the following:

(a) A person selling alcohol beverages by the glass, refillable container, or similar vessel, provided that the alcohol beverages originated from a container that was in compliance with this section.

(b) A “Class B” licensee selling intoxicating liquor for off-premises consumption in a container with a tamper-evident seal as authorized under s. 125.51 (3) (a) and (b), Stats.

(c) A “Class B” licensee selling mixed drinks from a bulk container that is in compliance with s. 125.51 (3) (bg), Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (1), (2) made under s. 35.17, Stats., Register December 2025 No. 840.

Wis. Admin. Code § Tax 7.08 Purchases and invoices {#sec-tax-7.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.08}

(1) Purpose. This section is created for purposes of compliance with invoice and records information and retention requirements under s. 139.11 (1), Stats.

(2) Definitions. In this section, “retailer” has the meaning provided under s. 125.02 (19), Stats., and includes brewers, rectifiers, manufacturers, and wineries approved by the division to make full-service retail sales under s. 125.29 (7), 125.52 (4), or 125.53 (3), Stats., when acting in their capacity to make retail sales of alcohol beverages at any of their full-service retail premises, and permitted brewpubs.

(3) Purchases by intoxicating liquor producers.

(a) No Wisconsin permitted manufacturer, rectifier, or winery may purchase or obtain intoxicating liquor for shipment into the state from outside the state except from a person holding an out-of-state shipper’s permit issued under s. 125.58, Stats. Intoxicating liquor purchased from a person holding a permit issued under s. 125.58, Stats., by a permitted manufacturer, rectifier, or winery shall be used for the sole purpose of further production of intoxicating liquor.

(b) An out-of-state shipper permittee shall issue a separate invoice to a manufacturer, rectifier, or winery covering each sale, shipment, or delivery of intoxicating liquor to that manufacturer, rectifier, or winery.

(4) Purchases by wholesalers. No person holding a permit under s. 125.28 or 125.54, Stats., may purchase or obtain alcohol beverages from any person, except from any of the following:

(a) A person holding a permit under s. 125.29, 125.295, 125.30, 125.52, 125.53, or 125.58, Stats., and who is the primary source of supply for that beverage.

(b) Another person holding a permit under s. 125.28 or 125.54, Stats.

(5) Separate invoices to wholesalers. Persons listed in sub. (4) (a) and (b) shall issue a separate invoice to a wholesaler covering each sale, shipment, or delivery of alcohol beverages to that wholesaler.

(6) Purchases by retailers. No retailer may purchase or obtain alcohol beverages from any person, except from any of the following:

(a) A wholesaler holding a permit under s. 125.28 or 125.54, Stats.

(b) A brewer’s permit holder self-distributing fermented malt beverages under s. 125.29 (3m), Stats.

(d) A fermented malt beverage out-of-state shipper permittee under s. 125.30, Stats., self-distributing fermented malt beverages under s. 125.30 (4), Stats.

(e) A retailer making a transaction under s. Tax 7.10.

(7) Separate invoices to retailers. Each person listed in sub. (6) (a) to (d) shall issue a separate invoice to a retailer covering each sale, shipment, or delivery of alcohol beverages to that retailer.

(8) Invoice retention requirements.

(a) The invoices described under subs. (3) (b), (5), and (7) shall be retained on the premises of both the purchaser and seller for a minimum of 2 years from the date of invoice or for as long as any of the alcohol beverages remain on the premises of the purchaser, whichever date is later. These invoices shall be available for inspection in accordance with s. 125.025 (3), Stats.

(b) Alcohol beverage invoices described in this section shall be retained in groups covering a period of one month each. The date of payment for each invoice shall be recorded and retained by the seller. Invoices under this section may be retained in electronic form. An electronic invoice is subject to the same inspection and retention requirements as a physical invoice.

(9) Invoice information requirements. An invoice shall contain all the following information:

(a) Invoice number.

(b) Date of sale.

(d) Location from which the alcohol beverage delivery originated and the location where it was delivered.

(e) Name of common carrier, if applicable.

(f) Name of salesperson, if applicable.

(g) Quantity and package size of alcohol beverages by type and brand.

(h) Unit price per package.

(i) Discount, if any.

(j) If applicable, the amount of Wisconsin excise tax, listed as a separate line item.

(10) Deliveries to one premises. Except as provided in s. Tax 7.10 and ss. 125.29 (3) (c), 125.295 (1) (e), 125.52 (1) (b) 5., and 125.53 (1) (a) 6., Stats., no retailer may transfer any alcohol beverages to another retailer or location for sale at that location, including a location also owned or operated by that retailer. All deliveries of alcohol beverages to retailers shall be made only to the premises or location listed on the invoice and such alcohol beverages shall remain at that premises or location until sold to consumers.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.09 Sales by wholesalers to non-licensees and certain permittees {#sec-tax-7.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.09}

A wholesaler holding a permit under s. 125.28 or 125.54, Stats., may sell alcohol beverages to any of the following:

(1) A campus making retail sales of alcohol beverages.

(2) Railroads and aircraft making retail sales or allowing consumption of alcohol beverages in compliance with s. 125.06 (5), Stats.

(3) A persons holding a permit under ss. 125.275, 125.56, 125.61, 125.62, and 125.63, Stats.

(4) A producer approved by the division to make full-service retail sales under s. 125.29 (7), 125.52 (4), or 125.53 (3), Stats., for resale at the producer’s full-service retail premises.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.10 Transfer of retail alcohol beverage inventory upon liquidation {#sec-tax-7.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.10}

(1)

(a) Upon permanent closure of the business, a licensed or permitted retailer may sell their entire inventory of alcohol beverages that are in original, sealed containers, but only in one transaction to any other licensed or permitted retailer as provided under sub. (2).

(b) Subject to par. (c), upon the permanent closure of the business, a producer approved to make full-service retail sales may sell their entire inventory of alcohol beverages as described under par. (a), but a producer may not purchase the liquidated inventory from another producer, or licensed or permitted retailer.

(c) Paragraph (b) applies only with respect to the alcohol beverages not manufactured or rectified by the liquidating producer.

(2) Prior to the transfer, an inventory transfer form shall be completed. The form shall be made available on the division’s website for use in a transfer under this section. The inventory transfer form shall list the complete quantities, brands, container sizes, and the type of alcohol beverages to be transferred. The form shall be signed by both the buyer and the seller. The seller shall retain one copy, and another copy shall be retained by the buyer on the licensed or permitted premises. The provisions described under s. Tax 7.08 (8) as they apply to invoices, apply to an inventory transfer form.

Note: The inventory transfer form is available on the division’s website at https://www.revenue.wi.gov/Pages/Form/alcohol-Home.aspx.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.11 Operators’ permits {#sec-tax-7.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.11}

(1) An operators’ permit issued by the division under s. 125.175, Stats., shall expire 2 years from the date of issuance.

(2) Upon submission of an application for an operators’ permit to the division, the applicant shall remit the background check fee under s. Tax 7.03.

(3) Prior to issuance or renewal of an operator’s permit by the division, an applicant shall remit the fee under s. Tax 7.04.

(4) Each person holding a permit under this section shall keep their permit in their possession whenever they are working in a capacity authorized by the permit. Upon request, the permittee shall exhibit such permit for inspection and validation by any peace officer. A copy of the permit may be produced electronically.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.12 Alcohol beverage warehouse standards {#sec-tax-7.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.12}

(1) No person may be issued an alcohol beverage warehouse permit under s. 125.19, Stats., unless they are a producer or a wholesaler holding a permit under s. 125.28 or 125.54, Stats.

(2) Each alcohol beverage warehouse permit shall be issued to the person that owns or has title to the alcohol beverages stored at the warehouse premises. If a producer or wholesaler is leasing warehouse space from another person, the permit shall be issued to the producer or wholesaler and not to the owner of the warehouse.

(3) Where more than one person holds an alcohol beverage warehouse permit within the same building, no permittee’s premises may overlap with another premises and. the division may require physical barriers, such as floor-to-ceiling walls, fencing, or similar barriers to separate the premises.

(4) No wholesaler holding an alcohol beverage warehouse permit may receive alcohol beverages delivered directly to the alcohol beverage warehouse premises. Any alcohol beverages purchased or obtained by a wholesaler shall first be delivered to, and physically unloaded as required under ss. 125.28 (5) (a) and 125.54 (7) (a) 1., Stats.

(5) An alcohol beverage warehouse serves as overflow or additional storage for a producer or wholesaler. No person shall invoice from, or make a sale of alcohol beverages from, an alcohol beverage warehouse premises unless that person also holds a wholesaler permit for the same premises.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.13 Permissible interests {#sec-tax-7.13 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.13}

(1) Definitions. In this section, “ownership interest” includes, but is not limited to, any ownership in a sole proprietorship, partnership, corporation, limited liability company, or estate as an individual, partner, shareholder, member and includes an interest in a trust as a trustee or trust beneficiary.

(2) Ownership interests of restricted investors. For purposes of s. 125.20 (6) (a) 1., Stats., any determination whether a person holds more than a 10 percent ownership interest in a licensee or permittee shall include ownership interests in the licensee or permittee held directly or indirectly by entities connected to the person. All ownership interests in the licensee or permittee that are held or connected to the person shall be aggregated.

(3) Marriage affidavits, prenuptial agreements, and marital property agreements. To be considered a permissible interest under s. 125.20 (6) (c), Stats., a prenuptial agreement or marital property agreement submitted to a municipal clerk or the division under s. 125.20 (6) (c) 3., Stats., shall explicitly state that the licensed or permitted business is the individual property of a spouse and is not marital property.

Note: Section 125.04 (3) (h), Stats., provides that within 30 days of any change in any fact set out in an application for a license or permit to sell alcohol beverages, the licensee or permittee shall file with the issuing authority a written description of the changed fact, including any change in restricted investors under s. 125.20 (6) (a) 5., Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.; correction in (3) made under s. 35.17, Stats., Register December 2025 No. 840

Wis. Admin. Code § Tax 7.14 Production agreements {#sec-tax-7.14 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.14}

(1) Definitions. In this section, all terms have the same meaning as provided in s. 125.21, Stats.

(2) Written contracts. Upon request of the division, a producer, contract producer, recipe producer, guest producer, host producer, out-of-state recipe supplier, producer-licensee, or licensor shall provide to the division the written contract or agreement for any contract production agreement, alternating proprietorship, or licensing agreement.

(3) Out-of-state recipe suppliers.

(a) A producer may enter into a contract production agreement with an out-of-state recipe supplier that does not hold a Wisconsin production permit only if all the finished alcohol beverages are shipped directly from the producer to a location outside of this state.

(b) An out-of-state recipe supplier that contracts with a producer where alcohol beverages produced under the contract are warehoused in this state or sold from this state directly to a wholesaler or producer in this state, shall obtain the Wisconsin production permit that authorizes the production of that alcohol beverage to engage in these activities.

(4) Contract production agreements. A producer is not required to obtain a separate production permit, nor pay an additional permit fee, for each contract production agreement insofar as all producers hold the appropriate production permit.

(5) Alternating proprietorships. In the case of an alternating proprietorship, a guest producer shall obtain a separate production permit, and pay a separate permit fee, for each alternating proprietorship the guest producer enters.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.15 Common carrier permit; shipments into state {#sec-tax-7.15 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.15}

(1) A person applying for a common carrier permit issued under s. 125.22, Stats., shall apply for one permit on a single application for all locations from which wine is shipped or transported directly to consumers in accordance with s. 125.22 Stats.

(2) The report under s. 125.22 (2) (a), Stats., shall be filed electronically with the division in the manner prescribed by the division.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.16 Fulfillment houses {#sec-tax-7.16 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.16}

(1) A fulfillment house permit issued under s. 125.23, Stats., shall be separately applied for and issued for each location from which wine will be shipped into this state.

(2) The report submitted by a fulfillment house pursuant to s. 125.23 (5), Stats., shall be filed electronically with the division in the manner prescribed by the division.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.17 Full-service retail sales by producers {#sec-tax-7.17 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.17}

(1) Definitions. In this section, “special outlet” means the one full-service retail outlet that a producer may relocate to a new location within this state without limitation on frequency in each calendar year as provided under ss. 125.29 (7) (g) 5., 125.52 (4) (g) 5., and 125.53 (3) (g) 5., Stats.

(2) Application.

(a) An application to make full-service retail sales by a producer, including sales made on the production premises or an off-site retail outlet, shall be submitted to the division on the application form created by the division.

Note: The official application form for full-service retail sales is available on the division’s website at https://www.revenue.wi.gov/Pages/Form/AlcoholBeveragePermit.aspx.

(b) An application for full-service retail sales by a producer shall be submitted to the division at least 15 business days prior to the commencement of full-service retail sales. An application submitted to the division less than 15 business days prior to the commencement of full-service retail sales may not receive approval by the division prior to the date of commencement.

(c) The provisions under s. Tax 7.04 (3) (a) to (c) applying to permits apply to applications for and approvals of full-service retail sales.

(3) Production volume and eligibility.

(a) Cumulative production volumes shall be verified by the producer’s Wisconsin excise tax returns filed with the department of revenue. Qualified cumulative production volumes are determined only by finished product in the month reported on excise tax returns.

(b) Cumulative production volume requirements shall be based on a calendar year. However, a producer shall be eligible to apply for full-service retail sales at any point within a calendar year when their filed Wisconsin excise tax returns report qualifying cumulative production volume.

(c) Historical cumulative production volumes for a producer shall only be considered for the person that is applying to make full-service retail sales and that currently holds the respective producer permit. In the case of mergers, acquisitions, reorganizations, and similar business restructures, the cumulative production volume of a previously permitted person is not considered when evaluating the applicant’s production volume eligibility.

(d) Provided that the person issued the permit remains the same, historical cumulative production volumes shall be considered when evaluating an applicant’s cumulative production volume eligibility for any of the following:

A person previously issued a brewpub permit that is subsequently issued a brewer’s permit.
A person previously issued a winery permit that is subsequently issued a rectifier’s or manufacturer’s permit.
A person previously issued a manufacturer’s or rectifier’s permit that is subsequently issued a winery permit.

(e) Upon a producer submitting and the division receiving a written request for a waiver, the division administrator may waive the determinations on eligibility of historical production volumes provided under pars. (c) and (d) if the division administrator determines the waiver is fair and equitable. A producer submitting a written request for a waiver shall explain the reasons why such waiver is fair and equitable, the effects of granting or denying the waiver request, and the individual circumstances surrounding the business entity change.

(4) Municipal approval of full-service retail outlets.

(a) An application for a full-service retail outlet by a producer shall be approved by the municipality where the prospective outlet will be located prior to applying to the division.

(b) Except as described in par. (c), a full-service retail outlet by a producer shall be granted or denied by the governing body of the municipality or a duly authorized committee of a city council.

(c) Pursuant to ss. 125.29 (7) (d) 3., 125.52 (4) (d) 3., and 125.53 (3) (d) 3., Stats., a municipality may, by ordinance, designate a municipal official to grant or deny a producer’s special outlet that will be in existence for less than 4 consecutive calendar days.

(5) Division approval of full-service retail sales.

(a) No producer shall make full-service retail sales without first receiving approval by the division.

(b) Approval by the division for full-service retail sales by a producer shall be in the form of a permit certificate issued to the producer which indicates the person authorized to make full-service retail sales, the premises description, the municipality, the type of alcohol beverages authorized for sale, and the dates and times when sales are authorized. The certificate described in this paragraph is a separate certificate than the production permit certificate authorizing a person to be a producer.

(6) Renewals.

(a) Unless otherwise noted in the permit certificate described in sub. (5) (b), an approval for full-service retail sales, including an approval for sales made on the production premises or an off-site retail outlet, shall expire on the same date as the producer’s production permit and the business tax registration certificate issued under s. 73.03 (50), Stats.

(b) A renewal of a full-service retail sales approval shall be reviewed by the division at the same time as the renewal for the underlying production permit.

(7) Revocations, suspensions, and refusals to renew.

(a) The division shall have the sole authority to revoke a producer’s approval for full-service retail sales.

(b) A revocation of a producer’s approval for full-service retail sales by the division shall follow the procedures in s. 125.12 (5), Stats.

(c) A municipality or person may make a complaint to the division alleging that a producer has violated the law or that the producer does not hold the proper qualifications for full-service retail sales. The division shall review such complaints and determine whether the allegations are sufficient to revoke, suspend, or refuse to renew the authorization.

(8) Alcohol beverage purchases, deliveries, and invoices.

(a) Except as provided in par. (b), the provisions of s. Tax 7.08 (6) and (10), as they relate to the purchase source of alcohol beverages and the delivery and transfer of alcohol beverages, apply individually to each of a producer’s full-service retail sales premises, including the production premises and an off-site retail outlet.

(b) With respect to a special outlet that will be in existence for less than 4 consecutive calendar days, a producer may do all of the following:

Accept delivery of alcohol beverages at their production premises and subsequently transport those alcohol beverages to the special outlet.
Transport alcohol beverages not sold or consumed at the expiration of the outlet back to their production premises to be sold at the full-service retail location at the production premises or at a subsequent special outlet in existence for less than 4 consecutive days.

(c) Nothing in par. (b) relieves a producer from the requirements under s. Tax 7.08 (7) and (8) to have alcohol beverage purchase invoices available for inspection at a full-service retail outlet, including a special outlet in existence for less than 4 consecutive days.

(9) Alcohol beverage sales.

(a) No producer may make full-service retail sales of alcohol beverages for consumption off the premises unless the sale is made in the original unopened package or container.

(b) Nothing in this subsection alters a municipality’s ability to limit the scope of alcohol beverages offered for sale at a producer’s full-service retail sales outlet.

(10) Possession with intent to sell. The provisions under s. Tax 7.21 as they apply to retail licenses and permits apply to full-service retail sales by producers at their production premises and any off-site retail outlet.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (3) (e), (4) (c) made under s. 35.17, Stats., and correction in numbering of (10) made under s. 13.92 (4) (b) 1., Stats., Register December 2025 No. 840.

Wis. Admin. Code § Tax 7.18 Wholesaler warehouse facilities {#sec-tax-7.18 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.18}

(1) Minimum requirements for wholesaler warehouse facilities. The premises described in a permit issued under s. 125.28 or 125.54, Stats., shall have a minimum of 1,000 square feet of floor space and shall be located in a building where the premises described is not part of or connected to a premises covered by a retail license or permit.

(2) Exception to minimum requirements. The division administrator may waive the requirement that a premises have a minimum of 1,000 square feet of floor space if the division administrator determines the waiver is fair and equitable and if the applicant or permittee does all of the following:

(a) Submits a written request to the division for a waiver along with the application for issuance or renewal of a permit.

(b) Clearly indicates how the requirements described in sub. (1) and s. 125.28 (5) (a) or 125.54 (7), Stats., other than the requirement that the premises described in the permit be a minimum of 1,000 square feet of floor space, are or will be met.

(3) Inventory records. Every permittee under s. 125.28 or 125.54, Stats., shall complete a written inventory listing the entire stock of alcohol beverage stored at the premises described in the permit as of the close of business on the last day of every month. A copy of the inventory listing shall be retained on the premises described in the permit for 2 years from the date the inventory is completed and shall be open to inspection during normal business hours.

(4) Inspections of wholesaler warehouse facilities. Before issuing a permit under s. 125.28 or 125.54, Stats., the division shall conduct a site inspection of the premises described in the permit application to determine if such premises meets the minimum requirements described in sub. (1). The division shall also conduct periodic site inspections of these premises.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.19 Returns of alcohol beverages {#sec-tax-7.19 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.19}

(1) Returns by individual consumers to retailers. Once a sale has been made by a retailer to an individual consumer, no retailer may accept a return of alcohol beverages. Nothing in this subsection prohibits a retailer from issuing a refund to an individual consumer for an alcohol beverage.

(2) Returns by retailers.

(a) In this section:

“Expired” means an alcohol beverage that is past its best by date, expiration date, or similar date.
“Recalled” means an action taken by a producer, wholesaler, or any person who manufactures alcohol beverages to remove an alcohol beverage from the marketplace.
“Spoiled” means an alcohol beverage that has deteriorated in quality, making it unsuitable for consumption.

(b) Except as provided in par. (c), persons identified in s. Tax 7.08 (6) (a) to (d) may not accept returns of alcohol beverages from retailers.

(c) Persons identified in s. Tax 7.08 (6) (a) to (d) may replace expired, spoiled, or recalled alcohol beverages sold to retailers as long as the beverages are replaced with an identical brand, flavor, quantity, and size, and the replacement transaction is documented on an invoice provided to the retailer and in compliance with s. Tax 7.08.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26; correction in (2) (b), (c) made under s. 35.17, Stats., Register December 2025 No. 840.

Wis. Admin. Code § Tax 7.20 Retail premises {#sec-tax-7.20 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.20}

(1) A retail license shall be issued for a fixed premises describing land or buildings.

(2) No person may be issued a retail license unless the person is the owner or the lessee, or has written permission from the owner for use of the premises described in the license application. An applicant shall have, and each licensee shall maintain, complete control over the premises described in the license application, which is not shared by another person.

(3)

(a) For purposes of s. 125.51 (8), Stats., a licensed premises is not a connecting premises if it is completely separated from another licensed premises by floor-to-ceiling walls and has its own primary entrance to the premises.

(b) Except as provided under s. 125.51 (8), Stats., no municipality may issue, and no person may hold, the following retail license types for the same or connecting premises:

Class “B” and Class “A”
Class “B” and “Class A”
“Class B” and Class “A”
“Class B” and “Class A”
“Class B” and “Class C”
“Class C” and Class “A”’
“Class C” and “Class A”

(4) Every application for a retail license shall include a premises description that describes the land or buildings, or both, to be licensed, including detailed descriptions of the rooms within such buildings.

(5) No retail license may be granted where the premises described in the application is not contiguous.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.21 Possession with intent to sell {#sec-tax-7.21 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.21}

(1) The possession of alcohol beverages on a premises covered by a retail license or permit shall be deemed prima facie evidence that such products are kept with intent to sell.

(2) Whenever a retail license or permit becomes expired, void, not renewed, suspended, revoked, or otherwise invalid, all alcohol beverages on the previously licensed or permitted premises shall be removed from public exposure for sale by being locked or secured in an area that is outside of public view. Any alcohol beverages not so removed shall be deemed contraband and are subject to confiscation under s. 125.14 (2) (a), Stats.

History

CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.22 No-sale event venue permits {#sec-tax-7.22 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.22}

(1) Definitions. Under ss. 125.09 (1) and 125.24, Stats., “rent” or “lease” requires consideration, whether directly or indirectly or through any shift, device, or scheme, in exchange for the use of real property.

(2) Application. An application for a no-sale event venue permit shall be made on the application form prescribed by the division. Each application shall be complete and shall be submitted with all documentation required by the division.

Note: The official application form for no-sale event venue permits is available on the division’s website at https://www.revenue.wi.gov/Pages/Form/AlcoholBeveragePermit.aspx.

(3) Quota exception for qualifying event venues.

(a) The “Class B” licenses referenced in s. 125.24 (5) (b) 2., Stats., does not include a “Class B” license issued under s. 125.51 (10), Stats.

(b) An applicant shall provide the division with contracts and invoices demonstrating that the requirements under s. 125.24 (5) (a), Stats., were satisfied.

(c) Subject to acceptance by the division, sufficient documentation for the requirement under s. 125.24 (5) (b) 1., Stats., shall include any of the following:

A valid business tax registration certificate issued to the applicant under s. 73.03 (50), Stats., that was valid for the 12 months preceding the date of application.
A valid seller’s permit issued to the applicant under s. 77.52 (7) (a), Stats., that was valid for the 12 months preceding the date of application.
A valid registration with the department of financial institutions under ch. 180, 181, or 183, Stats., that was valid for the 12 months preceding the date of application.
Any other documentary evidence provided by the applicant that is acceptable to the division.

(d) The documentation required under s. 125.24 (5) (b) 4., Stats., shall be submitted on the form prescribed by the division.

Note: The official application form for qualifying event venue certification is available on the division’s website at https://www.revenue.wi.gov/Pages/Form/alcohol-Home.aspx.

History

CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Subchapter II Fermented Malt Beverages

Wis. Admin. Code § Tax 7.31 Restrictions on dealings between brewers, brewpubs, wholesalers, and retailers {#sec-tax-7.31 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.31}

(1) Definitions. In this section and in s. 125.33, Stats.:

(a) “Event” means any activity, game, contest, tournament, or entertainment that is conducted on that part of a campus premises where the sale of fermented malt beverages takes place or premises operated under a Class “B” fermented malt beverage license or permit or promoted by a campus operation for the sale of fermented malt beverages or Class “B” fermented malt beverage licensee or permittee.

(b) “Sign” means a graphic display, containing letters, words, symbols, numerals, shapes, forms or pictures, including all component parts and labor necessary to assemble the unit, which has no value or use except to advertise or identify a product or a place of business or an event or any combination of these. The value of the sign is determined by the original cost of acquisition if it is purchased by a brewer, brewpub, or wholesaler.

(c) “Sponsor” means to underwrite in whole or in part the cost of an event by providing signs, advertising in score cards or on scoreboards and fences or by providing equipment, prizes, trophies, entertainment, or other things of value.

(2) Brewer’s permit restriction and exceptions.

(a) Restriction. No brewer, brewpub, or wholesaler of fermented malt beverages may sponsor any event:

Held on the premises of a Class “B” license or permit or promoted by a Class “B” licensee or permittee.
Held on a portion of a campus where the sale of fermented malt beverages takes place or, promoted by a campus operation where fermented malt beverages will be sold.

(b) Exceptions. However, a brewer, brewpub, or wholesaler may do any of the following:

Purchase advertising or other services or rights for a fair consideration from any corporate Class “B” licensee or permittee which is a member of a regularly established athletic league if the licensee derives more than 50 percent of its gross income from the ownership, maintenance and operation of a professional athletic team which plays a regular schedule of games and which derives more than 50 percent of its income from the sale of admissions to the team’s games.
Enter into a contract or other arrangement directly with an unlicensed 3rd party to sponsor an event or sponsor radio or television broadcasts, to make payment for advertising, or to provide other services or things of value if all of the following conditions are met:

a. The payment, services, or other things of value are made directly or indirectly by the brewer, brewpub, or wholesaler to a Class “B” licensee or permittee.

b. The payment, services, or other things of value are not contingent upon the event being held at a premises designated by the brewer, brewpub, or wholesaler.

c. The sponsor’s products are not required to be sold or served at the premises selected by the non-licensed 3rd party.

Allow a refrigerated truck or trailer to remain on the premises covered by a Class “B” license or permit for the storage of fermented malt beverages during an event. At the conclusion of the event, the brewer, brewpub, or wholesaler may issue one invoice to the Class “B” licensee or permittee for the fermented malt beverages actually used at the event.

(3) Examples of prohibited activities. Subject to the limitations in sub. (2), a brewer, brewpub, or wholesaler my not do any of the following:

(a) Sponsor an association, team or other organization for a campus or Class “B” licensee or permittee or have a Class “B” licensee or permittee, corporate officer or partner who is part of an association, team or other organization it sponsors.

(b) Hire a person to provide a concert or music at a premises covered by a Class “B” license or permit.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.32 Out-of-state shippers of fermented malt beverages {#sec-tax-7.32 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.32}

For purposes of s. 125.30 (3) (a), Stats., a person who engages in wholesale sales in another state and is the holder of a Federal Basic Importer’s Permit is eligible to obtain a permit under s. 125.30 (1), Stats.

History

CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Subchapter III Intoxicating Liquor

Wis. Admin. Code § Tax 7.41 Size of distilled spirits containers and standards of fill {#sec-tax-7.41 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.41}

(1) Except as provided in sub. (4), no person may sell or offer for sale distilled spirits in a container larger than 1.75-liter (59.1752 fluid ounce) capacity, pursuant to s. 125.03 (2), Stats.

(2) Except as provided in sub. (4), no person may sell or offer for sale, any intoxicating liquor that does not comply with the standards of fill established by the federal alcohol and tobacco tax and trade bureau under 27 CFR Parts 4 and 5. Copies are on file at the division of alcohol beverages and the legislative reference bureau.

(3) Except as provided in sub. (4), possession of a container that is in violation of sub. (1) or (2) by a licensee or permittee is prima facie evidence that the container is offered for sale and is therefore contraband subject to seizure under s. 125.14 (2) (a), Stats.

(4)

(a) Manufacturers and rectifiers may have in their possession distilled spirits in containers greater than 1.75 liters in size for purposes of manufacturing or rectifying or for sale to other manufacturers, rectifiers, or wineries in Wisconsin or in interstate commerce.

(b) This section does not apply to a “Class B” licensee selling mixed drinks from a bulk container that is in compliance with s. 125.51 (3) (bg), Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.42 Empty containers {#sec-tax-7.42 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.42}

(1) The regulations in this section are created for purposes of compliance with s. 125.68 (8), Stats.

(2) A person who sells or offers for sale distilled spirits, including an agent or employee of such person, shall, as soon as such container is emptied, scratch, deface or mutilate the label attached thereto in such a manner that the label cannot be used. The requirement that labels be defaced does not apply to labels placed on ceramic commemorative containers and other uniquely designed decanters.

(3) No person who sells or offers for sale, distilled spirits, including an agent or employee of such person, may fill, or cause to be filled, a container previously used to store distilled spirits. Such containers, except ceramic commemorative containers and other uniquely designed decanters and containers retained for delivery or collection for recycling through a process which will result in rendering them unusable as containers, shall be broken and destroyed immediately upon being emptied of their original contents.

(4) An empty liquor container retained for recycling purposes shall have the label scratched, defaced, or mutilated, and shall be stored in a container marked “For recycling only”, and be removed from the retail licensed or permitted premises within 10 days.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.43 Small cooperative wholesalers {#sec-tax-7.43 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.43}

(1) Purpose. The purpose of this section is to set forth the requirements for the creation and operation of small cooperative wholesalers, under s. 125.545, Stats.

(2) Bylaws for cooperative wholesalers. Bylaws filed by a cooperative wholesaler shall contain all the following information:

(a) Membership requirements that recognize the cooperative wholesaler’s duty to negotiate in good faith with manufacturers, rectifiers, and wineries that seek to sell products.

(b) Membership requirements that recognize the cooperative wholesaler’s duty to diligently ensure that distribution channels are available for the sale of intoxicating liquor from a small winery and a small manufacturer.

(d) A description of the rights and responsibilities of a member.

(e) The process for the election of the board of directors.

(f) The plans for a membership meeting.

(g) Whether the cooperative will allow a nonmember to purchase preferred stock.

(3) Submission of application for cooperative wholesalers. The bylaws created under s. 125.545 (3) (a) 1., Stats., and that contain the information outlined in sub. (2), shall be submitted to the division with the application for a wholesaler’s permit.

(4) Interest restrictions. A cooperative wholesaler may provide reimbursement for necessary and ordinary business expenses of manufacturer, rectifier, and winery owners and employees acting as volunteers for activities related to the sale and distribution of intoxicating liquor by the cooperative. Reimbursement for necessary and ordinary business expenses may not include compensation for time spent acting as a volunteer.

(5) Renewal of cooperative wholesaler permit. The cooperative wholesaler shall provide the division with a biennial report with its application for wholesaler permit renewal. The biennial report shall summarize the sales quantity and product data for all intoxicating liquor industry trade goods sold by the cooperative wholesaler.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.44 Salesperson {#sec-tax-7.44 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.44}

(1) No person may solicit orders for sales of intoxicating liquor for future delivery to retailers on behalf of a manufacturer, rectifier, winery, or wholesaler, whether located within this state or outside this state, unless the person first holds a salesperson’s permit under s. 125.65, Stats. A salesperson’s permit is not required to solicit sales of alcohol beverages to wholesalers on behalf of a manufacturer, rectifier, winery or another wholesaler.

(2) Samples of intoxicating liquor carried by salespersons shall be subject to Wisconsin excise tax and comply with requirements under s. 139.06, Stats.

(3) A salesperson’s permit authorizes the solicitation of orders or sales of intoxicating liquor for future delivery to retailers. Retail sales to consumers are prohibited.

(4) Every person holding a permit under this section shall keep their permit in their possession whenever they are working in a capacity authorized by the permit. Upon request, the permittee shall exhibit such permit for inspection and validation by any peace officer. A copy of the permit may be produced electronically.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.45 Procedure for apportionment of costs of administration of s. 125.69 (4) (e), Stats {#sec-tax-7.45 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.45}

(1) All direct and indirect costs of administering s. 125.69 (4) (e), Stats., including costs for supplies, equipment, and rent and clerical, investigative, administrative and supervisory help, shall be borne by the intoxicating liquor permittees. The aggregate of such costs shall be determined by the division semiannually and shall be prorated by it among the permittees at any time licensed in each period covered. Each such permittee shall be billed its share of such aggregate costs and such bill shall be paid within 10 days of the billing date.

(2) The costs of administration for each 6-month period shall be prorated among the permittees licensed in such period on the basis of estimated dollar sales to retailers based upon reported gallons and liters of wine and liquor sold to retailers by each permittee. Whenever the sales of a permittee have not been reported to the division, the division shall estimate an unreported sale for purposes of such proration.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 7.46 Samples {#sec-tax-7.46 omnilex-key=us-wi-regs-official--agency-tax--Tax 7.46}

(1) Each manufacturer, rectifier, and winery shall attach a memo invoice stating the quantity and package size by type and brand when shipping intoxicating liquor to a representative in this state for the purpose of free samples under s. 125.69 (9), Stats.

(2) An out-of-state manufacturer shall possess a permit under s. 125.58, Stats., prior to shipping into this state any liquor samples to their representatives.

(3) The memo invoice in sub. (1), shall bear the words, “Applicable state tax paid. Not for resale.” All sample liquor is subject to the Wisconsin liquor excise tax. The tax paid by the out-of-state shipper shipping or causing the liquor to be shipped into this state shall be remitted no later than the 15th day of the month following the shipment.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Chapter Tax 8 ALCOHOL BEVERAGE TAXATION

Wis. Admin. Code § Tax 8.01 Authority and purpose {#sec-tax-8.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.01}

This chapter is promulgated pursuant to ss. 139.08 and 227.11 (2) (a), Stats., to carry out the secretary of revenue’s duties to administer alcohol beverage taxes under subch. I of ch. 139, Stats., and to collect and keep a record of alcohol beverage taxes collected.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.02 Definitions {#sec-tax-8.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.02}

Unless otherwise provided, the words and phrases in this chapter have the same meanings as provided in s. 125.02 or 139.01, Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.03 Tax forms and filing {#sec-tax-8.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.03}

(1) Forms. The department shall provide official forms for filing alcohol beverage tax returns, reports, and refund claims, under s. 139.01 (2r), Stats. Except as approved by the department, tax returns, reports, and refund claims may only be filed using these official forms.

Note: The official forms for filing alcohol beverage tax returns and refund claims are available on the department’s website at www.revenue.wi.gov/Pages/Form/AlcoholBeverageTax.aspx.

(2) Filing forms.

(a) Forms filed with the department shall be submitted by filing them electronically by means prescribed by the department.

(b) The secretary of revenue may waive the requirement to file electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

Requests the waiver in writing.

Note: Written requests may be e-mailed to DORExcise@wisconsin.gov, faxed to (608) 261-7049, or addressed to Mandate Waiver Request, Wisconsin Department of Revenue, Mail Stop 5-107, PO Box 8900, Madison WI 53708-8900.

Clearly indicates why the requirement causes an undue hardship.

(c) In determining whether the requirement to file electronically causes an undue hardship, the secretary of revenue may consider any of the following factors:

Unusual circumstances that may prevent the person from filing electronically.
Any other factor that the secretary determines is pertinent.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.04 Liquor tax {#sec-tax-8.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.04}

(1) Purpose. This section clarifies the tax liability on all sales of intoxicating liquor shipped into Wisconsin under s. 139.06 (1) (b), Stats., including foreign country imports.

(2) Imposition. All intoxicating liquor, including wine, shipped to a permittee located in Wisconsin shall be sold with the tax imposed under s. 139.03, Stats., included in the selling price except as provided in pars. (a) to (d):

(a) Intoxicating liquor may be sold without tax if sold and shipped in bulk to a rectifier or winery. The tax liability shall be incurred by the permittee doing the rectifying and bottling of the intoxicating liquor at the time of the first sale in Wisconsin.

(b) Intoxicating liquor may be sold without tax if sold and shipped to a Wisconsin wholesaler permittee located in Wisconsin if the shipment is from a foreign country and the Wisconsin wholesaler permittee is the importer of record as recorded on the U.S. customs document. However, if the importer of record is the holder of an out-of-state shipper’s permit, the tax is due from the out-of-state shipper on the shipment of intoxicating liquor into Wisconsin regardless of whether the shipment is released from U.S. customs bond within or outside Wisconsin.

(c) Intoxicating liquor may be sold without tax if the liquor is destined to be shipped outside Wisconsin in interstate commerce and is properly labeled as “interstate merchandise.”

(d) Intoxicating liquor may be sold without tax if sold and shipped to any of the following types of permit holders:

Sacramental wine permittees.
Wholesale alcohol permittees, but only if the alcohol shipped is at least 190 proof.
Medicinal alcohol permittees.
Industrial alcohol permittees.
Industrial wine permittees.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.05 Refunds {#sec-tax-8.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.05}

(1) Destruction or return of Alcohol beverages in Wisconsin.

(a) A brewery, brewpub, manufacturer, rectifier, winery, or wholesaler properly authorized by Wisconsin who possesses alcohol beverages in sealed containers, whole cases, or full kegs that are spoiled or unfit to drink may file a claim for a tax refund under s. 139.10, Stats., with the department.

(b) A claimant of a tax refund shall provide a written notice to the department of intent to destroy the beverages at least 10 days prior to destroying such beverages.

(c) The department, upon receipt of the written notice of intent to destroy the beverages, may inspect the beverages prior to destruction by notifying the claimant prior to the expiration of the 10-day period.

(d) If the department does not notify the claimant of its intent to inspect under par. (c) before the end of the 10-day period, the claimant may destroy the beverages and file a claim for refund. The claimant shall file the claim for a tax refund in the form and manner provided by the department.

(2) Returns to an out-of-state source.

(a) A brewery, brewpub, manufacturer, rectifier, winery, or wholesaler authorized by Wisconsin, who possesses alcohol beverages in sealed containers, whole cases, or full kegs that are spoiled or unfit to drink, may file a written notice to the department of intent to return such beverages to an out-of-state source at least 10 days prior to shipping the beverages.

(b) The department, upon receipt of the notice of intent under par. (a), may inspect the alcohol beverages prior to shipment by notifying the claimant prior to the expiration of the 10-day period. If the department does not notify the claimant of its intent to inspect before the end of the 10-day period, the alcohol beverages may be returned, and the out-of-state permittee may file a claim for a tax refund under s. 139.10, Stats. or take an appropriate amount of credit against taxable shipments into Wisconsin on their applicable alcohol beverage tax return for that month.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.06 Inventory records {#sec-tax-8.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.06}

(1) This section clarifies recordkeeping requirements for purposes of compliance with s. 139.11, Stats.

(2) A Wisconsin brewery, brewpub, manufacturer, rectifier, wholesaler, or winery may maintain separate inventory of untaxed and taxed alcohol beverages on the same premises. Detailed records shall be maintained that shows evidence of the beverages placed into and removed from untaxed inventory. Failure to maintain these records or to properly segregate the untaxed inventory from the taxed inventory shall make the untaxed inventory immediately subject to the provisions of ss. 139.02 to 139.06, Stats.

(3) Invoices and records maintained under ss. Tax 7.08 and 7.18, shall be available for inspection during normal business hours by representatives of the department for purposes of compliance with this section and s. 139.11, Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.07 Sales outside of Wisconsin {#sec-tax-8.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.07}

(1) The tax imposed under ss. 139.02 and 139.03, Stats., upon the sale of intoxicating liquor and fermented malt beverages within Wisconsin does not apply to alcohol beverages that are shipped from within Wisconsin to a point outside Wisconsin, under s. 139.04 (5), Stats. Brewers, brewpubs, manufacturers, rectifiers, wineries, and wholesalers need not pay the tax on alcohol beverages that are sold and shipped outside Wisconsin. The burden of proof, however, is at all times upon the Wisconsin brewer, brewpub, manufacturer, rectifier, winery, or wholesaler to show that the alcohol beverages actually went into interstate commerce.

(2) Wisconsin brewers, brewpubs, manufacturers, rectifiers, wineries, and wholesalers claiming exemption from the tax imposed under ss. 139.02 and 139.03, Stats., on the ground that shipments or deliveries were made in interstate commerce shall certify, under oath, one of the following:

(a) That the person receiving the shipment or delivery outside Wisconsin at the address stated in the shipping documents is authorized in the foreign state to receive the shipments or deliveries at the stated address.

(b) That the Wisconsin brewer, brewpub, manufacturer, rectifier, winery, or wholesaler has possession of bills of lading, waybills, freight bills or other evidence of shipment issued by common carriers operating in Wisconsin and that such shipments or deliveries were made to persons having an actual licensed place of business in the foreign state.

(3) No Wisconsin brewer, brewpub, manufacturer, rectifier, winery, or wholesaler shall receive an exemption from the tax imposed under ss. 139.02 and 139.03, Stats., on the sale of intoxicating liquor or fermented malt beverage shipped into any state or territory if the importation or sale of such alcohol beverage is prohibited by state or federal law. No exemption shall apply to alcohol beverages sold and shipped into other states if the purchaser or recipient of alcohol beverages cannot lawfully purchase or receive the alcohol beverages under the laws of the other state.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.08 Contract production {#sec-tax-8.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.08}

(1) This section applies to contract production agreements entered between a producer and an out-of-state recipe supplier under s. 125.21 (3) (b) 3., Stats. All other contract production agreements are governed by s. 125.21 (3), Stats.

(2) If the alcohol beverages created under a contract production agreement between parties outlined in s. 125.21 (3) (b) 3., Stats. is sold into interstate commerce, then s. Tax 8.07 shall apply, and the contract producer shall report the production in the report filed under s. 139.11 (2), Stats.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Wis. Admin. Code § Tax 8.09 Transfers of alcohol beverages between production premises and full-service retail outlet {#sec-tax-8.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 8.09}

Alcohol beverages removed from the production premises for transfer to a full-service retail outlet established by a brewer under s. 125.29 (7), Stats., a manufacturer or rectifier under s. 125.52 (4), Stats., or a winery under s. 125.53 (3), Stats., is a removal for consumption or sale and the tax under s. 139.02 or 139.03, Stats., shall be imposed at the time of transfer.

History

EmR2419: emerg. cr., eff. 12-14-24; CR 25-050: cr. Register December 2025 No. 840, eff. 1-1-26.

Chapter Tax 9 CIGARETTE TAX

Wis. Admin. Code § Tax 9.001 Cigarette and tobacco products report, tax return, and refund claim forms {#sec-tax-9.001 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.001}

(1) Forms. The department shall provide official forms for filing cigarette and tobacco products reports, tax returns, and refund claims. Except as approved by the department, reports, tax returns, and refund claims may only be filed using these official forms.

Note: The official forms for filing cigarette reports, tax returns, and refund claims are available on the department’s web site at https://www.revenue.wi.gov/Pages/Form/CigTobVapeForms.aspx. The official forms for filing tobacco products reports, tax returns, and refund claims are available on the department’s web site at https://www.revenue.wi.gov/Pages/Form/CigTobVapeForms.aspx.

(2) Filing forms.

(a) Forms filed with the department shall be submitted as prescribed by the department or by one of the following means:

Mailing them to the address specified by the department on the forms or in the instructions.
Delivering them to the department or to the destination that the department prescribes.
Filing them electronically by means prescribed by the department.

(c) The secretary of revenue may waive the requirement to file electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

Requests the waiver in writing.

Note: Written requests should be e-mailed to DORExciseTaxpayerAssistance@wisconsin.gov, faxed to (608) 261-7049, or addressed to Wisconsin Department of Revenue, Excise Tax Unit — Mail Stop 5-107, PO Box 8900, Madison WI 53708-8900.

Clearly indicates why the requirement causes an undue hardship.

(d) In determining whether the requirement to file electronically causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the internet.

Any other factor that the secretary determines is pertinent.

Note: Section Tax 9.001 interprets ss. 139.30 (4m) and 139.75 (4m), Stats.

History

CR 10-093: cr. Register November 2010 No. 659, eff. 12-1-10; CR 21-085: am. (2) (a) (intro.), r. (2) (b) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 9.01 Definitions {#sec-tax-9.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.01}

In this chapter:

(1) “Indian” means a natural person of Indian descent who is a member of a recognized federal Indian tribe occupying a reservation. Membership in a recognized federal Indian tribe is shown by either a name on the tribal roll or confirmation of that fact by the tribal council.

(2) “Indian corporation” means a corporation in which Indians own at least 51% of the voting stock.

(3) “Indian partnership” means a partnership in which at least 51% of the investment is made by Indians, at least 51% of the equity is owned by Indians and at least 51% of the profits or losses accrue to Indians.

(4) “Indian retailer” means an individual Indian, Indian partnership, Indian corporation or other person authorized to sell cigarettes by the tribal council of the reservation where the retailer’s business is located.

(5) “Reservation” means all land within the boundaries of the Bad River, Forest County Potawatomi, Lac Courte Oreilles, Lac du Flambeau, Menominee, Mole Lake, Oneida, Red Cliff, St. Croix and Stockbridge-Munsee reservations and the Ho-Chunk Nation Communities.

(6) “Stamped cigarettes” means cigarettes bearing valid Wisconsin tax stamps.

(7) “Untaxed cigarettes” means cigarettes not bearing valid Wisconsin tax stamps.

Note: Section Tax 9.01 interprets subch. II, ch. 139, Stats.

History

Cr. Register, April, 1984, No. 339, eff. 4-1-84; am. (1), (5) to (7), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.06 Affixing of state revenue stamps {#sec-tax-9.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.06}

Tax stamps of the proper denomination shall be affixed to either the top or the bottom of each individual package of cigarettes, except that in the case of flat tins or other odd-sized containers the tax stamps shall be affixed to some portion of the flat surface of the container.

Note: Section Tax 9.06 interprets s. 139.32, Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; renum. (1) to be Tax 9.06 and am., r. (2), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.08 Cigarette tax refunds to Indian tribes {#sec-tax-9.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.08}

(1) Scope. This section applies to sales of cigarettes to and by Indians and Indian retailers on the reservations of tribes who on behalf of their resident enrolled members have entered into agreements under s. 139.325, Stats., with the department for refunds of taxes on stamped cigarettes.

(2) Law.

(a) Section 139.323, Stats., directs the department to refund to Indian tribal councils 70% of the cigarette taxes collected under s. 139.31 (1), Stats., in respect to “ . . . sales on reservations or trust lands of an Indian tribe to the tribal council of the tribe having jurisdiction over the reservation or trust land on which the sale is made if all the following conditions are fulfilled:

(b) Section 139.325, Stats., allows the department to “... enter into agreements with Indian tribes to provide for the refunding of the cigarette tax imposed under s. 139.31 (1) on cigarettes sold on reservations to enrolled members of the tribe residing on the tribal reservation.”

(3) Sales to Indians.

(a) Except as provided in s. Tax 9.09 (2) and (4), Wisconsin cigarette distributors shall sell only stamped cigarettes to federally recognized Indian tribes within Wisconsin, or to persons authorized by the Indian tribe to purchase and sell cigarettes.

(b) The Indian tribal council may authorize retailers on its reservations or trust land to purchase and sell cigarettes on which the tribal government may be entitled to a tax refund by providing the department and the cigarette distributor a certified letter stating that the retailer has tribal authorization to purchase and sell cigarettes on the reservation.

(c) The Wisconsin cigarette distributor shall retain, for a period of 2 years from the date of sale, records substantiating sales to federally recognized Indian tribes or their authorized retailers.

(d) The Wisconsin cigarette distributor shall include with its monthly cigarette tax returns a list of all sales of cigarettes to federally recognized Indian tribes or their authorized retailers on a separate form prescribed by the department.

(4) Refunds.

(a) Upon receipt of a proper claim for refund, the department shall reimburse the Indian tribal council 70% of the amount of tax paid under s. 139.31, Stats., on all cigarettes purchased by the Indian tribal council or person authorized to purchase and sell cigarettes by the tribal council of the reservation where the purchaser’s business is located.

(b) Claims shall be filed upon forms prescribed and furnished by the department.

(d)

The Wisconsin cigarette distributor shall, upon request, furnish each purchaser with the original invoice prepared at the time of delivery, and the purchaser shall send the original invoice to the department when making a claim for refund. In this paragraph,“original invoice” means the top copy and not a duplicate original or carbon copy of the original invoice.
The original invoice shall be printed or rubber stamped with the words “original invoice” and shall in addition contain the following information:

a. Date of sale.

b. Name and address of seller.

c. Name and address of purchaser.

d. Number of cigarettes purchased.

e. Amount of Wisconsin cigarette tax paid as a separate item.

Double-faced carbon paper shall be used between the original paper or product approved in advance by the department as affording protection equivalent to double-faced carbon paper.
A separate original invoice shall be used for each sale and delivery and shall be legible.
If an original invoice has been lost or destroyed, a duplicate original invoice shall be used to support a claim for refund and accompanied by an affidavit by the purchaser that the original invoice has been lost or destroyed. The distributor when issuing the duplicate original invoice, shall indicate on the face of the invoice that it is a duplicate original invoice. The duplicate invoice shall contain the same information as on the original invoice.

(e) On the filing of a claim, the department shall determine the amount of refund due. The department may investigate the correctness of the facts stated in a claim and may require a claimant to submit records to substantiate the claim. When the department has approved a claim, it shall pay the claimant the reimbursement provided in this subsection, out of the monies collected under s. 139.31 (1), Stats.

(f) An Indian tribe that has entered into an agreement with the department under s. 139.325, Stats., shall file its claim for refund of the remaining 30% of the precollected tax on cigarettes sold on the reservation to enrolled members of the tribe residing on the tribal reservation on forms prescribed by the department.

(g) The penalties provided in s. 139.44, Stats., for filing a false or fraudulent claim apply to all refund claimants.

(h) The right of any tribal council to a refund under s. 139.323, Stats., is not assignable, and the application for a refund shall be made by the same tribal council who purchased or authorized the purchase of the cigarettes, and by no other person, and the proceeds or amount of the refund as determined by the department shall be paid to the tribal council whose name appears on the invoice and to no other person.

(i) Refunds under ss. 139.323 and 139.325, Stats., and this section shall be of tax only and may not include interest.

Note: Section Tax 9.08 interprets ss. 139.323 and 139.325, Stats.

History

Cr. Register, July, 1981, No. 307, eff. 8-1-81; emerg. r. and recr., eff. 10-1-83; r. and recr. Register, March, 1984, No. 339, eff. 4-1-84; am. (2), (3), (4) (a), (c), (d) 1. and (i), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.09 Cigarette sales to and by Indians on reservations of tribes that have not entered into a refund agreement with the department {#sec-tax-9.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.09}

(1) Scope. This section applies to sales of cigarettes to and by Indians and Indian retailers on the reservations of tribes who have not entered into agreements under s. 139.325, Stats., with the department for refunds of precollected taxes on stamped cigarettes.

(2) Sales to Indians for sale to resident tribal members.

(a) A Wisconsin cigarette distributor permittee may sell untaxed cigarettes to an Indian retailer if the untaxed cigarettes are to be sold to resident tribal members on the reservation. If this occurs:

The cigarettes shall be delivered by the distributor to the purchaser on the reservation.
The Wisconsin cigarette distributor shall retain, for a period of 2 years from the date of sale, proof that all of the sales were to a qualified Indian retailer. Either of the following types of proof shall be retained:

a. A purchase order issued by an Indian tribal council on its letterhead.

b. A photocopy of the written authorization to traffic in cigarettes issued to the Indian retailer by the tribal council of the reservation to which the cigarettes are to be delivered.

The Wisconsin cigarette distributor shall list all sales of untaxed cigarettes to Indian purchasers on form CT-103 as “Out-of-State Sales.”

(b) The Wisconsin cigarette distributor may not sell untaxed cigarettes to an Indian retailer if the department has notified the distributor that the untaxed cigarettes are being sold to persons other than resident tribal members.

(3) Sales to Indians for sale to persons other than resident tribal members. A Wisconsin cigarette distributor shall sell only stamped cigarettes to an Indian retailer if the cigarettes are to be sold to persons other than resident tribal members.

(4) Sales by Indians to resident tribal members. An Indian retailer may sell untaxed cigarettes to resident tribal members on the reservation.

(5) Sales by Indians to persons other than resident tribal members. An Indian retailer shall sell only stamped cigarettes to persons other than resident tribal members.

(6) Records for sales by Indians. The Indian retailer shall keep detailed records of both taxable and nontaxable transactions and shall record the number and dollar amounts of taxable sales to nonmembers of the tribe. With respect to nontaxable sales, the retailer shall record and retain for state inspection the names of all Indian purchasers, their tribal affiliations, the Indian reservation within which sales are made, and the number, dollar amounts and dates of sales. In addition, unless the Indian purchaser is personally known to the retailer, he or she shall present a tribal identification card.

(7) Refunds. If all the statutory requirements of s. 139.323, Stats., are fulfilled in accordance with s. Tax 9.08 (2), (3) and (4), the department shall refund 70% of the tax collected under s. 139.31 (1), Stats., to the tribal council.

Note: Section Tax 9.09 interprets subch. II, ch. 139, Stats.

History

Emerg. cr. eff. 10-1-83; cr. Register, March, 1984, No. 339, eff. 4-1-84; am. (2) (b), (6) and (7), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.11 Refunds {#sec-tax-9.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.11}

(1) A refund shall be granted to any cigarette distributor for stamps which were applied to packages of cigarettes when the distributor supplies documentation to the department that the packages of cigarettes to which stamps have been affixed were damaged or otherwise unsalable and have been returned to the manufacturer. A distributor who has possession of unsalable cigarettes may ship the cigarettes to the manufacturer and make application for refund. The distributor shall make application for refund on a form to be furnished by the department. The application for refund shall be accompanied by a copy of the signed bill of lading for the shipment. A copy of the credit memo for each shipment from the manufacturer shall be forwarded to the department prior to processing the refund. The department also requires an affidavit from the manufacturer attesting to the number of cigarettes received in each shipment.

(2) A refund shall be granted on all stamps unfit for use or otherwise unused and returned to the department by duly authorized permittees, providing the sale of the stamps can be verified by the department.

Note: Section Tax 9.11 interprets s. 139.36, Stats.

History

1-2-56; r. cr. Register, November, 1971, No. 191, eff. 12-1-71; correction in (1) made under s. 13.93 (2m) (b) 5., Stats., Register, October, 1995, No. 478; am. (1) and (2), r. (3), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.19 Stamp application machines and stamps {#sec-tax-9.19 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.19}

(2) The use of stamps and any machines or devices for their application by any distributor shall be subject to the approval of the secretary of revenue and the approval may be withdrawn at any time at the discretion of the secretary of revenue.

(3) To be properly stamped the full revenue stamp and at least 50% of the surrounding “field” shall be clearly visible in a proper position on the cigarette package.

(4) To be considered properly stamped an identifying code number shall also be clearly affixed to the cigarette package by the distributor or in a method approved by the secretary of revenue.

Note: Section Tax 9.19 interprets ss. 139.32 (2) and (3) and 139.34 (7), Stats.

History

Cr. Register, February, 1967, No. 134, eff. 3-1-67; am. Register, June, 1975, No. 234, eff. 7-1-75; am. Register, August, 1996, No. 488, eff. 9-1-96; CR 13-013: am. (title), r. (1), am. (2) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 9.21 Shipments to retailers {#sec-tax-9.21 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.21}

(1) Out-of-state permittees shipping cigarettes to Wisconsin retailers shall, prior to the entry of the cigarettes into this state, have affixed to the cigarette containers the proper Wisconsin revenue stamps.

(2) Wisconsin retailers purchasing cigarettes from outside the state shall purchase them only from out-of-state manufacturers and distributors who hold permits issued to them by the department.

(3) All out-of-state manufacturers may ship cigarettes either stamped or unstamped directly to any Wisconsin manufacturers or distributors who hold the proper permit issued by the department.

Note: Section Tax 9.21 interprets ss. 139.31, 139.32 (1) and 139.34, Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; am. Register, August, 1996, No. 488, eff. 9-1-96; CR 13-013: am. (3) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 9.22 Drop shipments {#sec-tax-9.22 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.22}

(1) Drop shipments are prohibited to retailers unless the proper tax stamps are affixed to the cigarette containers prior to sale and delivery.

(2) All consignors of cigarettes, on drop shipments, shall furnish a memo invoice to the distributor or the retailer receiving the merchandise directly, as well as an invoice to the distributor through whom the billing is serviced.

(3) The consignors shall list on their regular schedule CT-107 the name of the consignee actually receiving the merchandise, as well as the name of the distributor through whom it is billed.

Note: Section Tax 9.22 interprets ss. 139.32 (1) and 139.38, Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; am. (3), Register, December, 1977, No. 264, eff. 1-1-78; am. (1) to (3), r. (4), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.26 Trade or transfer of unstamped cigarettes {#sec-tax-9.26 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.26}

(2) No manufacturer or distributor may receive unstamped cigarettes from a retailer for stamping purposes.

(3) No unstamped cigarettes may be transferred from one permittee to another for any reason whatsoever, except for interstate commerce. All cigarettes sold by one permittee to another for the purpose of interstate commerce shall have a label affixed to each case stating “For Interstate Commerce Only.” The label shall be 2 inches by 5 inches in size. This merchandise shall be used for interstate commerce and may not be diverted in any manner for intrastate sale.

Note: Section Tax 9.26 interprets s. 139.32 (1), Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; correction in (1) made under s. 13.93 (2m) (b) 5., Stats., Register, October, 1995, No. 478; am. Register, August, 1996, No. 488, eff. 9-1-96; CR 13-013: r. (1) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 9.31 Sales out of Wisconsin {#sec-tax-9.31 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.31}

(1) The excise tax imposed upon the sale of cigarettes within the state does not apply to merchandise which is shipped from within the state to a point outside the state. Manufacturers and distributors need not affix revenue stamps to the original containers of cigarettes that are sold and shipped outside the state. The burden of proof, however, is at all times upon the Wisconsin manufacturer or distributor to show that the merchandise actually went into interstate commerce.

(2) Wisconsin manufacturers and distributors claiming exemption from the excise tax on cigarettes on the grounds that shipments or deliveries were made in interstate commerce shall certify under oath either of the following:

(a) Names and addresses of the persons receiving the shipments or deliveries in the foreign state.

(b) That they are in possession of bills of lading, waybills, freight bills or other evidence of shipment issued by common carriers.

Note: Section Tax 9.31 interprets s. 139.31 (3), Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; am. Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.36 Displaying of cigarettes {#sec-tax-9.36 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.36}

All cigarette retail outlets in the state of Wisconsin shall display all cigarettes offered for sale at retail in a manner permitting verification that they are stamped cigarettes.

Note: Section Tax 9.36 interprets ss. 139.32 (1) and 139.39, Stats.

History

1-2-56; am. Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.41 Vending machines {#sec-tax-9.41 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.41}

Each vending machine operator shall place on the front of each vending machine operated or controlled by the operator a sticker listing the operator’s name, address and vending machine operator’s permit number as issued by the department, in such a position that it will not become dislodged or detached. The sticker may be placed behind the glass, provided it is completely visible and readable from the front.

Note: Section Tax 9.41 interprets s. 139.32 (1) and (2), Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; correction, made under s. 13.93 (2m) (b) 5., Stats., Register, October, 1995, No. 478; am. Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.46 Purchases by the retailer {#sec-tax-9.46 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.46}

(1) No firm, person or corporation engaged in the retail sale of cigarettes may purchase cigarettes except from a manufacturer, distributor or jobber who holds a permit from the department.

(2) All retailers selling cigarettes shall retain invoices covering all purchases of cigarettes. The invoices shall be retained on the licensed premises in groups covering a period of one month each, and shall be available for inspection at all reasonable times by any representative of the department.

Note: Section Tax 9.46 interprets ss. 139.34 and 139.38, Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; am. Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.47 Invoicing of sales, including exchanges of cigarettes {#sec-tax-9.47 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.47}

(1) A true and correct invoice shall accompany the cigarettes at the time of any sale, including exchanges, between permittees or between permittees and retailers. Permittees include cigarette sellers, distributors, jobbers, vending machine operators or multiple retailers. A true and correct invoice shall contain the following information:

(a) Names and business addresses of both parties as shown on the permit or license of each.

(b) Date of sale or exchange.

(d) Unit price per pack or carton. The unit price of the cigarettes alone may be shown with the Wisconsin cigarette tax stated as a separate item.

(e) Signature of the person receiving the cigarettes. In an exchange, both parties shall sign the invoice.

(2) When a seller, acting as a representative of a cigarette manufacturer, exchanges fresh cigarettes for dried or damaged cigarettes, the seller shall accept and receive only dried or damaged cigarettes of the brands manufactured by the seller’s employer and shall prepare and deliver with the fresh cigarettes a true and correct invoice as set forth in sub. (1).

(3) When a seller, acting as a representative of a cigarette manufacturer, or when a permittee returns dried or damaged cigarettes to a distributor for return to the manufacturer and receives fresh cigarettes in exchange, the seller or permittee shall prepare a true and correct invoice as set forth in sub. (1). Each carton of dried or damaged cigarettes shall contain only cigarettes of one brand and pack. The distributor shall verify that all of the cigarettes are stamped cigarettes.

(4) A clearly legible copy of all invoices evidencing a sale or exchange of cigarettes shall be retained by each of the parties to the transaction for a period of 5 years from the date of the invoice, in groups covering a period of one month each.

Note: Section Tax 9.47 interprets s. 139.38, Stats.

History

Cr. Register, November, 1971, No. 191, eff. 12-1-71; correction in (2) and (3) made under s. 13.93 (2m) (b) 5., Stats., Register, February, 1994, No. 458; correction in (1) (intro.) made under s. 13.93 (2m) (b) 5., Stats., Register, October, 1995, No. 478; am. (1) (intro.), (d), (e), (3) and (4), Register, August, 1996, No. 488, eff. 9-1-96; CR 13-013: am. (4) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 9.51 Samples {#sec-tax-9.51 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.51}

(1) Cigarettes shipped into this state by manufacturers to their representatives, including advertising agencies and airlines, for the purpose of free samples shall be accompanied by a memo invoice stating brands and number of cigarettes. The memos shall be retained by the representative for the statutory period of 5 years.

(2) Manufacturers may ship free sample cigarettes in quantities of 400 or fewer to consumers, such as employees or stockholders.

(3) All sample cigarettes described in subs. (1) and (2) shall bear the legend: “Applicable state tax paid. Not for resale.” The cigarettes are subject to Wisconsin cigarette use tax. The tax paid by the manufacturer shipping or causing the cigarettes to be shipped into this state shall be remitted no later than the 15th day of the month following the shipment. Along with the applicable tax remitted each manufacturer shall submit a list of persons to whom cigarettes were shipped indicating the amount of cigarettes shipped to each person.

Note: Section Tax 9.51 interprets ss. 139.31 and 139.33, Stats.

History

1-2-56; r. cr. Register, November, 1971, No. 191, eff. 12-1-71; am. Register, August, 1996, No. 488, eff. 9-1-96; CR 13-013: am. (1) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 9.56 Branch offices {#sec-tax-9.56 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.56}

Separate sets of records are required for each branch or place at which a wholesale cigarette business is operated.

Note: Section Tax 9.56 interprets s. 139.34 (4), Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75.

Wis. Admin. Code § Tax 9.61 Warehousing of cigarettes {#sec-tax-9.61 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.61}

Out-of-state persons, firms or corporations having permits to engage in the sale of cigarettes in the state of Wisconsin may warehouse either stamped or unstamped merchandise in properly licensed warehouses located in the state of Wisconsin. No out-of-state person, firm or corporation may affix stamps to merchandise while it is stored in the licensed warehouse.

Note: Section Tax 9.61 interprets s. 139.34 (8), Stats.

History

1-2-56; am. Register, June, 1975, No. 234, eff. 7-1-75; am. Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.67 Cigarette tax credit {#sec-tax-9.67 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.67}

(1) Payment for cigarette tax stamps. Under s. 139.32 (6), Stats., manufacturers and distributors having obtained a permit from the secretary of revenue may purchase cigarette tax stamps on credit. The credit extended by the department for any cigarette tax stamp purchase shall become due and payable upon the earlier of:

(a) Formal demand by the department.

(b) Fifteen days after the close of the month in which the indicia were received by the manufacturer or distributor.

(2) Investigation. The department may investigate the financial stability of the applicant and may deny credit to any permittee when there is any question of ability to pay as required in this section.

(3) Revocation of privilege. The privilege granted to any manufacturer or distributor of making cigarette tax stamp purchases on credit may be revoked at any time at the discretion of the department.

Note: Section Tax 9.67 interprets s. 139.32 (6), Stats.

History

Cr. Register, November, 1957, No. 23, eff. 12-1-57; am. Register, 68, eff. 9-1-61; am. Register, June, 1975, No. 234, eff. 7-1-75; emerg. r. and recr. eff. 9-1-93; r. and recr. Register, February, 1994, No. 458, eff. 3-1-94.

Wis. Admin. Code § Tax 9.68 Ownership and name changes {#sec-tax-9.68 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.68}

(1) General. Under s. 139.34 (4), Stats., a cigarette permit is not transferable to another person. This section clarifies when a new cigarette permit is required, as the result of an ownership or name change, or both.

(2) Ownership change.

(a) When there is a change in ownership of a business, the new owner shall apply for a new permit using form CTP-129, except as provided in par. (c). The new owner shall notify the department not later than 10 days prior to the change.

Note: Form CTP-129 is available on the department’s web site at www.revenue.wi.gov.

(b) A new permit shall be obtained by using form CTP-129 when there is a change in ownership of a sole proprietorship, partnership, corporation or other form of ownership, except as provided in par. (c).

Examples. A new permit is required if: 1) A sole proprietorship or partnership incorporates.

2) A sole proprietorship is sold to a different sole proprietor.

3) A sole proprietorship becomes a partnership.

4) A partner in a partnership leaves the partnership or a partner is added to the partnership.

5) The federal employer identification number of a business changes.

A corporation is merged with another corporation, the merged corporation ceases to exist, and the surviving corporation does not have a valid permit.
The federal employer identification number of a corporation changes.

(3) Name change.

(a) A permittee shall notify the department of a name change at least 10 days prior to the change and the permittee shall retain the same permit number.

(b) A rider, verifying the name change, such as one filed by a permittee’s insurance company at the request of the permittee, shall be submitted and attached to the security documents on file with the department. If no security is on file, or if a rider is not filed with the department, new security shall be deposited under the new name as required, and any old security shall be returned to the permittee.

Note: Section Tax 9.68 interprets s. 139.34 (4), Stats.

History

Cr. Register, September, 1991, No. 429, eff. 10-1-91; am. (2) (b) and (3) (b), Register, August, 1996, No. 488, eff. 9-1-96.

Wis. Admin. Code § Tax 9.69 Master settlement agreement with tobacco product manufacturers {#sec-tax-9.69 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.69}

(1) Purpose. This section describes requirements and methods relating to collecting, maintaining and reporting data regarding the number of Wisconsin state cigarette excise tax stamps affixed to packages of cigarettes, and the amount of “roll-your-own” cigarette tobacco, sold in Wisconsin each year.

Note: The data collected, maintained and reported under this section shall be used to ascertain the amount of Wisconsin excise tax paid on the cigarettes of each tobacco product manufacturer that elects to place funds in a qualified escrow fund under s. 995.10, Stats., for each year, or, if the department deems it appropriate, is a participating manufacturer under the master settlement agreement between the state and tobacco product manufacturers, pursuant to 1999 Wis. Act 122.

(2) Definitions. In this section:

(a) “Cigarette” has the same meaning as in s. 995.10 (1) (d), Stats., and includes “roll-your-own” cigarette tobacco.

(b) “Master settlement agreement” has the same meaning as in s. 995.10 (1) (e), Stats.

(d) “Sell” or “sale” has the same meaning as in s. 139.30 (12), Stats.

(e) “Tobacco product manufacturer” has the same meaning as in s. 995.10 (1) (i), Stats., and includes both a cigarette manufacturer under subch. II of ch. 139, Stats., and a tobacco products manufacturer under subch. III of ch. 139, Stats., that sells “roll-your-own” cigarette tobacco.

(f) “Wisconsin consumer” means a consumer within this state, including a direct consumer, distributor, retailer or intermediary similar to a distributor or a retailer.

(3) Reporting requirement.

(a) Every tobacco product manufacturer that elects to sell cigarettes to Wisconsin consumers shall, by the 15th day of each month, file a schedule with the department that reconciles the number of Wisconsin state cigarette excise tax stamps affixed to packages of cigarettes sold to Wisconsin consumers and the amount of “roll-your-own” cigarette tobacco sold to Wisconsin consumers in the previous calendar month.

(b) The schedule required under par. (a) shall contain all of the following information that is applicable:

A listing of each sale of cigarettes other than “roll-your-own” cigarette tobacco manufactured, or the name of the manufacturer of the cigarettes that were delivered to Wisconsin consumers, onto which state cigarette excise tax stamps were affixed.
A listing of each sale of “roll-your-own” cigarette tobacco manufactured, or the name of the manufacturer of the “roll-your-own” cigarette tobacco, that was delivered to Wisconsin consumers.
For each manufacturer listed pursuant to subd. 1., a listing of all brands of cigarettes sold and the number of Wisconsin state cigarette excise tax stamps affixed to cigarette packages with respect to each brand.
For each brand of cigarettes listed for each manufacturer pursuant to subd. 3., the following additional information, if known:

a. The name of the manufacturer of the cigarettes.

b. The name of the person or entity first responsible for the cigarettes being designated or identified for sale in the United States.

For each sale of “roll-your-own” cigarette tobacco listed for each manufacturer pursuant to subd. 2., the following additional information, if known:

a. The name of the manufacturer of the “roll-your-own” cigarette tobacco.

b. The name of the person or entity first responsible for the “roll-your-own” cigarette tobacco being designated or identified for sale in the United States, by brand.

Any other information the department may deem necessary to administer the provisions of this section.

(4) Escrow fund certification requirements.

(a) Every tobacco product manufacturer that is not a participating manufacturer under the master settlement agreement shall by April 15 of each year certify to the department and to the attorney general that the amounts required under s. 995.10 (2) (b), Stats., have been placed into a qualified escrow fund that is designated for Wisconsin judgments or release payments.

(b) The certification required under par. (a) shall include all of the following:

The name of the qualified financial institution where the escrow fund is maintained.
The amount of funds placed into the escrow fund since the last reporting period, based on Wisconsin sales.
The amounts, if any, paid out of the escrow fund in judgments or release payments and the purpose of the disbursements.
The balance in the escrow fund as of March 31 of each year.
A copy of the escrow fund balance statement as of March 31 of each year.

(5) Recordkeeping requirements. Every tobacco product manufacturer required to file a schedule under sub. (3) shall maintain complete and accurate records to support the information reported on the required schedule. These records shall be maintained for a period of 5 years from the date of sale into Wisconsin and shall include all of the following:

(a) Purchase records indicating the tobacco product manufacturer of the cigarettes, the date of purchase and the number of cigarettes by brand or amount of “roll-your-own” cigarette tobacco purchased, by brand.

(b) Sales records indicating to whom the sale was made, the tobacco product manufacturer of the cigarettes, the date of sale and the number of cigarettes by brand or amount of “roll-your-own” cigarette tobacco sold.

(d) Any additional records deemed necessary by the secretary.

(6) Remedies for noncompliance. The failure of a tobacco product manufacturer to either become a participating manufacturer under the terms of the master settlement agreement or place funds into a qualified escrow fund, as provided in s. 995.10 (2) (b) 1., Stats., shall be subject to civil action and penalties under s. 995.10 (2) (b) 3., Stats.

Note: Section Tax 9.69 interprets subchs. II and III of ch. 139, Stats., and s. 995.10, Stats.

History

Emerg. cr., eff. 8-17-00; cr. Register, December, 2000, No. 540, eff. 1-1-01; corrections in (2) (a) to (e), (4) (a) and (6) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 17-019: am. (5) (intro.), Register June 2018 No. 750 eff. 7-1-18.

Wis. Admin. Code § Tax 9.70 Cigarette, tobacco, and vapor products tax bad debt deductions {#sec-tax-9.70 omnilex-key=us-wi-regs-official--agency-tax--Tax 9.70}

(1) Purpose. This section clarifies when and how a person who pays cigarette taxes or a distributor who pays tobacco and vapor taxes may claim a deduction under ss. 139.362 and 139.801, Stats., for cigarette, tobacco, and vapor products tax attributable to bad debt.

(2) Definitions. In this section:

(a) “Bad debt” has the meaning given in ss. 139.362 (1) and 139.801 (1), Stats.

(b) “Cigarette” has the meaning given in s. 139.30 (1m), Stats.

(d) “Tobacco products” has the meaning given in s. 139.75 (12), Stats.

(e) “Vapor product” has the meaning given in s. 139.75 (14), Stats.

(3) Bad debts.

(a) Deduction from measure of tax. Using Form CT-117, titled “Cigarette Distributor Bad Debt Deduction for Uncollectible Wisconsin Cigarette Tax,” or Form TT-117, titled “Tobacco and Vapor Products Distributor Bad Debt Deduction for Uncollectible Wisconsin Tobacco Products Tax,” a person who pays cigarette taxes or a distributor who pays tobacco and vapor products taxes may claim a deduction on the monthly tax report for the cigarette, tobacco, and vapor products tax attributable to bad debt that is written off as uncollectible in their books and records and that is eligible to be deducted as bad debt under s. 166 of the Internal Revenue Code.

(b) When to report the deduction. The deduction under par. (a) shall be claimed on the monthly tax report that is submitted for the month in which the amount of the deduction is written off as uncollectible and in which such amount is eligible to be deducted as a bad debt under s. 166 of the Internal Revenue Code.

Example: A distributor writes off a debt attributable to tobacco products tax on September 10, 2005. At the time the debt is written off it is eligible to be deducted as a bad debt under s. 166 of the Internal Revenue Code. The distributor may claim a bad debt deduction by attaching a completed form TT-117 to the monthly tobacco products tax report filed for the month of September 2005.

(c) Recovery of bad debt. If a person who pays cigarette taxes or a distributor who pays tobacco and vapor products taxes subsequently collects in whole or in part any bad debt for which a deduction is claimed under par. (a), they shall include the amount collected in the monthly tax report filed for the month in which the amount is collected and shall pay the tax with the report.

(d) Payments and credits. Payments and credits applied to a debt before it is written off as uncollectible shall be apportioned to the amount of such debt attributable to cigarette or tobacco and vapor products tax on the basis of the ratio of the cigarette or tobacco and vapor products tax to be paid per the invoice to the total amount to be paid per the invoice. The amount so apportioned shall reduce the amount of debt attributable to cigarette or tobacco and vapor products tax to arrive at the deduction under par. (a).

Examples: 1) At a time when the cigarette tax rate is 12.6¢ per stick, Person A sells cigarettes to Customer B. The amount of the invoice is $20,000, consisting of cigarette tax of $5,040, cost of cigarettes of $12,000 and sundries of $2,960. Customer B defaults and discontinues operations, leaving a balance due to Person A of $2,100, which includes interest of $200 not included in the original invoice amount. The deductible tax is $478.80, computed as follows:

2) At a time when the tobacco products tax rate is 71% of the manufacturer’s established list price, Distributor A sells tobacco products to Customer B. The amount of the invoice is $11,800, consisting of tobacco products tax of $3,550, cost of tobacco products of $5,000 and sundries of $3,250. Customer B defaults and discontinues operations, leaving a balance due to Distributor A of $3,000, which includes interest of $200 not included in the original invoice amount. The deductible tax is $841, computed as follows:

(e) Tax rate change. If the deduction under par. (a) is claimed for a month when the cigarette or tobacco products or vapor products tax rate is different from the tax rate in effect when the cigarettes, tobacco or vapor products were sold, the tax rate in effect when the cigarettes, tobacco or vapor products were sold shall be used to determine the amount of the deduction.

(f) Illegal sales. No deduction under par. (a) shall be allowed for cigarette, tobacco, and vapor products tax attributable to bad debt incurred on sales of cigarettes, tobacco, or vapor products sold in violation of state or federal law.

Example: Sales of banned products sold in violation of the directory of certified manufacturers and brands, s. 995.12, Stats.

Note: Section Tax 9.70 interprets ss. 139.362 and 139.801, Stats.

Note: Sections 139.362 and 139.801, Stats., were created by 2005 Wis. Act 25, and took effect on September 1, 2005.

History

CR 06-107: cr. Register April 2007 No. 616, eff. 5-1-07; CR 22-044: am. (title), (1), cr. (2) (e), am. (3) (a), (c) to (f) Register June 2023 No. 810, eff. 7-1-23.

Chapter Tax 10 UNCLAIMED PROPERTY

Wis. Admin. Code § Tax 10.01 Virtual currency {#sec-tax-10.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 10.01}

(1) A holder that is required to report and remit virtual currency to the department as provided under s. 177.0307, Stats., shall liquidate the virtual currency within 30 days prior to the November 1 due date of the report required under s. 177.0401, Stats.

(2) A holder that meets the requirement in sub. (1), and substantially complies with ss. 177.0501 and 177.0502, Stats., is considered to have delivered the virtual currency in good faith and is relieved of liability arising after payment and delivery of the virtual currency to the administrator.

History

CR 23-028: cr. Register February 2024 No. 818, eff. 3-1-24.

Chapter Tax 11 SALES AND USE TAX

Subchapter I General Provisions

Wis. Admin. Code § Tax 11.001 Forward and definitions {#sec-tax-11.001 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.001}

(1) Applicability. Chapter Tax 11 is applicable to the state sales and use taxes imposed under subch. III of ch. 77, Stats., and is also applicable to the county sales and use taxes authorized under subch. V of ch. 77, Stats.

(2) Definitions. In this chapter, unless otherwise specified:

(a) “Consumers” means persons who purchase and use tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

(am) “County tax” means the sales and use tax that is authorized under subch. V of ch. 77, Stats.

(b) “Department” means the Wisconsin department of revenue.

(bc) “Goods under s. 77.52 (1) (d), Stats.” means specified digital goods and additional digital goods that are sold, leased, licensed, or rented on a permanent or less than permanent basis and regardless of whether the purchaser is required to make continued payments for such right.

(bg) “Items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.” means “items under s. 77.52 (1) (b), Stats.” as defined in par. (bn), “property under s. 77.52 (1) (c), Stats.” as defined in par. (br), and “goods under s. 77.52 (1) (d), Stats.” as defined in par. (bc).

(bn) “Items under s. 77.52 (1) (b), Stats.” means coins and stamps of the United States that are sold, licensed, leased, rented, or traded as collector’s items above their face value.

(br) “Property under s. 77.52 (1) (c), Stats.” means leased property that is affixed to real property, if the lessor has the right to remove the leased property upon breach or termination of the lease agreement, unless the lessor of the leased property is also the lessor of the real property to which the leased property is affixed.

(e) “Tax” means the Wisconsin sales or use taxes in effect under ss. 77.52 (1) and (2) and 77.53 (1), Stats. “Tax” also includes the county tax imposed under s. 77.71, Stats.

(f) “Taxable” and similar terms including “subject to the tax” and “tax applies” mean either of the following:

The sales tax applies to a sale of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services, measured by the sales price from the sale.
The use tax applies to the storage, use, or other consumption of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services sold, measured by the purchase price.

(3) Retailers and retail sales.

(a) Retailers shall comply with all requirements imposed upon them, including all of the following:

Obtaining a seller’s permit for each place of business in this state.
Filing tax returns and paying tax.
Collecting use tax when applicable and remitting the tax with returns.
Keeping proper records.

Note: See s. Tax 11.92 regarding proper record keeping.

(b) Sales to consumers are retail sales to which either the sales tax or the use tax applies.

Note: Section Tax 11.001 interprets subchs. III and V of ch. 77, Stats.

Note: The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2. The regional transit authority taxes were authorized by 2009 Wis. Act 28 and repealed by 2011 Wis. Act 32.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (12), Register, January, 1983, No. 325, eff. 2-1-83; emerg. am. (intro.), eff. 3-24-86; am. (intro.), Register, October, 1986, No. 370, eff. 11-1-86; renum. (3), (5), (8), (12) and (13) to be (1) to (5), am. (3) (d), Register, June, 1991, No. 426, eff. 7-1-91; am. (intro), renum. (4) to (5), cr. (4) and (6), r. (5), Register, October, 1997, No. 502, eff. 11-1-97; CR 02-128: renum. (intro.), (1), (2), (3) (intro.) and (a) to (d), (4) (5) and (6) (intro.), (a) and (b) to be (1), (2) (a), (b) and (c), (3) (a) 1. to 4. and (2) (d), (e) and (f) (intro.), 1. and 2., am. (1), (2) (a) and (c), (3) (a) 1. to 3. and (2) (d) and (e), cr. (2) (intro.), (a) (intro.) and (b), Register July 2003 No. 571, eff. 8-1-03; EmR0924: emerg. am. (1), (2) (a), (e), (f) 1. and 2., cr. (2) (am), (bc), (bg), (bn), (br), and bw), eff. 10-1-09; CR 09-090: am. (1), (2) (a), (e), (f) 1. and 2., cr. (2) (am), (bc), (bg), (bn), (br), and (bw) Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (1), r. (2) (bw), am. (2) (e) Register August 2012 No. 680, eff. 9-1-12; CR 20-027: am. (3) (a) 3. Register July 2021 No. 787, eff. 8-1-21; CR 22-044: am. (1), r. (2) (d), am. (2) (e) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.002 Registration {#sec-tax-11.002 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.002}

(1) Purpose. The purpose of this section is to set forth the requirements to apply for a seller’s permit, use tax registration certificate, or consumer’s use tax registration certificate on the part of persons intending to operate as a seller at retail in this state, to collect use tax for the convenience of customers, or to report use tax; and to establish time limits within which the department will act on the application.

(2) Permits and certificates required.

(a) Seller’s permit. Every individual, partnership, corporation, or other organization making retail sales, licenses, leases, or rentals of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or selling, licensing, performing, or furnishing taxable services at retail in Wisconsin shall have a seller’s permit for each place of operation, unless the seller is exempt from taxation.

Note: A nonprofit organization’s receipts are exempt from taxation if it meets the requirements under s. 77.54 (7m), Stats. Also see s. Tax 11.35.

(b) Use tax registration certificate. Every out-of-state retailer engaged in business in this state and not required to hold a seller’s permit or who is not engaged in business in this state but elects to collect use tax for the convenience of its Wisconsin customers shall have a use tax registration certificate.

(c) Consumer’s use tax registration certificate. Every person not required to have a seller’s permit or use tax registration certificate who regularly has use tax obligations because purchases are made without sales or use tax being charged by the seller shall have a consumer’s use tax registration certificate.

(d) Local exposition registration. Every person selling lodging, alcoholic beverages, as defined in s. 77.51 (1b), Stats., if the alcoholic beverages are for consumption on the retailer’s premises, candy, as defined in s. 77.51 (1fm), Stats., prepared food, as defined in s. 77.51 (10m), Stats., and soft drinks, as defined in s. 77.51 (17w), Stats., or renting automobiles subject to local exposition district taxes shall register with the department. Upon registration for local exposition district taxes, a separate seller’s permit or use tax registration certificate only for local exposition district taxes will not be issued. The seller’s permit or use tax registration certificate, as described in pars. (a) and (b), issued for sales and use tax purposes will apply for local exposition district tax purposes.

(3) Application for seller’s permit or use tax certificates.

(a) A person required to have a seller’s permit or use tax registration certificate shall register by one of the following methods:

Using the department’s online registration system.
Filing an “Application for Business Tax Registration,” form BTR-101, with the department at the address shown on the form. The application shall include all information and fees required and shall be signed by the appropriate person described on the form.

a. Using the Streamlined Sales Tax Registration System (SSTRS). The information submitted using the SSTRS is obtained by the department on a daily basis and used to automatically register a person in Wisconsin. If the department determines that additional information is necessary to process the registration, a person will be contacted by the department.

b. Except for a seller who uses a certified service provider, a seller who registers through the SSTRS may indicate at the time of registration that it anticipates making no taxable sales in Wisconsin and is not required to file a sales and use tax return in Wisconsin until the seller makes a taxable sale that is sourced to Wisconsin. However, once the seller makes a taxable sale in Wisconsin, the seller is required to file a sales and use tax return in Wisconsin by the last day of the month following the end of the calendar quarter in which the sale occurred and continue to file returns by the last day of each calendar quarter thereafter, unless it is notified in writing by the department of a different filing frequency.

(am) A person required to have a consumer’s use tax registration certificate or required to register for local exposition district taxes shall register using the method described in par. (a) 1. or 2.

(b) Security, as described in s. Tax 11.925, may be required.

Note: The online registration system and Form BTR-101 are available on the Department’s web site at: http://www.revenue.wi.gov/forms/sales/index.html. Form BTR-101 may also be obtained by writing or calling Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, telephone (608) 266-2776.

(4) Review and action by department. The department shall review and make a determination on an application for a seller’s permit or use tax certificate described in sub. (2) within 15 business days from the day the application is received by the department. For this purpose, a determination is made on the day whichever of the following events occurs first:

(a) The approved permit is mailed by the department to the applicant.

(b) The department mails notification to the applicant that security is required or that the application is incomplete or incorrect, or more information is needed. The 15-day period shall reapply from the day all information necessary to make a determination, including payment of a required fee, or payment of security is received by the department.

(c) A notification of denial of the application with explanation for the denial is mailed by the department to the applicant.

Note: Section Tax 11.002 interprets ss. 66.0615 (1m) (f), 77.52 (9) and (12), 77.53 (9) and (9m), 77.58 (2) (d), 77.61 (2), 77.982 (4), 77.991 (4) and 227.116, Stats.

Note: Section Tax 11.002 (3) (am) interprets s. 77.58 (2) (d), Stats., which became effective May 27, 2010.

History

Cr. Register, August, 1985, No. 356, eff. 9-1-85; am. (2) (a), (3), and (4) (intro.), Register, March, 1991, No. 423, eff. 4-1-91; am. (1), (2) (c), (3), (4) (a) and (b), cr. (2) (d), Register, October, 1997, No. 502, eff. 11-1-97; EmR0924: emerg. am. (1), (2) (a) and (d), renum. (3) to be (3) (a) (intro.) and am., cr. (3) (a) 1., 2. and (b), eff. 10-1-09; CR 09-090: am. (1), (2) (a) and (d), renum. (3) to be (3) (a) (intro.) and am., cr. (3) (a) 1., 2. and (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (d), (3) (a) (intro.), cr. (3) (a) 3., (am) Register November 2010 No. 659, eff. 12-1-10; CR 20-027: am. (3) (a) 3. Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.01 Sales and use tax, local exposition tax, and premier resort area tax return forms {#sec-tax-11.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.01}

(1) Forms. For filing sales and use tax, local exposition tax, and premier resort area tax returns, the following forms shall be used:

(a) Form MV-1. A department of transportation form for occasional and dealer sales of motor vehicles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, and semi-trailers.

(b) Form S-012. Also called form ST-12. The monthly, quarterly, or annual return used to report state, county, and stadium taxes by persons holding a Wisconsin seller’s permit, use tax registration certificate, or consumer’s use tax registration certificate. This form is also used to file refund claims or report additional taxes for prior periods.

(c) Form SU-050. Also called form UT-5. For consumers other than persons holding a Wisconsin seller’s permit, use tax registration certificate, or consumer’s use tax registration certificate.

(d) Form DT 1556. A department of transportation form for occasional and dealer sales of aircraft.

(e) Form 9400-193. A department of natural resources form for occasional and dealer sales of boats.

(f) Form 9400-210. A department of natural resources form for occasional and dealer sales of snowmobiles.

(g) Form 9400-376. A department of natural resources form for occasional and dealer sales of all-terrain vehicles and utility terrain vehicles.

(gm) Form 9400-609. A department of natural resources form for occasional and dealer sales of off-highway motorcycles.

(h) Form EX-012. The return used to report local exposition taxes. This form is also used to file refund claims or report additional taxes for prior periods.

(i) Form PRA-012. The return used to report premier resort area taxes. This form is also used to file refund claims or report additional taxes for prior periods.

(2) Filing returns.

(a) Forms required to be filed shall be submitted by one of the following means:

Mailing them to the address specified by the department on the forms or in the instructions.
Delivering them to the department or to the destination that the department prescribes.
Filing them electronically as prescribed by the department.

(b) Except as provided in par. (c), the department may require a person registered or required to be registered for Wisconsin sales and use tax purposes to file its sales and use tax return electronically. The department shall notify the person at least 90 days prior to the due date of the first sales and use tax return required to be filed electronically of the requirement to file electronically. In its notice, the department shall indicate the period covered for the first return to be filed electronically.

(bg) Except as provided in par. (c), the department may require a person registered or required to be registered for Wisconsin sales and use tax purposes to file its premier resort area tax return electronically. The department shall notify the person at least 90 days prior to the due date of the first premier resort area tax return required to be filed electronically of the requirement to file electronically. In its notice, the department shall indicate the period covered for the first return to be filed electronically.

(br) Except as provided in par. (c), the department may require a person registered or required to be registered for Wisconsin local exposition tax purposes to file its local exposition tax return electronically. The department shall notify the person at least 90 days prior to the due date of the first local exposition tax return required to be filed electronically of the requirement to file electronically. In its notice, the department shall indicate the period covered for the first return to be filed electronically.

(c) The secretary of revenue may waive the requirement to file electronically when the secretary determines that the requirement causes an undue hardship, if the person does all of the following:

Requests the waiver in writing.

Note: Written requests should be e-mailed to DORWaiverRequest@wisconsin.gov, faxed to (608) 267-1030, or addressed to eFile Waiver Request, Wisconsin Department of Revenue, Mail Stop 5-77, PO Box 8949, Madison WI 53708-8949.

Clearly indicates why the requirement causes an undue hardship.

(d) In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:

Unusual circumstances that may prevent the person from filing electronically.

Example: The person does not have access to a computer that is connected to the internet.

Any other factor that the secretary determines is pertinent.

Note: Section Tax 11.01 interprets ss. 77.51(3r), 77.58, 77.75, 77.982(2), and 77.9941(4), Stats.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (1) (a), r. (1) (d), cr. (1) (m), Register, January, 1983, No. 325, eff. 2-1-83; r. and recr., Register, March, 1991, No. 423, eff. 4-1-91; r. (1) (e), renum. (1) (f) to (i) to be (1) (e) to (h), Register, January, 1992, No. 433, eff. 2-1-92; am. (1) (b), cr. (1) (i), (j) and (k), Register, October, 1997, No. 502, eff. 11-1-97; CR 01-143: am. (1) (b), r. (1) (c), (d), (e) and (h), renum. (1) (f), (g), (i), (j) and (k) to be (1) (c) to (g) and am. (1) (d), r. and recr. (2) Register July 2002 No. 559, eff. 8-1-02; CR 10-093: am. (title), (1) (intro.), (a), (b), (c), (2) (a) 3., (b), (c) (intro.), (d) (intro.), 1., cr. (1) (h), (i), (2) (bg), (br) Register November 2010 No. 659, eff. 12-1-10; correction in (1) (a) made under s. 13.92 (4) (b) 7., Stats., Register November 2010 No. 659; CR 16-053: am. (1) (g) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: cr. (1) (gm) Register June 2020 No. 774, eff. 7-1-20.

Subchapter II Exempt Entities

(1) Definitions.

(a) In this section:

“Elementary school” means a school providing any of the first 8 grades of a 12 grade system and kindergarten where applicable.
“School district” has the same meaning as provided for in s. 115.01 (3), Stats.
“Secondary school” means a school providing grades 9 through 12 of a 12 grade system and includes the junior and senior trade schools described in s. 119.30, Stats.

(b) Elementary and secondary schools include parochial and private schools not operated for profit which offer any academic levels comparable to those described in par. (a) 1. and 3. and which are educational institutions having a regular curriculum offering courses for at least 6 months in the year. Elementary and secondary schools also include school districts for purposes of exemption under s. 77.54 (4), Stats.

(c) Elementary or secondary schools do not include flying schools, driving schools, art schools, music schools, dance schools, modeling schools, charm schools, or similar schools which do not offer systematic instruction of the scope and intensity common and comparable to elementary and secondary schools.

(2) Sales by elementary and secondary schools.

(a) Exempt sales by elementary or secondary schools include:

The sale or rental of books, yearbooks, annuals, magazines, directories, bulletins, papers, or similar publications.
School lunches and library and book fines.

Example: A school auditorium is rented to a religious group which conducts a religious revival. The sales price from the rental is exempt.

Rental of auditoriums or gymnasiums, including any charges for lights, heat, janitor fees, and equipment, when used for other than recreational, athletic, amusement, or entertainment purposes.
Rental of auditoriums or gymnasiums, including any charges for lights, heat, janitor fees, and equipment, when used by a promoter or professional group which will sell admissions to the public for recreational, athletic, amusement, or entertainment purposes.

Examples: 1) A school gymnasium is rented to a professional basketball team which will sell tickets to the event. The sales price from the rental is exempt.

2) A school auditorium is rented to a popular band for one night. The band will sell tickets to its performance. The sales price from the rental is exempt.

Admissions to school activities such as athletic events, art and science fairs, concerts, dances, films or other exhibits, lectures, and school plays, if the event is sponsored by the school, the school has control over purchases and expenditures and the net proceeds are used for educational, religious, or charitable purposes.
The transfer of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a contractor for performance of a real property construction activity in exchange for a reduction in the contract price, even though the contract provides that the contractor is to supply all materials.

(b) Taxable sales by elementary or secondary schools include:

Admissions to recreational facilities, such as golf courses, swimming pools, ball fields, and gymnasiums which are open to the general public for recreational purposes.
Rental of auditoriums or gymnasiums, including any charges for lights, heat, janitor fees, and equipment, when used by persons for their own recreation, entertainment, or amusement where there is no charge for admission.

Example: A local neighborhood group rents the school gymnasium for its residents to play volleyball. The neighborhood group does not charge its residents to play volleyball. The sales price from the rental is taxable. If the group charged an entry fee to play volleyball, the sales price from the rental of the gymnasium is not taxable because the rental is for resale.

Taxable services under s. 77.52 (2) (a), Stats., such as parking and repair services.

Example: A school sponsors an athletic tournament and charges $1 for parking. The sales price from parking is taxable.

(3) Sales by school-related organizations and others. Taxable sales by school-related organizations and others, not including school districts, include:

(a) The sale of class rings, photographs, or caps and gowns rented or sold to students by retailers or photographers where the school acts as a collection agent for the seller, whether or not the school receives a commission for the collection. The retailer, such as a photographer, is subject to the tax on these sales.

(b) Sales made by school-related organizations, such as parent-teacher associations and student organizations, not subject to the control and supervision of school officials.

(c) Sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services by technical college districts.

(4) Sales to schools and school-related organizations. Under s. 77.54, Stats., sales to the following organizations are exempt:

(a) Public schools, technical colleges, state colleges and universities, and public school districts, located in Wisconsin. An exemption certificate or a purchase order shall be acceptable evidence of a sale’s exempt status.

(b) Private schools having certificates of exempt status.

(c) Related organizations of private or public schools which have certificates of exempt status, such as parent-teacher associations and student organizations which are not subject to the control and supervision of school officials.

(d) Related organizations of private or public schools, such as parent-teacher associations and student organizations which are subject to the control and supervision of school officials. An exemption certificate completed by the school or a school purchase order shall be acceptable evidence of a sale’s exempt status.

Note: Section Tax 11.03 interprets ss. 77.52 (1) and (2) (a) and 77.54 (4), (9), and (9a), Stats.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1) (a), (2) (a) 3., (3) (a) and (4) (c), renum. (2) (a) 4. to be 5., cr. (2) (a) 4., r. and recr. (2) (b), Register, September, 1991, No. 429, eff. 10-1-91; r. and recr. (1) (a), am. (1) (b), (3) (intro.) and (a), cr. (2) (a) 6., Register, April, 1993, No. 448, eff. 5-1-93; renum. (1) (a) 2. and 3. to be (1) (a) 3. and 2., am. (1) (b), (3) (c), (4) (a) and (c), cr. (4) (d), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. am. (2) (a) (intro.), 6., (b) (intro.), (3) (intro.), (c) and (4) (intro.), eff. 10-1-09; CR 09-090: am. (2) (a) (intro.), 6., (b) (intro.), (3) (intro.), (c) and (4) (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (a) 1., 3., 4., 5., (b) 1., 2., (3) (a), (4) (a) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 11.04 Constructing buildings for exempt entities {#sec-tax-11.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.04}

(1) Definition. In this section, “exempt entity” means a person qualifying for an exemption under s. 77.54 (9a) or 77.55 (1), Stats.

(1m) Exemptions.

(a) Section 77.54 (9a), Stats., provides an exemption for sales to all of the following:

The state of Wisconsin or any agency of the state of Wisconsin, the University of Wisconsin Hospitals and Clinics Authority, Wisconsin Aerospace Authority, Wisconsin Economic Development Corporation, and Fox River Navigational System Authority.
Any county, city, village, town or school district in Wisconsin.
A county-city hospital established under s. 66.0927, Stats.
A sewerage commission organized under s. 281.43 (4), Stats., or a metropolitan sewerage district organized under ss. 200.01 to 200.15 or 200.21 to 200.65, Stats.
Any other unit of government in this state or any agency or instrumentality of one or more units of government in Wisconsin.
Any federally recognized American Indian tribe or band in Wisconsin.
Any joint local water authority created under s. 66.0823, Stats.
Any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation.
An entity described under section 501 (c) (2) of the Internal Revenue Code that is exempt from federal income tax under section 501 (a) of the Internal Revenue Code and that is organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to an entity described in s. 77.54 (9a) (f), Stats.
A local exposition district under subch. II of ch. 229, Stats.
A local cultural arts district under subch. V of ch. 229, Stats.
A cemetery company or corporation described under section 501 (c) 13 of the Internal Revenue Code, if the tangible personal property or taxable services are used exclusively by the cemetery company or corporation for the purposes of the company or corporation.

(b) Section 77.55 (1), Stats., provides an exemption for sales to all of the following:

The United States, its unincorporated agencies and instrumentalities.
Any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States.

(2) Taxable sales. Except as provided in s. 77.54 (9m), (26), (41), (62m) and (65), Stats., or if prohibited by federal law, sales of building materials to contractors or subcontractors used in the construction of buildings or structures, or the alteration, repair or improvement of real property for exempt entities, are subject to the tax.

(3) Purchases presumed taxable. When a contractor and an exempt entity enter into a construction contract to improve real property, and the contract provides that the contractor is to furnish the building materials, it is presumed until the contrary is established, that deliveries of building materials to the contractor are made pursuant to purchases made by the contractor.

(4) Supplier is contractor. A supplier, who is also the contractor who uses the building materials in the construction of buildings or structures, or the alteration, repair or improvement of real property for an exempt entity, is the consumer of such building materials, not the seller of personal property to the exempt entity. Except as provided in s. 77.54 (9m), (26), (41), (62m), and (65), Stats., or if prohibited by federal law, the sale of building materials to the consumer is subject to the tax.

(5) Exempt sales. A supplier’s sales of building materials made directly to an exempt entity are not taxable, even though such tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is used by the contractor in the erection of a building or structure, or in the alteration, repair or improvement of real property for the exempt entity. Suppliers of building materials may presume that a sale is made directly to an exempt entity if the supplier receives a purchase order from the exempt entity, and payment for such building materials is received directly from the exempt entity.

Note: Section Tax 11.04 interprets ss. 77.51 (2) and (14), 77.54 (9a), (9m), (26), (41), (62m), and (65) and 77.55 (1), Stats.

Note: The interpretations in s. Tax 11.04 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The building materials exemption for certain sports stadiums became effective October 1, 1991, pursuant to 1991 Act 37; (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (c) The building materials exemption for a facility in an electronics and information technology manufacturing zone became effective September 20, 2017, pursuant to 2017 Act 58; (d) The building materials exemption for contracts with certain exempt entities became effective January 1, 2016, pursuant to 2015 Wis. Act 126; and (e) A missing reference was added to the list of exempt entities for a local exposition district and certain title holding companies were also added to the list of exempt entities, effective September 1, 2017, pursuant to 2017 Wis. Act 231.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register, August, 1999, No. 524; EmR0924: emerg. am. (1), (2) (title), (3) and (5), eff. 10-1-09; CR 09-090: am. (1), (2) (title), (3) and (5) Register May 2010 No. 653, eff. 6-1-10; CR12-014: am. (1) Register August 2012 No. 680, eff. 9-1-12; CR 13-012: am. (1) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (1) Register August 2014 No. 704, eff. 9-1-14; CR 20-018: am. (1), cr. (1) (a) 9., am. (2), (4) Register July 2021 No. 787, eff. 8-1-21; correction in (1) (intro.) made under s. 35.17, Stats., renumber (1) (a), (b) to (1m) (a), (b) under s. 13.92 (4) (b) 1., Stats., and create (1m) (title) under s. 13.92 (4) (b) 2., Stats., Register July 2021 No. 787.

Wis. Admin. Code § Tax 11.05 Governmental units {#sec-tax-11.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.05}

(1) General. Sales by the state of Wisconsin, any agency thereof and governmental units within this state are generally subject to the Wisconsin sales tax. However, sales by the United States government or any agency thereof are not taxable.

(2) Taxable sales. Taxable sales by governmental units include the following:

(a) Admissions to facilities if the activity being conducted at the facility is amusement, athletic, entertainment, or recreational in nature, except as provided in sub. (3) (r), (s), and (y).

Example: Green fees, campground fees, swimming fees, ice skating fees and park shelter house fees are taxable if the activity being conducted at the facility is amusement, athletic, entertainment or recreational in nature.

(b) Food and gift stand sales, including sales of candy, soft drinks, prepared foods, cigarettes, tobacco products, postcards, books, magazines and other periodicals described in s. Tax 11.19, and novelties. Newspaper sales are exempt.

Note: See s. Tax 11.51 for a list of food products subject to tax.

(d) Charges for access to or use of athletic facilities such as baseball and softball diamonds, stadiums, and gymnasiums, including entry fees and any charges for lights, heat, janitor fees and equipment, when used for activities which are amusement, athletic, entertainment or recreational in nature, except as provided in sub. (3) (r), (s), (y), and (zg).

(e) Sales of electricity, gas, and steam by municipal utilities, except as provided in sub. (3) (b).

(f) Sales of maps, plat books, photocopies, or other printed material, except as provided in sub. (3) (q).

(g) Sales or rental of equipment and office furniture, including the rental of motor vehicles to employees.

(gm) Sales of motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, semitrailers, all-terrain vehicles, utility terrain vehicles, off-highway motorcycles, and aircraft. Governmental units must collect the sales tax on its sales of these items. If the governmental unit does not collect the tax from the purchaser, the purchaser shall file a sales tax return and pay the tax prior to titling or registering the property in this state.

(h) Sales of buildings or timber when the purchaser acquires the property for removal.

(i) Furnishing of rooms or lodging facilities, available to the public, to any person residing for a continuous period of less than one month, except that the tax does not apply to the receipts from accommodations furnished by any hospitals, sanatoriums, nursing homes, colleges, or universities operated by governmental units and the tax does not apply to furnishing rooms or lodging to a person through the sale of any kind of time-share property.

(j) Sales of taxable items, property, or goods dispensed through vending machines, and sales of access to or the use of amusement devices, if the governmental unit owns the machine or device or has control of the contents of the machine or the device.

(k) Sales of soft drinks and alcoholic beverages, including sales of these items by hospitals, sanatoriums, nursing homes, retirement homes, community-based residential facilities as defined in s. 50.01 (1g), Stats., and any facility certified or licensed under ch. 48, Stats.

(L) Charges for candy, soft drinks, dietary supplements and prepared foods to “Huber” law prisoners.

(m) Sales of books and supplies, including sales by technical college districts. Sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., by elementary and secondary schools are exempt under s. 77.54 (4), Stats.

(n) Sales of craft supplies for playground craft programs.

(o) Auction sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., including motor vehicles.

(p) Sales and delivery of trees, shrubs, or gravel to private purchasers. A sale of gravel is not taxable if the seller of the gravel puts the gravel in its final resting place.

Examples: 1) Governmental Unit A sells a load of gravel to Individual B. Governmental Unit A dumps the gravel in a pile at Individual B’s home. Individual B will then spread the gravel and put it in its final resting place. The sale of the gravel by Governmental Unit A to Individual B is a sale of tangible personal property that is subject to Wisconsin sales or use tax.

2) Governmental Unit X dump spreads or gate spreads gravel on Customer Z’s driveway. Customer Z, or someone other than Governmental Unit X, will then grade, rake, and compact the materials into their final resting place. Since Governmental Unit X is not placing the gravel in its final resting place, Governmental Unit X’s sale of the gravel to Customer Z is subject to sales tax as a sale of tangible personal property.

3) Governmental Unit G spreads gravel on Individual H’s driveway. Governmental Unit G grades and compacts the gravel so that it is in its final resting place. Governmental Unit G’s charges to Individual H are not subject to Wisconsin sales or use tax since Governmental Unit G is performing a real property construction activity by putting the gravel in its final resting place.

(q) Sales of impounded animals, even though the amount received may be designated as a placement fee.

(r) The sales price received for parking and providing parking space for motor vehicles and aircraft, and docking or providing storage space for boats.

(s) The sales price received for landscaping and lawn maintenance services, including weed cutting in lawn and garden areas and along highways, streets, and walkways, but not charges for damages described in sub. (3) (c).

(t) Charges for salvage vehicle inspections.

(3) Nontaxable receipts. Receipts by governmental units from the following are not taxable:

(a) Fees for licenses and permits, including tavern, cigarette, hunting and fishing, marriage, building and septic tank permits and I.D. cards, including original or duplicate library cards but not camping permits or I.D. cards issued exclusively for obtaining admission to facilities or events taxed under s. 77.52 (2) (a) 2., Stats.

(b)

Water delivered through mains. Wood residue used for fuel and sold for use in a business activity. Coal, fuel oil, propane, steam, peat, fuel cubes produced from solid waste, wood, and biomass as defined in s. 196.378 (1) (ar), Stats., used for fuel sold for residential use. Electricity and natural gas sold for residential use during the months of November through April. Fuel and electricity sold for use in farming. Fuel and electricity consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats. In this paragraph, “residential use” has the meaning in s. Tax 11.57 (2) (q) 2.
Electricity and natural gas are considered sold at the time of the billing. If the billings are mailed, the time of billing is the day on which the billing is mailed.
Fuels other than electricity and natural gas are considered sold at the time possession is transferred from the seller or seller’s agent to the purchaser or purchaser’s agent, except that a common carrier is the agent of the seller regardless of any f.o.b. point and regardless of the method in which the freight is paid.

(d) Rental of buildings or space, such as offices, warehouses, and meeting rooms, used for activities which are not amusement, athletic, entertainment, or recreational in nature.

(e) Storage fees, notary public fees and bid deposits.

(f) Library fines, including charges for books that are not returned or charges for a duplicate library card.

(g) Police escort and ambulance service charges.

(h) Separately stated fees for instruction.

(i) Special assessments and fees for garbage or trash removal. However, sales of bags or receptacles for garbage or trash are taxable unless a combined charge is made for removal and bags or receptacles and the amount allocated to the bag or receptacle is incidental to the charge for removal.

Example: A city government provides that in order to have trash removed by the city, the trash must be put in special bags which are sold for $1 each. The $1 charge is allocated as follows: 18¢ for the bag, 42¢ for removal and 40¢ for cost of the disposal site. The $1 charge for the bag is not subject to tax because the transfer of the bag is incidental to the sale of the waste removal service.

(j) Commissions on vending machines or amusement devices when the governmental unit does not own the machine or device, or does not have the right of access to the machine or device for stocking or restocking or for removing the receipts from the machine or device.

(jm) Sales through vending machines of food and food ingredients, except for candy, soft drinks, dietary supplements, and prepared foods.

(k) Sales or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services to other governmental units, schools or organizations which hold a certificate of exempt status.

(L) Food and food ingredients, except soft drinks, sold by hospitals, sanatoriums, nursing homes, retirement homes, community-based residential facilities as defined in s. 50.01 (1g), Stats., and any facility certified or licensed under ch. 48, Stats., such as day care centers, child placement agencies, residential care centers, foster homes, treatment foster homes, group homes and shelter care facilities, including prepared food sold to the elderly or disabled by “mobile meals on wheels.” Sales of alcoholic beverages by these organizations are taxable.

(m) Food and food ingredients furnished in accordance with any contract or agreement by a public or private institution of higher education, or paid for to a public or private institution of higher education through the use of an account of the institution and furnished by the institution, if either of the following conditions is met:

The food and food ingredients are furnished to an undergraduate student, a graduate student or a student enrolled in a professional school if the student is enrolled for credit at that institution, provided the items are consumed by that student.
The food and food ingredients are furnished to a national football league team.

(n) Service charges for snow removal, police officers at social gatherings, service of legal papers including summons, complaints, and civil process, and ushers and door guards.

(o) Sales for resale, if supported by a valid exemption certificate obtained from the purchaser.

(p) Fees charged for admission to a university student union building.

(q) Charges for filing, entering, docketing, recording, or furnishing certified or uncertified copies of records by a state registrar, register of deeds, health officer and clerk of court under ss. 59.40 (3), 59.43 (2), and 69.22, Stats., or by a filing officer under s. 409.525, Stats., and fees charged by a register in probate pursuant to s. 814.66, Stats. Also, charges by an “authority,” as defined in s. 19.32 (1), Stats., for copies of a record under s. 19.35 (1) (a), Stats., including charges for a search of records.

(r) The sale of all admission fees or admission stickers to state parks and recreational areas in state forests imposed under s. 27.01 (7), (8) and (9), Stats.

(s) Camping fees in Wisconsin state parks imposed under s. 27.01 (10) (d), Stats.

(t) Admissions to any museum operated by a nonprofit corporation under a lease agreement with the state historical society.

(u) Revenues collected under s. 256.35 (3), Stats.

(v) Animal identification tags and standard samples representing product or commodity grades only when sold by the Wisconsin department of agriculture, trade and consumer protection.

(w) Parking tickets.

(x) Charges for lessons.

(y) The sale or furnishing the use of recreational facilities on a periodic basis or other recreational rights, including but not limited to, membership rights, vacation services, and club memberships, in connection with the sale or use of time-share property, if the facilities or rights are not available to persons who have not purchased the time-share property, other than guests.

(z) The collection of low-income assistance fees under s. 16.957 (4) (a) or (5) (a), Stats.

(zg) Admissions by a governmental unit to participate in any sports activity in which more than 50 percent of the participants are 19 years old or younger.

(zr) Police and fire protection fees imposed under s. 196.025 (6), Stats.

(4) Purchases.

(a) Section 77.54 (9a), Stats., exempts sales to and the storage, use or other consumption of tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., and services by any of the following:

Wisconsin or by any agency of Wisconsin, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority.
Any county, city, village, town or school district in Wisconsin.
A county-city hospital established under s. 66.0927, Stats.
A sewerage commission organized under s. 281.43 (4), Stats., or a metropolitan sewerage district organized under ss. 200.01 to 200.15 or 200.21 to 200.65, Stats.
Any other unit of government in this state or any agency or instrumentality of one or more units of government in Wisconsin.
Any federally recognized American Indian tribe or band in Wisconsin.
Any joint local water authority created under s. 66.0823, Stats.; any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation.
An entity described under section 501 (c) (2) of the Internal Revenue Code that is exempt from federal income tax under section 501 (a) of the Internal Revenue Code and is organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to an entity described under s. 77.54 (9a) (f), Stats.
A local exposition district under subch. II of ch. 229, Stats.
A local cultural arts district under subch. V of ch. 229, Stats.
A cemetery company or corporation described under section 501 (c) (13) of the Internal Revenue Code, if the tangible personal property or taxable services are used exclusively by the cemetery company or corporation for the purposes of the company or corporation.

Note: Refer to s. Tax 11.04 regarding the purchase of building materials used in the construction of buildings for governmental units.

(b) In addition to the invoice or other billing document being in the name of the governmental unit, a Wisconsin governmental unit shall provide one of the following to a retailer as proof that a sale to the governmental unit is exempt from tax:

A purchase order or similar written document identifying the governmental unit as the purchaser.
A Wisconsin sales and use tax exemption certificate, form S-211.

Note: Form S-211 is available from any department of revenue office.

Its certificate of exempt status number that the retailer should record on the invoice or other document it keeps as part of its records.

(bg) Purchases by a state veterans organization, as defined in s. 45.41 (1) (b), Stats., are exempt except purchases of property and services used primarily in preparing, storing, serving, selling, or delivering food and beverages, including products and services for cleaning machinery and equipment used for the food and beverages that are sold by the veterans organization. A state veterans organization does not qualify for a certificate of exempt status, CES, number. The organization should provide a fully completed Wisconsin sales and use tax exemption certificate, Form S-211 or S-211E, to claim exemption on their qualifying purchases.

(c) A Wisconsin governmental unit’s payments to retailers for welfare recipients’ purchases are generally subject to the tax, except when the purchase is made directly by the governmental unit and all 3 of the following conditions apply:

The governmental unit gives the retailer a purchase order.
The retailer issues the billing or invoice for the purchases in the name of the governmental unit.
The retailer keeps a copy of the governmental unit’s purchase order and the retailer’s billing or invoice to substantiate that the sale was exempt from sales and use tax.

Example: A governmental unit intends to purchase clothing for a welfare recipient. The governmental unit gives a purchase order to the retailer and the retailer makes the invoice out to the governmental unit. The sale is not subject to sales tax if the welfare recipient pays the retailer with funds given to the recipient by the governmental unit or if the governmental unit pays the retailer directly.

(d) Purchases by state chartered credit unions are subject to the tax. Purchases by federally chartered credit unions and federal reserve banks are not subject to the tax.

(e) Purchases, including lodging, meals, or uniforms, by employees of a governmental unit are not exempt, whether or not the employee is subsequently reimbursed for the purchases by the governmental unit, unless the retailer issues the billing or invoice in the name of the governmental unit, receives from the governmental unit a document as described in par. (b), and keeps a copy of both documents.

(f) Purchases by consular and diplomatic personnel of other countries which have entered into multilateral treaties with the United States government providing for sales and use tax exemptions are exempt provided the personnel present their tax exemption card issued by the United States department of state or the American Institute in Taiwan showing their tax exemption number.

Note: Section Tax 11.05 interprets ss. 77.52 (1), (2), (13), and (14) and 77.54 (1), (9a), (10), (15), (17), (20n), (30), (32), (37), (42), (44), and (55), Stats.

Note: The interpretations in s. Tax 11.05 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales by vocational, technical and adult education schools were exempt from July 1, 1972, through October 3, 1973; (b) Mobile meals on wheels became exempt October 4, 1973, pursuant to Chapter 90, Laws of 1973; (c) Admission fees to state parks became exempt on July 1, 1978, pursuant to Chapter 418, Laws of 1977; (d) Sales of coal, fuel oil, propane, steam and wood used for fuel became exempt July 1, 1979, and the electricity and natural gas six-month exemption became effective on November 1, 1979, both pursuant to Chapter 1, Laws of 1979; (e) A governmental unit’s charges for parking motor vehicles and aircraft and docking and providing storage space for boats became taxable June 1, 1980, pursuant to Chapter 221, Laws of 1979; (f) Landscaping and lawn maintenance services became taxable on May 1, 1982, pursuant to Chapter 317, Laws of 1981; (g) A governmental unit’s charges for copying public records became exempt effective April 27, 1984, pursuant to 1983 Wis. Act 287, later amended effective April 2, 1986, pursuant to 1985 Wis. Act 149 to clarify that the exemption also applies to confidential records, and again amended effective May 1, 1992, pursuant to 1991 Wis. Act 269, to include records under s. 19.35 (1) (a), Stats.; (h) The exemption for peat and fuel cubes produced from solid waste became effective April 2, 1986, pursuant to 1985 Wis. Act 149; (i) The exemption for an agency or instrumentality of a Wisconsin governmental unit became effective June 1, 1986, pursuant to 1985 Wis. Act 149; (j) Wood residue used for fuel by businesses became exempt on September 1, 1987, pursuant to 1987 Wis. Act 27; (k) The exemption for admissions to a museum operated by a nonprofit corporation under lease with the state historical society became exempt July 20, 1985, pursuant to 1985 Wis. Act 29; (L) The exclusion of hospital service insurance corporation from the definition of exempt entity became effective September 1, 1985, pursuant to 1985 Wis. Act 29; (m) Revenues from establishing a “911” emergency telephone system became exempt August 1, 1987, pursuant to 1987 Wis. Act 27; (n) State park camping fees became exempt effective September 1, 1989, pursuant to 1989 Wis. Act 31; (o) The exemption for animal identification tags and standard samples by the Wisconsin department of agriculture, trade and consumer protection became effective October 1, 1993, pursuant to 1993 Wis. Act 16; (p) The exemption for fuel used in farming became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (q) The requirement that meals must be served on the premises of hospitals, nursing homes, etc., for exemption to apply became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (r) The exemption for sales to a local exposition district became effective April 26, 1994, pursuant to 1993 Wis. Act 263; (s) The exemption for sales of meals by community-based residential facilities became effective June 1, 1994, pursuant to 1993 Wis. Act 332; (t) The exemption for sales to the University of Wisconsin Hospitals and Clinics Authority became effective July 29, 1995, pursuant to 1995 Wis. Act 27; (u) The exemption for certain meals, food, food products and beverages furnished by institutions of higher education was revised to apply only if the items are furnished to an undergraduate student, a graduate student or a student enrolled in a professional school if the student is enrolled for credit at that institution and if the items are consumed by that student, or the items are furnished to a national football league team, effective for contracts or agreements entered into on or after October 14, 1997, pursuant to 1997 Wis. Act 27, and further revised to include certain meals, food, food products or beverages paid for to an institution of higher education through the use of an account of the institution, if the items are furnished by the institution, effective December 31, 1997, pursuant to 1997 Wis. Act 41; (v) The exemption for electricity sold for use in farming was expanded to include sales of electricity during the entire year, effective for sales on or after May 1, 2000, pursuant to 1999 Wis. Act 9; (w) The exemption for sales from the collection of public benefit fees became effective October 29, 1999, pursuant to 1999 Wis. Act 9; (x) The exemption for use of recreational facilities in connection with the sale of time-share property became effective December 1, 1999, pursuant to 1999 Wis. Act 9; (y) The exemption for certain items sold from a vending machine became effective July 1, 2001, pursuant to 1999 Wis. Act 9; (z) The exemption for fuel consumed in manufacturing became effective January 1, 2006, pursuant to 2003 Wis. Act 99; (zb) The exemption for regional transit authorities and the Wisconsin Quality Home Health Care Authority became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (ze) The exemption for federally recognized American Indian tribes or bands in Wisconsin became effective August 1, 2009, pursuant to 2009 Act 28; (zh) The requirement that governmental units collect sales tax on their sales of used motor vehicles became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (zL) The exemption for low-income assistance fees became effective July 1, 2005, pursuant to 2005 Wis. Act 141; (zp) The exemption for certain admissions to sports activities by governmental units became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (zr) The exemption for the police and fire protection fee became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (zu) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (zy) The exemption for sales of food and food ingredients, except soft drinks, by any facility certified or licensed under ch. 48, Stats., became effective May 6, 2010, pursuant to 2009 Wis. Act 204; (zz) The exemption for regional transit authorities was repealed effective September 28, 2011, pursuant to 2011 Wis. Act 32 and the exemption for the Wisconsin Quality Home Care Authority was repealed effective June 29, 2011, pursuant to 2011 Wis. Act 10; (zza) The exemption for certain title holding entities described under s. 501 (c) (2) of the Internal Revenue Code was effective retroactively to September 1, 2017, pursuant to 2017 Wis. Act 231; and (zzb) The exemption for state veterans organizations was effective July 1, 2018, pursuant to 2017 Wis. Act 190.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (3) (f) and (h), (4) (c) and cr. (4) (e), Register, August, 1979, No. 284, eff. 9-1-79; am. (2) (e) and (i), cr. (2) (r), r. and recr. (3) (b), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (b) and (m), (3) (a), (L), (m) and (p), cr. (2) (s) and (3) (q), Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (p), Register, July, 1987, No. 379, eff. 8-1-87; reprinted to correct error in (2) (p), Register, October, 1987, No. 382; am. (3) (b) and (4) (intro.), Register, June, 1990, No. 414, eff. 7-1-90; am. (2) (a), (d), (i), (k) and (o), (3) (i), (L), (p) and (q), and (4) (intro.), (d) and (e), cr. (3) (r), (s) and (t), r. and recr. (4) (b), Register, June, 1991, No. 426, eff. 7-1-91; am. (3) (p), renum. (4) (intro.) to (e) to be (4) (a) to (f), Register, April, 1993, No. 448, eff. 5-1-93; am. (2) (f) and (g), (3) (L), (4) (c) (intro.), 1. and 2., cr. (3) (u), Register, April, 1994, No. 460, eff. 5-1-94; reprinted to restore dropped copy in (2) (g) and correction made in (4) (a) under s. 13.93 (2m) (b) 7., Stats., Register, October, 1996, No. 490; emerg. am. (2) (s), eff. 5-18-97; am. (2) (h), (k), (m), (s), (3) (b), (L) and (4) (a), (e), r. and recr. (4) (b), Register, October, 1997, No. 502, eff. 11-1-97; am. (2) (a), (d), (f) and (i), (3) (d) and (L), (4) (a) and (b) 2., renum. (3) (m) to (u) to be (3) (n) to (v), cr. (3) (m), (w) and (x), (4) (b) 3., Register, October, 1999, No. 526, eff. 11-1-99; corrections in (4) (a) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (2) (title), (intro.), (a), (b), (d), (g), (i) to (m), (o), (p), (r), (s), (3) (intro.), (a), (b), (d), (j) to (m), (o), (q), (u), (4) (a) and (b) (intro.), cr. (2) (gm), (t), (3) (jm), (y), (z), (zg) and (zr), eff. 10-1-09; CR 09-090: am. (2) (title), (intro.), (a), (b), (d), (g), (i) to (m), (o), (p), (r), (s), (3) (intro.), (a), (b), (d), (j) to (m), (o), (q), (u), (4) (a) and (b) (intro.), cr. (2) (gm), (t), (3) (jm), (y), (z), (zg) and (zr) Register May 2010 No. 653, eff. 6-1-10; correction in (3) (b) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; CR 10-094: am. (2) (a), (d), (e), (f), (k), (s), (3) (d), (L), (n), (y), (4) (e) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: renum. (3) (b) to be (3) (b) 1. and am., cr. (3) (b) 2., 3., am. (4) (a) Register August 2012 No. 680, eff. 9-1-12; CR 13-012: am. (4) (a) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (4) (a) Register August 2014 No. 704, eff. 9-1-14; CR 16-053: am. (2) (gm) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (2) (gm), (4) (f) Register June 2020 No. 774, eff. 7-1-20; CR 19-122: am. (3) (L) Register July 2020 No. 775, eff. 8-1-20; CR 20-018: am. (3) (u), (4), renum. (4) (a) to (4) (a) (intro.), cr. (4) (a) 8., (bg) Register July 2021 No. 787, eff. 8-1-21.

Subchapter III Exemptions

Wis. Admin. Code § Tax 11.08 Durable medical equipment, mobility-enhancing equipment, and prosthetic devices {#sec-tax-11.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.08}

(1) General. Certain items may qualify as either “durable medical equipment” or a “prosthetic device,” depending on whether or not the item is worn in or on the body. The distinction between when an item is “durable medical equipment” or a “prosthetic device” is important because an item that is “durable medical equipment” is exempt only when purchased for use by a human being in a person’s home, whereas the purchase of a “prosthetic device” for a human being is exempt regardless of whether or not it is purchased for use in a person’s home.

(2) Durable medical equipment. Section 77.54 (22b), Stats., exempts the sales price from the sale of and the storage, use, or other consumption of durable medical equipment that is for use in a person’s home, along with repair parts, replacement parts, and accessories for that equipment, if the equipment is used for a human being.

(a) “Durable medical equipment” is defined in s. 77.51 (3pm), Stats., to mean equipment, including the repair parts and replacement parts for the equipment that is primarily and customarily used for a medical purpose related to a person; that can withstand repeated use; that is not generally useful to a person who is not ill or injured; and that is not placed in or worn on the body. “Durable medical equipment” does not include mobility-enhancing equipment.

(b)

“Use in a person’s home” means that the equipment is sold to an individual for use where they are living, regardless of whether the individual resides in a single family home, apartment building, nursing home, assisted living center, convalescent home, or school dormitory.
Durable medical equipment is not for use in a person’s home if it is purchased by a hospital, clinic, nursing home, assisted living center, convalescent home, dental office, chiropractor, or optician’s office. In addition, purchases of durable medical equipment by a nursing home, assisted living center, and convalescent home are not for use in a person’s home even if the equipment is purchased for use by the residents of the nursing home, assisted living center, or convalescent home.

(c) Examples of durable medical equipment that qualify for exemption from Wisconsin sales and use tax if they are purchased for use in a person’s home include the following:

Note: A listing that contains numerous items and descriptions of items that have been categorized as drugs, durable medical equipment, mobility-enhancing equipment, and prosthetic devices can be found in the Rules and Procedures of the Streamlined Sales Tax Governing Board, Inc., available at http://www.streamlinedsalestax.org.

(d) Examples of items that are not durable medical equipment include the following:

(3) Mobility-enhancing equipment. Section 77.54 (22b), Stats., exempts from Wisconsin sales and use tax the sales price from the sale of mobility-enhancing equipment for human use and its accessories.

(a) “Mobility-enhancing equipment” is defined in s. 77.51 (7m), Stats., to mean equipment, including the repair parts and replacement parts for the equipment, that is primarily and customarily used to provide or increase the ability of a person to move from one place to another; that may be used in a home or motor vehicle; and that is generally not used by a person who has normal mobility. “Mobility-enhancing equipment” does not include a motor vehicle or any equipment on a motor vehicle that is generally provided by a motor vehicle manufacturer. “Mobility-enhancing equipment” does not include durable medical equipment.

(b) Examples of mobility-enhancing equipment for a human being that are exempt include the following:

(4) Prosthetic devices. Section 77.54 (22b), Stats., exempts from Wisconsin sales and use tax the sales price from the sale of prosthetic devices and accessories for prosthetic devices that are used for a human being.

(a) “Prosthetic device” is defined in s. 77.51 (11m), Stats., to mean a replacement, corrective, or supportive device, including the repair parts and replacement parts for the device, that is placed in or worn on the body to artificially replace a missing portion of the body; to prevent or correct a physical deformity or malfunction; or to support a weak or deformed portion of the body.

(b) A device is “worn in or on the body” if the device is implanted or attached so that it becomes part of the body or if it is carried by the body and does not hinder the mobility of the individual. Items that are attached to the body, but are either stationary or placed on a pole, cart, or other device that makes them portable are durable medical equipment and not prosthetic devices. Therefore, these items are only exempt if they are purchased for use in a person’s home.

(d) The following are examples of items which if worn in or on the body are also exempt as prosthetic devices:

Note: If these items are not worn in or on the body, they are not exempt as prosthetic devices, but may be exempt as durable medical equipment if for use by a person in a person’s home.

(5) Parts, accessories and service. The sales price from the sale of repair and replacement parts, accessories, and services to the exempt property identified in s. 77.54 (22b), Stats., is also exempt.

(6) Diabetes supplies. Section 77.54 (28), Stats., exempts from Wisconsin sales and use tax the sales price from the sale of and the storage, use or other consumption to or by the ultimate consumer of supplies used to determine blood sugar level.

Example: The sales price from the sale of blood glucose test strips is exempt from sales and use tax.

Note: Section Tax 11.08 interprets ss. 77.51 (3pm), (7m), and (11m) and 77.54 (22b) and (28), Stats.

Note: The interpretations in s. Tax 11.08 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Charges for oxygen equipment became exempt September 1, 1983, pursuant to 1983 Wis. Act 27; (b) Charges for motorized wheelchairs and scooters became exempt September 1, 1985, pursuant to 1985 Wis. Act 29; (c) Charges for apparatus or equipment for the injection of insulin or the treatment of diabetes and supplies used to determine blood sugar levels became exempt March 1, 1989, pursuant to 1987 Wis. Act 399; (d) Charges for antiembolism elastic hose and stockings prescribed by a physician became exempt October 1, 1989, pursuant to 1989 Wis. Act 31; (e) The exemption for adaptive equipment for a disabled person’s vehicle became exempt effective June 1, 1990, pursuant to 1989 Wis. Act 238, renumbered by 1989 Wis. Act 359; (f) The exemption for parts and accessories became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (g) The exemptions provided in s. 77.54 (14s) and (22), Stats., were repealed effective October 1, 2009, and replaced with the exemptions provided under s. 77.54 (22b), Stats., pursuant to 2009 Wis. Act 2; (h) The exemption in s. 77.54 (28), Stats., was amended to remove the exemption for apparatus and equipment for the injection of insulin or the treatment of diabetes. These items will still qualify for exemption under s. 77.54 (22b), Stats., if they are for home use, pursuant to 2009 Wis. Act 2; and (i) The clarification that a “prosthetic device” must be a replacement, corrective, or supportive device became effective July 2, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (1) and (4), Register, July, 1978, No. 271, eff. 8-1-78; am. (1), (2) and (3), Register, January, 1983, No. 325, eff. 2-1-83; r. (2) (c), renum. (5) to be (6), cr. (5), Register, September, 1984, No. 345, eff. 10-1-84; am. (4), Register, July, 1987, No. 379, eff. 8-1-87; am. (1), cr. (5), (7) and (8), renum. (5) and (6) to be (6) and (9), Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (intro.), (2) (intro.), (3) to (6), (8) and (9), r. (1) (d), renum. (1) (e) to (i) to be (1) (d) to (h), Register, May, 1993, No. 449, eff. 6-1-93; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (b) 2., (4) (b), (5) Register November 2010 No. 659, eff. 12-1-10; CR 14-006: am. (4) (a) Register August 2014 No. 704, eff. 9-1-14.

Wis. Admin. Code § Tax 11.09 Drugs {#sec-tax-11.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.09}

(1) Definition. For the exemption in s. 77.54 (14), Stats., “drug” means a compound, substance, or preparation, or any component of them, other than food and food ingredients, dietary supplements, or alcoholic beverages, to which any of the following applies:

(a) It is listed in the United States Pharmacopoeia, Homeopathic Pharmacopoeia of the United States, or National Formulary, or any supplement to any of them.

(b) It is intended for use in diagnosing, curing, mitigating, treating, or preventing a disease.

(2) Items which are drugs. Drugs include the following items described in sub. (1):

(a) Acne medications.

(b) Alcohol (rubbing).

(d) Antacids.

(e) Antibiotic creams and ointments.

(f) Antifungal creams and sprays.

(g) Antihistamines.

(h) Antiseptics (betadyne, iodine).

(i) Birth control (pills and patches and implants).

(j) Burn remedies.

(k) Contraceptives (creams, gels, foams, and medicated condoms).

(L) Cold and cough medicines, drops, and lozenges.

(m) Contact lens solutions.

(n) Decongestants.

(o) Dermal fillers (injectable).

(p) Dialysis dialysate solution.

(q) Diaper rash creams.

(r) Enema preparations.

(s) Eye drops.

(t) Gases — medical grade (air, carbon dioxide, helium, nitrogen, oxygen).

(u) Hand sanitizers.

(v) Hydrogen peroxide.

(w) Insulin.

(x) Laxatives.

(y) Lip balm.

(z) Nutrition formulas (enteral and parenteral with a drug facts label).

(za) Oxygen.

(zb) Prescription medicines.

(zc) Radioactive isotopes.

(zd) Rubs, mentholated.

(ze) Sleeping pills.

(zf) Smoking cessation products such as gums, lozenges, and patches that contain nicotine.

(zg) Sterile water (for injections).

(zh) Sterile normal saline .9% (IV or irrigation).

(zi) Vaccines.

(zj) Yeast infection medications.

(3) Items which are not drugs. Items which are not described in sub. (1) and which are not drugs include:

(a) Alcoholic beverages, soft drinks and distilled water.

(b) Durable medical equipment.

(d) Mobility-enhancing equipment.

(e) Dietary supplements.

(4) Exempt sales or use of drugs. Drugs shall be exempt if:

(a) Prescribed for the treatment of a human being by a person authorized to prescribe the drugs, and dispensed on prescription filled by a registered pharmacist in accordance with law. Insulin furnished by a pharmacist to a person for treatment of diabetes as directed by a physician shall be deemed dispensed on prescription.

(b) Sold to a licensed physician, surgeon, podiatrist, dentist, or hospital for the treatment of a human being.

(c) Furnished by a licensed physician, surgeon, podiatrist, or dentist to a patient who is a human being for treatment of the patient.

(d) Furnished by a hospital for treatment of any person pursuant to the order of a licensed physician, surgeon, dentist, or podiatrist. For this exemption, “hospital” has the meaning described in s. 50.33 (2), Stats., and does not include nursing homes.

(e) Sold to this state or any political subdivision or municipal corporation of the state, for use in the treatment of a human being; or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation of the state.

(f) Furnished without charge to a physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist licensed under ch. 447, Stats., podiatrist licensed under ch. 448, Stats., or optometrist licensed under ch. 449, Stats., if the drug may not be dispensed without a prescription.

(5) Taxable sales of drugs. Taxable sales of drugs include:

(a) Retail sales for use in laboratories.

(b) Retail sales of drugs for pets.

Note: For exemption of drugs used on farm livestock or other animals, refer to ss. Tax 11.12 and 11.61.

Note: Section Tax 11.09 interprets ss. 77.51 (3pj) and 77.54 (14), (14r), and (33), Stats.

Note: The interpretations in s. Tax 11.09 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for certain medicines furnished without charge became effective October 14, 1997, pursuant to 1997 Wis. Act 27; and (b). The definition of “drug” is effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; r. (3) (g), Register, September, 1984, No. 345, eff. 10-1-84; am. (4) (d) and (6), Register, July, 1987, No. 379, eff. 8-1-87; am. (5) (b), Register, June, 1990, No. 414, eff. 7-1-90; am. (2) (c), (3) (c) and (4) (a), Register, March, 1991, No. 423, eff. 4-1-91; am. (1), (4) (e), cr. (4) (f), r. (6), Register, May, 1999, No. 521, eff. 6-1-99; EmR0924: emerg. r. and recr. (title), (1), (2) and (3), am. (4) (title), (intro), (a) to (d), (f), (5) (title), (intro.) and (b), eff. 10-1-09; CR 09-090: r. and recr. (title), (1), (2) and (3), am. (4) (title), (intro), (a) to (d), (f), (5) (title), (intro.) and (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (b), renum. (2) to be (2) (intro.) and am., cr. (2) (a) to (zj) Register November 2010 No. 659, eff. 12-1-10; CR 20-027: am. (4) (a) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.10 Wind, solar, and certain gas powered products {#sec-tax-11.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.10}

(1) General. Section 77.54 (56), Stats., provides a sales and use tax exemption for the following:

(a) The sales price from the sale of and the storage, use, or other consumption of a product whose power source is wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural waste, if the product produces at least 200 watts of alternating current or 600 British thermal units per day, except that the exemption does not apply to an uninterruptible power source that is designed primarily for computers.

(b) Except for the sale of electricity or energy that is exempt from taxation under s. 77.54 (30), Stats., the sales price from the sale of and the storage, use, or other consumption of electricity or energy produced by a product described in par. (a).

(2) Definitions. In this section and in s. 77.54 (56), Stats.:

(a) “Agricultural waste” means a byproduct of farming.

(b) “Farming” has the meaning given in s. Tax 11.12 (2) (f), except “farming” includes holding livestock in a feed lot for less than 30 days.

(d) “Gas” means a fuel that is comprised primarily of methane and exists in a gaseous state at normal room temperature and pressure.

(e) “Product” means tangible personal property that converts wind energy, direct radiant energy received from the sun, or gas generated from the anaerobic digestion of animal manure and other agricultural waste into alternating current electricity or heat.

(3) Items which are products. Product, as defined in sub. (2) (e), includes the following items:

(a) Wind turbine generators, including blade assembly and tower.

(b) Gas powered electric generators.

(d) Photovoltaic cells, modules, and arrays, including tracking equipment that maintains optimal orientation to the sun.

(e) Solar thermal collectors.

(f) Inverters used to transform direct current produced by an item described in sub. (2) into alternating current, including property used to convey the direct current from the product to the inverter.

(g) Hardware required for installation of an item described in pars. (a) to (f).

(4) Items which are not products. Product, as defined in sub. (2) (e), excludes the following items:

(a) Tangible personal property that consumes electricity or heat produced by an item described in sub. (2) (e).

Example: A refrigerator that consumes electricity produced by a wind turbine generator is not itself a product whose power source is wind energy.

(b) A foundation for an item described in sub. (2) (e).

Example: A solar tracking device that holds an array of photovoltaic cells is installed onto a concrete foundation. The concrete foundation is not a product whose power source is direct radiant energy received from the sun.

(c) Except as provided in sub. (3) (f), property necessary to convey, transfer, or alter electricity or heat generated by an item described in sub. (2) (e).

(d) Tangible personal property used to store electricity or heat produced by an item described in sub. (2) (e).

Examples: 1) A tank that stores hot water heated by a solar collector is not itself a product whose power source is direct radiant energy received from the sun.

2) Batteries used to store electricity produced by a wind turbine generator or photovoltaic cells are not themselves products whose power source is wind energy or direct radiant energy received from the sun.

(5) Exemption for products.

(a) For purposes of the exemption under sub. (1) (a), a product that produces direct current shall be considered to produce alternating current if the direct current is modified to alternating current prior to the direct current being stored, used, consumed, or sold by the producer.

Examples: 1) An array of photovoltaic cells produces direct current. All of the current produced by the array is transferred directly to an inverter. The alternating current from the inverter is then either used to power equipment or it is sold to a utility. The photovoltaic array is considered to meet the requirement that it be a product that produces alternating current.

2) A wind turbine generator produces direct current. The current is used to charge batteries. When needed, the batteries supply direct current to an inverter, producing alternating current used to power various devices. The direct current generator does not qualify for exemption since the direct current is being stored by the producer prior to changing it to alternating current.

(b) In order to qualify for the exemption under sub. (1) (a), a product using gas as a power source shall use gas from the anaerobic digestion of animal manure and other agricultural waste exclusively as its power source. A product that uses other fuels such as natural gas, propane, or gas generated from a landfill does not qualify for exemption.

An alternating current wind turbine generator rated by the manufacturer to produce at least 200 watts of alternating current with a wind speed of 25 miles per hour.
A direct current wind turbine generator that is rated by the manufacturer to produce at least 250 watts of direct current at a wind speed of 25 miles per hour and produces alternating current as described in par. (a).

Example: A direct current wind turbine generator is rated by the manufacturer to produce at least 250 watts of direct current with a wind speed of 25 miles per hour. The generator is connected to an inverter that modifies the direct current to alternating current prior to the direct current being stored, used, consumed, or sold by the producer. The generator, inverter, and the property used to convey the direct current from the generator to the inverter qualify for exemption.

A direct current wind turbine generator that produces alternating current as described in par. (a) of at least 200 watts as measured at the inverter under normal operating conditions with a wind speed of no more than 25 miles per hour.
A solar thermal collector with an output rating of at least 600 British thermal units per day, as determined by the Solar Rating and Certification Corporation, that is normally in service every day throughout the year.
A photovoltaic cell, module, or array with a standard test condition output rating of at least 250 watts of direct current that produces alternating current as described in par. (a).
A direct current gas powered generator that meets the requirement in par. (b) and produces alternating current as described in par. (a) of at least 200 watts as measured at the inverter when producing direct current under its normal operating conditions.
A gas fueled furnace, space heater, or water heater that meets the requirement in par. (b) and can be expected to consume gas in an amount equivalent to at least 600 British thermal units per day throughout the year.

Example: Gas generated by the anaerobic digestion of animal manure or agricultural waste is used solely as the power source for a space heater and a water heater. Both products, when in use, produce over 600 British thermal units per day. The water heater is used every day of the year while the space heater is used only during the months of October through April. The water heater qualifies for exemption; the space heater does not.

(d) The exemption under sub. (1) (a) may be claimed by the consumer of the product who purchases the product as tangible personal property. A contractor who will purchase, furnish, and install a product which will become real property when installed is the consumer of the product, and may provide its supplier with a properly completed exemption certificate, claiming the product is exempt under s. 77.54 (56), Stats. A contractor who will furnish and install a product that will remain tangible personal property when installed may purchase a product without tax for resale. The purchaser may then issue the contractor an exemption certificate, claiming the product is exempt under s. 77.54 (56) (a), Stats.

Note: See s. Tax 11.68 (4), (5), and (6) for information on the determination of the classification of property after installation.

(6) Exemption for energy produced by a product.

(a) The exemption under sub. (1) (b) applies to a direct sale from the producer of electricity or energy to the consumer of the same electricity or energy where all of the following apply:

The electricity or energy is produced by a product that qualifies for exemption under sub. (1) (a).
The sale does not qualify for exemption under s. 77.54 (30), Stats.

Note: Section 77.54 (30) (a), Stats., includes an exemption for electricity sold from November through April for residential use, fuel and electricity sold for use in farming, and fuel and electricity consumed in manufacturing tangible personal property in Wisconsin.

(b) The exemption under sub. (1) (b) does not apply to electricity or energy which is first purchased for resale from the producer and is then sold in a subsequent retail sale, unless the person making the retail sale is able to account for the quantity of electricity or energy that qualifies for exemption under s. 77.54 (56) (b), Stats., and is able to identify the person to whom such electricity or heat is sold.

Example: Electricity that would otherwise qualify for exemption under s. 77.54 (56) (b), Stats., is commingled in a distribution network with electricity that is not produced by a product whose power source is wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural wastes. It is not possible to determine to whom, or in what amount, the electricity that qualifies for exemption is sold. A purchaser of this electricity will not be able to provide an exemption certificate to a utility and properly claim what portion of the electricity it has purchased is exempt pursuant to s. 77.54 (56) (b), Stats., nor is it possible for a utility to know what portion of the electricity purchased by the consumer was from eligible sources.

(c) The exemption under sub. (1) (b) does not apply to the sale of, or the storage, use or other consumption of gas produced by the anaerobic digestion of animal manure or other agricultural wastes unless such gas is produced by a product described in sub. (1) (a).

History

EmR1110: emerg. cr., eff. 6-29-11; CR 11-052: cr. Register July 2012 No. 679, eff. 8-1-12.

Wis. Admin. Code § Tax 11.11 Utility, industrial and governmental waste treatment facilities {#sec-tax-11.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.11}

(1) General. Section 77.54 (26), Stats., provides a sales and use tax exemption for tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., which becomes a component part of certain waste treatment facilities.

(2) Utility waste treatment exemption. If a utility waste treatment facility that is taxed under ch. 76, Stats., qualifies for property tax exemption under s. 76.025 (1), Stats., as approved by the department, it qualifies for the sales and use tax exemption under s. 77.54 (26), Stats.

Note: Refer to s. Tax 6.40 for information on how to request approvals for property tax exemption for utility waste treatment facilities. For more information regarding exemptions for waste treatment facilities owned by a utility, including railroads, airlines, and pipelines, approved by the department, write to Wisconsin Department of Revenue, Manufacturing and Utility Bureau, PO Box 8971, Madison WI 53708-8971; telephone (608) 266-3845; send an e-mail to mfgtelco@wisconsin.gov; or access the department’s web site at www.revenue.wi.gov and search ”waste treatment facilities”.

(2m) Industrial waste treatment exemption.

(a) An industrial waste treatment facility is any property purchased or constructed as a waste treatment facility used exclusively and directly to remove, store, or cause a physical or chemical change in industrial waste or air contaminants for the purpose of abating or eliminating pollution of surface waters, the air, or waters of the state if that property is not used to grow agricultural products for sale. In this paragraph, “used exclusively” means to the exclusion of all other uses except:

For other use not exceeding 5% of total use.
To produce heat or steam for a manufacturing process, if the fuel consists of either 95% or more industrial waste that would otherwise be considered superfluous, discarded, or fugitive material or 50 percent or more of wood chips, sawdust, or other wood residue from the paper and wood products manufacturing process, if the wood chips, sawdust, or other wood residue would otherwise be considered superfluous, discarded, or fugitive material.

(b) Tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., becoming a component part of an industrial waste treatment facility is exempt from the sales and use tax under s. 77.54 (26), Stats., if the facility qualifies for property tax exemption under s. 70.11 (21), Stats.

Note: For information regarding the property tax exemption for industrial waste treatment facilities of manufacturers write or call the district office of the Wisconsin Department of Revenue, Bureau of Manufacturing and Telco Assessments. To locate the district office, write or call Wisconsin Department of Revenue, Bureau of Manufacturing and Telco Assessment, PO Box 8971, Madison WI 53708-8971; telephone (608) 266-1147. The web site is http://www.revenue.wi.gov/contact/slfbmta.html. To ascertain whether a non-manufacturing property would be exempt under s. 70.11 (21), Stats., owners may refer to the Wisconsin Property Assessment Manual or contact the local property tax assessor.

(3) Municipal waste treatment exemption. Tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., which become a component or ingredient part of municipal facilities that treat waste qualifies for exemption from Wisconsin sales and use tax under s. 77.54 (26), Stats. Municipal facilities that treat waste include:

(a) Wastewater treatment facility.

Only the central waste treatment plant which actually treats the sewage qualifies for the exemption.
Storm sewers, water supply systems and private domestic waste water facilities do not qualify for the sales and use tax exemption.
The collection system throughout the area served by the treatment facility, the effluent pipeline carrying the treated sewage away from the central treatment plant, earthen dikes, and chain link fences on the boundary of a treatment plant, and dredge material disposal sites are not exempt. The collection systems includes the lift stations, force mains, and associated pumping equipment used to bring the raw sewage to the central treatment plant.

(b) Material recovery facility.

A facility constructed by a municipality to meet mandates of ch. 287, Stats., regarding the reuse, recycling, and recovery of waste material to reduce the need for waste disposal is exempt if the activities include all of the following:

a. Sorting recyclable materials delivered from municipalities.

b. Processing recyclable materials which may include removing contaminants, baling paper, shredding paper, pelletizing plastics, and crushing glass.

c. Storing processed recyclable materials for sale to others.

The exemption does not apply if the only activities performed are sorting and storing and no processing of the materials takes place.

(c) Sanitary landfill. A sanitary landfill, including the treatment equipment, such as the collection and burner system, laboratory equipment, maintenance buildings, garages, office buildings, fences, and gates, qualifies for exemption.

(d) Groundwater facilities.

A municipal facility constructed to treat hazardous or contaminated groundwater, including oil and water separators, air strippers, aerators, blowers, filters, carbon units, controls, pumps, and thermal oxidizers, qualifies for exemption.
The collection system used to bring the hazardous or contaminated water to the facility and the distribution system used to carry the treated water away from the facility are not exempt.

Note: For more information regarding the exemption for municipal treatment facilities, write, email or call Wisconsin Department of Revenue, Customer Service Bureau, Mail Stop 5-77, PO Box 8949, Madison WI 53708-8949, email dorsalesanduse@wisconsin.gov, telephone (608) 266-2776. The web site is www.revenue.wi.gov.

(4) Repair, service and operation.

(a) The repair, service, alteration, cleaning, painting, and maintenance of a utility waste treatment facility described in sub. (2), an industrial waste treatment facility described in sub. (2m), and a municipal waste treatment facility described in sub. (3) as well as the repair parts and replacement for those types of facilities are exempt from the sales and use tax.

(b) Chemicals and supplies, including fuel and electricity, used or consumed in operating a utility waste treatment facility described in sub. (2), an industrial waste treatment facility described in sub. (2m) and a municipal waste treatment facility described in sub. (3) are exempt from the sales and use tax.

(5) Contractors and subcontractors.

(a) Exempt purchases. The sales and use tax exemption extends to and includes the purchases of tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., by a contractor-installer who incorporates the property into an approved utility waste treatment facility or who incorporates the property into an industrial waste treatment facility or a municipal waste treatment facility. The contractor-installer shall certify the intended exempt use of the item to each supplier in order to relieve the supplier of the duty of collecting and reporting the tax on the sales. Certification of exempt use shall be made on a Wisconsin sales and use tax exemption certificate, form S-211.

Note: Form S-211 may be obtained by writing or calling Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, telephone (608) 266-2776.

(b) Taxable purchases. A contractor’s purchases of items used or consumed in the performance of the construction contract, and which do not become a component part of the waste treatment facility, are subject to the tax. This includes industrial gases, form lumber, tunnel shields, and supplies used by a contractor during construction. Payments by a contractor for equipment purchased or leased to perform a construction job are also taxable.

‘Utility property taxed under ch. 76, Stats.’ A contractor or subcontractor may be liable for sales and use tax on a purchase of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that becomes a component part of a utility waste treatment facility that has not been approved by the department for a property tax exemption under s. 76.025 (1), Stats.

Note: Contractors may direct questions concerning the property to the department as provided in sub. (2).

‘Industrial property taxed under ch. 70, Stats.’ Approvals are not required for industrial waste treatment facilities. A contractor or subcontractor may be liable for sales and use tax on a purchase of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that becomes a component part of a facility that is determined to not qualify for a waste treatment facility property tax exemption under s. 70.11 (21), Stats.

Note: Contractors may direct questions concerning the taxability of the waste treatment facility to the department as provided in sub. (2m).

‘Municipal waste treatment facilities.’ Approvals are not required for municipal waste treatment facilities. A contractor or subcontractor may be liable for sales and use tax on a purchase of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that becomes a component part of a facility that is determined not to be a municipal waste treatment facility as provided in sub. (3).

Note: Contractors may direct questions concerning the taxability of the waste treatment facility to the department as provided in sub. (2m).

Note: Section Tax 11.11 interprets s. 77.54 (26), Stats.

Note: The interpretations in s. Tax 11.11 are effective July 31, 1975 when ss. 70.11 (21) and 77.54 (26), Stats., were revised, except: (a) The exemptions for chemicals and supplies used or consumed in operating a waste treatment facility became effective September 1, 1979, pursuant to Chapter 39, Laws of 1979; (b) The approval process for property and sales tax exemptions for industrial waste treatment facilities, except utilities, were eliminated effective January 1, 2002, pursuant to 2001 Wis. Act 16; (c) The definition of an industrial waste treatment facility was amended pursuant to 2007 Wis. Act 19 and applies on and after October 1, 2007; and (d) The separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, March, 1979, No. 279, eff. 4-1-79; am. (2), (4) (b) and (5) (d), r. and recr. (3), Register, September, 1982, No. 321, eff. 10-1-82; am. (2) (b), (3) (a) and (b) and (5) (b), Register, September, 1984, No. 345, eff. 10-1-84; cr. (2) (c), r. (1) (b) and (3), renum. (1) (a) to be (1) and am., renum. (2) (a), (b) and (c) to be (4) (a), (c) and (b) and am., renum. (4) to be (2) and am. (2) (a) and (b), renum. (5) (a), (b), (c) and (d) to be (3) (b), (a), (c) and (d), Register, June, 1991, No. 426, eff. 7-1-91; correction in (2) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, August, 1999, No. 524; am. (2) (b), r. (2) (c), cr. (3) (intro.), (b), (c) and (d), renum. (3) (a) to (d) and (4) to be (3) (a) 1., 2. and 3, (4) and (5) and am. (4) and (5) (c), Register, October, 1999, No. 526, eff. 11-1-99; CR 02-053: renum. (2) (a) and (4) to be (2) and (4) (a) and am., r. (2) (b), cr. (2m) and (4) (b), am. (5) (a), r. and recr. (5) (c) Register November 2002 No. 563, eff. 12-1-02; EmR0924: emerg. am. (1), (2m) (b), (3) (intro.), (5) (a), (c) 1. to 3., renum. (2m) (a) to be (2m) (a) (intro.) and am., cr. (2m) (a) 1. and 2., eff. 10-1-09; CR 09-090: am. (1), (2m) (b), (3) (intro.), (5) (a), (c) 1. to 3., renum. (2m) (a) to be (2m) (a) (intro.) and am., cr. (2m) (a) 1. and 2. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (3) (a) 3., (b) 1. (intro.), b., (c), (d) 1., (4) (a), (5) (b) Register November 2010 No. 659, eff. 12-1-10; CR 16-053: am. (3) (intro.) Register June 2018 No. 750, eff. 7-1-18.

Wis. Admin. Code § Tax 11.12 Farming, including dairy farming, agriculture, horticulture, floriculture, silviculture, and custom farming services {#sec-tax-11.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.12}

(1) Statutes. Section 77.54 (3) and (3m), Stats., provides exemptions for certain sales of tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., to persons who are engaged in farming as a business enterprise, including dairy farming, agriculture, horticulture, floriculture, silviculture, beekeeping, and custom farming services.

(2) Definitions. In this section and s. 77.54 (3), (3m), (30) (a) 3. and 5., and (33), Stats.:

(a) “Animal bedding” used in farming means disposable loose materials, including straw, shavings, sawdust, leaves, sand, and shredded paper, used where an animal may lie, to promote cleanliness and absorb urine or liquid manure. It does not include nonabsorbent items, including rubber floor mats.

(am) “Beekeeping” has the meaning given in s. 77.51 (1bm), Stats.

(b) “Custom farming services” means the performance of an activity, defined as farming in this section, for a farmer for a fee. The fee may include a cash payment, a share of the harvest or other valuable consideration. “Custom farming services” also includes services performed by a veterinarian to animals that are farm livestock or farm work stock used exclusively in the business of farming.

(c) “Dairy farming” means the business of feeding and raising cattle and other milk producing animals, but does not include operations such as pasteurizing, homogenizing, or making butter, cheese, or ice cream.

(d) “Farm livestock drugs” means any substance or preparation used in the diagnosis, cure, mitigation, treatment, or prevention of disease in farm livestock. This includes antibiotics, dewormers, mastitis treatments, medicated shampoos and vaccines in the form of boluses, capsules, feed additives, fluids, pills, powders, ointments, and salves. This also includes disinfectants, flea powder and flea sprays, mastitis indicators, teat dips, udder wash, and vitamins. “Farm livestock drug” does not include drugs for work stock, horses used in racing, pleasure riding, or show, or small domestic animals, including dogs and cats. It also does not include laboratory equipment used by a veterinarian, non-medicated shampoos, non-medicated pet foods, and non-medicated bandages, or plaster of paris that is used to set an animal’s broken bone.

(e) “Farm work stock” means animals, such as draft horses and mules, which are used exclusively in farming. The phrase includes horses used exclusively in farming to check on or herd livestock. The phrase does not include dogs, horses used for racing, pleasure riding or show or laboratory animals. The food for animals which are not farm work stock is taxable unless the animals are livestock as defined in par. (j).

(f) “Farming” means the business of producing food products or other useful crops by tilling and cultivating the soil or by raising cattle, sheep, llamas, poultry, domesticated rabbits, or other animals which produce a food product or which are themselves a food product. In addition, consistent with chs. 29 and 94, Stats., “farming” includes raising earthworms, pheasants, foxes, fitch, nutria, marten, fisher, mink, chinchilla, rabbit, caracul, and bees; producing honey products by a beekeeper; commercial raising of fish for food; commercial breeding and raising of horses and llamas for sale; and raising ginseng, mushrooms, and sod. “Farming” does not include home gardening and other similar noncommercial activities; breeding or raising dogs, cats, other pets or animals intended for use in laboratories; operating sporting or recreational facilities, such as riding stables or shooting preserves; operating stockyards, slaughterhouses, or feed lots as described in par. (g); pulpwood and sawmill operations; milling and grinding grain; and preparing sausage, canned goods, jellies, juices, or syrup.

Example: Dog and cat food is taxable.

(g) “Feed lot” means a restricted area containing pens or lots where livestock are held and fed. A person who holds livestock in a feed lot for less than 30 days is not engaged in farming. Feed purchased for livestock held in a feed lot for less than 30 days is taxable. However, a person who holds livestock in a feed lot for 30 days or more is engaged in farming and the feed purchased for the livestock is exempt. If a person holds some livestock for less than 30 days and some livestock for 30 days or more and purchases feed for both types at the same time, an allocation of the feed costs may be made so that tax is paid on the feed consumed by livestock held for less than 30 days and is not paid on feed consumed by livestock held for 30 days or more.

(h) “Floriculture” means the business of producing flowers, Christmas trees or other decorative trees, plants, or shrubs, including such operations as greenhouses.

(i) “Horticulture” means the business of producing vegetables, vegetable plants, fruits, and nursery stock, including the operation of commercial nurseries and orchards but not businesses which hold stock for purposes other than propagation or growth. “Horticulture” does not include the business of servicing plants owned by others; the raising of trees as timber; or lumber or sawmill operations.

(j) “Livestock” and “poultry” include animals, the products of which are normally used as food for human consumption, and domestically raised fur bearing animals or animals which are a source of wool, such as llamas, including those purchased for breeding.

(k)

“Silviculture” means the business of raising trees for timber, lumber, or other wood products. Silviculture includes the logging of timber when it is performed by a person engaged in the business of silviculture and the logging is conducted with respect to that person’s silviculture activity. Silviculture does not include pulp or sawmill operations.
“Logging” as used in subd. 1. includes the following activities which occur while in the field:

a. The felling of trees.

b. The delimbing of trees.

c. The cutting of trees into logs, poles, or other units.

d. The transportation of cut timber to a sawmill.

e. Activities conducted in the forest incidental to the felling, cutting, and removal of trees from the forest such as the clearing of the forest to allow access to and removal of the timber from the forest land.

(3) Obtaining exemption certificates. A retailer shall have a signed exemption certificate for every exempt sale made to a farmer, except that if the exemption certificate is received electronically, a signature is not required. Every invoice to which the certificate refers must contain the seller’s name, the farmer’s name and address, the date of sale and a brief description of the product sold.

(4) Statutory exemptions.

(a) Section 77.54 (3) (a), Stats., exempts the sales price from the sales of and the storage, use, or other consumption of tractors and machines, including accessories, attachments, and parts, lubricants, nonpowered equipment, and other tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that are used exclusively and directly, or are consumed or lose their identities, in the business of farming, including dairy farming, agriculture, horticulture, floriculture, silviculture, beekeeping, and custom farming services, but excluding automobiles, trucks, and other motor vehicles for highway use; excluding personal property that is attached to, fastened to, connected to or built into real property or that becomes an addition to, component of or capital improvement of real property and excluding tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., used or consumed in the erection of buildings or in the alteration, repair, or improvement of real property, regardless of any contribution that that personal property, or item or property under s. 77.52 (1) (b) or (c), Stats., makes to the production process in that building or real property and regardless of the extent to which that personal property, or item or property under s. 77.52 (1) (b) or (c), Stats., functions as a machine, except as provided in subd. 4. d. For purposes of this section:

‘Directly.’ Items used “directly” in farming include a plow, a combine, and a milking machine. Items of “indirect” use include repair tools, computers used for tracking prices or inventories or for word processing, and lawn and garden tractors used for mowing lawns and tilling home gardens.
‘Exclusively.’ “Used exclusively” means used to the exclusion of all other uses except for other uses not exceeding 5% of total use.

2g. ‘Consumed.’ Property is “consumed” in farming when it is used 100% in farming. Items consumed in farming include repair tools used to repair farm machinery or farm equipment, insect control strips, computers used indirectly but solely in the business of farming, test kits to test milk for contaminants, and lubricants used in farm tractors and machines.

2r. ‘Lose their identities.’ Property “loses its identity in farming” when it is used 100% in farming. Property losing its identity in farming includes disinfectants and sanitizers such as iodine and chlorine, water softener salt, and detergents.

‘Accessories, attachments, and parts.’ Included within the exemption are accessories, attachments, and parts for tractors and machines used exclusively and directly, or which are consumed or lose their identities in the business of farming. “Accessories” and “attachments” include devices designed to be mounted on a machine, such as a slow moving vehicle sign attached to a tractor or pipes attached to an irrigation pump, or devices to be pushed or pulled by a machine such as a farm wagon or a plow. A machine “part” means a durable unit of definite, fixed dimensions and includes tractor tires, oil filters, and fuel pumps. Canvas covers and paint for exempt machines are exempt. “Parts” does not include fluids such as antifreeze, hydraulic fluids, or diesel fuel anti-gel additives. These are “other tangible personal property” rather than “parts.”
‘Machines.’

a. “Machine” means an assemblage of parts that transmit force, motion and energy from one part to another in a predetermined manner.

b. “Machines which qualify for exemption” include, if not realty improvements, all-terrain vehicles or trucks not licensed for highway use, balers, chain saws for orchard or logging use but not for use in cutting firewood for personal use or for use in pulpwood or sawmill operations, choppers, corn pickers, crop conditioners, crop thinners, cultivators, discs, drags, end loaders, electric clippers and hoof trimmers, electric dehorners, electric fence chargers not fencing or insulators, electric foggers, fork lifts, harrows, harvesting combines, hay wagons, manure spreaders, mowers, planters, plows, powered posthole diggers, pumps and associated piping for irrigation, rock pickers, rotary hoes, space heaters not for residential use, sprayers, stalk shredders, and windrowers.

c. “Machines which do not qualify for exemption” include tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., that are attached to, fastened to, connected to or built into real property or that become an addition to, component of or capital improvement of real property. Also, tangible personal property, and items and property under s. 77.52 (1) (b) and (c), Stats., used or consumed in the erection of buildings or in the alteration, repair or improvement of real property, regardless of any contribution that the personal property, or item or property under s. 77.52 (1) (b) or (c), Stats., makes to the production process in that building or real property and regardless of the extent to which that personal property, or item or property under s. 77.52 (1) (b) or (c), Stats., functions as a machine does not qualify for exemption. However, there is an exception for those items specifically mentioned in subd. 4. d.

d. The following items retain their character as tangible personal property and qualify for exemption, regardless of the extent to which they are fastened to, connected to or built into real property: auxiliary power generators, bale loaders, barn cleaners and elevators, conveyors, feed elevators and augers, grain dryers and grinders, irrigation implements, milk coolers, milking machines, including piping, pipeline washers and compressors, top and bottom silo unloaders, and powered feeders, excluding platforms and troughs constructed from ordinary building materials.

‘Real property improvements.’

a. “Building” means any structure that is intended to be a permanent accession to real property; that is designed or used for sheltering people, animals, or plants, for storing property, or for working, office, parking, sales, or display space, regardless of any contribution that the structure makes to the production process in it; that in physical appearance is annexed to the real property; that is covered by a roof or encloses space; that is not readily moved or disassembled; and that is commonly known to be a building because of its appearance and because of the materials of which it is constructed.

b. Certain machines in addition to those in subd. 4. qualify for the exemption if purchased by farmers directly from retailers, even though after the sale they are affixed to realty by the farmer, or someone hired by the farmer. Machines included are automated livestock feeder bunks, but not ordinary building materials; automatic stock waterers powered by electricity or water pressure and built into a permanent plumbing system; automatic water softeners, such as for milkhouses; barn fans and blowers and other ventilating units; unit heaters and other heating units; water heaters serving production areas; and water pumps serving production areas.

‘Motor vehicles and their accessories, attachments, and parts.’ Specifically excluded from the exemption are “motor vehicles for highway use,” which includes motor trucks, automobiles, station wagons, buses and motorcycles. The exclusion from the exemption also applies to accessories, attachments, and parts for motor vehicles for highway use. “For highway use” means registered or required to be registered for that use. Charges for labor for the repair of vehicles registered for highway use, such as nurse tanks and trailers, are taxable. Sales of parts for vehicles registered for highway use which are used exclusively and directly in farming or are consumed in farming, such as nurse tanks and trailers, are taxable.

Note: Nurse tanks may qualify for the exemption provided in s. 77.54 (5) (d), Stats., as mobile units used for mixing and processing if they have pumps to blend and mix the product.

‘Other non-exempt sales.’ The exemption does not apply to:

a. Tools used in construction of or making repairs to real estate, such as block and tackle sets, chain hoists, cutters, electric drills, hammers, powered or nonpowered hand tools, planers, sharpeners, sanders, saws and wheelbarrows.

b. Building materials used to repair or improve real estate such as cement, drain tile, fencing, light fixtures, lumber, nails, and stanchions.

‘Sales and use tax.’ A person who buys without tax by claiming the farming exemption owes the sales tax at the time the person uses the property or item purchased in a taxable manner or for a taxable purpose. Property, items, or goods purchased without tax by claiming they will be used exclusively and directly in the business of farming, become subject to the tax when use of the property, items, or goods for nonexempt purposes exceeds 5% of total use. Property, items, or goods purchased without tax by claiming they will be consumed or lose their identity in the business of farming, become subject to the tax when the property, items, or goods are used for a purpose other than for an exempt use in the business of farming.

(b) Section 77.54 (3m), Stats., exempts: “The sales price from the sale of and the storage, use or other consumption of the following items if they are used exclusively by the purchaser or user in the business of farming; including dairy farming, agriculture, horticulture, floriculture, silviculture, beekeeping, and custom farming services:

‘Seeds for planting.’ “Seeds for planting” includes seeds for alfalfa, blue grass, canning peas, clover, field corn, field peas, rye grass, sweet corn, timothy and vegetables; plant parts capable of propagation; and bulbs. “Seeds for planting” does not include sod.
‘Plants.’ “Plants” include herbs, shrubs or young trees, slips, seedlings, or saplings planted or ready to plant.
‘Feed.’

a. “Feed” includes processed vegetable and animal products and essential minerals required for the normal nutritional needs of livestock, poultry and domestic fur-bearing animals and other materials which are required for the normal nutritional needs of animals in some domestic environments, such as vitamins A, B-complex, D and E. Essential minerals include phosphorous, calcium, sodium, chlorine, iodine, iron, copper, sulfur, potassium, magnesium and zinc. Common feed additives containing these substances include cod liver oil, salt in granular or block form, ground limestone, fish oil, fish meal, oyster shells and bone meal.

b. “Feed” includes medicated feed or drug carriers purchased for use as an ingredient of medicated feed, the primary purpose of which is the prevention of diseases in livestock or poultry. “Feed” does not include a mixture labeled and sold for specific treatment or cure of a disease. Feed for farm livestock, poultry and work stock is exempt but feed for pets, such as dogs and cats, is taxable.

‘Fertilizers and soil conditioners.’

a. “Fertilizer” means any substance containing nitrogen, phosphoric acid, potash or any recognized plant food element or compound which is used primarily for its plant food content to improve the soil’s agricultural qualities. “Fertilizer” and “soil conditioners” include fertilizer and insecticide combinations, agricultural minerals, carbon dioxide for application to land, urea, sewage sludge, liquid spray mixtures of minerals and plant nutrients, lime, compost, manure, peat moss and soy bean straw.

b. “Fertilizer” and “soil conditioners” do not include fill dirt, top soil, wood chips, wood shavings, litter and hormone growth stimulants.

Note: The difference between fertilizers and hormone growth stimulants is that fertilizers nourish plants whereas hormone growth stimulants act upon the cellular structure.

‘Sprays, pesticides and fungicides.’ “Sprays,” “pesticides” and “fungicides” include disinfectant sprays, fly sprays and preparations used to destroy insects, mites, nematodes, slugs, or other invertebrate animals injurious to plants and animals; chemicals used for crop disease, pest and weed control, including insecticides, rodenticides, and pesticides used to sanitize and clean dairy equipment. Products used to sanitize dairy equipment are exempt, if they are registered with the U.S. environmental protection agency, or “EPA,” as pesticides, advertised and sold as pesticides, and each bottle, can, or other container containing the pesticide has an EPA pesticide registration number on it.
‘Containers for fruits, vegetables, bee products, grain, hay, silage and animal wastes and plastic bags, plastic sleeves and plastic sheeting used to store or cover hay or silage.’

a. “Containers for fruits, vegetables, bee products, grain, hay, silage and animal wastes and plastic bags, plastic sleeves and plastic sheeting used to store or cover hay or silage” includes any kind of personal property which is purchased exclusively for holding or storing fruit, vegetables, bee products, grains, hay, silage or animal wastes. The phrase includes feeders and feed carts if used to hold hay, silage or feed which contains grain.

b. A complete corn crib or grain bin may be purchased “knocked-down” in kit form and still qualify for this exemption. However, a person who contracts with a farmer to provide and install the bin permanently into real estate is a consumer of the bin, not its seller. The contractor, dealer or installer, not being a farmer, may not furnish an exemption certificate claiming a farming exemption on the bin’s purchase. Being the consumer, not a seller, the contractor shall pay the sales tax to the supplier or report the use tax or sales tax pursuant to s. Tax 11.14 (2) (c) on the purchase price directly to the department. A farmer who utilizes the exemption certificate on the purchase of a grain bin or corn crib normally built on a slab or otherwise affixed to real estate may purchase the crib or bin separately and do any necessary installation work.

c. Farmers or contractors may purchase animal waste containers or the component parts of animal waste containers without tax, by issuing their supplier a properly completed “single purchase” exemption certificate.

d. Silos are not included in the exemption. The purchaser of materials used in building a silo shall pay the sales tax to the purchaser’s supplier. A silo unloader may be purchased by a farmer as an exempt machine.

‘Semen.’ Semen used for artificial insemination of livestock is exempt under s. 77.54 (27), Stats.

(c) Section 77.54 (30) (a) 3., Stats., exempts the sales price from the sale of electricity sold for use in farming, including but not limited to agriculture, dairy farming, floriculture, silviculture, beekeeping, and horticulture. Section 77.54 (30) (a) 5., Stats., exempts the sales price from the sale of fuel sold for use in farming, including but not limited to agriculture, dairy farming, floriculture, silviculture, beekeeping, and horticulture.

Electricity and fuel sold for use in farming includes electricity and fuel sold for use in performing custom farming services.
Fuel includes oxygen used to enrich a fuel mixture, or oxygen and acetylene used in a welding process.

(d) Section 77.54 (33), Stats., exempts the sales price from sales of and the storage, use or other consumption of drugs used on farm livestock, not including workstock, or on bees.

(5) Services furnished to farmers.

(a) Sales tax imposed under s. 77.52 (2) (a) 10., Stats., does not apply to the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., if the farmer may purchase the property, item, or good without tax under s. 77.54 (3), (3m), (27), (30) (a) 3. and 5., (33), and (50), Stats.

Examples: 1) Charges to a farmer for labor to replace a water pump on a motor vehicle registered for highway use are taxable. However, charges to a farmer for labor to replace a water pump on a tractor used exclusively and directly in farming are not taxable.

2) A farmer may claim an exemption when having draft horses or horses used exclusively in farming for breeding or to check on or herd livestock shod, but not when having horses ridden for pleasure shod.

(b) Fees for breeding farm livestock or farm work stock, charges for artificial insemination of farm livestock or farm work stock, and medical and hospitalization services furnished by veterinarians are not taxable.

(c) The exemptions under s. 77.54 (3), Stats., do not apply to farmers’ purchases of other services which are taxable under s. 77.52 (2) (a), Stats., including telephone, laundry, dry cleaning, photographic services, and breeding or artificial insemination of animals other than farm livestock or farm work stock.

(6) Services provided by farmers.

(a) Nontaxable services. The following services performed by farmers are not subject to the sales tax:

‘Custom work.’ The performance of custom farm services, such as plowing a field, planting seeds, harvesting grain, or logging timber.
‘Training animals.’ The training of horses, dogs, or other animals.

(b) Services to tangible personal property. Charges for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property or items, property or goods under s. 77.52 (1) (b), (c), or (d), Stats., are taxable, unless at the time such services are performed, a sale in Wisconsin of the type of property, item or good so serviced would have been exempt from Wisconsin sales tax. Taxable services to tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., include:

‘Boarding animals.’ The boarding of dogs, cats, horses used for racing, pleasure riding or show, or other recreational animals. The entire boarding charge is taxable, but the retailer may purchase the feed for the animals without tax by supplying a properly completed exemption certificate claiming an exemption for resale.
‘Grooming animals.’ The grooming of recreational animals.

Example: Charges by a farmer for labor to replace a radiator on a motor vehicle registered for highway use are taxable. However, charges by a farmer for labor to replace a radiator on a tractor used exclusively and directly in the business of farming are not taxable.

(7) Taxable sales. Sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., by farmers which are taxable include:

(a) Horses for use in racing, pleasure riding, or show.

(b) Llamas for use as pack animals, pets, or to herd sheep.

(d) Timber or gravel when the purchaser acquires this property for removal, unless the purchaser pays royalties to lease land.

Note: Section Tax 11.12 interprets ss. 77.51 (1bm) and (2d), 77.52 (1) and (2) (a) 10., and 77.54 (3), (3m), (27), (30), and (33), Stats.

Note: The interpretations in s. Tax 11.12 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Semen became exempt effective July 22, 1971, pursuant to Chapter 64, Laws of 1971; (b) Baling wire and twine became exempt effective December 24, 1975, pursuant to Chapter 146, Laws of 1975; (c) The exemption for electricity for residential use and use in farming and for fuel oil, propane, coal, steam or wood for residential use became effective July 1, 1979, pursuant to Chapter 1, Laws of 1979; (d) The definition of “feed lot” became effective December 1, 1981; (e) Farm livestock medicine, milk house supplies and animal bedding became exempt effective July 1, 1986, pursuant to 1985 Wis. Act 29; (f) The definition of “exclusively used” became effective October 1, 1989, pursuant to 1989 Wis. Act 31; (g) The farm machinery exemption was revised effective October 1, 1989, pursuant to 1989 Wis. Act 31; (h) The exemption for farm fuel for items other than machines became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (i) The exemption for electricity sold for use in farming was expanded to include sales of electricity during the entire year, effective for sales on or after May 1, 2000, pursuant to 1999 Wis. Act 9; (j) The expansion of the exemption for tangible personal property consumed in farming and the addition of “silviculture” to the definition of farming became effective July 1, 2007, pursuant to 2005 Wis. Act 366; (k) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (L) The clarification that “custom farming services” includes services performed by veterinarians to farm livestock or work stock used exclusively in the business of farming became effective July 2, 2013, pursuant to 2013 Wis. Act 20; and (m) The addition of “beekeeping” to the definition of farming and various farming exemptions became effective December 1, 2017, pursuant to 2017 Wis. Act 59.

History

Cr. Register, March, 1978, No. 267, eff. 4-1-78; am. (2) (intro.), (4) (a) 1., (4) (b) (intro.) and (5) (c), renum. (2) (a) to be (2) (a) 1. and am., cr. (2) (a) 2., Register, November, 1981, No. 311, eff. 12-1-81; am. (2) (a) 1., (4) (b) 5., 6. c. and 9., Register, June, 1983, No. 330, eff. 7-1-83; am. (4) (a) 1., 3. and 5., and (5) (c), cr. (5) (d), Register, September, 1984, No. 345, eff. 10-1-84; am. (4) (a) (intro.) and 7., (4) (b) 6. b., Register, July, 1987, No. 379, eff. 8-1-87; am. (2) (a) 1. and (4) (b) 7., cr. (7), Register, November, 1988, No. 395, eff. 12-1-88; renum. (2) (a) to (d) and (4) (b) 7. and 8. to be (2) (c), (g), (f), (b), (h) and (e), cr. (2) (a), and (d) and (i), am. (4) (b) (intro.) and 3. b., Register, June, 1990, No. 414, eff. 7-1-90; cr. (2) (b), (4) (a) 2., 4. c. and d. and 5. a., am. (1), (4) (a) (intro.), (4) (b) 3. a., 4. b. and 6. b. and d., renum. (2) (b) to be (2) (c), renum. (2) (c) 1. and 2. to be (2) (d) and (g) and am. (g), renum. (2) (d) to (g) to be (2) (e), (f), (h) and (i) and am. (f), renum. (2) (h) and (i) to be (2) (j) and (k), renum. (4) (a) 2. to be 3., and am., renum. (4) (a) 3. and 4. a. and b. to be (4) (a) 4. and 5. b. and c., and am. 4. a. and b. and 5. b. and c., renum. (4) (a) 5., 6., and 7. to be (4) (a) 6., 7. and 8. and am. 7. b. and 8., Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (d), (e), (i) and (3), (4) (a) (intro.), 3., 5. c., 6., 7. c., (b) (intro.), 4. a., 5. and 6. c., renum. (4) (b) 9. to be (4) (b) 7., r. (5) (d), Register, April, 1993, No. 448, eff. 5-1-93; am. (1), (3), (4) (a) (intro.), 7. c. and (b) (intro.), 1. and 6., a., b., c., and e., (5), (6) (b) 1. and (7) (b), r. (4) (a) 5. c., renum. (2) (d), (e) and (f) to be (2) (f), (d) and (e) and am. (e) and (f), Register, May, 1999, No. 521, eff. 6-1-99; EmR0924: emerg. am. (title), (1), (2) (intro.), (d), (f), (4) (a) (intro.), 1., 3., 4. b. to d., 5. b., 7. a., 8., (b) (intro.), 2., 6. c., 7., (5) (a), (6) (a) 1., (b) 1., and (7) (intro.), r. and recr. (2) (k), (4) (a) 6., (6) (b) (title) and (intro.), cr. (4) (a) 2g., 2r., (c) and (d), r. (4) (a) 7. c., (b) 6. e., and (7) (a), renum. (7) (b) to (e) to be (7) (a) to (d), eff. 10-1-09; CR 09-090: am. (title), (1), (2) (intro.), (d), (f), (4) (a) (intro.), 1., 3., 4. b. to d., 5. b., 7. a., 8., (b) (intro.), 2., 6. c., 7., (5) (a), (6) (a) 1., (b) 1., and (7) (intro.), r. and recr. (2) (k), (4) (a) 6., (6) (b) (title) and (intro.), cr. (4) (a) 2g., 2r., (c) and (d), r. (4) (a) 7. c., (b) 6. e., and (7) (a), renum. (7) (b) to (e) to be (7) (a) to (d) and am. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (a), (c), (d), (f), (h), (i), (k) 1., 2. e., (4) (a) (intro.), 3., 4. b., d., 5. a., 6., 7. b., (b) 2., 5., (5), (6) (a) 2., (b) (intro.) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (3) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: am. (2) (b) Register August 2014 No. 704, eff. 9-1-14; CR 20-018: am. (1), cr. (1) (am), am. (2) (f), (4) (a) (intro.), (b) (intro.), 6. (title), a., (c), (d) Register July 2021 No. 787, eff. 8-1-21; renum. (1) (am) to (2) (am) under s. 13.92 (4) (b) 1., Stats., Register July 2021 No. 786.

Wis. Admin. Code § Tax 11.13 Direct pay {#sec-tax-11.13 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.13}

(1) Definitions. In this section:

(a) “Continuous” use of a direct pay permit means that the purchase without tax applies to the purchase being made from the retailer and subsequent purchases from that retailer and is considered a part of each order given to the retailer.

(b) “Single purchase” use of a direct pay permit means that the purchase without tax applies only to the purchase being made from a retailer for which the direct pay permit is given.

(2) General.

(a) The holder of a direct pay permit may purchase tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services, except those in sub. (6) (a) and (b), from a retailer without paying Wisconsin sales or use tax to the retailer.

(b) The direct pay permit holder shall report Wisconsin use tax on the purchase price of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services purchased from a retailer without tax using a direct pay permit if the property, item, good, or service is subject to Wisconsin sales or use tax. The tax shall be reported on the direct pay permit holder’s Wisconsin sales tax return for the period in which the taxable storage, use, or consumption first occurs in Wisconsin.

Note: Purchase price, for purposes of this paragraph, has the meaning specified in s. 77.51 (12m), Stats.

(3) Issuance.

(a) The department shall issue a direct pay permit to those applicants who meet the qualifications set forth in s. 77.52 (17m) (b), Stats.

(b) Persons who wish to obtain a direct pay permit shall apply to the department using form S-101, “Application for Direct Pay Permit.”

Note: Form S-101 is available by writing to Wisconsin Department of Revenue, Mail Stop 5-77, PO Box 8949, Madison WI 53708-8949; calling (608) 266-2776; or downloading it from the department's web site, www.revenue.wi.gov.

(c) A direct pay permit shall be effective for purchases made beginning on the first day of the applicant’s taxable year, for Wisconsin franchise or income tax purposes, after the permit is issued.

Example: A person’s taxable year begins July 1 for Wisconsin franchise or income tax purposes. The person files an application for a direct pay permit with the department on January 1, 2009. The person is issued a direct pay permit which is effective for purchases made on or after July 1, 2009.

(4) Revocation or cancellation.

(a) A direct pay permit issued by the department may be used indefinitely until it is revoked by the department or cancelled by the holder.

(b) A permit may be cancelled by the holder by mailing the permit to the department for cancellation. A letter shall be enclosed with the permit, indicating the holder’s intention to cancel the permit.

Note: The permit to be cancelled and letter should be mailed to Wisconsin Department of Revenue, Mail Stop 3-80, PO Box 8902, Madison WI 53708-8902.

(c) The cancellation of a direct pay permit shall become effective immediately following the last day of the holder’s taxable year in which the permit is received by the department.

(5) Using direct pay.

(a) Documentation. A direct pay permit holder shall provide one of the following to a retailer when purchasing without paying tax to the retailer using a direct pay permit:

A copy of its direct pay permit. The direct pay permit holder shall also provide to the retailer a written statement as to whether the direct pay permit is for a single purchase or is continuous.
A form S-211, “Wisconsin Sales and Use Tax Exemption Certificate,” or other written document, either of which contains all of the following:

a. The name and address of the direct pay permit holder.

b. A statement that the direct pay permit holder is purchasing without Wisconsin sales or use tax using a direct pay permit.

c. The direct pay permit holder’s direct pay permit number.

d. The effective date of the direct pay permit.

e. A statement as to whether the use of the direct pay permit is for a single purchase or is continuous.

f. The signature of the direct pay permit holder.

(b) Continuous use.

If a direct pay permit holder indicates in writing to a retailer that the use of the direct pay permit is continuous, that purchase and all subsequent purchases from the retailer, except those in sub. (6) (a) and (b), shall be made without paying Wisconsin sales or use tax to the retailer using the direct pay permit, unless the continuous use is voided by the direct pay permit holder. The direct pay permit holder may void the continuous use of its direct pay permit by furnishing the retailer a letter indicating that continuous use no longer applies.
If the use of a direct pay permit is continuous, it is necessary for the direct pay permit holder to provide the documentation in par. (a) to a retailer only at the time the direct pay permit holder begins making purchases without paying tax to that retailer using the direct pay permit, rather than at the time of each purchase.
While the use of a direct pay permit is continuous, all purchases from a retailer, except those in sub. (6) (a) and (b), shall be made using the direct pay permit even though an exemption certificate requiring different documentation may apply.

Example: On October 1, 2009, Company A begins using its direct pay permit when purchasing tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., from Company B. Company A provides a written statement to Company B that the use of its direct pay permit will be continuous. All purchases of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, except those described in sub. (6) (a) and (b), by Company A from Company B on or after October 1, 2009, while continuous use is in effect, must be made without paying sales or use tax to the retailer using the direct pay permit. While continuous use of a direct pay permit is in effect, no other exemption certificate may be used.

(c) Single purchase. If a direct pay permit holder uses its direct pay permit for a single purchase, any subsequent purchase by the direct pay permit holder from that retailer is subject to Wisconsin sales or use tax unless the direct pay permit holder provides the information in par. (a) for that purchase or that purchase is otherwise exempt from tax.

(d) Retailer records. The retailer shall keep the information provided by the direct pay permit holder under par. (a) on file as authorization for the direct pay permit holder to make purchases without paying tax to the retailer.

(6) Services and property not eligible for direct pay.

(a) Services. A direct pay permit holder shall pay Wisconsin sales or use tax to a retailer on the retailer’s sales of services to the direct pay permit holder under the following Wisconsin statutes:

Section 77.52 (2) (a) 1., Stats., relating to furnishing rooms or lodging.
Section 77.52 (2) (a) 2., Stats., relating to admissions to amusement, athletic, entertainment, or recreational events, devices, or facilities.
Section 77.52 (2) (a) 5. and 5m., Stats., relating to internet access services; prepaid calling services and intrastate, interstate, and international telecommunications services, except interstate 800 services; ancillary services, and telecommunications message services.
Section 77.52 (2) (a) 9., Stats., relating to parking.
Section 77.52 (2) (a) 12., Stats., relating to cable television system services.
Section 77.52 (2) (a) 20., Stats., relating to landscaping services.

(b) Property. A direct pay permit holder shall pay Wisconsin sales or use tax to a retailer on the retailer’s sale, lease, license, or rental to the direct pay permit holder of the following tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.:

Tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred to a purchaser in connection with the sale of landscaping services subject to tax under s. 77.52 (2) (a) 20., Stats.
Motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, semitrailers, all-terrain vehicles, utility terrain vehicles, off-highway motorcycles, or aircraft.
Candy as defined in s. 77.51 (1fm), Stats., soft drinks as defined in s. 77.51 (17w), Stats., dietary supplements as defined in s. 77.51 (3n), Stats., prepared foods as defined in s. 77.51 (10m), Stats., and alcoholic beverages as defined in s. 77.51 (1b), Stats.

(c) Exemptions. Although not eligible to be purchased without paying Wisconsin sales or use tax to a retailer using a direct pay permit, the taxable services and tangible personal property, and items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., described in pars. (a) and (b) may be purchased without Wisconsin sales or use tax if a resale, farming, manufacturing, or other exemption applies. Documentation is required to purchase without tax, as provided in s. Tax 11.14.

(d) Penalty for prohibited or incorrect use. A person who uses a direct pay permit in a manner that is prohibited by or inconsistent with the Wisconsin sales and use tax laws or who provides incorrect information to a seller or certified service provider related to their direct pay permit shall be subject to a penalty of $250 for each invoice or bill of sale related to the prohibited or inconsistent use of their direct pay permit as provided in s. 77.60 (13), Stats.

(7) Retailer’s liability — permit revoked or cancelled. A retailer is not liable for sales or use tax on the sales price from the sale of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, except those described in sub. (6) (a) and (b), to a person who has provided the retailer with the appropriate information under sub. (5) (a), until the earlier of the following:

(a) The date the retailer is notified by the direct pay permit holder or the department that the holder’s direct pay permit has been revoked by the department. A direct pay permit is considered revoked on the date the holder receives the department’s notice of revocation.

(b) The last day of the direct pay permit holder’s taxable year in which the retailer is notified by the holder or the department that the holder’s direct pay permit is being cancelled by the holder as provided in sub. (4) (b).

Note: Section Tax 11.13 interprets ss. 77.52 (17m) and 77.60 (13), Stats.

Note: The change of the term “gross receipts” to “sales price,” the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., and the penalty for prohibited or inconsistent use of a direct pay permit became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, June, 1995, No. 474, eff. 7-1-95; CR 02-128: am. (1) (a), (3) (b), (5) (a) 2. (intro.) and (b) 3., Register July 2003 No. 571, eff. 8-1-03; EmR0924: emerg. am. (2) (a), (b), (6) (b) (intro.), 1., 2., (c), and (7) (intro.), cr. (6) (a) 3m., r. and recr. (6) (b) 3., r. (6) (b) 4., eff. 10-1-09; CR 09-090: am. (2) (a), (b), (6) (b) (intro.), 1., 2., (c), and (7) (intro.), cr. (6) (a) 3m. and (d), r. and recr. (6) (b) 3., r. (6) (b) 4. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (6) (a) 2., 3., (b) (intro.), 2., 3., (c), r. (6) (a) 3m. Register November 2010 No. 659, eff. 12-1-10; CR 16-053: am. (6) (b) 2. Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (6) (b) 2. Register June 2020 No. 774, eff. 7-1-20.

Wis. Admin. Code § Tax 11.14 Exemption certificates {#sec-tax-11.14 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.14}

(1) Statutes. The sales tax status of exemption certificates is contained in s. 77.52 (13) to (17), Stats., and the use tax status of exemption certificates is contained in s. 77.53 (10) to (13), Stats.

(2) General.

(a) Exemption certificates are given to sellers or lessors by purchasers or lessees to verify that a transaction is exempt from Wisconsin sales and use taxes. Sellers and lessors shall exclude from the taxable sales price those transactions for which they have accepted a valid exemption certificate from the purchaser. The following sales and use tax exemption certificates may be used in Wisconsin:

Wisconsin sales and use tax exemption certificate, form S-211. This is a multipurpose form which may be used for any Wisconsin sales and use tax exemption provided by law, except as provided in sub. (14). For direct pay, form S-211 may be used as the document described in s. Tax 11.13 (5) (a) 2. if all of the required information is included on the form S-211.
Construction contract entered into before the effective date of county/stadium tax, form S-207CT-1. This is a certificate which may be used by a contractor to purchase building materials without a county or stadium tax under the circumstances described in sub. (13).
Streamlined Sales and Use Tax Exemption Certificate, SSTGB Form F0003 or Streamlined Sales and Use Tax Exemption Certificate - Wisconsin, Form S-211-SST. These are multistate forms which may be used to claim any sales or use tax exemption provided under Wisconsin law. Since these are multistate exemption certificates, purchasers should use caution when issuing these certificates, since they contain various exemptions that are not applicable in Wisconsin and only apply in other states. Purchasers are responsible for knowing if they qualify for the exemption they are claiming in the state in which the exemption is being claimed. The purchaser will be held liable for any tax, interest, and penalties that result from the purchaser claiming an exemption for which they were not eligible.

(b) Use of an exemption certificate designed by the department is not required by law. A person may use a substitute exemption certificate if it contains all the essential information relating to the transaction and if it is in a form approved by the department. Paper exemption certificates must be signed by and bear the name and address of the purchaser, a general description of the purchaser’s business and the reason for the claimed exemption. An electronic exemption certificate shall contain the same information as a paper exemption certificate, except that a signature is not required.

(c) If a purchaser provides an exemption certificate indicating that the property, item, good, or service purchased will be used for activities or under circumstances which make the purchase of the property, item, good, or service exempt from the sales tax or for resale, and the property, item, good, or service is subsequently used by the purchaser in a manner that makes the property, item, good, or service ineligible for exemption from tax, the purchaser is liable for payment of the applicable sales or use tax.

(3) Effect of obtaining certificate.

(a) Except as provided in par. (b), a seller is relieved of liability for the tax if the seller obtains from the purchaser, prior to the date of the sale or within 90 days after the date of the sale, a fully completed exemption certificate which indicates that the purchaser will use the property or service in a manner that is exempt from Wisconsin sales and use tax.

(b) A seller is not relieved of its liability to collect and remit the applicable Wisconsin sales or use tax on a sale to a purchaser if any of the following apply:

The seller fraudulently fails to collect the sales or use tax.
The seller solicits the purchaser to claim an unlawful exemption.
The seller accepts an exemption certificate from a purchaser claiming to be an entity that is not subject to sales and use taxes, if both of the following apply:

a. The subject of the transaction covered by the exemption certificate is received by the purchaser at the seller’s Wisconsin location.

b. The exemption certificate clearly and affirmatively indicates that the claimed exemption is not available in Wisconsin.

Note: All retailers should be familiar with the instructions contained in an exemption certificate.

(4) Failure to obtain certificate.

(a) A seller who does not obtain an exemption certificate as provided in sub. (3) (a), shall be relieved from liability for the tax if, no later than 90 days after the sale, the seller captures and maintains all of the following data elements in its accounting system, with respect to the transaction upon which an exemption is being claimed:

Name and business address of the purchaser.
Purchaser’s state tax identification number and state of issue. If the purchaser does not have a state tax identification number then the purchaser’s federal employer identification number is needed. If the purchaser does not have a federal employer identification number then the purchaser’s personal driver’s license number and state of issue is needed.
Purchaser’s type of business.
The reason for the claimed exemption.

(b) If a seller does not obtain an exemption certificate as provided in sub. (3) (a) or the relevant data elements provided in par. (a), the seller may, within 120 days after it is requested by the department to substantiate a claimed exemption, either obtain, in good faith, a fully completed exemption certificate from the purchaser; or by some other means provide proof that the transaction was not subject to Wisconsin sales or use tax. If a seller cannot prove that a transaction was exempt by one of these methods, the seller is not relieved from liability for the tax, interest, or penalties.

(c)

A seller accepts an exemption certificate as provided in sub. (4) (b) in good faith if all of the following apply:

a. The exemption claimed was authorized by law on the date of the transaction in the jurisdiction to which the transaction is sourced.

b. The exemption could be applicable to the property, item, good, or service being purchased.

c. The exemption being claimed is reasonable for the purchaser’s type of business.

If a seller obtains the information in subd. 1., the seller is relieved of its liability for the tax unless it is discovered through the audit process that the seller had knowledge or reason to know at the time the information relating to the exemption was provided that the information was materially false or the seller otherwise knowingly participated in an activity intended to purposefully evade the tax that is properly due on the transaction.

(5) Continuous certificates.

(a) Continuous or blanket exemption certificates do not expire and need not be renewed at any prescribed interval. However, they should be renewed at reasonable intervals in case of a business change, registration number change, or discontinuance of the specific business claiming the exemption. The seller should periodically review exemption certificates on file to ascertain that the person claiming the exemption is the person who furnished the certificate.

(b) If a purchaser provides a continuous or blanket exemption certificate, the purchaser may not issue “this time only” purchase orders or similar documents cancelling the continuous or blanket exemption certificate for the one transaction only. In addition, the notation “taxable” on a purchase order is not sufficient to relieve a purchaser of the responsibility for a previously issued continuous or blanket certificate. The seller is not liable for the tax on transactions covered by a valid exemption certificate. If a purchaser does not want a continuous or blanket exemption certificate to apply, it must notify the seller in writing that it is rescinding a previously issued continuous or blanket exemption certificate.

(6) Resale.

(a) Effect of obtaining exemption certificate claiming resale.

The burden of proving that a sale of property, items, goods, or services is not at retail is upon the seller unless the seller accepts an exemption certificate from the purchaser as provided in sub. (3) (a) or captures and maintains the data elements as required in sub. (4) (a) that indicate the property, item, good, or service is purchased for resale. Obtaining the certificate or capturing and maintaining the data elements that indicate the property, item, good, or service is purchased for resale, relieves the seller from liability for the sales tax and the duty of collecting the use tax.
If a purchaser gives an exemption certificate as provided in sub. (3) (a) or provides the data elements described in sub. (4) (a), claiming resale for property, item, good, or service acquired and then makes any storage or use of the property, item, good, or service other than retention, demonstration, or display while holding it for sale, lease, license, or rental in the regular course of business, the storage or use is taxable to the purchaser as of the time the property, item, good, or service is first stored or used. The sales tax shall be reported and paid by the purchaser with the tax return for the period in which the property, item, good, or service is first so stored or used.

(b) Contents of exemption certificates claiming resale. An exemption certificate claiming resale shall contain the following information for the seller to be relieved from the burden of proving the sale of property or services was not a taxable sale:

The name, address, and signature of the purchaser, except that if the exemption certificate is received electronically, a signature is not required.
A general description of the purchaser’s business.
The basis for the claimed exemption including the seller’s permit number of the purchaser, except that:

a. A wholesaler who sells only to other sellers for resale may insert “wholesale only” in the space for a seller’s permit number.

b. A person registered as a seller in another state, who makes no retail sales in Wisconsin, may insert the name of the state in which registered and the permit number issued to the person by that state.

c. A person who makes exempt sales only in the regular course of business may insert the words “exempt sales only” in the space for a seller’s permit number.

(7) Manufacturing exemption.

(a) A supplier who accepts a fully completed exemption certificate claiming a manufacturing exemption marked for “continuous” use may make sales to the manufacturer without collecting the tax if the nature of the property, items, or services sold qualifies for one of the exempt uses claimed by the manufacturer on the form. If an exemption certificate is a “continuous” form, each purchase order of the manufacturer shall refer to it. If an individual order contains both exempt and non-exempt purchases, the purchaser shall designate which items are taxable.

(b) If the manufacturer uses “single purchase” certificates, it may print these as an integral part of its purchase orders, as long as the essential information on the approved form is retained.

(8) Farmer’s exemption. A retailer shall have a signed exemption certificate for every exempt sale made to a farmer, except that if the exemption certificate is received electronically, a signature is not required.

Note: Section Tax 11.12 describes the types of property, items, goods, and services which may be sold to farmers without tax, and the use of the exemption certificate to claim farming exemptions.

(9) Exemption for fuel oil, propane, coal, steam, and wood for fuel for residential or farm use. A retailer shall have a signed exemption certificate if the sale of fuel oil, propane, coal, steam or wood for residential or farm use is partially exempt from sales or use tax, except that if the exemption certificate is received electronically, a signature is not required. If the sale is 100% exempt, an exemption certificate is not required.

(10) Exemption for electricity and natural gas sold for residential or farm use. A retailer of electricity or natural gas shall have a signed exemption certificate, except that if the exemption certificate is received electronically, a signature is not required, for all sales of electricity or natural gas for residential or farm use which are exempt from sales or use tax unless any, or all, of the following apply:

(a) 100% of the electricity or natural gas is for exempt use.

(b) The sale is to an account which is properly classified as residential or farm pursuant to schedules which are filed for rate tariff with the Wisconsin public service commission which are in force at the time of the sale.

(c) The sale is to an account which is properly classified as residential or farm for classification purposes as directed by the federal rural electrification administration.

(11) Government sales and use tax exemption.

(a) A retailer of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services may accept from a federal or Wisconsin governmental unit or any federally recognized American Indian tribe or band in Wisconsin, an exemption certificate as provided in sub. (3) (a) or the data elements as required in sub. (4) (a) as proof that a sale is exempt from sales or use tax.

(b) In lieu of accepting an exemption certificate as provided in par. (a), a retailer who issues its billing or invoice in the name of the Wisconsin or federal governmental unit or any federally recognized American Indian tribe or band in Wisconsin, may accept either one of the following:

A purchase order or similar written document from the governmental unit or tribe or band, identifying itself as the purchaser.
A verbal indication of the governmental unit’s or tribe’s or band’s, certificate of exempt status, or CES, number, which the retailer shall record on the copy of the invoice it retains.

(12) Other exemptions. The Wisconsin sales and use tax exemption certificate, form S-211, and the Streamlined Sales and Use Tax Exemption Certificate, SSTGB Form F0003, may also be used to claim any other sales and use tax exemption provided by law, including the following:

(a) Containers and other packaging, packing, and shipping materials used to transfer merchandise to customers of the purchaser.

(b) Tangible personal property and items under s. 77.52 (1) (b), Stats., that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale, except as provided in s. 77.54 (30) (a) 6., Stats.

(c) Trailers or accessories, attachments, parts, supplies, materials, and service on motor trucks, tractors, and trailers which are used exclusively in common or contract carriage.

(d) Property, items, goods, or services purchased directly by and used by a religious, charitable, educational, scientific, or other organization; title holding entity described under section 501 (c) (2) of the Internal Revenue Code; or governmental unit holding a Certificate of Exempt Status, “CES.” Sales to organizations holding a CES also can be documented as exempt by a retailer’s recording the certificate number on its bill of sale. A corporation, community chest fund, foundation, or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, which is located out-of-state, may use the Wisconsin sales and use tax exemption certificate, form S-211, or the Streamlined Sales and Use Tax Exemption Certificate, SSTGB Form F0003, to purchase without tax even though it has not been issued a Wisconsin CES number.

(e) Railway cars, locomotives and other rolling stock used in railroad operations, or accessories, attachments, parts, lubricants, or fuel therefor.

(f) Commercial vessels and barges of 50-ton burden or over engaged in interstate or foreign commerce or commercial fishing, and accessories, attachments, parts, and fuel therefor.

(13) Construction contracts entered into before the effective date of a county or stadium tax.

(a) The certificate for a construction contract entered into before the effective date of a county tax, or a stadium tax as defined in s. Tax 11.001 (2) (d), form S-207CT-1, is used by contractors to purchase building materials without the county or stadium tax. The certificate shall be used by a contractor only if the following 3 conditions are met:

Note: Section Tax 11.001 (2) (d) was repealed with CR 22-044.

The contractor entered into a written contract or made a formal bid before the effective date of the county or stadium tax to construct, alter, repair, or improve real estate for another person.
The written contract is for a fixed price that cannot be changed or the formal written bid cannot be altered or withdrawn.
The building materials purchased on or after the effective date of the county or stadium tax are affixed and made a part of real estate in fulfilling the written contract or formal written bid.

(b) The certificate shall give the descriptive name of the contract, job site, county or stadium tax effective date, date of prime contract and bid, date contract was signed, seller’s name, date of performance of the contract, and contractor’s name and address and shall be signed by the contractor, except that if the certificate is received electronically, a signature is not required.

(14) direct pay permits. The use of direct pay permits in Wisconsin is authorized under s. 77.52 (17m), Stats. A person may apply to the department for a direct pay permit.

Note: For information on who qualifies for a direct pay permit and how to use direct pay, refer to s. Tax 11.13.

(15) Improper use of certificates.

(a) A purchaser who gives an exemption certificate knowing at the time that the transaction is not exempt may be guilty of a misdemeanor under s. 77.52 (16), Stats. The purchaser may also be liable for other penalties provided by law for filing incorrect returns.

(b) A purchaser who uses an exemption certificate in a manner that is prohibited by or inconsistent with Wisconsin law or who provides incorrect information to a seller or certified service provider relating to an exemption being claimed will also be subject to a penalty of $250 for each invoice or bill of sale related to the prohibited or inconsistent use to which the incorrect information applies.

(16) Exemption certificate not needed for certain sales. No exemption certificate is required for sales of property, items, goods, or services that are exempt from Wisconsin sales and use tax under s. 77.54 (5) (a) 3., (7), (7m), (8), (10), (11), (14), (15), (17), (20n), (21), (22b), (31), (32), (35), (36), (37), (42), (44), (45), (46), (51), (52), (66), and (67), Stats.

Note: Section Tax 11.14 interprets ss. 77.52 (13) to (17), 77.53 (10) to (13), 77.54 (9a) and (9g), 77.60 (13), and 77.77 (3), Stats.

Note: The interpretations in s. Tax 11.14 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for railroad lubricants became effective July 1, 1978, pursuant to Chapter 418, Laws of 1977; (b) The use of direct pay permits in Wisconsin became effective for taxable years beginning on or after January 1, 1995, pursuant to 1993 Wis. Act 437; (c) The elimination of the exemption certificate requirement for sales of certain consigned commodities became effective December 1, 1997 as it relates to sales taxes on commodities consigned for resale, pursuant to 1997 Wis. Act 27, and June 17, 1998 as it relates to sales and use taxes on commodities consigned for sale, pursuant to 1997 Wis. Act 237; (d) The multipurpose exemption certificate, form S-211, was created in November 1998 to replace various types of exemption certificates; (e) The removal of the good faith requirement if a fully completed exemption certificate is obtained by the seller from the purchaser within 90 days of the date of sale became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (f) The requirement that a seller is allowed 120 days after the Department of Revenue requests that they obtain an exemption certificate or otherwise prove that a transaction is exempt became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The exemption from sales and use tax for federally recognized American Indian bands or tribes in Wisconsin became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (h) The acceptance of the Streamlined Sales and Use Tax Exemption Certificate to prove a transaction is exempt became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (i) The penalty for prohibited or inconsistent use of an exemption certificate or direct pay permit became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (j) The identification of the specific exemptions for which an exemption certificate is not required became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (k) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (L) The exemption for certain title holding entities described under section 501 (c) (2) of the Internal Revenue Code was effective retroactively to September 1, 2017, pursuant to 2017 Wis. Act 231.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (7) (a)., Register, June, 1983, No. 330, eff. 7-1-83; cr. (2) (c) and am. (10), Register, July, 1987, No. 379, eff. 8-1-87; cr. (2) (a) 5. and 6., (10), (11) and (14), am. (2) (a), (5) (b), (6) (b) (intro.) and 5., (7) (a) (intro.) and 4. and 5., (8) (a) and (9), renum. (10) and (11) to be (12) and (13) and am., Register, March, 1991, No. 423, eff. 4-1-91; am. (2) (c), (3) (b) and (c), (6) (b) 4., r. and recr. (12), Register, June, 1995, No. 474, eff. 7-1-95; renum. (12), (13) and (14) to be (13), (14) and (15), am. (2) (a) (intro.), cr. (2) (a) 7. and (12), Register, October, 1997, No. 502, eff. 11-1-97; am. (1) (c), (3) (a) and (b), (5) (b), (6) (a) 2., (b), 3., r. and recr. (2) (a) 1. and 2., cr. (6) (b) 4. c. and (16), r. (2) (a) 3. to 7., (7) (b), (10) (b), (11) (b) and (12) (b) 1., renum. (7) (a) 1. to 6. to be (12) (a) to (f) and am. (12) (d), renum. (8) to (10) (a) to be (7) to (9) and am. (7) (a), (8) and (9), renum. (11) (a) 1. to 3. to be (10) (a) to (c), renum. (12) (a) to be (11) (a) and am., renum. (12) (b) 2. and 3., (13), (14) and (15) to be (11) (b) 1. and 2., (13), (14) and (15) and am. (13) (a), 1. and 3. and (b), Register, August, 1999, No. 524, eff. 9-1-99; CR 02-128: am. (6) (a) 2., and (13) (a) (intro.) and (b), Register July 2003 No. 571, eff. 8-1-03; EmR0924: emerg. am. (2) (a) (intro.), 1., (b), (c), (5) (a), (6) (a) 1., 2., (b) 2., (7) (a), (11), (12) (intro.), (b) to (f), (13) (a) 1. and (b), cr. (2) (a) 3. and (15) (b), r. and recr. (3), (4), (5) (b) and (16), r. (6) (b) 3. and 5., renum. (6) (b) 4. and (15) to be (6) (b) 3. and (15) (a) and am. (6) (b) 3. (intro.), eff. 10-1-09; CR 09-090: am. (2) (a) (intro.), 1., (b), (c), (5) (a), (6) (a) 1., 2., (b) 2., (7) (a), (11), (12) (intro.), (b) to (f), (13) (a) 1. and (b), cr. (2) (a) 3. and (15) (b), r. and recr. (3), (4), (5) (b) and (16), r. (6) (b) 3. and 5., renum. (6) (b) 4. and (15) to be (6) (b) 3. and (15) (a) and am. (6) (b) 3. (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (c), (3) (a), (4) (b), (5) (a), (6) (a), (7) (a), (9), (12) (a), r. and recr. (4) (c) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (2) (a) 3., (6) (b) 1., (8), (9), (10) (intro.), (13) (b) Register August 2012 No. 680, eff. 9-1-12; CR 19-112: am: (2) (b), (16) Register June 2020 No. 774, eff. 7-1-20; CR 20-018: am. (12) (d), (16) Register July 2021 No. 787, eff. 8-1-21; correction in (16) made under s. 35.17, Stats., Register July 2021 No. 787.

Wis. Admin. Code § Tax 11.15 Containers and other packaging and shipping materials {#sec-tax-11.15 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.15}

(1) Property exempt under s. 77.54 (6) (am) 2., stats.

(a) To be exempt, containers, labels, sacks, cans, boxes, drums, bags, or other packaging and shipping materials for use in packing, packaging, or shipping tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., shall be “used by the purchaser to transfer merchandise to customers.” Whether the containers or other packaging or shipping materials are returnable or nonreturnable is not a factor. The exemption does not apply to containers used in the incidental transfer of property to customers by persons providing services.

(b) Containers include barrels, bottles, cartons, chemical carboys, and kegs. Packaging and shipping materials include property used inside a package to shape, form, preserve, stabilize, or protect the contents, such as excelsior, straw, cotton, cardboard fillers, separators, shredded paper, ice, dry ice, and batting, and rope, twine, gummed tape, wrapping paper, rubber bands, crates, and crating materials, pallets, skids, and mailing tubes.

Cans in which canned goods, paints, and other commodities are contained; medicine bottles; boxes in which jewelry, candy, suits, dresses, and hats are delivered to customers; and ice cream cartons.
Bottles and cases used by breweries, wineries, or soda water beverage producers to transfer the product to customers.
Barrels, half-barrels, kegs, and the like, used by a brewery to transfer draft beer to wholesalers or retailers.
Caps for milk, beer, and soda water bottles.
“Fragile,” “Handle with Care,” or other shipping labels.
Paper food dividers used to separate food sections in a container for transfer to a customer.
Paper bags purchased by grocery stores, bakeries, or other retailers and used by their customers in carrying out their purchases.
Feed bags purchased by feed dealers who use the bags to transfer merchandise sold to their customers.
Bale ties sold to a hay owner and used to deliver hay to the owner’s customers.
Ice used by a commercial fisher inside a box of fish to preserve the fish during shipment to market.
LPG tanks used to transfer fuel to customers which are replaced each time the fuel is exhausted.
Packaging and shipping materials for use in packing, packaging, or shipping meat or meat products, regardless of whether these items are used to transfer merchandise to customers.

Note: See Tax 11.12 for information on farmer’s container exemption.

(2) Property not exempt under s. 77.54 (6) (am) 2., Stats. Sales of the following items are not within this exemption:

(a) Wrapping equipment such as paper holders, tape dispensers, staplers, and string holders.

(b) Coat hangers used on display racks in stores.

(d) Computer produced gummed label mailing lists used to address envelopes. However, labels for envelopes used to transfer tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., to customers are exempt.

(e) Containers or other packaging and shipping materials used merely for storage or to transfer merchandise owned by a person from one location to another, such as bakery delivery carts and containers used in delivering bakery products to retailers, where the carts are not transferred by the bakery to the retailer.

Examples: 1) Wholesaler A’s truck driver delivers bakery products to Grocery Store B. The truck driver brings the bakery products into Grocery Store B on a cart, puts the bakery products from the cart onto Grocery Store B’s shelves and returns the cart to the truck and provides Grocery Store B with an invoice for the bakery products. The cart is not transferred to Grocery Store B (the bakery retailer), and is not an exempt container.

2) Wholesaler C’s truck driver delivers bread to Grocery Store D. The truck driver brings the bread into Grocery Store D on a cart, and leaves the bread on the cart at Grocery Store D. The truck driver picks up the cart that was left with the last delivery. The truck driver provides Grocery Store D with an invoice for the bread. Grocery Store D’s employees stock its shelves as needed with the bread from the cart. The cart is transferred to Grocery Store D (the bakery retailer), and is an exempt container.

(f) Lumber or other material used for bracing, blocking, skidding, or shoring items while in transit that is not transferred to the customer of the shipped items; and cardboard and paper used to line box cars.

(g) Price tags and advertising matter used in connection with the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., including counter display cards used for advertising and display purposes.

(h) Tanks on trucks used to deliver merchandise to customers.

(i) Corrugated boxes and other containers and related packing materials purchased by movers for use in transporting a customer’s goods.

(j) Bags, boxes, hangers, and other containers transferred to customers by laundries, dry cleaners, and other persons providing services.

Note: In a decision dated November 23, 1979 in the case of Leicht Transfer & Storage Co., Inc. vs. Wisconsin Department of Revenue the Wisconsin Tax Appeals Commission held that corrugated boxes and related packing materials used by Leicht to transport a customer’s property from one location to another do not come within the exemption in s. 77.54 (6) (b), 2011 Stats. This decision was affirmed by the Dane County Circuit Court on May 19, 1980, by the Court of Appeals, District IV on May 26, 1981.

(3) Deposits on returnable containers.

(a) Returnable container deposits received by a retailer at the time of the retail sale of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., such as soft drink bottles, beer bottles and containers, and refunds of the deposits may be excluded from the computation of the taxable sales price if they are excluded from the sales price on the retailer’s books of account.

(b) If a retailer’s books of account include container deposits in the sales price and if refunds of the deposits are deducted from the sales price, the retailer shall use this method of reporting the taxable sales price on a sales tax return. Under this method, the sales price from the deposit is subject to the tax and the tax may be collected from the customer. However, when the deposit is refunded to the customer, the applicable sales tax shall also be refunded to the customer.

(4) Disposable items used by restaurants.

(a) The sales price from sales to restaurants, cafeterias, caterers, nursing homes, or vending machine operators of disposable items, including paper and plastic cups, plates, butter chips, hamburger and frankfurter baskets or buckets, utensils, straws, placemats, napkins, doggie bags, wrapping materials, and toothpicks, transferred to customers for a valuable consideration by these persons as part of the sale of food, food products, and beverages to customers are not subject to the tax.

(b) The sales price from the sale of disposable products to a restaurant that are transferred with candy, soft drinks, dietary supplements, and prepared foods furnished for no consideration by the restaurant to the restaurant’s own employees during the employee’s work hours is not subject to the tax.

(5) Demurrage, lease, or rental of fuel storage tanks. A gas supplier’s monthly charge to a customer for the use of an LPG or other fuel storage tank which remains indefinitely on the customer’s premises is taxable. The charge a supplier makes because a gas cylinder is retained by a customer beyond a 30-day period is also taxable. These “demurrage” charges constitute taxable rentals paid for the continuation of possession of the container. If a charge is made to the customer for the use of the container and the container is used exclusively for those leasing purposes, the gas supplier may issue an exemption certificate claiming resale when the supplier purchases the container.

(6) Containers and packaging materials sold.

(a) If a charge is made by a seller or lessor of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., to a customer for a container or packaging materials used in connection with the shipment of the property or item, the charge for the container or packaging materials becomes a part of the sales price or rental charge. If the sale of the property or item shipped is not subject to or is exempt from tax, the charge for the container or packaging materials is not subject to or is exempt from tax. If the sale of the property or item shipped is subject to tax, the charge for the container or packaging materials is subject to tax. This paragraph is applicable to the taxation of containers and packaging materials regardless of whether the charge for the containers or packaging materials is separately stated or not separately stated.

(b) Any credit given by a seller or lessor to a customer for the container or packaging materials used in connection with the shipment of property or items which the customer returns to the seller or lessor shall reduce the seller’s or lessor’s sales price subject to tax in the reporting period during which the materials are returned, if the seller or lessor included the selling price of the container or packaging materials in the sales price subject to tax, and the seller or lessor returns the tax to the customer.

(7) Gift wrapping. The amount charged for gift wrapping packages is taxable.

Note: Section Tax 11.15 interprets ss. 77.51 (14) (intro) and (j) and (15b), 77.52 (1) and (2) (a) 10., and 77.54 (3m), (6) (am) 2. and 2m., and (20r), Stats.

Note: The interpretations in s. Tax 11.15 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for meat packaging and shipping materials became effective on May 20, 1978, pursuant to Chapter 368, Laws of 1977; (b) Laundries and dry cleaners became the consumers of bags, boxes, hangers, and other containers transferred to customers effective September 1, 1983, pursuant to 1983 Wis. Act 27; and (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

Note: In Dernehl-Taylor Co. v. Department of Revenue (Wisconsin Tax Appeals Commission, May 26, 1978), it was held that the gross receipts for doggie bags qualify for the exemption under s. 77.54 (6) (b), 2011 Stats., because they are used to transfer merchandise to customers.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (5) (a) and (8), r. (5) (b), Register, June, 1983, No. 330, eff. 7-1-83; cr. (2) (k), Register, December, 1983, No. 336, eff. 1-1-84; renum. (2) (j) to be (1) (c) 12., and am., Register, September, 1984, No. 345, eff. 10-1-84; am. (1) (a), (b), (c) 8., 11. and 12., (2) (g), (4) (a) and (b) and (5) (a), cr. (2) (L), Register, March, 1991, No. 423, eff. 4-1-91; renum. (2) (k) and (L) to be (2) (j) and (k), am. (7), cr. (7) (b), Register, July, 1993, No. 451, eff. 8-1-93; correction in (1) (c) 10. made under s. 13.93 (2m) (b) 5., Stats., Register, July, 1993, No. 451; am. (1) (a) and (c) 5., r. (3), renum. (4), (5), (6), (7) and (8) to be (3), (4), (5), (6) and (7) and am. (5), Register, December, 1997, No. 504, eff. 1-1-98; EmR0924: emerg. am. (1) (a), (c) (intro.), (2) (title), (intro.), (a), (d) to (f), (3), (5) and (6), r. (2) (g), renum. (2) (h) to (k) and (4) to be (2) (g) to (j) and (4) (a) and am. (2) (g) and (4) (a), cr. (4) (b), eff. 10-1-09; CR 09-090: am. (1) (a), (c) (intro.), (2) (title), (intro.), (a), (d) to (f), (3), (5) and (6), r. (2) (g), renum. (2) (h) to (k) and (4) to be (2) (g) to (j) and (4) (a) and am. (2) (g) and (4) (a), cr. (4) (b) Register May 2010 No. 653, eff. 6-1-10; CR. 10-094: am. (1) (title), (a), (b), (c) 1. to 5., 7., 12., (2) (title), (j), (3) (a), (4), (5) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (3) (a) Register August 2012 No. 680, eff. 9-1-12; corrections in (1) (title), (2) (title) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704.

Wis. Admin. Code § Tax 11.16 Common or contract carriers {#sec-tax-11.16 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.16}

(1) Motor carriers.

(a) Exemption. Section 77.54 (5) (b), Stats., provides a sales and use tax exemption for motor trucks, truck tractors, road tractors, buses, trailers, and semitrailers, and accessories, attachments, parts, supplies, and materials therefor, sold to common or contract carriers who use such motor trucks, truck tractors, road tractors, buses, trailers, and semitrailers exclusively as common or contract carriers, including the urban mass transportation of passengers as defined in s. 71.38, Stats.

(am) Definitions. For purposes of the exemption in s. 77.54 (5) (b), Stats., and this section:

“Common carrier” has the same meaning as “common motor carrier” in s. 194.01 (1), Stats.
“Contract carrier” has the same meaning as “contract motor carrier” in s. 194.01 (2), Stats.
“Exclusively” means that the motor trucks, truck tractors, road tractors, buses, trailers, and semitrailers are used solely as common or contract carriers to the exclusion of all other uses, except that the sales and use tax exemption for this tangible personal property will not be invalidated by an infrequent and sporadic use other than as a common or contract carrier.

Note: Under department of transportation rules, a licensed carrier (LC) number is required if a common or contract carrier hauls goods of others for hire. The sales and use tax exemption in par. (a) applies only if the common or contract carrier used the vehicle exclusively for hauling goods of others for hire.

(b) Accessories and attachments. Accessories, attachments, parts, and supplies for exempt vehicles are exempt from the sales and use tax under s. 77.54 (5) (b), Stats. This exemption includes the following items if they are assigned to and carried on vehicles used exclusively as common or contract carriers: dollies, pianoboards, ladders, walkboards, tire chains, fire extinguishers, flares, bug deflectors, engine block heaters, defroster fans, auxiliary heaters and cooling units and their fuel, radios, flag kits including flags and reflectors, cell phones, tracking devices, global positioning system or “GPS” units, on board recorders, and items designed to be used with a vehicle which protect or secure the vehicle’s load including tape, fitted tarpaulins, tarpaulin straps, furniture pads and covers, load holding chains, logistic straps, and shoring beams. This exemption does not include corrugated boxes, containers, and related materials that are transferred to customers in conjunction with the selling, performing, or furnishing of a moving service, as provided in par. (g).

Note: In a decision dated May 19, 1980 in the case of Leicht Transfer & Storage Co., Inc. vs. Wisconsin Department of Revenue the Dane County Circuit Court reversed the November 23, 1979 decision of the Wisconsin Tax Appeals Commission and held that van equipment and supplies that are exempt under s. 77.54 (5) (b), Stats., include furniture pads, covers, packing supplies, tape, pianoboards, ladders, walkboards, straps, lining paper and corrugated boxes. The Court also stated that “It must be kept in mind that it is undisputed that all of the items are assigned to and carried on the vans.” The Court of Appeals District IV, affirmed the Circuit Court’s decision. Under this interpretation, the only corrugated boxes and packing materials that qualify for exemption under s. 77.54 (5) (b), Stats., are those that are assigned to and carried on an exempt van and that are not transferred to a customer.

(c) Repairs. The sale or furnishing of repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance to exempt vehicles shall be exempt.

(d) Exceptions. The exemption shall not apply to the following property used by common or contract carriers:

Automobiles as defined in s. 340.01 (4), Stats., except an automobile registered as a truck.
Self-propelled vehicles for off-highway use, such as road machinery, fork lifts, and other industrial trucks.

(e) Equipment and supplies. Equipment acquired by a carrier for the repair, service, or maintenance of its exempt vehicles is not exempt, including repair tools, welding torches, battery chargers, and grinding discs.

(f) Conversion to private use. If a vehicle purchased without tax is converted to private use, a use tax or sales tax pursuant to s. Tax 11.14 (2) (c) is due. The tax is measured by the sales price of the vehicle to the purchaser.

(g) Packaging materials. The transfer to a customer of corrugated boxes, containers, and related packing materials in conjunction with moving or transporting a customer’s goods is incidental to the selling, performing, or furnishing of the moving or transportation service. The service provider is the consumer of the property and shall pay tax on its purchase of the property to be transferred.

(h) Occasional sales. Motor carriers are not required to register as retailers with the department if the sales price from their sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services are less than $2,000 within a calendar year. Persons who are exempt from registration under this standard shall pay sales or use tax on all purchases of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services not otherwise exempt, including items that may be resold to customers. Persons who exceed the standard shall register with the department and obtain a seller’s permit. Persons who register may purchase tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services for resale without paying tax by issuing to their supplier a properly completed exemption certificate claiming resale or they may pay the tax to their supplier and, if the property is resold, claim a credit for the tax paid against any sales tax due.

Note: Refer to s. Tax 11.002 for description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

Examples: 1) A truck purchased to transport pads and packing materials to and from moving jobs qualifies for the exemption in par. (a).

2) Cutting down trees, cutting them into logs, and hauling them to a mill as a private business operation voids the exemption in par. (a), even though the trucker also hauls logs as a common or contract carrier for other persons at the same time.

3) Vehicles of a milk or cheese factory that engage in hauling milk from farms to its plant for processing do not qualify for the exemption under par. (a).

4) Towing of vehicles to the repair facility of a garage-wrecker operator is part of a private repair business that is not exempt under par. (a).

(2) Railway rolling stock.

(a) Section 77.54 (12), Stats., provides a sales and use tax exemption for the sales price from the sales of and the storage, use, or other consumption in this state of rail freight or passenger cars, locomotives, or other rolling stock used in railroad operations, or accessories, attachments, parts, lubricants, or fuel therefor.

(b) The exemption for rolling stock includes:

The sale or furnishing of repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance to exempt rolling stock.
Purchases of any equipment that is operated on railroad rails, including an industrial firm’s switching locomotives used to switch freight cars on its own property, except vehicles that may also be used on a highway.
Fuel used to heat a caboose or run a compressor that cools a railway car.
A utility’s coal cars used to haul coal from mines to the utility.

Rails, crossties, and other road building and maintenance materials. However, sales of crossties to a common or contract carrier are exempt if they are shipped wholly or in part by way of the purchasing carrier under a bill of lading, whether the freight is paid in advance or the shipment is made freight charges collect, to a point outside Wisconsin if the property is transported outside Wisconsin for use by the carrier in the conduct of its business as a carrier. The exemption will not be invalidated because of interruption of the shipment for storage, drying, processing, or creosoting of the crossties in Wisconsin.
Bracing materials, rough lumber, and dunnage materials.
Ice to refrigerate a railway car.

(3) Commercial vessels.

(a) Section 77.54 (13), Stats., provides a sales and use tax exemption for the sales price from the sales of and the storage, use, or other consumption in this state of commercial vessels and barges of 50-ton burden or over primarily engaged in interstate or foreign commerce or commercial fishing, and the accessories, attachments, parts, and fuel therefor.

(b) The exemption for commercial vessels applies to:

Vessels and barges primarily engaged in interstate or foreign commerce or commercial fishing that are documented under the laws of the United States showing a net volumetric tonnage of 50 tons or more.
Items that become a component part of the exempt commercial vessel.
The sale or furnishing of repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of exempt commercial vessels.

(c) The exemption does not apply to consumable supplies or furnishings that are not attached to the vessel, such as bedding, linen, table and kitchenware, tables, chairs, lubricants, work clothes, acetylene gas, nets, fishing tackle, lumber for dry docking, bracing, blocking and dunnage materials and other materials not incorporated into the vessel.

Note: Section Tax 11.16 interprets ss. 77.51 (9), 77.54 (5) (b), (7) (a), (12), and (13), 77.55 (2m), and 77.57, Stats.

Note: The interpretations in s. Tax 11.16 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The sale of packing materials to a service provider became taxable effective September 1, 1983, pursuant to 1983 Wis. Act 27; (b) The exemption for certain railroad crossties became effective July 20, 1985, pursuant to 1985 Wis. Act 29; (c) Section 340.01 (61), Stats., which defined “station wagon” was repealed pursuant to 1999 Wis. Act 80; (d) In Freight Lime and Sand Hauling, Inc. v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, November 20, 2002 (CCH 400-646), trucks hauling property of others for hire were found to qualify for exemption, even though the property being hauled had no value; (e) Section 77.57, Stats., was amended to remove the portion of the statute that allowed a purchaser to use the lesser of the cost or fair market value of an item that was purchased exempt and whose first taxable use occurred more than 6 months after it was purchased, pursuant to 2009 Wis. Act 2; (f) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The definition of “common motor carrier” was amended, pursuant to 2013 Wis. Act 364, which first applies to motor carrier operations occurring on April 25, 2014; and (h) The threshold for exempt occasional sales was changed to less than $2,000 in annual sales, effective for sales beginning January 1, 2018, pursuant to 2017 Wis. Act 59.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (1) (a) and (d), (3) (b) 1., Register, November, 1981, No. 311, eff. 12-1-81; am. (3) (b) 1., Register, January, 1983, No. 325, eff. 2-1-83; am. (1) (b), (d) and (2) (b) 2., r. and recr. (1) (e), cr. (1) (h) and (i), Register, December, 1983, No. 336, eff. 1-1-84; am. (1) (f) and (3) (b) 1., Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (e) and (3) (b) 1., Register, April, 1990, No. 412, eff. 5-1-90; correction in (1) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, April, 1990, No. 412; am. (1) (a) and (d) and (2) (c) 1., r. (1) (g), renum. (1) (h) to be (g) and (1) (i) to be (h), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1) (a), (b), (c), (f), (h), (2) (a), (b) 1. to 3., (3) (a) and (b) 3., renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. and 2., eff. 10-1-09; CR 09-090: am. (1) (a), (b), (c), (f), (h), (2) (a), (b) 1. to 3., (3) (a) and (b) 3., renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. and 2. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a), (am), (b), (e), (g), (2) (a), (c) 1., 2., (3) (a) Register November 2010 No. 659, eff. 12-1-10; CR 16-053: am. (1) (am) (title), renum. (1) (am) to (1) (am) 3., cr. (1) (am) (intro.), 1., 2., am. (1) (b) Register June 2018 No. 750, eff. 7-1-18; CR 20-018: am. (1) (h) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.17 Hospitals, clinics and medical professions {#sec-tax-11.17 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.17}

(1) General.

(a) Although professional personnel in hospitals and clinics and other members of medical professions including physicians, surgeons, oculists, optometrists, and podiatrists regularly transfer antibiotics, bandages, splints, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to their patients in the performance of professional services, the transfer of that property, item, or good is an incident of a service rather than a retail sale of the property, item, or good. The persons are, therefore, deemed the consumers of the property, items, or goods in the same way they are the consumers of other materials and supplies used by them in the performance of their services. Accordingly, the suppliers of hospitals, clinics, and members of medical professions are retailers obligated to register and report tax on sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services, unless the transaction is specifically exempt from the tax.

(b) Section 77.54 (14) (b), Stats., specifically provides an exemption for drugs furnished by a licensed physician, surgeon, or podiatrist to that person’s patient for medical treatment. Section 77.54 (22b), Stats., provides an exemption for durable medical equipment for home use, mobility-enhancing equipment, and prosthetic devices, and repair and replacement parts and accessories for such equipment or devices, if such equipment or devices are used by a human being. The scope of these exemptions is set forth in ss. Tax 11.08, 11.09, and 11.45.

(2) Purchases by hospitals. Purchases by hospitals, except hospital service insurance corporations under s. 613.80 (2), Stats., are exempt from the sales and use tax if the hospitals are nonprofit and, as such, qualify as charitable organizations under s. 77.54 (9a), Stats. Each is issued a Certificate of Exempt Status, “CES,” by the department. When purchasing property, items, goods, and services, a hospital shall furnish its CES number to its supplier, and the supplier may then make sales of every type of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services to the hospital without tax. Hospitals organized for profit do not qualify for this exemption.

(3) Purchases by clinics and members of the medical profession. Purchases made by physicians and medical clinics that do not hold a Certificate of Exempt Status, “CES,” are subject to the sales or use tax unless specifically exempt by law. To be exempt, the items on the exempt list shall be furnished to patients at the direction of a physician, surgeon, or podiatrist in conjunction with providing medical service, except for items noted with an asterisk. These items are exempt even though not purchased under the direction of the health professional. The following is a partial list of taxable and exempt purchases of clinics and members of the medical professions.

(4) Sales by hospitals, hospital auxiliaries, clinics, and members of the medical professions.

(a) The sales price from sales of the following are exempt from the tax:

Charges made by hospitals to patients for rooms, medical services, and other items including charges for anesthesia and anesthesia supplies, bandages applied in the hospital, blood and blood plasma, dressings applied in the hospital, intravenous solutions, laboratory tests, oxygen, radiation, and x-ray treatment.
Hospitals’ sales of food and food ingredients, except soft drinks.
Prepared food sold to the elderly or disabled by persons providing “mobile meals on wheels.”
Patient health records sold to a patient or to a person authorized by the patient to receive such medical records.

(b) The sales price from the sales of the following are taxable:

A hospital’s specific charge to a patient for the rental of a television set.
Parking fees.
Sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services by a clinic, which sales are not directly related to the rendition of medical services.
Sales of prepared food and other tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services by an organization affiliated with a hospital, except as provided in par. (a) 3.

Examples: 1) If a ladies’ auxiliary of a hospital operates a coffee shop on the hospital premises, and holds or is required to hold a seller’s permit, the sales by this business are taxable.

2) Sales by a hospital auxiliary, which holds or is required to hold a seller’s permit, of an emergency response system that links an individual to medical attention by pushing a button which transmits to a communicator connected to a telephone and sends an automatic call for help are taxable telecommunications message services.

Sales of soft drinks by hospitals.
An optometrist’s sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., including nonprescription sun glasses, contact lens solution, and other types of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., ordinarily taxable when sold at retail, unless the sales price from those sales are less than $2,000 during the calendar year. Optometrists whose receipts from taxable property, items, and goods equal or exceed $2,000 in a calendar year shall register with the department and obtain a seller’s permit. Those whose receipts from taxable property, items, and goods are less than $2,000 shall be exempt as occasional sellers and shall pay tax to their suppliers or a use tax, as appropriate, on purchases of taxable property, items, or goods.

(5) Hospital definition. Section 50.33 (2), Stats., provides the definition of hospital which is to be used for sales tax purposes.

Note: Section Tax 11.17 interprets ss. 77.51 (3pj), (3pm), (7m), (9), and (11m), 77.52 (1) and (2) (a) 1. and 9., and 77.54 (9a), (14), (14r), (20n), (22b), (28), and (64), Stats.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

Note: Refer to s. Tax 11.33 for additional information relating to occasional sales.

Note: The interpretations in s. Tax 11.17 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for needles and syringes used by diabetics became effective November 19, 1975, pursuant to Ch. 102, Laws of 1975; (b) The exemption for oxygen equipment became effective September 1, 1983, pursuant to 1983 Wis. Act 27; (c) The exemption for motorized scooters became effective September 1, 1985, pursuant to 1985 Wis. Act 29; (d) The exemption for diabetic apparatus and equipment and supplies for determining blood sugar levels became effective March 1, 1989, pursuant to 1987 Wis. Act 399; (e) The exemption for antiembolism elastic hose and stockings prescribed by a physician became effective October 1, 1989, pursuant to 1989 Wis. Act 31; (f) The purchases by a hospital service insurance corporation under s. 613.80 (2), Stats., became taxable effective September 1, 1985, pursuant to 1985 Wis. Act 29; (g) The exemption for parts and accessories for certain medical equipment became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (h) The sales of meals by hospitals off the hospital’s premises became taxable October 1, 1991, pursuant to 1991 Wis. Act 39; (i) The exemptions for durable medical equipment for home use, mobility-enhancing equipment, and prosthetic devices became exempt October 1, 2009 pursuant to 2009 Wis. Act 2; (j) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (k) The exemption for patient health records under s. 77.54 (64), Stats., became effective June 23, 2017, pursuant to 2017 Wis. Act 17; and (L) The threshold for exempt occasional sales was changed to less than $2,000 in annual sales, effective for sales beginning January 1, 2018, pursuant to 2017 Wis. Act 59.

History

Cr. Register, May, 1978, No. 269, eff. 6-1-78; am. (4) (a) 1. and cr. (4) (b) 5., Register, January, 1983, No. 325, eff. 2-1-83; am. (3), Register, September, 1984, No. 345, eff. 10-1-84; am. (1) (a), Register, August, 1985, No. 356, eff. 9-1-85; am. (1) (b), (2), (3), (4) (b) 4. and (5), Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (a), (3), (4) (a) 2. and (b) 4., renum. (4) (b) 5. to be (4) (b) 6. and am., cr. (4) (b) 5., Register, May, 1993, No. 449, eff. 6-1-93; EmR0924: emerg. am. (1) to (4) (a), (b) (intro.) and 3. to 6., cr. (4) (a) 3., eff. 10-1-09; CR 09-090: am. (1) to (4) (a), (b) (intro.) and 3. to 6., cr. (4) (a) 3. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) to (3), (4) (title), (a) 2., 3. Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (4) (b) 6. Register August 2012 No. 680, eff. 9-1-12; CR 13-011: am. (3) Register August 2013 No. 692, eff. 9-1-13; CR 19-122: am. (4) (a) 3. Register July 2020 No. 775, eff. 8-1-20; CR 20-018: cr. (4) (a) 4., am. (4) (b) 6. Register July 2021 No. 787, eff. 8-1-21; CR 020-027: am. (3) (table) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.18 Dentists and their suppliers {#sec-tax-11.18 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.18}

(1) Dentists’ charges. Charges by dentists for dental services are not subject to the sales tax. In addition, charges for items specifically designed for a patient which are installed in the patient’s mouth, including artificial teeth, fillings, bridges, crowns, or inlays, and parts and accessories for those items, are not subject to the tax.

(2) Exempt sales to dentists.

(a) The sales price from the following sales to dentists are exempt under s. 77.54 (14) or (22b), Stats., when used for a human being:

Drugs, including nitrous oxide, oxygen, novocaine, toothpaste, and bone regeneration materials.
Gold, silver, amalgam, and other alloys used to fill teeth and cement and bonding agents used in conjunction with fillings.
Crowns, bridges, bridgework, dentures, inlays, fillings, and other items, including parts and accessories for those items, which the dentist installs in the human patient’s mouth.
Bands, brackets, wire, space maintainers, positioners, and other items installed in a patient’s mouth to prevent or correct a physical deformity or to support a weak or deformed portion of the body.

(b) The items described in par. (a) include braces and other corrective and supporting devices, such as teeth, mouth, and jaw braces and supports.

(3) Taxable sales to dentists.

(a) The sales price from the following sales to dentists are taxable:

Dental equipment and surgical instruments.
Office equipment, office supplies, and consumable supplies used by dentists to conduct their business.

(b) Items included in par. (a) include tongue depressors, bandages, tooth brushes, dental floss, and cotton.

Note: Section Tax 11.18 interprets ss. 77.51 (3pj), (11m), (13) (e) and (f), and (15a), 77.52 (2m), and 77.54 (14) and (22b), Stats.

Note: The interpretations in s. Tax 11.18 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for parts and accessories for certain items became effective October 1, 1991, pursuant to 1991 Wis. Act 39; and (b) The term “gross receipts” was changed to “sales price” effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (1), r. and recr. (2) and (3), Register, April, 1990, No. 412, eff. 5-1-90; am. (1) and (2) (a) 3., Register, May, 1993, No. 449, eff. 6-1-93; EmR0924: emerg. am. (2), (3) (a) (intro.), 2. and (b), cr. (2) (a) 4., r. and recr. (3) (a) 1., eff. 10-1-09; CR 09-090: am. (2), (3) (a) (intro.), 2. and (b), cr. (2) (a) 4., r. and recr. (3) (a) 1. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (b) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 11.19 Printed material exemptions {#sec-tax-11.19 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.19}

(1) General. All retail sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., including printed material, are subject to the tax, except when a specific exemption applies to the transaction. This section describes exemptions which commonly apply to sales of printed material.

(2) Statutes.

(a) Section 77.52 (2) (a) 11., Stats., imposes the sales and use tax on certain services. However, an exemption is provided for the printing or imprinting of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., furnished by customers, that results in any of the following:

Printed materials that are exempt under s. 77.54 (25), Stats.
Catalogs or their mailing envelopes that are exempt under s. 77.54 (25m), Stats.
Advertising and promotional direct mailing that is exempt under s. 77.54 (59), Stats.

(b) Section 77.54 (15), Stats., provides an exemption for the sale of newspapers, of periodicals sold by subscription and regularly issued at average intervals not exceeding 3 months, or issued at average intervals not exceeding 6 months by an educational association or corporation sales to which are exempt under s. 77.54 (9a) (f), Stats., of controlled circulation publications sold to commercial publishers for distribution without charge or mainly without charge or regularly distributed by or on behalf of publishers without charge or mainly without charge to the recipient and of shoppers guides which distribute no less than 48 issues in a 12-month period.

(c) Section 77.54 (25), Stats., provides an exemption for printed material which is designed to advertise and promote the sale of merchandise, or to advertise the services of individual business firms, which printed material is purchased and stored for the purpose of subsequently transporting it outside Wisconsin by the purchaser for use thereafter solely outside Wisconsin. This exemption does not include catalogs or the envelopes in which the catalogs are mailed.

(cm) Section 77.54 (25m), Stats., provides an exemption for catalogs, as defined in s. 77.51 (1fr), Stats., and the envelopes in which the catalogs are mailed, that are designed to advertise and promote the sale of merchandise or to advertise the services of individual business firms.

(d) Section 77.54 (2m), Stats., provides an exemption for the sales price from the sales of and the storage, use, or other consumption of tangible personal property or services that are used exclusively and directly by a manufacturer in manufacturing shoppers guides, newspapers, or periodicals and that become an ingredient or component of shoppers guides, newspapers, or periodicals or that are consumed or lose their identity in the manufacture of shoppers guides, newspapers, or periodicals, whether or not the shoppers guides, newspapers, or periodicals are transferred with charge to the recipient. This exemption applies to newspapers, shoppers guides, and periodicals which are issued at average intervals not exceeding 3 months or issued at average intervals not exceeding 6 months by an educational association or corporation sales to which are exempt under s. 77.54 (9a) (f), Stats. It does not apply to advertising supplements that are not newspapers as defined in s. 77.51 (8), Stats.

(dm) Section 77.54 (59), Stats., provides an exemption for advertising and promotional direct mail.

(e) Section 77.51 (13h), Stats., provides that a foreign corporation that is a publisher of printed materials is not engaged in business in Wisconsin and is not required to register and collect Wisconsin sales or use tax if its only activities in Wisconsin are:

The storage of its raw materials in Wisconsin in or on property not owned by the foreign corporation and delivery of its raw materials to another person in Wisconsin if the storage and delivery are for printing by that other person. “Raw material” means tangible personal property which becomes an ingredient or component part of the printed materials or which is consumed or destroyed or loses its identity in the printing of the printed materials.
The purchase from a printer of printing services or of printed materials in Wisconsin for the publisher.
The storage of the printed material or raw material for any length of time in Wisconsin in or on property owned by a person other than the publisher.
Maintaining, occupying, and using, directly or by means of another person, a place that is in Wisconsin, that is not owned by the publisher and that is used for the distribution of printed material.

(f) Section 77.54 (43), Stats., provides a sales and use tax exemption for raw materials used for the processing, fabricating, or manufacturing of, attaching to or incorporating into, printed materials that are transported and used solely outside Wisconsin.

(3) Newspapers, shoppers guides, controlled circulation publications and periodicals defined.

(a) Section 77.51 (8), Stats., defines a “newspaper” under ch. 77, Stats., as: “... those publications which are commonly understood to be newspapers and which are printed and distributed periodically at daily, weekly or other short intervals for the dissemination of current news and information of a general character and of a general interest to the public. In addition, any publication which qualifies as a newspaper under s. 985.03 (1) is a newspaper. ‘Newspaper’ also includes advertising supplements if they are printed by a newspaper and distributed as a component part of one of that newspaper’s publications or if they are printed by a newspaper or a commercial printer and sold to a newspaper for inclusion in publications of that newspaper. A ‘newspaper’ does not include handbills, circulars, flyers, or the like, advertising supplements not described in this subsection which are distributed with a newspaper, nor any publication which is issued to supply information on certain subjects of interest to particular groups, unless such publication otherwise qualifies as a newspaper within this subsection. In this subsection, advertising is not considered news of a general character and of a general interest.”

(b) Section 77.54 (15), Stats., defines a shoppers guide as: “a community publication delivered, or attempted to be delivered, to most of the households in its coverage area without a required subscription fee, which advertises a broad range of products and services offered by several types of businesses and individuals” and it defines a controlled circulation publication as “a publication that has at least 24 pages, is issued at regular intervals not exceeding 3 months, that devotes not more than 75% of its pages to advertising and that is not conducted as an auxiliary to, and essentially for the advancement of, the main business or calling of the person that owns and controls it.”

Example: A taxpayer publishes a quarterly publication which it mails to current and prospective customers. The publication contains articles of interest to customers which contain endorsement of the taxpayer’s business and products. The publication also contains advertising of the taxpayer’s products as well as products of other vendors. This publication is conducted essentially for the advancement of the taxpayer’s business and does not qualify as a controlled circulation publication.

(c) The exemption for periodicals is limited to publications which are sold by subscription and which are regularly issued at average intervals not exceeding 3 months, or issued at average intervals not exceeding 6 months by an educational association or corporation sales to which are exempt under s. 77.54 (9a) (f), Stats., each issue of which contains news or information written by different authors which is of general interest to the public, or to some particular organization or group of persons. Each issue must bear a relationship to prior or subsequent issues in respect to continuity of literary character or similarity of subject matter, and there must be some connection between the different issues of the series in the nature of the articles appearing in them. To qualify for the exemption, the publication must qualify for the periodicals rate under U.S. postal laws and regulations or as a controlled circulation publication.

(d) The newspaper and periodical exemption does not apply to books complete in themselves, even those issued at stated intervals; paperback books, a new one of which may be issued once a month or some other interval; or so-called “one-shot” magazines that have no literary or subject matter connection or continuity between prior or subsequent issues. The exemption also does not apply to catalogs, programs, scorecards, handbills, maps, real estate brokers’ listings, price or order books, corporate reports to stockholders, house organs, or to advertising materials which become a component part of a periodical.

Example: Books sold by the Book of the Month Club or similar organizations do not qualify for the newspaper and periodical exemption.

(4) Printed advertising materials for out-of-state use.

(a) Printed advertising materials may be purchased from Wisconsin or out-of-state suppliers without tax pursuant to s. 77.54 (25), Stats., when those materials are purchased and stored for the purpose of subsequently transporting the same outside Wisconsin by the purchaser for use thereafter solely outside Wisconsin. This exemption does not apply to catalogs designed to be used by a seller’s potential customers. See sub. (5m) for information relating to an exemption for catalogs and the envelopes in which the catalogs are mailed.

(b) The exemption does not apply to printed advertising materials shipped to Wisconsin addresses, except for catalogs and the envelopes in which they are mailed, as provided in s. 77.54 (25m), Stats., parts stock order books, order forms, stocking and purchasing guides, stockholders’ annual reports or proxy statements, display racks, 3-dimensional plastic items designed to be used by wholesalers and retailers, matchbooks, desk pads, golf balls, binders, and playing cards. It also does not apply to the following items if they are not designed to advertise or promote the sale of merchandise:

Calendars.
Calendar pads.
Envelopes.
Folders.
Parts price lists.

(5) Raw materials incorporated into printed materials. Pursuant to s. 77.54 (43), Stats., Wisconsin sales and use tax is not imposed on raw materials if both of the following conditions are met:

(a) The raw materials are processed, fabricated, or manufactured into, attached to, or incorporated into printed materials.

(b) The resulting printed materials will be transported and used solely outside Wisconsin.

Examples: 1) Company A, a Wisconsin company, publishes catalogs to promote the sale of its products. Company A purchases paper from a company that does not have nexus in Wisconsin. The paper is delivered to a Wisconsin printer that prints the catalogs for Company A. The catalogs are shipped outside Wisconsin for use solely outside Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin use tax.

2) Assume the same facts as 1) above, except that the company selling the paper is located in Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin sales tax.

(5m) Catalogs and their mailing envelopes.

(a) Section 77.54 (25m), Stats., provides an exemption from Wisconsin sales and use tax for the sales price from the sale of and the storage, use, or other consumption of catalogs, and the envelopes in which the catalogs are mailed, that are designed to advertise and promote the sale of merchandise or to advertise the services of individual business firms.

(b) “Catalog” is defined in s. 77.51 (1fr), Stats., to mean a printed and bound, stitched, sewed, or stapled book containing a list and description of property or services for sale, regardless of whether a price is specified.

(5s) Advertising and promotional direct mail.

(a) Section 77.54 (59), Stats., provides an exemption from Wisconsin sales and use tax for the sales price from the sales of and the storage, use, or other consumption of advertising and promotional direct mail.

(b) “Advertising and promotional direct mail” is defined in s. 77.51 (1ag), Stats., to mean direct mail that has the primary purpose of attracting public attention to a product, person, business, or organization or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization.

(6) Exempt purchasers. Sales of printed material to federal and Wisconsin governmental units, federally recognized American Indian tribes or bands in Wisconsin, Wisconsin public schools, certain nonprofit religious, charitable, educational, or scientific organizations, and certain title holding entities described under section 501 (c) (2) of the Internal Revenue Code holding a certificate of exempt status are exempt under s. 77.54 (9a) or 77.55 (1), Stats. Sales to federal and Wisconsin governmental units and public schools need not be supported by exemption certificates, if a copy of the purchase order from the organization is retained or the governmental unit’s certificate of exempt status number is recorded on the bill of sale. Sales to nonprofit organizations holding a certificate of exempt status can be documented as exempt by recording the certificate of exempt status number on the bill of sale.

Note: Section Tax 11.19 interprets ss. 77.51 (1fr), (8), and (13h), 77.52 (1) and (2) (a) 11., 77.54 (2m), (9a), (15), (25), (25m), (43), and (59), and 77.55 (1), Stats.

Note: The interpretations in s. Tax 11.19 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for printing or imprinting of tangible personal property furnished by customers and used out-of-state in sub. (2) (a) became effective March 1, 1970; (b) The exemption for advertising materials used out-of-state in sub. (4) (a) became effective May 21, 1972; (c) The second class mail standard described in sub. (3) became effective August 1, 1974; (d) The exemption for sales of shoppers guides became effective July 1, 1978; (e) The exemption for ingredients and components of shoppers guides, newspapers and periodicals described in sub. (2) (d) became effective July 2, 1983; (f) The definition of newspaper in sub. (3) (a) and the limitation of the periodical exemption to “periodicals sold by subscription” became effective July 2, 1983; (g) The exemption for controlled circulation publication reflected in subs. (2) (b) and (3) (b) became effective September 1, 1983, pursuant to 1985 Wis. Act 149; (h) The provision for foreign publishers described in sub. (2) (e) became effective January 1, 1980 for publishers of books or periodicals or both other than catalogs and January 1, 1990, for all other foreign publishers pursuant to 1989 Wis. Act 336; (i) The definition of storage and use for purposes of imposing use tax does not include storing or using raw materials becoming printed materials to be shipped outside Wisconsin effective October 1, 1993, pursuant to 1993 Wis. Act 16; (j) The sales and use tax exemption for raw materials becoming printed materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (k) The exemption for periodicals sold by subscription by educational associations and corporations which are exempt under s. 77.54 (9a) (f), Stats., became effective December 1, 1997 pursuant to 1997 Wis. Act 27; (L) The exemption for catalogs became effective April 1, 2009 pursuant to 2007 Wis. Act 20; (m) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (n) The definition of “direct mail” became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (o) The definition of “advertising and promotional direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; (p) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; and (q) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, August, 1979, No. 284, eff. 9-1-79; am. (2) (c) and (4) (b), Register, December, 1983, No. 336, eff. 1-1-84; am. (2) (b) and (3) (c), cr. (2) (d), r. and recr. (3) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (a) and (b), (3) (b) and (4) (a), Register, June, 1990, No. 414, eff. 7-1-90; am. (1), (2) (a), (c) and (d), (3) (d), (4) (a) and (b) and (5), cr. (2) (e), Register, March, 1991, No. 423, eff. 4-1-91; am. (2) (e) and (4) (b), cr. (2) (f) and (5), renum. (5) to be (6), Register, April, 1994, No. 460, eff. 5-1-94; am. (2) (d), (f), (5) (intro.), (b) and (6), Register, June, 1999, No. 522, eff. 7-1-99; EmR0924: emerg. am. (1), (2) (a) to (d), (e) 2., 4., (f), (3) (c), (4) (a), (5) (intro.), (a) and (6), cr. (2) (cm) and (5m), r. and recr. (4) (b), eff. 10-1-09; CR 09-090: am. (1), (2) (a) to (d), (e) 2., 4., (f), (3) (c), (4) (a), (5) (intro.), (a) and (6), cr. (2) (cm) and (5m), r. and recr. (4) (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1), (2) (a), (d) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: cr. (2) (dm), (5s) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: renum. (2) (a) to (2) (a) (intro.) and am., cr. (2) (a) 1. to 3. Register August 2014 No. 704, eff. 9-1-14; CR 20-018: am. (6) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.20 Property used in qualified research and property used to raise research animals {#sec-tax-11.20 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.20}

(1) Definitions. In this section:

(a) “Animals” include bacteria, viruses, and other microorganisms.

(b) “Biotechnology” means the application of biotechnologies, including recombinant deoxyribonucleic acid techniques, biochemistry, molecular and cellular biology, genetics, genetic engineering, biological cell fusion, and other bioprocesses, that use living organisms or parts of an organism to produce or modify products to improve plants or animals or improve animal health, develop microorganisms for specific uses, identify targets for small molecule pharmaceutical development, or transform biological systems into useful processes and products.

(c) “Biotechnology business” means a business certified, as described in sub. (4), by the department to be primarily engaged in the application of biotechnologies that use a living organism or parts of an organism to produce or modify products to improve plants or animals, develop microorganisms for specific uses, identify targets for small molecule pharmaceutical development, or transform biological systems into useful processes and products.

(cg) “Building” has the meaning given in s. 70.111 (10) (a) 1., Stats.

(cr) “Combined group” has the meaning given in s. 71.255 (1) (a), Stats.

(d) “Institution of higher education” means an accredited educational organization providing education after completion of high school, including undergraduate, graduate, and professional education.

(e) “Machinery” has the meaning given in s. 70.11 (27) (a) 2., Stats., and means a structure or assemblage of parts that transmits forces, motion or energy from one part to another in a predetermined way by electrical, mechanical or chemical means, but “machinery” does not include a building.

(f) “Person” includes any natural person, firm, partnership, limited liability company, joint venture, joint stock company, association, public or private corporation, the United States, the state, including any unit or division of the state, any county, city, village, town, municipal utility, municipal power district or other governmental unit, cooperative, unincorporated cooperative association, estate, trust, receiver, personal representative, any other fiduciary, any other legal entity, and any representative appointed by order of any court or otherwise acting on behalf of others.

(g) “Primarily” means more than 50 percent.

(h) “Qualified research” means qualified research as defined under section 41 (d) (1) of the Internal Revenue Code, except that it includes qualified research that is funded by a member of a combined group for another member of a combined group.

(i) “Used exclusively” means used to the exclusion of all other uses except for other use not exceeding 5% of total use.

(2) Exemptions for property and items used in qualified research.

(a) The sales price from the sale of and the storage, use, or other consumption of machinery and equipment, including attachments, parts, and accessories, and other tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that are sold to any of the following and that are consumed or destroyed or lose their identities while being used exclusively and directly in qualified research is exempt:

A person engaged in manufacturing in this state at a building assessed under s. 70.995, Stats.
A person engaged primarily in biotechnology in this state.
A combined group member who is conducting qualified research for another combined group member and that other combined group member is a person described under subd. 1. or 2.

(b) For purposes of determining whether a person is engaged primarily in biotechnology in this state under par. (a), only activities in Wisconsin are considered. When a person conducts activities in Wisconsin in addition to biotechnology, the person must allocate its activities between its biotechnology activities and its other activities using a reasonable and consistent method. If a person’s biotechnology activities in Wisconsin are more than 50% of its total activities in Wisconsin, the person is engaged primarily in biotechnology in this state.

Examples: (1) Company A performs research and development services at locations in Wisconsin for its customers. This is Company A’s only activity in Wisconsin. Some of the research and development services are biotechnology and some of the research and development services are not biotechnology. Using the sales price of its services as the measure of activity, more than 50% of the total sales price Company A receives for performing all of its research and development services in Wisconsin is derived from biotechnology. Therefore, Company A is primarily engaged in biotechnology in Wisconsin.

(2) Company B performs research and development services at locations outside of Wisconsin that constitute biotechnology. Company B also manufactures tangible personal property at a building in Wisconsin, assessed under s. 70.995, Stats. The manufacturing activity does not constitute biotechnology. This is Company B’s only activity in Wisconsin. The products manufactured in Wisconsin are used by Company B in performing its research and development services at locations outside of Wisconsin. Company B is not engaged primarily in biotechnology in Wisconsin but is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats.

(3) Company X manufactures machinery at a plant outside of Wisconsin. Company X operates a facility in Wisconsin that is devoted solely to research and development relating to the products Company X manufactures. Although Company X’s activities in Wisconsin are research and development activities that constitute qualified research, its activities in Wisconsin are not biotechnology. The research and development activities are Company X’s only activities in Wisconsin. Therefore, Company X is neither engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., nor engaged primarily in biotechnology in Wisconsin.

(4) Company Z manufactures products at a plant outside of Wisconsin. Company Z operates a facility in Wisconsin that is devoted solely to research and development. This is Company Z’s only activity in Wisconsin. The research and development relates to products Company Z currently manufactures as well as to new products that Company Z may manufacture. Some of its research and development activities in Wisconsin constitute biotechnology and qualified research. Since Company Z only performs research and development activities for itself, it does not have any sales revenue from these activities. Company Z reasonably allocates its costs and expenses incurred in conducting all of these research and development activities in Wisconsin between biotechnology and non-biotechnology. More than 50% of these costs and expenses are for biotechnology. Therefore, Company Z is engaged primarily in biotechnology in Wisconsin.

(5) Company T is a new business located solely in Wisconsin. In its first year of operation, Company T’s only activity is developing new products for itself. Some of these development activities are biotechnology. Since Company T only performs development activities for itself, it will not have any sales revenues during its first year of operations. Company T reasonably allocates its costs and expenses incurred in conducting all of its development activities in Wisconsin between biotechnology and non-biotechnology during its first year of operations. More than 50% of these costs and expenses are for biotechnology. Therefore, Company T is engaged primarily in biotechnology in Wisconsin.

(c) For purposes of determining whether an activity is qualified research under par. (a), the regulations under Treas. Reg. section 1.41-4 apply, except that qualified research that is funded by a member of a combined group for another member of a combined group shall remain qualified research for purposes of this subsection.

Note: Treas. Reg. section 1.41-4 provides interpretation and guidance concerning what constitutes qualified research under section 41 (d) (1) of the Internal Revenue Code. Treas. Reg. section 1.41-4 is available at https://www.ecfr.gov/cgi-bin/text-idx?SID=55d6d62e711e2571238fb720003f7232&mc=true&node=se26.1.1_141_64&rgn=div8 or https://www.ecfr.gov/cgi-bin/ECFR?page=browse.

(d) If property or an item purchased without tax by claiming an exemption under par. (a) is used for non-exempt purposes that exceed 5% of total use, that property or item is subject to sales or use tax.

Examples: (1) Company A is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company A purchases a machine that it will use directly in conducting qualified research at its manufacturing plant in Wisconsin and purchases it exempt from Wisconsin sales tax claiming the exemption in par. (a). After completing the qualified research and having made no use of the machine other than direct use in qualified research, Company A begins using the machine exclusively and directly in its manufacturing operation, which is another exempt use under s. 77.54 (6) (am) 1., Stats. Company A does not owe Wisconsin sales or use tax on its purchase of the machine since it uses the machine only in an exempt manner.

(2) Company B is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company B purchases a machine that it will use directly in conducting qualified research at its manufacturing plant in Wisconsin. More than 5% of Company B’s total use of this machine will be for conducting research and development projects that do not meet the definition of qualified research. Company B’s purchase of the machine is taxable because it is not used exclusively in qualified research.

(3) Company C is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company C develops a new product in an activity that is qualified research. Company C purchases a variety of raw materials. Some of these materials are used exclusively and directly and destroyed in qualified research. Once the qualified research is completed, Company C consumes the remaining raw materials in activities that are not qualified research. Company C’s purchases of the raw materials that it uses exclusively and directly and destroys in qualified research are exempt under par. (a) 2. Company C’s purchases of the raw materials that it uses in activities that are not qualified research do not qualify for exemption under par. (a).

(4) Manufacturer P is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Manufacturer P contracts with Company D to produce a prototype that is tangible personal property. Manufacturer P’s primary objective in this transaction is to obtain the prototype, rather than a research and development service. Company D may purchase the materials used to construct the prototype without tax for resale. Manufacturer P will use the prototype exclusively and directly in one of its research and development activities that constitutes qualified research and may claim the exemption under par. (a) on its purchase of the prototype.

(5) Manufacturer F is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Manufacturer F contracts with Company E to perform research services. Manufacturer F and Company E are not members of the same combined group. Company E will provide a prototype that is tangible personal property to Manufacturer F along with these services. Manufacturer F’s primary objective in this transaction is to obtain the research and development services. Company E’s primary activity in Wisconsin is the provision of professional engineering services that do not involve biotechnology, and Company E is not a manufacturer. Company E may not claim the exemptions under par. (a), since Company E is neither engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., nor engaged primarily in biotechnology in Wisconsin. In addition, Company E cannot purchase the materials without tax for resale that it uses to construct the prototype, because Company E uses the prototype in performing its research services. The prototype is transferred to Manufacturer F incidental to the research services.

(e)

A business claiming an exemption under par. (a) shall maintain records to substantiate that at least 95% of the property or item’s total use is direct use in qualified research, including records to establish all of the following:

a. The activity or activities in which the property or item is used.

b. The manner in which the property or item is used in each activity.

c. The activity or activities in which the property or item is used constitute qualified research.

If contemporaneous with the research activity or activities performed, documents that may, as required under subd. 1. c., establish an activity or activities that constitute qualified research include the following:

a. Materials explaining the research activities conducted, including brochures, pamphlets, press releases, and other similar documents.

b. Submissions to management, the board of directors, review committees, or other similar groups regarding the research projects, activities, and the expenditures.

c. Documents prepared by, or on behalf of, internal audit, including quarterly and annual reports that refer in any manner to the research activities.

d. Minutes, notes, or other similar recordings from budget, board of director, managerial or other similar meetings concerning the research activities.

e. Project authorizations, budgets, or work orders that initiate a research project.

f. Position and department descriptions of employees identified as providing qualified research.

g. The internal authorization policies for approving a research project.

h. Patent applications.

i. Project summaries and/or project reports and project meeting minutes.

j. Prototype and process testing reports, field and lab verification data/summary data.

k. Papers, treaties, or other published documents regarding the taxpayer’s research.

L. Complete copies of contracts, including all modifications, letter agreements, memoranda of understanding, or similar documents for research performed by, or on behalf of, a third party.

Example: This example illustrates records that are generally acceptable as adequate to document the exemptions under par. (a).

Company A is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company A attempts to make a new and improved widget. Upon approval of a project, Company A documents the scope and goals of the project, the uncertainties that exist in accomplishing these goals, and the processes by which Company A hopes to eliminate the uncertainties. In addition, contemporaneously with conducting the research project, Company A documents: (1) the location or locations at which the research is conducted, (2) the machinery and equipment used in the project and the manner used, (3) the various materials and supplies used in attempting to produce the improved widget, the purpose and manner in which such items were used, (4) the processes applied, (5) the results achieved throughout the research process, and (6) the point at which Company A either abandons the research project or achieves the goal of eliminating the uncertainties involved with the development of the new widget. Company A purchased various machinery and equipment, and supplies and materials used in conjunction with development of the new widget without tax claiming the purchases are exempt under par. (a). In general, contemporaneous records kept in the manner and detail described will be accepted and used by the department in making its determinations regarding whether the taxpayer is entitled to claim the exemptions under par. (a).

A business claiming an exemption under par. (a) shall provide records described in subd. 2. or any other information as required by the department to verify that activities are qualified research or that machinery, equipment, or other property or items are used exclusively and directly in qualified research.

(3) Exemptions for raising animals used in qualified research or manufacturing.

(a) Sales of the following property and items to a person who is engaged in the business of raising animals are exempt if all of the animals raised by the seller of the animals are sold primarily to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those entities in qualified research or manufacturing:

Machines and specific processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly in raising such animals.
Seeds for planting, plants, feed, fertilizer, soil conditioners, animal bedding, sprays, pesticides and fungicides, breeding and other livestock, bees, beehives and bee combs, poultry, farm work stock, baling twine and baling wire, containers for fruits, vegetables, grain, hay, silage and animal wastes, plastic bags, plastic sleeves and plastic sheeting used to store or cover hay or silage, drugs, semen for artificial insemination, fuel, and electricity, that are used exclusively and directly in raising such animals.

Examples: (1) Company A raises various animals that it sells for use in qualified research. Company A sells more than 50% of the animals it raises to biotechnology businesses for exclusive and direct use in qualified research. All of the feed Company A purchases for exclusive and direct use in raising its animals is exempt.

(2) Company T raises various animals that it sells for use in qualified research. Company T uses cages to raise some of these animals. Company T’s purchases of cages are exempt only if more than 50% of all the animals raised by Company T are sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those organizations in qualified research or manufacturing.

(b) For purposes of determining whether an activity is qualified research under par. (a), the regulations under Treas. Reg. section 1.41-4 apply, except that qualified research that is funded by a member of a combined group for another member of a combined group shall remain qualified research for purposes of this subsection.

(c)

Except as provided in subd. 2. and sub. (4) (am), a person claiming an exemption under par. (a) shall obtain a “Purchaser’s Statement to Seller for Animals Used in Qualified Research or Manufacturing,” Form S-209, from each of its customers described in par. (a) (intro.) and keep the completed forms as a part of its records to document the number of animals that were raised by the seller and sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use in qualified research or manufacturing. When completing Form S-209, the purchaser of the animals is attesting to the number of animals purchased and the number of animals used exclusively and directly in qualified research or manufacturing.
A person is not required to obtain Form S-209 from its customers that are public or private institutions of higher learning and governmental units. For purposes of the exemption in par. (a), animals sold to such customers are deemed to be sold to such customers for exclusive and direct use in qualified research.

Note: Form S-209 is available on the department’s web site at www.revenue.wi.gov.

(4) Certification of biotechnology businesses by the department.

(a) Except as provided in par. (am), in order to be considered a biotechnology business for purposes of the exemptions under sub. (3), a business shall first obtain certification from the department as prescribed in this subsection.

(am) In lieu of Form S-209, a seller may accept a fully completed exemption certificate, Form S-211 or S-211E from a purchaser that is a biotechnology business indicating the percentage of the animals purchased from the seller that are for exclusive and direct use in qualified research or manufacturing. The seller of the animals may regard such animals claimed as exempt for exclusive and direct use in qualified research or manufacturing, subject to a request by the department that the seller obtain certifications described in par. (a) from the purchasers to verify the exemption. If the department determines that all of the animals raised by the seller are not sold primarily to biotechnology businesses, the department may invalidate the exemption and make an adjustment to reflect the correct tax.

Example: Company A raises and sells animals exclusively to purchasers that are biotechnology businesses. Based on the Forms S-209 and the fully completed exemption certificates received by Company A, 60% of all the animals it sells are sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Company A is audited by the department. The department requests that certain purchasers of animals be certified by the department as biotechnology businesses for years relating to the audit. Some of these purchasers are not certified as biotechnology businesses by the department. As a result, only 45% of Company A’s sales of animals are considered to be sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Since Company A does not sell more than 50% of the animals to biotechnology businesses, Company A does not qualify for the exemption under sub. (3) (a).

(b) A business seeking certification or renewal of a certification under this subsection shall apply with the department in the manner prescribed by the department. The department may require any business submitting an application under this paragraph to provide additional information, as determined by the department, prior to the department granting or denying the applicant’s request for certification or renewal of a certification.

Note: Information concerning the certification process is available on the department’s web site at www.revenue.wi.gov.

Example: Additional information that may be requested by the department in processing an application includes documentation of the nature of the business’ income and expenses.

(c) A business shall be certified by the department as a biotechnology business for the period described in par. (d) if, during that period, the business’ activities are primarily biotechnology.

(d) The certification period under par. (c) shall correspond to the business’ tax year as determined for federal income tax purposes, including short years, subject to the following conditions:

If a business is certified by the department with respect to a previous tax year, the certification is valid only for the previous tax year.
If a business is certified for a current tax year, the certification is valid until the expected end of the tax year unless, during such tax year the business’ tax year terminates earlier than expected. When a tax year terminates earlier than expected, the certification is valid until the actual end of the tax year as determined for federal income tax purposes.

(e) Notwithstanding any other provision in this subsection, the department may:

Revoke any certification granted under this subsection, but only upon information that either the business’ application for certification contained a misstatement as to the business’ gross income or expenses and deductions or the business no longer qualifies as a biotechnology business.
Require any business seeking certification to be certified only with respect to its previous tax years.

Note: Section Tax 11.20 interprets ss. 77.51 (1c), (1d), and (10rn) and 77.54 (57) and (57d), Stats.

Note: The interpretations in s. Tax 11.20 are effective beginning January 1, 2012, pursuant to 2009 Wis. Act 28, except for the following amendments effective July 2, 2013, pursuant to 2013 Wis. Act 20: (a) “Qualified research” was amended to include research funded by one member of a combined group for another member of a combined group; (b) The exemption for property used in qualified research by persons engaged primarily in manufacturing in Wisconsin was amended to apply to property used in qualified research by a person engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats.; (c) The exemption for property used in qualified research was amended to include use by one member of a combined group who is conducting qualified research for another combined group member who is either engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., or is primarily engaged in biotechnology; and (d) The change of the term “medicines” to “drugs.”

History

CR 12-015: cr. Register July 2012 No. 679, eff. 8-1-12; CR 14-006: cr. (1) (cg), (cr), am. (1) (h), r. and recr. (2) (a), am. (2) (b), (Example 2), (Example 3), (c), (d) (Example 1) to (Example 5), (e) 2. L. (Example), (3) (a) 2., (b) Register August 2014 No. 704, eff. 9-1-14; correction in (2) (d) (Examples) (1) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 19-113: renum. (3) (c) to (3) (c) 1. and am., cr. (3) (c) 2., am. (4) (a), cr. (4) (am), (Example) Register April 2020 No. 772, eff. 5-1-20; CR 20-027: am. (3) (a) 2. Register July 2021 No. 787, eff. 8-1-21.

Subchapter IV Sales Price

Wis. Admin. Code § Tax 11.26 Other taxes, fees, and charges in taxable sales price and purchase price {#sec-tax-11.26 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.26}

(1) General rule.

(a) Tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., sold at retail are subjected to many direct and indirect taxes, fees, and charges prior to reaching a retailer. The taxes, fees, and charges are commonly included in the price the retailer pays for the property and are not separately identifiable as taxes, fees, and charges. Occasionally, however, a tax, fee, or charge is either separately passed on to a retailer or is imposed at the retail level of activity, but is different from and in addition to the sales tax. The tax, fee, or charge may be imposed by Wisconsin, the federal government, or a municipality.

(b) In determining the sales price or purchase price used to compute Wisconsin sales or use taxes, the treatment of a tax, fee, or charge for sales tax purposes is identical to the treatment that applies for use tax purposes. The same taxes, fees, and charges that are included or excluded from the sales price are also included or excluded from the purchase price.

(2) Taxes, fees, and charges included as part of sales price and purchase price. The following taxes, fees, and charges are included in the sales price and the purchase price, regardless of whether they are separately stated on the invoice, bill of sale, or other similar document given by the seller to the purchaser, except as provided in sub. (3):

(a) The fermented malt beverage tax imposed by s. 139.02, Stats.

(b) The taxes imposed upon intoxicating liquors, including wine, by s. 139.03, Stats.

(c) Any federal stamp tax and manufacturer’s or importer’s excise tax not imposed directly on the purchaser. Federal excise taxes include excise taxes on alcohol, tobacco, motor and aviation fuel except motor fuel taxes refunded, tires, firearms and ammunition, sporting goods, and air or ship transportation.

(d) A federal, county, or municipal fuel tax included in the price of alternate fuels and general aviation fuel subject to sales tax.

Example: Fuel taxes are included in the price of fuel used in aircraft, boats, and for other nonhighway use. The taxes are included in the sales price.

(e) The cigarette tax imposed by ss. 139.31 and 139.33, Stats.

(f) The Canadian or any other country’s export gallonage tax on fuels.

(g) The tobacco products tax imposed under ss. 139.76 and 139.78, Stats.

(h) The federal gas guzzler tax imposed under s. 4064 of the Internal Revenue Code.

(j) The federal medical device excise tax imposed under s. 4191 of the Internal Revenue Code.

(k) The federal universal service fund fee.

(L) The dry cleaning fee imposed under s. 77.9961, Stats.

(m) The dry cleaning products fee imposed under s. 77.9962, Stats.

(n) The fees imposed by the public service commission under s. 196.85, Stats.

(o) The telephone relay service surcharge imposed under s. 196.858, Stats.

(p) The telecommunications utility trade practices surcharge imposed under s. 196.859, Stats.

(q) The state-issued video service franchise fee imposed under s. 66.0420 (3), Stats.

(r) The petroleum inspection fee imposed under s. 168.12, Stats.

(s) The motor fuel taxes imposed under s. 78.01, Stats.

(3) Taxes, fees, and charges excluded from sales price or purchase price. Section 77.51 (12m) (b) 3. and (15b) (b) 3., Stats., exclude from the sales price and purchase price any taxes legally imposed directly on the purchaser that are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser. Section 77.51 (12m) (b) 3m. and (15b) (b) 3m., Stats., exclude from the sales price and purchase price taxes imposed on the seller that are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser if the law imposing or authorizing the tax provides that the seller may, but is not required to, pass on to and collect the tax from the user or consumer. Therefore, the following taxes, fees, and charges are excluded from the sales price or the purchase price if they are separately stated on the invoice, bill of sale, or similar document given to the purchaser:

(a) The federal communications tax imposed upon telegraph service and telephone service.

(ac) The room taxes imposed under s. 66.0615, Stats., which municipalities or local exposition districts impose on persons furnishing lodging to transients.

(ag) The county and stadium sales and use taxes imposed under s. 77.71, Stats.

(aL) The local exposition district food and beverage and rental car taxes imposed under ss. 77.98 and 77.99, Stats.

(ap) The premier resort area taxes imposed under s. 77.994, Stats.

(at) The state rental vehicle fee imposed under s. 77.995, Stats.

(ax) The federal luxury tax imposed under ss. 4001 to 4007 of the Internal Revenue Code.

(d) The police and fire protection fee imposed under s. 196.025 (6), Stats.

(e) The low-income assistance fees imposed under s. 16.957 (4) and (5), Stats.

(f) The landline 911 charge imposed under s. 256.35 (3), Stats.

(h) The state universal service fund fee imposed under s. 196.218, Stats.

(i) The municipal video service provider fee imposed under s. 66.0420 (7), Stats.

(j) The federal excise tax imposed on the first retail sale of heavy trucks and trailers under section 4051 of the Internal Revenue Code.

Note: Section Tax 11.26 interprets s. 77.51 (12m) and (15b) and 77.54 (37), Stats.

Note: The interpretations in s. Tax 11.26 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exclusion for federal and Wisconsin motor vehicle excise taxes refunded became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (c) The regional transit authority taxes were authorized by 2009 Wis. Act 28 and repealed by 2011 Wis. Act 32; (d) The definitions of “purchase price” and “sales price” were amended to provide when taxes are not included in the “purchase price” or “sales price,” pursuant to 2013 Wis. Act 20; and (e) The definitions of “purchase price” and “sales price” were amended retroactively to September 1, 2014, to exclude the federal excise tax on heavy trucks and trailers, pursuant to 2015 Wis. Act 361.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (2) (d) and (e) and cr. (2) (f), Register, January, 1983, No. 325, eff. 2-1-83; cr. (2) (g), Register, December, 1983, No. 336, eff. 1-1-84; am. (3) (b), Register, April, 1990, No. 412, eff. 5-1-90; am. (1) (a) and (b), (2) (intro.), (b), (c), (d) and (e) and (3) (a), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (intro.), (c), (3) (intro.) and (b), Register, December, 1992, No. 444, eff. 1-1-93; am. (2) (c) and (d), cr. (2) (h) and (3) (c), Register, August, 1999, No. 524, eff. 9-1-99; EmR0924: emerg. am. (title), (1) (a), (2) (title), (intro.), (c), (3) (title) and (b), r. and recr. (1) (b) and (3) (intro.), eff. 10-1-09; CR 09-090: am. (title), (1) (a), (2) (title), (intro.), (c), (3) (title) and (b), r. and recr. (1) (b) and (3) (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a), (2) (c), (d), (3) (b) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (3) (Example 1), (Example 3) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: am. (title), (1) (a), (b), (2) (title), (intro.), (c), (h), cr. (2) (i) to (s), am. (3) (title), (intro.), cr. (3) (ac) to (ax), r. (3) (b) and (Example 1) to (Example 7), cr. (3) (d) to (h) Register August 2014 No. 704, eff. 9-1-14; CR 19-112: r. (2) (i), am. (2) (q), cr. (3) (i), (j) Register June 2020 No. 774, eff. 7-1-20.; CR 20-018: r. (3) (g) Register July 2021, No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.27 Maintenance contracts, insurance, and warranties {#sec-tax-11.27 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.27}

(1) Definitions. In this section:

(a) “Computer software maintenance contract” means a contract that obligates a vendor of computer software to provide a customer with future updates or upgrades to computer software, computer software support services, or both.

(b) “Insurance” means a contract or agreement which promises indemnity against loss or damage resulting from perils outside of and unrelated to defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

(c) “Warranty” means a contract or agreement which promises indemnity against defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., sold.

(2) Receipts from insurance. The sales price from the sale of insurance, except contracts under s. 77.52 (2) (a) 13m., Stats., are not subject to Wisconsin sales or use tax when separately stated on the invoice provided to the purchaser.

Examples: 1) Company A rents a vehicle to Customer A for $200 which includes insurance. The entire charge of $200 is subject to Wisconsin sales or use tax because the charge for insurance is not separately stated.

2) Company A rents a vehicle to Customer B for $200. On the invoice, Company A shows a charge for vehicle rental of $175 and a charge for insurance of $25. The charge of $175 is subject to Wisconsin sales or use tax. The $25 charge for the insurance is not subject to tax since it is separately stated on the invoice provided to the purchaser.

(3) Receipts from maintenance contracts and warranties. Section 77.52 (2) (a) 13m., Stats., imposes Wisconsin sales tax on the sale of contracts, including service contracts, maintenance agreements, computer software maintenance contracts for prewritten computer software, and warranties, that provide, in whole or in part, for the future performance of or payment for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., unless the sale, license, lease, or rental in this state of the property, items, or goods to which the contract relates is or was exempt, to the purchaser of the contract, from taxation under subch. III of ch. 77, Stats.

Examples: 1) Company A sells a machine to Customer C which will be used exclusively and directly in manufacturing. Customer C purchases an extended warranty with the machine. Customer C provides Company A with a properly completed exemption certificate. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the machine to which it relates is exempt from Wisconsin sales or use tax.

2) Customer D, a resident of Minnesota, purchases an automobile from a dealership in Wisconsin. Customer D makes no use of the automobile in Wisconsin other than to drive it to his home in Minnesota. Customer D purchases an extended warranty with the automobile. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the sale of the automobile is exempt from Wisconsin sales or use tax.

3) Assume the same facts as in Example 2, except that Customer D does not purchase the extended warranty at the time of sale of the automobile. Instead, six weeks after the sale, Customer D purchases the extended warranty from the dealer. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the automobile to which the sale relates was exempt from Wisconsin sales or use tax.

4) Customer E, a resident of Wisconsin, purchases an appliance from a store in Wisconsin. Customer E purchases an extended warranty with the appliance. The sale of the extended warranty is subject to Wisconsin sales tax because the sale of the appliance is subject to Wisconsin sales tax.

5) Assume the same facts as in Example 4, except that Customer E does not purchase the extended warranty at the time of sale of the appliance. Instead, 2 months after the sale, Customer E purchases the extended warranty from the store. The sale of the extended warranty is subject to Wisconsin sales tax because the appliance to which the sale relates was subject to Wisconsin sales tax.

(4) Repairs by retailers under insurance plans.

(a) The sales price from charges by a retailer to a customer or an insurer for taxable repair parts or taxable services performed under an insurance plan are subject to Wisconsin sales or use tax.

Examples: 1) Company A sold an appliance to Customer E. Company A also sold an insurance plan for the appliance to Customer E. The appliance is later repaired by Company A under the insurance plan. Company A bills the insurance company for the repair. The charge to the insurance company is subject to Wisconsin sales or use tax.

2) Company A sold an appliance to Customer F. Company A also sold an insurance plan for the appliance to Customer F. The appliance is later repaired by Company A under the insurance plan. Company A bills the customer for the repair. Customer F submits the bill to the insurance company and receives reimbursement from the insurance company. The charge to Customer F for the repair is subject to Wisconsin sales tax.

(b)

A retailer who provides parts or performs taxable repair services to tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under an insurance plan may purchase the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred to the customer as part of the repair without Wisconsin sales or use tax as property for resale.
A person who provides tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., in repairing real property under an insurance plan is the consumer of the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred to a customer as part of the repair to real property and is subject to Wisconsin sales or use tax on the purchase of the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred.

Note: Refer to s. Tax 11.68 for information about distinguishing between real and tangible personal property.

(5) Repairs by retailers under maintenance contracts and warranties.

(a) The sales price from charges by a retailer to a customer for taxable repair parts or taxable services performed under a maintenance contract or warranty and that are not reimbursed by the seller of the maintenance contract or warranty are subject to Wisconsin sales or use tax.

Example: Customer A purchased an automobile from a dealership in Wisconsin. Customer A purchased an extended warranty from the dealership which was subject to Wisconsin sales or use tax. Customer A brings the automobile to the dealership for repair under the warranty. Under the terms of the warranty, Customer A must pay a deductible of $100. The $100 charge to Customer A is subject to Wisconsin sales or use tax.

(b) Reimbursement to a retailer from a manufacturer or other person, whether in the form of money or replacement of parts used to perform repair services under a warranty is not subject to Wisconsin sales or use tax.

Example: Customer B purchased a television with an extended warranty from an appliance store. Customer B has the television repaired under the warranty. The appliance store is reimbursed $200 by the warranty company for the repair of the television. The $200 reimbursement is not subject to Wisconsin sales or use tax.

(c)

A retailer who provides parts or performs taxable repair services to tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a maintenance contract or warranty may purchase the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., transferred to the customer as part of the repair without Wisconsin sales or use tax as property, items, or goods for resale.
A person who provides tangible personal property or items or property, under s. 77.52 (1) (b) or (c), Stats., in repairing real property under a maintenance contract or warranty is the consumer of the tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., transferred to a customer as part of the repair to real property and is subject to Wisconsin sales or use tax on the purchase of the tangible personal property or items or property, under s. 77.52 (1) (b) or (c), Stats., transferred.

Note: Refer to s. Tax 11.68 for information about distinguishing between real and tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

(6) Repairs not by retailers. If a retailer does not repair tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a maintenance contract, warranty, or insurance plan, but instead has another person perform the repairs covered under the maintenance contract, warranty, or insurance plan, the person’s sales price from the sale of the repair to the retailer is not subject to Wisconsin sales or use tax provided the retailer gives the person a properly completed exemption certificate. The charge for repairs by the other person is exempt as a sale for resale whether or not the original sale of the property, item, or good to which the maintenance contract, warranty, or insurance plan relates occurred in Wisconsin. The sales and use tax treatment of the charge by the retailer to the customer or plan provider is the same as provided in subs. (4) and (5).

Note: Refer to s. Tax 11.14 for information regarding exemption certificates.

(7) Goodwill work. A retailer who provides free parts or services or both to a customer under an implied warranty in order to maintain good customer relations, although not required to do so under a sales agreement, maintenance agreement, express warranty, or insurance plan may purchase the parts without Wisconsin sales or use tax for resale.

Example: Customer Z, a resident of Wisconsin, purchased an automobile and extended warranty from a Wisconsin dealership. The dealership charged Wisconsin sales tax on the sale of the automobile and warranty. Customer Z brought the vehicle to the dealership for repairs that were covered under the warranty. While performing the repairs, a part is damaged. The dealership, who is not required by the terms of the warranty to provide the part, provides the part free of charge to Customer Z. The dealership may purchase the part provided free to Customer Z without Wisconsin sales or use tax as property for resale.

Note: Section Tax 11.27 interprets ss. 77.51 (14) (intro.), (15b), 77.52 (2) (a) 10. and 13m., and 77.54 (8), Stats.

Note: The interpretations in s. Tax 11.27 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) the definitions in sub. (1) and the provisions in subs. (4) (b) 2. and (5) (c) 2. became effective on February 1, 1994; (b) The definition of computer software maintenance contract became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (c) The specific imposition of tax on maintenance contracts and extended warranties became effective October 1, 2009 pursuant to 2009 Wis. Act 2; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1), (2) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c), Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. Register, January, 1994, No. 457, eff. 2-1-94; EmR0924: emerg. am. (title), (2), (4), (5) (title), (a), (c), (6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r. and recr. (3), eff. 10-1-09; CR 09-090: am. (title), (2), (4), (5) (title), (a), (c), (6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r. and recr. (3) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.28 Gifts and other advertising specialties {#sec-tax-11.28 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.28}

(1) Definitions.

(a) Section 77.51 (15a) (b) 2., Stats., provides that “sales, lease, or rental for resale, sublease, or subrent” does not include any sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a purchaser even though the property, items, or goods may be used or consumed by another person to whom the purchaser transfers the property, items, or goods without valuable consideration, such as gifts and other advertising specialties distributed at no charge and apart from the sale of other tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services.

(b) Section 77.51 (15b) (a), Stats., provides that “sales price” means the total amount of consideration, including cash, credit, property, and services, for which tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services are sold, licensed, leased or rented, valued in money, whether received in money or otherwise.

(2) Gifts and sales incentive plans.

(a) General. Persons who make gifts of taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or distribute tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., at no charge to others are the consumers of the property, items, or goods and the tax shall apply to the sales price from the sale of the property, items, or goods to persons making gifts. Taxable sales include sales of samples, advertising material, display cases, racks, and other similar marketing aids to manufacturers, distributors, jobbers, and wholesalers acquiring the property, items, or goods for the purpose of giving it to retailers for use in selling merchandise to customers.

Examples: 1) A paint manufacturer is the consumer of color cards which it provides to retailers without charge to facilitate the sale of the manufacturer’s paint.

2) A tavern operator is liable for the tax measured by the tavern operator’s purchase price of liquor given to customers.

(b) Grand opening gifts. A person who sells tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a retailer who uses the property, items, or goods as gifts at a grand opening or similar event, such as an open house, celebrity appearance, or farm days, should charge the retailer the applicable Wisconsin sales or use tax, unless the retailer provides the seller with a fully completed exemption certificate at the time of the sale. In cases where a seller furnishes free property to a retailer for use as gifts at a grand opening or similar event, the seller furnishing the property to the retailer without charge is subject to the sales or use tax on the property donated, unless the property is exempt from use tax under s. 77.56 (3), Stats., because it is donated to an entity exempt from sales or use tax under s. 77.54 (9a), Stats.

The sales price from the sale of a gift certificate is not taxable because the certificate represents an intangible right. When a gift certificate is redeemed for taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, the transaction is completed and the retailer’s tax liability accrues at that time.

Example: Retailer A sells Customer B a gift certificate that is valued at $50. The gift certificate can be used to purchase any items that Retailer A sells. The sale of the gift certificate is not subject to Wisconsin sales tax.

The sale of a certificate that entitles the holder of the certificate to redeem the certificate for a specific product follows the tax treatment of the product for which the certificate can be redeemed.

Examples: 1) Retailer A sells Customer B a certificate that can be redeemed for a free radio. The sale of the certificate is subject to Wisconsin sales tax since a radio is subject to tax under s. 77.52 (1) (a), Stats.

2) Retailer X sells Customer Y a certificate that can be redeemed for 10 pounds of fresh fruit for human consumption. The sale of the certificate is not subject to Wisconsin sales tax since the sale of fresh fruit for human consumption is not subject to tax.

(d) Gifts shipped out-of-state. When taxable property, items, or goods to be given as a gift are purchased at retail and the purchaser, without obtaining possession of the gift, directs the seller to ship it to a location outside Wisconsin, the sales price is not subject to Wisconsin sales tax.

(e) Awards. Persons transferring tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to salespersons or distributors or both in redemption of awards, such as points, given under a sales incentive plan shall pay the tax on their purchases of the property, items, or goods.

(f) Gifts originally purchased for resale. When a person purchases property for resale or for another exempt purpose or under a valid exemption certificate but uses the property for a purpose other than for resale or another exempt purpose and does not donate the property to an entity described in s. 77.54 (9a), Stats., the purchaser shall be liable for tax on its purchase price of the property.

Note: The amount subject to tax is the purchase price as described in s. Tax 11.32.

(3) Coupons and premiums.

(a) Coupons for free property, items, or goods issued and redeemable by a manufacturer or other third party. When a manufacturer’s or other third party’s coupons are distributed to consumers and subsequently are redeemed by a retailer for tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., without charge, the transfer of the property, items, or goods by the retailer to the coupon holder is a sale, not a gift. The consideration for the sale upon which the measure of tax is based, if taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is transferred, is the amount the manufacturer or other third party reimburses the retailer for the coupon, less any coupon handling fees, if the following conditions are met:

The retailer receives consideration from a third party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale.
The retailer is obligated to pass the price reduction or discount on to the purchaser.
The amount of the consideration attributable to the sale is a fixed amount and the retailer is able to determine the amount at the time of the sale.
One of the following also applies:

a. The purchaser presents a coupon, certificate, or other documentation to the retailer to claim the price reduction or discount, if the coupon, certificate, or other documentation is authorized, distributed, or granted by a third party with the understanding that the third party will reimburse the retailer for the amount of the price reduction or discount.

b. The purchaser identifies himself or herself to the retailer as a member of a group or organization that may claim the price reduction or discount.

c. The retailer provides an invoice to the purchaser, or the purchaser presents a coupon, certificate, or other documentation to the retailer that identifies the price reduction or discount as a third party price reduction or discount.

(b) Cents-off coupons reimbursed by manufacturers and other third parties. A common arrangement between manufacturers or other third parties and retailers involves the use of cents-off coupons. The coupons are issued by manufacturers or other third parties and used by consumers toward the purchase of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats. The retailer then is reimbursed by the manufacturer or other third party. In this situation, the retailer’s taxable sales price includes the amount the retailer receives from the customer. The retailer’s taxable sales price also includes the amount the retailer receives from the manufacturer, less any coupon handling fees paid by the manufacturer to the retailer, if the conditions in par. (a) 1. to 4. are met.

When a retailer distributes coupons which its customer may use to obtain free tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, the following shall apply:

a. When purchasing taxable products, including services, which will be given away to customers who make a required purchase consisting of only nontaxable products, a retailer may not purchase the free products without tax for resale. The retailer is deemed the consumer of the free products as provided in s. 77.52 (21) (a), Stats. If the free products were acquired without tax for resale, the retailer shall report the tax on its purchase price of those products.

Example: A retailer purchases key chains that it will give to customers who purchase eight gallons of gasoline. The gasoline is exempt from sales tax. The retailer is required to pay Wisconsin sales or use tax on its purchase of the key chains.

Note: See s. Tax 11.985 for additional information concerning bundled transactions.

ag. When purchasing taxable products, including services, which will be given away to customers who make a required purchase consisting of only taxable property, items, or goods, a retailer may purchase the free products without tax for resale. The retailer is deemed to be selling both the required property, item, or good and the product being provided free, as provided in s. 77.52 (21) (b), Stats.

Example: A retailer purchases bicycles that it will give to customers who purchase a sofa. The retailer may purchase the bicycles without tax for resale because the customer must purchase the sofa in order to receive the bicycle.

ar. When purchasing taxable products, including services, which will be given away to customers who make a required minimum purchase that may consist of both taxable and nontaxable property, items, and goods, the retailer may owe tax on its purchase of the free products. If the sales price of all of the taxable products sold equals or exceeds the required minimum purchase, the retailer may purchase the free products without tax for resale. If the sales price of all of the taxable products sold does not equal or exceed the required minimum purchase, the retailer owes tax on its purchase price of the free products to the extent that nontaxable products are included in the required minimum purchases. The retailer may make a reasonable allocation to compute the tax due on its purchase price of the free products. If the retailer does not want to make this allocation, the retailer shall pay tax on its purchase price of the products provided free of charge.

Examples: 1) A retailer provides a free soft drink to each customer that purchases at least $20 worth of property. A customer purchases $15 of taxable property and $5 of nontaxable property and receives the free soft drink. The retailer purchased the soft drink from its supplier for $1. Since 75% of the selling price of the minimum required purchase is from taxable property ($15/$20 minimum purchase requirement = 75%), the retailer is only required to pay tax on the remaining 25% of its $1 purchase price of the soft drink it gave away to this customer.

2) Same as Example 1, except that the customer purchases $5 of taxable property and $15 of nontaxable property and receives the free soft drink. Since 25% of the selling price of the minimum required purchases is from taxable property ($5/$20 minimum purchase requirement = 25%), the retailer is only required to pay tax on the remaining 75% of its $1 purchase price of the soft drink it gave away to this customer.

3) Same as Example 1, except that the customer purchased $15 of taxable property and $30 of nontaxable property and receives the free soft drink. Since 75% of the minimum required purchases is from taxable property ($15/$20 minimum purchase requirement = 75%), the retailer is only required to pay tax on the remaining 25% of its $1 purchase price of the soft drink it gave away to this customer.

4) Same as Example 1, except that the customer purchases $25 of taxable property and $30 of nontaxable property and receives the free soft drink. Since at least 100% of the $20 minimum required purchase is from taxable property, the retailer does not owe any sales or use tax on its purchase of the soft drink that it gave away to this customer.

Note: Additional examples can be obtained in Wisconsin Tax Bulletin 174 (January 2012) available on the Department’s web site at www.revenue.wi.gov.

b. A retailer may not use an exemption certificate when purchasing taxable products which the retailer knows, or should know, are to be given away to customers without a required purchase. If the product that is given away was acquired without tax for resale, the retailer shall report the tax on its purchase price of the product.

Example: A retailer purchases key chains that are subsequently given away to customers, regardless of whether the customer makes a purchase. If the retailer purchased the key chains without Wisconsin sales or use tax by giving its supplier an exemption certificate claiming resale, the retailer is liable for tax on its purchase price of the key chains given away.

The taxable sales price of retailers, who issue cents-off coupons which reduce the price of merchandise they sell, and who receive no reimbursement from a manufacturer or other third party, is the reduced amount charged the customer.

(4) Coupon books, including dinner club memberships.

(a) A sales promotional agency may sell coupon books or voucher books to purchasers who use the coupons or vouchers in obtaining reduced prices from participating retailers. The coupon books may contain coupons redeemable by several retailers or may contain coupons redeemable by only one retailer. The sales promotional agency may have agreed to retain all receipts from the sales of coupon books, or to remit some portion of the receipts to the participating retailers.

Example: Coupon books may contain coupons entitling the purchaser to a free meal with the purchase of another meal, free dry cleaning or free bowling games.

(b) A sales promotional agency’s receipts from sales of coupon or voucher books are not taxable, because the agency is selling intangible rights. These intangible rights entitle the purchaser of the coupon or voucher book to receive tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services at a reduced price or for no charge. However, any receipts received by participating retailers from the sales promotional agency are subject to the sales tax, if taxable property, items, goods, or services are furnished to the person using the coupon or voucher. Any additional receipts received by the retailer from the person using the coupons or vouchers also are taxable.

(c) Retailers are subject to the sales and use tax on taxable property, items, or goods transferred when coupons are redeemed without consideration from a sales agency, the consumer or any other person unless an exemption applies.

Example: Motel A provides a free breakfast with the purchase of lodging. Motel A purchases fruit, milk, cereal, bakery goods including rolls, bagels, muffins, and bread, ground coffee beans, frozen juice, napkins, plastic utensils, and paper plates and cups from a vendor. Motel A prepares the coffee and juice. The food and beverages are placed on a table in the lobby. Motel A’s customers may take as much or as little as they want of the food and beverage items.

Motel A’s purchases of fruit, milk, cereal, bakery goods, ground coffee beans, and frozen juice are not subject to Wisconsin sales or use tax because they are exempt food items under s. 77.54 (20n), Stats. Motel A’s purchases of the napkins, plastic utensils, and paper plates and cups are subject to sales or use tax because no exemption applies.

(5) Trading stamps.

(a) Furnishing trading stamps and stamp books, with or without charge, to a retailer is an advertising or sales promotional service. The person furnishing the stamps and books is the consumer of the material and shall pay the Wisconsin sales or use tax on purchases of the material.

(b) A retailer’s taxable sales price may not be reduced by the retailer’s payments for trading stamps and stamp books or for payments to customers in redemption of the stamps.

(6) Manufacturer rebates. A manufacturer’s rebate to a person who purchases tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services from a retailer is not a reduction of the retailer’s sales price or purchase price for the item for sales or use tax purposes.

Examples: 1) An automobile manufacturer gives an automobile dealer’s customer a cash rebate of $1,500 for an automobile purchased by a customer for $15,000. The taxable sales price of the dealer from the sale of the automobile is $15,000.

2) An automobile manufacturer gives an automobile dealer’s customer the option of receiving a $1,500 cash rebate or allowing the $1,500 rebate to be applied against the price of the automobile ($15,000) by assigning the right to the rebate to the dealer. The customer chooses to assign the rebate to the dealer and apply the rebate against the price paid for the automobile and pays the dealer $13,500 ($15,000 - $1,500) for the automobile. The manufacturer subsequently reimburses the dealer $1,500. The taxable sales price from the sale of the automobile is $15,000.

(7) Certain drugs furnished without charge. No sales or use tax is owed on drugs furnished without charge to a physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist licensed under ch. 447, Stats., podiatrist licensed under ch. 448, Stats., or optometrist licensed under ch. 449, Stats., if the drug may not be dispensed without a prescription.

Example: A drug manufacturer furnishes drug samples to doctors without charge. The drug samples may not be dispensed without a prescription. The drug manufacturer does not owe sales or use tax on its cost of the ingredients for the drug samples.

Note: Section Tax 11.28 interprets ss. 77.51 (1f), (3pf), (11d), (15a), and (15b), 77.52 (20) and (21), 77.54 (14) (f), 77.56 (3), and 77.57, Stats.

Note: The interpretations in s. Tax 11.28 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption from use tax of certain donated property became effective August 9, 1989, pursuant to 1989 Wis. Act 31; (b) The exemption for certain medicines furnished without charge became effective October 14, 1997, pursuant to 1997 Wis. Act 27; (c) Section 77.57, Stats., was amended to remove the portion of the statute that allowed a purchaser to use the lesser of the cost or fair market value of an item that was purchased exempt and whose first taxable use occurred more than 6 months after it was purchased, pursuant to 2009 Wis. Act 2; (d) The requirements for a third party reimbursement to be considered part of the sales price or purchase price of a product are effective October 1, 2009, pursuant to 2009 Wis. Act 2; (e) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (f) The tax treatment of products provided for free by retailers became effective September 1, 2011 pursuant to 2011 Wis. Act 32.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (2) (intro.) and (a), Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. (1) (a) and (b) and (2) (intro.), am. (2) (a) and (d), (3) (a), (b) and (c) 2., and (4) (a), cr. (2) (e) and (6), Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (a), renum. (2) (intro.) (a) to (e) to be (2) (a) to (f) and am. (2) (b) and (e), (3) (b), (4) (c) and (5), r. and recr. (3) (c), Register, December, 1996, No. 492, eff. 1-1-97; am. (2) (b), (c) and (f), (3) (c) 1. b. and (4) (b) and (c), cr. (7), Register, May, 1999, No. 521, eff. 6-1-99; EmR0924: emerg. am. (1), (2) (a) to (e), (3) (a) (title), (b), (c), (4) (b), (c), (5) (b), (6) and (7), renum. (3) (a) to be (3) (a) (intro.) and am., cr. (3) (a) 1. to 4., eff. 10-1-09; CR 09-090: am. (1), (2) (a), (b), (d), (e), (3) (a) (title), (b), (c), (4) (b), (c), (5) (b), (6) and (7), renum. (2) (c) and (3) (a) to be (2) (c) 1. and (3) (a) (intro.) and am., cr. (2) (c) 2. and (3) (a) 1. to 4. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (f), (3) (c) 1. a., b. Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (3) (c) 1. (intro.), a., cr. (3) (c) 1. a. (Example), ag., ar., am. (3) (c) 1. b., r. (3) (c) 1. b. (Example 1), renum. (3) (c) 1. b. (Example 2) to (Example) Register August 2012 No. 680, eff. 9-1-12.

Wis. Admin. Code § Tax 11.29 Leases, licenses and rentals of tangible personal property and items, property and goods under s. 77.52 (1) (b), (c), and (d), Stats {#sec-tax-11.29 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.29}

(1) Definitions.

(a) “Lease or rental,” as defined in s. 77.51 (7) (a), Stats., means any transfer of possession or control of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for a fixed or indeterminate term and for consideration and includes:

A transfer that includes future options to purchase or extend.
Agreements related to the transfer of possession or control of motor vehicles or trailers, if the amount of any consideration may be increased or decreased by reference to the amount realized on the sale or other disposition of such motor vehicles or trailers, consistent with section 7701 (h) (1) of the Internal Revenue Code.

(b) “Lease or rental,” as defined in s. 77.51 (7) (a), Stats., does not include:

A transfer of possession or control of tangible personal property or items, property or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a security agreement or deferred payment plan, if such agreement or plan requires transferring title to the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., after making all required payments.
A transfer of possession or control of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under any agreement that requires transferring title to the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., after making all required payments and after paying an option price that does not exceed the greater of $100 or one percent of the total amount of the required payments.
Providing tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., along with an operator, if the operator is necessary for the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to perform in the manner for which it is designed and if the operator does more than maintain, inspect, or set up the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

(c) The definition of “lease or rental” provided in pars. (a) and (b) first applies to lease and rental contracts entered into on October 1, 2009 and has no effect on lease or rental contracts entered into prior to October 1, 2009 until such lease or rental contract is renewed, extended, or modified on or after October 1, 2009.

(d) “Receive” as provided in s. 77.522 (1) (a) 1., Stats., means taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., or taking possession or making first use of digital goods under s. 77.52 (1) (d), Stats., whichever comes first. “Receive” does not include a shipping company taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., on a purchaser’s behalf.

(e) “Transportation equipment” as provided in s. 77.522 (1) (a) 2., Stats., means any of the following:

Locomotives and railcars that are used to carry persons or property in interstate commerce.
Trucks and truck tractors that have a gross vehicle weight rating of 10,001 pounds or greater, trailers, semitrailers, and passenger buses, if such vehicles are registered under the international registration plan under s. 341.405, Stats., and operated under the authority of a carrier that is authorized by the federal government to carry persons or property in interstate commerce.
Aircraft that are operated by air carriers that are authorized by the federal government or a foreign authority to carry persons or property in interstate or foreign commerce.
Containers that are designed for use on the vehicles described in subds. 1. to 3. and component parts attached to or secured on such vehicles.

(2) General rules.

(a) The sales price from the lease, license, or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., shall be subject to the sales and use taxes to the same extent that the sales price from the sale of the same property, item, or good would be subject to the tax. A lease is a continuing sale in Wisconsin under s. 77.51 (14) (j), Stats., and a lessor or licensor shall pay tax on the lease, license, or rental receipts sourced to Wisconsin under s. 77.522, Stats., even though the property, item, or good may have been acquired, used, or both previously by the lessee or licensee in another state.

Note: See s. Tax 11.32 for information explaining what is included in the “sales price.”

(b)

Transfers described in sub. (1) (a) are leases, licenses, or rentals regardless of whether such transfer is considered a lease, license, or rental under generally accepted accounting principles, or any other provision of federal, state, or local law.
Transfers described in sub. (1) (b) are not leases, licenses, or rentals, regardless of whether such transfer is considered a lease, license, or rental under generally accepted accounting principles, or any other provision of federal, state, or local law.

(c)

If a transaction does not meet the definition of “lease or rental” because title to the property, item, or good transfers to the lessor or licensor under a security or deferred payment plan upon completion of the required payments, the transaction shall be treated as a sale of the property, item, or good and the retailer is liable for the tax on the sales price at the time the property, item, or good is received by the purchaser.
The retailer may exclude from the sales price, as provided in s. 77.51 (15b) (b) 2., Stats., the interest and financing charges if they are separately stated on the invoice, bill of sale, or similar document that the retailer gives to the purchaser.

Example: Company A purchases a piece of equipment for $10,000. On October 1, 2009, Company A enters into an agreement with Company B, whereas Company B will make 24 monthly payments of $625 each, for a total of $15,000, relating to the equipment. Company B receives the equipment on November 10, 2009. Once Company B makes the last payment, title to the equipment will transfer from Company A to Company B. Since title to the equipment transfers as soon as Company B makes the last payment, the transaction is not treated as a lease, but instead is treated as a sale. Therefore, Company A’s purchase of the equipment may be made without any Wisconsin sales or use tax because it is for resale. Company A’s charges to Company B ($15,000) are subject to Wisconsin sales or use tax at the time Company B first receives the piece of equipment (November 10, 2009). Company A may exclude from tax that portion of the $15,000 that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company A to Company B.

If the retailer in a transaction described under subd. 1., has properly reported and paid to Wisconsin the tax due on its sales price from the transaction and the retailer has not excluded from the sales price an amount for interest or financing as described in subd. 2., if the retailer subsequently allows a reduction in the payments that must be made because the purchaser pays off the balance early, the retailer may claim a deduction on its sales and use tax return for this reduction in the sales price. The deduction is limited to the amount of the sales price that the retailer previously remitted tax on to Wisconsin.

Example: Company X enters into an agreement with Company Y that is not a lease or rental because it meets the requirements provided in subd. 1. The agreement provides that Company Y will provide 12 monthly payments of $1,000. Based on this agreement, Company X reported and paid the 5% Wisconsin sales tax on the $12,000. Company X did not separately state any amounts for interest or financing to Company Y and did not claim a deduction from the sales price related to that. After seven payments of $1,000 have been made to Company X, Company Y decides that it is going to pay off the remaining amounts due. Company X indicates to Company Y that if it pays off the entire balance by a particular date, Company Y only needs to pay an additional $4,700, instead of the full $5,000 that is still due based on the agreement. Company Y pays the $4,700 by the date required. Since Company X had previously reported the tax due based on the full $12,000 at the time the agreement was entered into, Company X may claim the $300 difference between the amount it previously reported as the taxable sales price on this transaction ($12,000) and the discounted sales price of the transaction ($11,700, made up of the $7,000 in monthly payments and the $4,700 early payoff amount). Company X would claim the deduction as a discount allowed.

If the property, item, or good to which subd. 1. applies is stored, used, or otherwise consumed in Wisconsin and then relocated to a location outside Wisconsin, no refund or partial refund of the Wisconsin tax paid is allowed since the transaction is treated as a “sale” and the property was first stored, used, or otherwise consumed in Wisconsin.

(d)

If a transaction does not meet the definition of “lease or rental” because title to the property, item, or good transfers to the lessor or licensor under an agreement that requires transferring title to the property, item, or good after all required payments have been made and after paying an option price that does not exceed the greater of $100 or 1% of the total amount of the payments, the transaction shall be treated as a sale of the property, item, or good and the retailer is liable for the tax on the sales price at the time the property, item, or good is received by the purchaser.
The retailer may exclude from the sales price, as provided in s. 77.51 (15b) (b) 2., Stats., the interest and financing charges if they are separately stated on the invoice, bill of sale, or similar document that the retailer gives to the purchaser.

Example: Company C purchases a piece of equipment for $20,000. On October 25, 2009, Company C enters into an agreement with Company D, whereas Company D will make 12 monthly payments of $2,000 each, for a total of $24,000, relating to the equipment. In addition, the agreement provides that after all of the $2,000 payments have been made, Company D may pay an option price of $200 and title to the equipment will be transferred to Company D. Company D receives the equipment on November 10, 2009. Since the agreement provides that title to the equipment will transfer to Company D if company D makes all the required payments and then pays an option price of $200 (which is less than 1% of the total amount of the payments), the transaction is not treated as a lease, but instead is treated as a sale. Therefore, Company C’s purchase of the equipment may be made without any Wisconsin sales or use tax because it is for resale. Company C’s charges to Company D ($24,200) are subject to Wisconsin sales or use tax at the time Company D first receives the piece of equipment (November 10, 2009). Company C may exclude from tax that portion of the $24,200 that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company C to Company D.

If the retailer in a transaction described under subd. 1., has properly reported and paid to Wisconsin the tax due on its sales price from the transaction and the retailer has not excluded from the sales price an amount for interest or financing as described in subd. 2., if the retailer subsequently allows a reduction in the payments that must be made because the purchaser pays off the balance early, the retailer may claim a deduction on its sales and use tax return for this reduction in the sales price. The deduction is limited to the amount of the sales price that the retailer previously remitted tax on to Wisconsin.
If the property, item, or good to which subd. 1. applies is stored, used, or otherwise consumed in Wisconsin and then relocated to a location outside Wisconsin, no refund or partial refund of the Wisconsin tax paid is allowed since the transaction is treated as a “sale” and the property was first stored, used, or otherwise consumed in Wisconsin.

(e) If a transaction constitutes a sale-leaseback transaction, the original sale of the property, item, or good to a purchaser may be made without tax for resale if that purchaser makes no taxable storage, use, or other consumption in Wisconsin of the property, item, or good prior to selling it. The sale of the property, item, or good from the first purchaser to a second purchaser (i.e., the person who will lease the equipment back to the first purchaser), may also be made without tax for resale if the second purchaser makes no taxable storage, use, or other consumption in Wisconsin of the property, item, or good prior to selling, leasing, licensing, or renting the property, item, or good back to the first purchaser. If the transfer of that property, item, or good from the second purchaser back to the first purchaser meets the definition of lease or rental in s. 77.51 (7) (a), Stats., the tax will be due on each payment as described in par. (a). If the transfer of that property, item, or good from the second purchaser back to the first purchaser does not meet the definition of lease or rental in s. 77.51 (7) (a), Stats., the tax will be due on the sales price from the sale of the property, item, or good from the second purchaser back to the first purchaser, as described in pars. (b) to (d).

Example: Company F purchases a piece of equipment for $20,000 from Company X. Prior to making any other use of the equipment, Company F sells the piece of equipment to Company G for $20,000 and immediately enters into an agreement to “lease” it back from Company G based on 12 monthly payments of $2,000 each. Based on the agreement, the “leasing back” of the equipment does not meet the definition of lease or rental contained in s. 77.51(7)(a), Stats., because title to the piece of equipment will transfer to Company F once Company F has made all of the required payments under the agreement to Company G. In this example, Company F may purchase the piece of equipment from Company X without tax because it is for resale. Company G may also purchase the piece of equipment from Company F without tax because it is for resale. However, since the agreement relating to the leaseback of the piece of equipment to Company F does not meet the definition of lease or rental contained in s. 77.51(7)(a), Stats., Company G is required to charge Wisconsin sales or use tax on the sales price of the piece of equipment (that is, the $24,000 required under the agreement), to Company F. Company G may exclude from tax that portion of the $24,000 required under the agreement that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company G to Company F.

(3) Purchases for lease, license, or rental.

(a) A lessor’s or licensor’s purchase of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to be used solely for lease, license, or rental shall be exempt as a purchase for resale.

(b) A lessor’s or licensor’s purchase of lubricants, repair parts, and repair services for tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., used solely for leasing, licensing, or renting shall also be exempt as a purchase for resale. However, if the same property, items, or goods are purchased by a lessee, licensee, or renter, the purchases shall be taxable.

(c) Charges by a lessor or licensor to a lessee, licensee, or renter under a maintenance contract on leased tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., shall be taxable.

(4) Property both rented and used personally. If tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are purchased by a person who uses them part of the time and leases, licenses, or rents them out part of the time, the sale of the property, item, or good to the person shall be taxable. The lessor’s or licensor’s rental receipts shall also be taxable, unless the transaction is specifically exempt by statute.

(5) Service vs. rental of equipment.

(a)

If an item of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is provided along with an operator that is necessary for the tangible personal property or item, property, or good to operate in the manner for which it is designed and does more than maintain, inspect, or set up the tangible personal property or item, property, or good, the transaction is considered a service and not a lease, license, or rental of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats.

Example: A backhoe and operator are provided to dig a trench. This transaction is the sale of a service and not a rental of the backhoe.

The purchaser of tangible personal property or items, property, or goods that are used in a transaction described in subd. 1. to provide a service is the consumer of that property, item, or good.
The charge by the person providing the service described in subd. 1. is subject to Wisconsin sales and use tax if the service is specifically identified as a taxable service in s. 77.52, Stats.

Example: Company A provides a tractor with a rototiller attachment and an operator to till up the lawn area around Customer B’s new home to prepare the seedbed for planting. Company A charges Customer B $50 per hour for the use of the tractor and rototiller attachment and $25 per hour for the operator. Since Company A is providing the tractor and rototiller along with the operator, this is not a lease or rental of the equipment, but instead is deemed to be a service. The charge by Company A to Customer B is subject to Wisconsin sales tax, since Company A is providing a landscaping service. Company A is also required to pay Wisconsin sales or use tax on its purchase of the tractor and rototiller used in providing the service.

(b) If an item of tangible personal property or item, property or good under s. 77.52 (1) (b), (c), or (d), Stats., is provided along with an operator that only maintains, inspects, or sets up the tangible personal property or item, property, or good, the transaction is considered a lease, license, or rental of the tangible personal property or item, property, or good.

Example: Company A rents scaffolding from Company B. Company B provides a person to set up the scaffolding as requested by Company A and to make sure none of the nuts and bolts holding the scaffolding together have loosened up. The entire charge by Company B to Company A is for the lease or rental of the scaffolding.

(c) Charges for the rental of motor trucks shall be taxable. However, if drivers are provided by the truck’s owner to operate the trucks, this shall be considered a service and not a lease or rental of the trucks.

(d) The sales price from the lease, license, or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., incidental to the providing of a nontaxable service shall not be taxable. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is incidental to the providing of a nontaxable service, the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is consumed by the service provider and the service provider is required to pay any applicable sales or use tax.

(6) Credit for sales tax paid. If a lessor of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., paid a Wisconsin sales tax on the acquisition of the property, item, or good used solely for leasing purposes, the lessor may either request a refund of the sales tax from the seller or the department or may claim a credit against the tax due on rental receipts from the property, item, or good involved, under s. 77.585 (2), Stats. If a credit is claimed, it shall expire when the cumulative rental receipts equal the sales price upon which the vendor paid sales tax to Wisconsin.

(7) Sourcing lease, license and rental payments.

(a) First or only payment. Except as provided in pars. (c) and (e), for lease, license, and rental agreements that only require one payment and for the first payment on lease, license, and rental agreements that require more than one payment, the lease, license, or rental is sourced to the location where the purchaser receives the product, as follows:

If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the lessor’s or licensor’s business location.
If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is not received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the location where the lessee or licensee or the lessee’s or licensee’s designated donee receives the product. This would include the location indicated by instructions known to the lessor or licensor for delivery to the lessee or licensee or the lessee’s or licensee’s designated donee. The delivery may be made by the lessor or licensor or by a shipping company hired by the lessee or licensee.
If the location cannot be determined under subds. 1. and 2., the first or only payment is sourced to the lessee’s or licensee’s address as indicated by the lessor’s or licensor’s business records, if the records are maintained in the ordinary course of the lessor’s or licensor’s business and if using that address to establish the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subd. 1., 2., or 3., the first or only payment is sourced to the lessee’s or licensee’s address as obtained during the consummation of the lease, license, or rental, including the address indicated on the lessee’s or licensee’s payment instrument, if no other address is available and if using that address to determine the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subd. 1., 2., 3. or 4., the first or only payment is sourced as follows:

a. For tangible personal property and items and property under s. 77.52 (1) (b) or (c), Stats., except for prewritten computer software, the first or only payment is sourced to the location from which the property or item was shipped.

b. For prewritten computer software delivered electronically and digital goods under s. 77.52 (1) (d), Stats., the first or only payment is sourced to the location from which the computer software or digital good was first available for transmission by the seller, but not including any location that merely provided the digital transfer of the product sold.

(b) Subsequent periodic payments. Except as provided in pars. (d) and (e), subsequent periodic payments on the lease, license, or rental of tangible personal property and items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are sourced to the property’s, item’s, or good’s primary location. The primary location is the address of the property, item, or good provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith.

(c) Motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment. Leases, licenses, and rentals of motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment are sourced to the primary location of such property as indicated by an address for the property that is provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith, and except that a lease, license, or rental that only requires one payment, shall be sourced as provided in par. (a).

(d) Intermittent use. The sourcing of the lease, license, and rental payments as described in pars. (a), (b), and (c) shall not be altered by any intermittent use of the property, item, or good at different locations.

Example: Company A leases laptop computers that are normally kept in State A and the lease payments are sourced to State A. However, when an employee is travelling and consulting with clients in other states, the employee brings the laptop computer to these other states. The intermittent use of the laptop computer in the other states does not affect the sourcing of these lease payments.

(e) Transportation equipment. Leases, licenses, and rentals of transportation equipment are sourced to the location determined in par. (a).

(8) Special rental situations.

(a) Demurrage. The charge a gas supplier makes to a customer-consumer, because a gas cylinder is retained beyond a 30-day or other period, shall be taxable. The “demurrage” charges shall constitute rentals paid for the continuing possession of the cylinders.

(b) Water softeners. The sales price from the rental of a cylinder type water softener which is periodically removed from a customer’s premises for recharging and replaced by another unit shall be taxable.

(c) Chemical toilets. A lessor’s entire charge for the use of chemical toilets used at fairs and other similar events shall be taxable, including cleaning services provided as part of the total charge.

(d) Mobile homes and manufactured homes. Rental of a mobile home as defined in s. 101.91 (10), Stats., and manufactured homes as defined in s. 101.91 (2), Stats., shall be taxable unless:

The mobile home or manufactured home is converted to real property by hooking it up to utilities and placing it on a foundation on land owned by the lessor. However, even if it is placed on a foundation and hooked up to utilities, a mobile home or manufactured home shall remain tangible personal property if the lessor does not own the realty on which it is located.
The mobile home as defined in s. 101.91 (10), Stats., or manufactured home as defined in s. 101.91 (2), Stats., is rented or leased for a continuous period of one month or more and is used as a residence by the renter or lessee.

(e) Lease cancellation charge. A payment by a lessee to a lessor for the cancellation of a lease of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., shall be taxable. The payment shall be deemed consideration arising from the original lease since it effectively decreases the term of the lease and thereby increases the rental payments for the actual period the property, item, or good was used.

(f) Delivery and erection. Lessors of scaffolding or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., who set forth separate charges for transportation, assembly, and disassembly shall pay tax on their total sales price. A lessee rents property, items, or goods when it is assembled and in place and the charges for transportation, assembly, and disassembly shall be deemed part of a lessor’s rental receipts.

(g) Funeral coaches. The sales price that the owner of a hearse receives when the owner furnishes it without a driver, to a funeral director is subject to tax. However, the sales price the owner of a hearse receives when the owner furnishes it with a driver that does more than maintain, inspect, or set up the hearse is not subject to tax.

(h) Waste reduction and recycling equipment. The lease or rental of waste reduction or recycling machinery and equipment shall not be taxable if used exclusively and directly for waste reduction or recycling activities described in s. 77.54 (26m), Stats.

Note: For information regarding the lease or rental of highway vehicles and mobile mixing units, see s. Tax 11.79.

Note: Section Tax 11.29 interprets ss. 77.51 (7), (13) (k), (14) (j), (15a), (15b), 77.52 (1), 77.522 (1) and (3), 77.54 (5) (b) and (d), (8), (26m) and (36), 77.58 (6), and 77.585 (2), Stats.

Note: The interpretations in s. Tax 11.29 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for mobile homes used for lodging for a continuous period of 1 month or more became effective July 1, 1984, pursuant to 1983 Wis. Act 341; (b) The exemption for the lease or rental of incidental property transferred in providing a nontaxable service became effective as a result of Dept. of Revenue vs. Dow Jones & Company, Inc., (COA-District IV, 1/26/89); (c) The exemption for waste reduction and recycling equipment became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (d) The definitions of “lease,” “receive,” and “transportation equipment” became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (e) The sourcing rules related to leases became effective October 1, 2009 pursuant to 2009 Wis. Act 2; and (f) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, July, 1977, No. 259, eff. 8-1-77; cr. (4) (d), (6) (d) 2. and (h), am. (1), (3), (4) (b), (5) and (6) (a), (d) and (g), Register, June, 1991, No. 426, eff. 7-1-91; correction in (6) (d) 2. made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction to numbering of (8) made under s. 13.92 (4) (b) 1., Stats., Register May 2010 No. 653.

Wis. Admin. Code § Tax 11.30 Credit sales, bad debts and repossessions {#sec-tax-11.30 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.30}

(1) Credit sales.

(a) Sales. If taxable personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are sold on credit, the entire amount of the retailer’s sales price from the sale shall be taxable and shall be reported on the tax return for the period in which the sale is made, without any reduction in the amount of tax payable by the retailer by reason of the retailer’s transfer at a discount of any open account, note, conditional sales contract, lease contract or other evidence of indebtedness. A sale involving the transfer of ownership of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is completed at the time possession is transferred by the seller or the seller’s agent to the purchaser or the purchaser’s agent. The location to which the sale is sourced is based on s. 77.522, Stats. The tax shall be reported on the accrual basis, except when the department is satisfied that an undue hardship would exist and authorizes reporting on some other basis.

(b) Repossessions. No deduction from the sales price shall be made if property, items, or goods sold on credit are repossessed unless the entire consideration paid by the purchaser is refunded to the purchaser or a deduction for worthless accounts is allowable as a bad debt under s. 77.585 (1), Stats.

(2) Bad debts.

(a) Definition of bad debt. “Bad debt” is defined in s. 77.585 (1) (a), Stats., to mean the portion of the sales price or purchase price that the seller has reported as taxable and for which the seller has paid the tax under subch. III of ch. 77, Stats., and that the seller may claim as a deduction under section 166 of the Internal Revenue Code. “Bad debt” does not include financing charges or interest, sales or use taxes imposed on the sales price or purchase price, uncollectible amounts on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that remain in the seller’s possession until the full sales price or purchase price is paid, expenses incurred in attempting to collect any debts, debts sold or assigned to 3rd parties for collection, and repossessed property or items.

(b) Deduction from measure of tax. A seller may claim as a deduction on a return under s. 77.58, Stats., the amount of any bad debt the seller writes off as uncollectible in the seller’s books and records and that is eligible to be deducted as a bad debt for federal income tax purposes, regardless of whether the seller is required to file a federal income tax return. Only a seller who has previously paid sales or use tax to this state on the accounts may claim the bad debt deduction. However, if a seller uses a certified service provider to file the returns and report the taxes due, the certified service provider may claim the bad debt deduction on the seller’s behalf if the seller has not and will not claim the same deduction. In either case, the deduction shall be claimed on the return for the period in which the seller writes off the amount of the deduction as uncollectible and the amount is eligible to be deducted as a bad debt for federal income tax purposes. That period is defined as any time within the seller’s fiscal or calendar year in which the account is written off. If the seller is out of business when the account becomes worthless, a bad debt deduction may be claimed on the last return filed by that business, or through a refund claim or amended return filed within the statutory time allowed. Notes, which later become worthless, received on the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., shall be treated in the same manner as other worthless accounts.

(c) Recovery of bad debts charged off. If any accounts found worthless and charged off as bad debts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the amount of the tax thereon paid with the return. The amounts recovered are first applied to the price of the property, item, good, or service and the proportionate share of the sales tax on that property, item, good, or service and then to interest, service charges and other charges related to the sale.

(d) Amount deductible.

‘Nontaxable receipts.’ If an account found worthless and charged off as a bad debt is comprised in part of nontaxable receipts, such as interest, financing, or insurance, and in part of taxable receipts upon which tax has been paid, a bad debt deduction may be claimed only for the unpaid amount upon which tax has been paid. In determining that amount, all payments and credits to the account shall be applied proportionately against the various charges comprising the amount the purchaser contracted to pay.
‘Expenses of collection.’ No deduction is allowable for expenses incurred by the seller in attempting to collect any account receivable, or for that portion of a debt recovered that is retained by or paid to a third party as compensation for services rendered in collecting the account.

(e) Special situations.

A purchaser of receivables is not entitled to a bad debt deduction for the receivables which subsequently become worthless.
A retailer who sells its receivables and agrees to bear any bad debt loss on them is entitled to a bad debt deduction to the same extent as if the accounts were not sold. However, a bad debt deduction is not allowable when receivables are sold outright at a discount.
A contractor engaged in real property construction activities is not entitled to a bad debt deduction, even though the total amount due the contractor under a real property construction contract cannot be collected, as the contractor is the consumer, not the retailer, of the tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., used to fulfill the construction contract.
A retailer permitted to report the sales price on the cash receipts basis may not claim a bad debt deduction.

(f) Repossessions. When property, items, or goods on which a receivable exists are repossessed, a bad debt deduction is allowable only to the extent that the seller sustains a net loss of the sales price upon which tax was paid. A net loss occurs when the sum of the pro rata portion of all payments, credits and the wholesale value of the repossessed property, item, or good attributable to the cash sales price of the property, item, or good, is less than the cash sales price upon which sales or use tax was paid.

Example: At the time when the tax rate is 5%, a motor home is purchased on January 1 of a year for a cash price of $15,000 and sales tax of $750. A down payment of $2,150 is made at the date of purchase, leaving a balance to finance of $13,600. The motor home is financed with the seller for a period of one year at the rate of 10% of the amount financed. After receiving periodic payments totaling $6,800, the motor home is repossessed. The wholesale value of the property is $6,000 on the date of repossession. The deductible bad debt loss upon repossession of the motor home is computed as follows:

(1) The down payment on line 2 is allocated between the total cash sales price of the motor home and the sales tax thereon on the basis of the percentage of each to their total. The percentages are shown on line 12.

(2) The payments on the contract on line 6 and the wholesale value on the date of repossession of the property repossessed on line 8 are allocated on the basis of the contract balances on line 5. The percentages thereof are shown on line 13.

(3) Tax rate change. If a deduction for bad debts is being claimed in a period when the tax rate is different from the tax rate in effect when the sale or sales were reported on tax returns, an adjustment to the deduction shall be made to compensate for the tax rate differential.

Example: If tax was reported on a $1,000 sale when the tax rate was 4%, $40 tax was reported. If a bad debt deduction is taken for the sale in a 5% tax rate period, only 80% of the $1,000, or $800, may be taken as a bad debt, resulting in a tax credit of $40. Four percent divided by 5% equals 80%.

Note: Section Tax 11.30 interprets ss. 77.51 (14) (c), (15b), 77.522, 77.58 (6m), and 77.585 (1), (4) and (8), Stats.

Note: The interpretations in s. Tax 11.30 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) the 4% tax rate was increased to 5% on May 1, 1982; (b) The deduction for bad debts was revised effective October 1, 2009 pursuant to 2009 Wis. Act 2; and (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (2) (a) and cr. (3), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c) 1. and (d) 1., Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1), r. and recr. (2), eff. 10-1-09; CR 09-090: am. (1), r. and recr. (2) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (a), (d) 1. Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 11.32 “Sales price” and “purchase price.” {#sec-tax-11.32 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.32}

(1) General. The amount to which the sales and use tax rate is applied is the “sales price” for sales tax and the “purchase price” for use tax. Both “sales price” and “purchase price” mean the total amount of the consideration for the sale, license, lease or rental from retail sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, valued in money, whether received in money or otherwise.

(2) Delivery, handling and service charges. A retailer’s charges for customer alterations, handling services, small orders, returned merchandise, restocking, split shipments, shipping, postage, crating, packing, fuel surcharges, and similar charges for services related to retail sales, are included in the sales price derived from the sale of taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services. Cancelled order charges are not taxable if there is no transfer of merchandise to a customer. For orders that include property and items that are subject to tax and property and items that are not subject to tax, the amount of the delivery charge that the seller allocates to the property and items subject to tax shall be based either upon the total sales price of property and items that are subject to tax as compared to the total sales price of all of the property and items included in the shipment or on the weight of the property and items subject to tax compared to the total weight of all of the property and items included in the shipment.

(3) Cash discounts or price rebates.

(a) Cash discounts, term discounts and coupons that are not reimbursed by a third party and which are allowed by a retailer directly to customers reduce the sales price subject to the tax. The customer must receive the discount for the retailer to exclude it from the sales price.

Example: A payment made to a nonprofit organization based on a percentage of the purchases made by the group’s members is not a cash discount for sales and use tax purposes.

(b) A retail cooperative’s rebates to members, which are made after the net profit is determined at the end of a year, are patronage dividends rather than cash discounts, and are not deductible from the cooperative’s sales price.

(c) A manufacturer’s cash rebate to a person who purchases tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services from a retailer is not a reduction in the retailer’s sales price or purchase price for the item, regardless of whether the rebate is paid in cash or is used to reduce the selling price.

Example: An automobile is sold for a sticker price of $18,000. The manufacturer offers a $1,500 rebate with the purchase. Regardless of whether the customer pays the retailer $18,000 and later receives $1,500 from the manufacturer or the customer pays the retailer $16,500 ($18,000 sticker price less $1,500 rebate), the retailer shall report a taxable sales price of $18,000 from the sale.

(d) “Sales price” and “purchase price” include consideration paid by third parties if all of the following apply:

The seller actually receives consideration from a third party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale.
The seller is obligated to pass the price reduction or discount to the purchaser.
The amount of the consideration that is attributable to the sale is a fixed amount and the seller is able to determine that amount at the time of the sale to the purchaser.
One of the following applies:

a. The purchaser presents a coupon, certificate or other documentation to the seller to claim the price reduction or discount, if the coupon, certificate or other documentation is authorized, distributed or granted by a third party with the understanding that the third party will reimburse the seller for the amount of the price reduction or discount.

b. The purchaser identifies himself or herself to the seller as a member of a group or organization that may claim the price reduction or discount.

c. The seller provides an invoice to the purchaser, or the purchaser presents a coupon, certificate or other documentation to the seller that identifies the price reduction or discount as a third party price reduction or discount.

(3m) Lease, license, and rental receipts.

(a) The following charges related to the lease, license, or rental of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are also included in the “sales price” or “purchase price”:

Personal property taxes, including any personal property tax administration fee, imposed on the lessor or licensor that are passed on to the lessee or licensee.

Example: Company A leases a piece of equipment to Company B. Taxing Authority C imposes property tax of $125 on Company A on the piece of equipment that Company A is leasing to Company B. The lease agreement provides that Company B is required to pay Company A the amount of property taxes imposed on Company A on that piece of equipment. Therefore, the $125 payment that Company B is required to make to Company A for the property taxes imposed on the piece of equipment is part of the sales price subject to tax.

Contract documentation or administration fees.
Disposal and return fees.

Examples: 1) Lessor X leases a motor vehicle to Company Y. As part of the lease agreement, Company Y agrees to pay Lessor X, at the end of the lease term, a fee to prepare the vehicle for sale. This disposition fee is to cover costs incurred by Lessor X for cleaning the motor vehicle, tuning up the vehicle and performing final maintenance on the vehicle before it is sold. The disposition fee is part of the “sales price” of the lease of the motor vehicle.

2) Lessor A leases laptop computers to Company B. As part of the lease agreement, Company B agrees to pay Lessor A a fee to remove all data from the hard drive of the laptop computer at the end of the lease term after Company B returns the computer to Lessor A. The fee charged by Lessor A to Company B for removing all of the data from the hard drive is part of the “sales price” of the lease of the laptop computer.

Service contract charges, warranty charges, and maintenance agreement charges.

(b) The following charges related to the lease, license, or rental of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are not included in the “sales price” or “purchase price” if they are separately stated on the invoice, bill of sale, or similar document provided to the lessee or licensee:

Personal property taxes imposed directly on the lessee or licensee.

Example: Company A leases a piece of equipment to Company B. Taxing Authority C imposes property tax of $100 on Company B on that piece of equipment. The lease agreement provides that Company B is responsible for any property taxes imposed on that piece of equipment. Since the $100 of property taxes are imposed directly on Company B, as opposed to being imposed on Company A, the property taxes imposed on the piece of equipment are not part of the sales price and are not subject to tax.

Title and registration fees.
Late payment fees that do not extend the term of the lease, license, or rental.
Returned check fees.
Insurance charges, including credit life and accident, casualty, theft, and loss, and gap insurance, as provided in s. 77.54 (8), Stats.

(4) Sales tax collected from customers.

(a) Section 77.585 (7), Stats., provides in part that if a retailer establishes to the department’s satisfaction that the sales tax has been added to the total amount of the sales price and has not been absorbed by the retailer, the total amount of the sales price shall be the amount received exclusive of the sales tax imposed. Therefore, when the tax is collected from customers who are notified of that fact, the amount of the tax collected is not included in the base to which the tax applies. The notification may be by any one of the following methods:

Providing the customer a receipt which separately itemizes the tax or states “Prices Include Sales Tax.”
Conspicuously posting the bracket system card, Form S-213, issued by the department.
Conspicuously posting a sign which states “Prices Include Sales Tax.”

Example: A tavern, located in a county which has a combined 5.5% Wisconsin state and county sales and use tax rate in effect, conspicuously posts a sign stating “Prices Include Sales Tax.” The tavern’s sales price from sales of food and beverages are $10,000 for the month. When filing its sales and use tax return, form ST-12, the tavern may deduct $521.33 of sales tax to arrive at taxable receipts of $9,478.67 ($10,000 ÷ 1.055 = $9,478.67). The tax payable by the tavern is determined by multiplying its taxable receipts times the tax rate ($9,478.67 x .055 = $521.33 tax payable).

(b) If a retailer cannot collect any tax because all sales are below the minimum price on which tax is collectible using the straight mathematical computation described in sub. (5) (a) or under the bracket systems set forth in sub. (5) (b), no part of the retailer’s sales price may be treated as tax collected from customers.

Example: A vending machine retailer whose only receipts are from sales of 5¢ items is unable to collect any sales tax from customers, and the tax applies to the total sales price.

(c) If a vending machine retailer sells taxable property at a price such that a sales tax is collectible using either the straight mathematical computation described in sub. (5) (a) or the bracket systems set forth in sub. (5) (b), part of the sales price from these sales shall include sales tax if customers are advised that the vending machine prices include sales tax.

(5) Straight mathematical computation.

(a) A retailer shall determine the amount of tax due on a transaction by combining the applicable tax rates under subchs. III and V, Stats., and multiplying the combined rate times the sales price or purchase price of each item or the total invoice amount. The tax collectible from the customer shall be rounded to the nearest $.0l by using the following rounding procedures:

For amounts less than $.005, the amount shall be rounded down to the next lowest penny.

Examples: 1) Tax computed at $.0849999 would be rounded down to $.08.

2) Tax computed at $3.2549 would be rounded down to $3.25.

For amounts equal to or greater than $.005, the amount shall be rounded up to the next highest penny.

Examples: 1) Tax computed at $.085000 would be rounded up to $.09.

2) Tax computed at $6.455001 would be rounded up to $6.46.

3) Retailer A sells Customer B three different taxable items in one transaction: Item 1’s selling price is $14.70, item 2’s selling price is $8.30, and item 3’s selling price is $7.10. The aggregate selling price of the taxable items is $30.10. The tax on the invoice provided to the customer may either be calculated by multiplying the 5% tax rate by the selling price of each item individually (($14.70 x 5% = $0.74) + ($8.30 x 5% = $0.42) + ($7.10 x 5% = $0.36) = $1.52) or by multiplying the 5% tax rate by the aggregate selling price ($30.10 x 5% = $1.51).

(b) The following bracket systems represent straight mathematical computations that comply with s. 77.61 (3m), Stats., and may be used by a retailer to determine the amount of tax due on a transaction. When using the bracket system, a retailer shall determine the amount of tax due on a transaction using either the sales price of each item or the total invoice amount.

In locations with no county or stadium district taxes the following bracket system may be used.
In counties having a county tax, but no stadium tax, the following bracket system may be used.

Example: For a sale of $11.50, the 5.5% tax is 63¢, consisting of 55¢ for $10.00 of sales plus 8¢ for $1.50 of sales.

In counties having a stadium tax, but no county tax, the following bracket system may be used.
In counties having a county tax and a stadium tax, the following bracket system may be used.

(c) The gross sales and use tax payable by a retailer on retail sales is the total of the applicable tax rates under ss. 77.52 (1) and (2), 77.53 (3) and (9m) and 77.71, Stats., times the retailer’s taxable sales price, regardless of the amount of tax collected from customers.

(6) Exchanging tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats. The taxable sales price includes the exchange of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for taxable or nontaxable services, realty, or intangibles if the person providing the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., receives the sales price or purchase price valued in money, whether received in money or otherwise.

Example: A restaurant operator exchanges meals having a retail price of $100 for radio or television advertising which has an established price of $100 for this type of advertising service. The restaurant operator and the radio or television station each have to report the sales price of $100 as a result of the transaction since the total sales reported on the sales and use tax return includes both taxable and nontaxable transactions.

The radio station may, however, deduct the $100 from its total sales reported on its sales and use tax return, if the advertising service that it is selling is not subject to Wisconsin sales or use tax. The restaurant operator’s sales of these meals are taxable. Therefore, no deduction may be taken on the restaurant operator’s sales and use tax return relating to these meals.

(7) Manufactured homes.

(a) The sales price and purchase price do not include 35% of the amount from the sale of a new manufactured home as defined in s. 101.91 (11), Stats., not including leases and rentals.

(b) If the exclusion under par. (a) applies to the sale of a manufactured home, no reduction in the sales price or purchase price is allowed for trade-ins.

(c) Sales of manufactured homes as defined in s. 101.91 (2), Stats., to a contractor-consumer for use in real property construction activities outside Wisconsin are exempt from Wisconsin sales and use tax.

(8) Modular homes.

(a) The sales price and purchase price from the sale of a “modular home,” as defined in s. 101.71 (6), Stats., that is tangible personal property when sold, may be reduced by one of the following:

35% of the sales price.
An amount equal to the sales price minus the cost of the materials that become an ingredient or component part of the modular home.

(b) No credit is allowed for trade-ins if the sales price or purchase price is reduced under par. (a).

(c) Once a retailer reduces the sales price or purchase price by the amount in par. (a) 1. or 2., the retailer shall continue to use that method of reduction for all sales of modular homes, that are tangible personal property when sold, until such time as the department approves in writing the use of the other method.

Example: Building Manufacturer sells a modular home, as defined in s. 101.71 (6), Stats., in Wisconsin to Dealer. Dealer will affix the modular home to real property in Wisconsin for Customer under a contract between Dealer and Customer. This is the first modular home, as defined in s. 101.71 (6), Stats., sold by Building Manufacturer pursuant to a contract entered into on or after December 1, 1997. Additional facts are as follows:

• $40,000 is the cost of materials purchased by Building Manufacturer that become an ingredient or component part of the modular home.

• $65,000 is the sales price of the modular home by Building Manufacturer to Dealer.

The amount subject to sales tax on the sale of the modular home to Dealer is one of the following:

(1) $42,250, which is the $65,000 sales price reduced by $22,750 (35% of the sales price).

(2) $40,000, which is the $65,000 sales price reduced by $25,000 (the sales price minus the cost of materials).

If Building Manufacturer chooses the method under (1) for computing the sales price from the sale of this modular home, it must use the method under (1) for computing the sales price from all future sales of modular homes, until the department approves in writing the use of the method under (2).

(d) Sales of modular homes as defined in s. 101.71 (6), Stats., to a contractor-consumer for use in real property construction activities outside Wisconsin are exempt from Wisconsin sales and use tax.

Note: Section Tax 2 interprets ss. 77.51 (12m) (a) (intro.) and 2., 3. and 4., (b) 1., 5., 7. and 8. and (c), (15a), (15b) (a) (intro.), 2., 3., and 4., (b) 1., 5., 7. and 8. and (c), 77.54 (8), 77.585 (7), and 77.61 (3m), Stats.

Note: The interpretations in s. Tax 11.32 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The 5% sales and use tax rate became effective May 1, 1982 (previously the rate was 4%); (b) The 35% reduction of gross receipts from the sale of a new mobile home that is a primary housing unit became effective January 1, 1987, pursuant to 1985 Wis. Act 29; (c) The 35% reduction of gross receipts from the sale of a new mobile home transported in 2 sections became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (d) The reduction of gross receipts and sales price for sales of manufactured buildings, as defined in s. 101.71 (6), Stats., became effective for sales of property pursuant to contracts entered into on or after December 1, 1997, pursuant to 1997 Wis. Act 27; (e) The term “manufactured building” was changed to “modular home” and the term “mobile home” was changed to “manufactured home” effective January 1, 2008 pursuant to 2007 Wis. Act 11; (f) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (g) The exemption for modular homes and manufactured homes used in real property construction activities outside Wisconsin became effective September 1, 2011 pursuant to 2011 Wis. Act 32.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (4) (a) and (b), (5) (b) and (c), r. and recr. (5) (a), Register, January, 1983, No. 325, eff. 2-1-83; am. (3) (c), Register, December, 1983, No. 336, eff. 1-1-84; emerg. am. (5) (a), eff. 3-24-86; am. (5) (a) and (am), Register, October, 1986, No. 370, eff. 11-1-86; cr. (6), Register, April, 1990, No. 412, eff. 5-1-90; cr. (7), am. (2), (3) (a) and (c) and (5) (d), Register, June, 1991, No. 426, eff. 7-1-91; am. (2), (4) (a) and (c), (5) (a), (am) and (b) and (7), Register, December, 1992, No. 444, eff. 1-1-93; cr. (4) (a) 1., 2., 3. and (6), am. (4) (b) and (c), r. and recr. (5), renum. (4) (a), (6) and (7) to be (4) (a) (intro.), (7) and (8) and am. (4) (a) (intro.), Register, October, 1997, No. 502, eff. 11-1-97; cr. (9), Register, August, 1999, No. 524, eff. 9-1-99; EmR0924: emerg. am. (title), (1) to (3), (4) (a) (intro.), (b) and (c), cr. (3) (d) and (7), r. and recr. (5), r. (6) and (8), renum. (7) and (9) to be (6) and (8) and am., eff. 10-1-09; CR 09-090: am. (title), (1) to (3), (4) (a) (intro.), (b) and (c), cr. (3) (d), (3m) and (7), r. and recr. (5), r. (6) and (8), renum. (7) and (9) to be (6) and (8) and am. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (6) (Example), renum. (7) to be (7) (a), cr. (7) (b), (c), (8) (d) Register August 2012 No. 680, eff. 9-1-12; CR 22-044: am. (4) (a) 2. Register June 2023 No. 810, eff. 7-1-23.

Subchapter V Occasional Sales

Wis. Admin. Code § Tax 11.33 Occasional sales {#sec-tax-11.33 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.33}

(1) Scope. This section describes the general rules for exempt occasional sales.

(2) General. Sales of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services are not taxable if they are exempt “occasional sales.” However, if the number, scope and character of the sales are such that they exceed the standards in the statutes and this section, a taxable sale occurs.

(3) Statutes.

(a) “Occasional sale” is defined in s. 77.51 (9), Stats.

(b) Section 77.54 (7), Stats., exempts most occasional sales from the sales and use taxes.

(4) Sales which are exempt occasional sales. Sales which are exempt occasional sales include:

(a) The sale of a motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all-terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft that is registered or titled in Wisconsin or required to be registered or titled in Wisconsin is an exempt occasional sale only if one of the following applies:

The sale is to a spouse, parent, stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or daughter-in-law, of the transferor provided the property has been previously registered or titled in Wisconsin in the name of the transferor, if required to be registered or titled, and the transferor is not engaged in the business of selling this type of property.
The item is a motor vehicle and the transferor sells the motor vehicle to a corporation owned solely by the transferor or the transferor’s spouse, provided the motor vehicle has been previously registered or titled in Wisconsin in the name of the transferor, if required to be registered or titled, and the transferor is not engaged in the business of selling motor vehicles. Transferor for purposes of this subdivision means a natural person.
The motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all-terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft is sold by a nonprofit organization meeting the requirements in s. Tax 11.35 (4).

(b) Any sale of a boat that is registered or titled in Wisconsin or required to be registered or titled in Wisconsin or under the laws of the United States, is an exempt occasional sale only if one of the following applies:

The sale is to a spouse, parent, stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or daughter-in-law, of the transferor provided the property has been previously registered or titled in Wisconsin in the name of the transferor, if required to be registered or titled, and the transferor is not engaged in the business of selling boats.
The boat is sold by a nonprofit organization meeting the requirements in s. Tax 11.35 (4).

(c) Except as provided in pars. (a) and (b), five or fewer auctions that are the sale of personal farm property or household goods and that are held by the same auctioneer at the same location during the year. For indoor locations, “location” means a building, except that in the case of a shopping center or shopping mall, “location” means a store.

Note: Refer to s. Tax 11.50 (4) and (5) regarding exempt occasional sales at auction of personal farm property and household goods.

(d) Except as provided in pars. (a) and (b), sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., by an individual who operates a sole proprietorship and who holds or is required to hold a seller’s permit, which have not been used in the course of the person’s business and the sales are not the type of property, items, or goods sold in the course of the person’s business. However, all tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., sold by a corporation or partnership which holds or is required to hold a seller’s permit shall be considered to be used or sold in the course of the organization’s business activities and are taxable.

Example: A taxpayer operates a service station as a sole proprietor and holds a seller’s permit for the purpose of selling cigarettes and repairing motor vehicles. The sales price from selling a refrigerator and stove used in the taxpayer’s residence are not subject to the sales tax. However, the sales price from the sale of a desk and refrigerator which were used in the service station’s business activities are subject to the sales tax.

(e) Except as provided in pars. (a) and (b), the sale of a business or business assets, not including inventory held for sale, previously used by a seller to conduct its trade or business at a location after that person has ceased actively operating in the regular course of business as a seller of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services at that location.

Note: Refer to s. Tax 11.34 regarding the occasional sales exemption for the sale of a business or business assets.

(f) Except as provided in pars. (a) and (b), sale of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services by a person who does not hold and is not required to hold a seller’s permit, if the total taxable sales price from sales of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services are less than $2,000 during the calendar year. However, purchases of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services which when resold are exempt under this paragraph, are taxable purchases by that person. This paragraph does not apply to nonprofit organizations.

Examples: 1) If the sales price from a person’s garage and rummage sales, lawn maintenance services, bait sales to fishermen, sales of books, charges for parking and other normally taxable receipts are less than $2,000 during the calendar year, that person’s receipts are deemed exempt occasional sales under par. (f). However, purchases by the seller of the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., which are sold are taxable.

2) Sales of soft drinks by employee groups are not taxable if the sales price from soft drink sales are less than $2,000 per year. These groups are deemed consumers and the supplier’s sales to them are taxable retail sales.

(g) Sales by nonprofit organizations meeting the requirements in s. 77.54 (7m), Stats.

Note: Refer to s. Tax 11.35 regarding the occasional sales exemption for nonprofit organizations.

(5) Sales which are not exempt occasional sales. Sales which are not exempt occasional sales, except as provided in sub. (4), include:

(a) Sales by a person who holds or is required to hold a seller’s permit.

Example: Sales of used equipment by a retail store or vending machine retailer are not occasional sales and would be subject to sales or use tax.

(b) Sales of a business or the assets of a business when the seller holds or is required to hold a seller’s permit. The tax applies to the portion of the sales price reasonably attributable to the taxable personal property such as equipment, furniture and fixtures.

Example: The sale by a sole proprietor holding a seller’s permit of a motor vehicle used in the sole proprietor’s business is taxable unless it qualifies as an exempt occasional sale under s. Tax 11.33 (4) (a) 1. or 2.

(c) Sales of motor vehicles, aircraft, boats, recreational vehicles as defined in s. 340.01 (48r), Stats., snowmobiles, trailers, semitrailers, all-terrain vehicles, utility terrain vehicles, and off-highway motorcycles. Unless exempt, a use tax or sales tax pursuant to s. Tax 11.14 (2) (c) shall be paid by the purchaser at the time the motor vehicle, aircraft, boat, recreational vehicle as defined in s. 340.01 (48r), Stats., snowmobile, trailer, semitrailer, all-terrain vehicle, utility terrain vehicle, or off-highway motorcycle is registered or titled within Wisconsin.

(d) Sales made by persons who hold themselves out to the public as engaged in business, even though their sales may be few and infrequent. This includes the sales of works of art, handmade articles, antiques or used property by artists or others who are pursuing a vocation or part-time business as a seller of this property.

(e) Sales of bingo supplies to players or the sale, rental or use of regular bingo cards, extra regular cards and special bingo cards.

(f) Sales by persons engaged primarily in the business of making nontaxable sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., such as manufacturers and wholesalers. Since these persons are in the business of selling tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the mere fact that only a small fraction of their total sales are taxable retail sales does not make these sales exempt occasional sales.

Note: Section Tax 11.33 interprets ss. 77.51 (9), 77.52 (1) and (2) (a) 2. and 77.54 (7) and (7m), Stats.

Note: The interpretations in s. Tax 11.33 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption in sub. (3) (b) became effective March 1, 1979; (b) Non-retailer sales of all-terrain vehicles as described in sub. (4) (c) became taxable and the sale of an all-terrain vehicle as described in sub. (3) (c) and (d) became exempt effective September 1, 1987, pursuant to 1987 Wis. Act 27; (c) The exemption for the sale of a business or business assets in sub. (3) (e) became effective May 17, 1988, pursuant to 1987 Wis. Act 399; (d) The exemption for transfers of motor vehicles, boats, etc., to in-laws became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (e) The occasional sales exemption for 5 or fewer auctions became effective January 1, 2000, pursuant to 1999 Wis. Act 9; (f) The term “mobile home” was changed to “recreational vehicle, as defined in s. 340.01 (48r), Stats.” effective January 1, 2008, pursuant to 2007 Wis. Act 11; (g) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (h) The threshold for exempt occasional sales was changed to less than $2,000 in annual sales, effective for sales beginning January 1, 2018, pursuant to 2017 Wis. Act 59.

History

Cr. Register, June, 1991, No. 426, eff. 7-1-91; am. (2), (4) (c) and (g), Register, April, 1993, No. 448, eff. 5-1-93; am. (4) (a) and (g), Register, August, 1999, No. 524, eff. 9-1-99; EmR0924: emerg. am. (2), (4) (a) to (d), (f), (g), (5) (b) to (d) and (f), eff. 10-1-09; CR 09-090: am. (2), (4) (a) to (d), (f), (g), (5) (b) to (d) and (f) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (4) (c) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: r. and recr. (4), am. (5) (title), cr. (5) (b) (Example) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: am. (4) (f) (Example 1) Register August 2014 No. 704, eff. 9-1-14; CR 16-053: am. (4) (a) (intro.), 3., (5) (c) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (4) (a) (intro.), 3., (5) (c) Register June 2020 No. 774, eff. 7-1-20; CR 20-018: am. (4) (f), (Example 1), (Example 2) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.34 Occasional sales exemption for sale of a business or business assets {#sec-tax-11.34 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.34}

(1) Scope. This section describes the exemption under s. 77.54 (7) (a), Stats., for the occasional sale of a business or business assets as described in s. 77.51 (9) (a) and (am), Stats.

(2) General.

(a) The sale of business assets, consisting of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., by a person who holds or is required to hold a seller’s permit at the time of the sale is subject to sales tax, except as provided in sub. (3) (c).

(b) Except as provided in sub. (3) (c), the tax applies if the business assets are sold as:

A disposition of surplus assets of a continuing business.
A single transaction or series of transactions prior to termination of a business.
Piecemeal sales, whether part of a continuing business or prior to termination.

(c) The tax does not apply to merchandise inventory sold to another retailer who purchases it for resale and sells it in the regular course of that retailer’s business.

(3) Effect of holding a seller’s permit.

(a) Pursuant to s. 77.51 (9) (a) and (am), Stats., a person holding or required to hold a seller’s permit at the time of disposition of business assets may not claim that a sale of a business asset is an occasional sale, except as provided in par. (b).

(b) A sale, other than a sale described in par. (bg) or (br), is exempt from sales and use tax as an occasional sale if all of the following conditions are met:

The sale is of personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., other than inventory held for sale, previously used by a person to conduct a trade or business at a location.
The sale occurs after the person ceased actively operating in the regular course of business as a seller of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services at that location.

(bg) A sale of a motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all-terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft that is registered or titled in Wisconsin or required to be registered or titled in Wisconsin, is subject to tax unless s. Tax 11.33 (4) (a) 1. or 2. apply.

Example: A business has four business locations in Wisconsin and has ceased all of its business activities at one location. All of the business assets at the location where the business has ceased operating, including one motor vehicle that it used in its business, are being sold. The business is required to continue to hold a seller’s permit for its other three locations. The motor vehicle is sold, but the purchaser is not a person described in s. Tax 11.33 (4) (a) 1. or 2. The sale of the motor vehicle is not an exempt occasional sale of a business asset and the seller is required to collect tax on its sale of the motor vehicle.

(br) A sale of a boat that is registered or titled or required to be registered or titled in Wisconsin or under the laws of the United States is subject to tax unless s. Tax 11.33 (4) (b) 1. applies.

(c) A sale meeting the conditions in par. (b) is exempt from sales or use tax even though the person holds a seller’s permit for one or more other locations.

(d) The holder of a seller’s permit shall wait until ceasing business before requesting the inactivation of the permit because a person may not continue regular business operations without a permit.

(4) Inactivation of seller’s permit.

(a) A permit holder may request that the department inactivate its seller’s permit by providing the department with the permit holder’s name, address, seller’s permit number, and the date the permit holder ceased business. The request may be made in any one of the following ways:

A permit holder may make a written request for seller’s permit inactivation. The department shall presume that the request was made at 12:01 a.m. on the postmark date of a postpaid properly addressed envelope, if the envelope and its contents are actually received by the department. If the retailer desires assurance that the department has received the request, the permit holder may use certified mail, return receipt requested.

Note: A person making a written request for seller’s permit inactivation should send its request to Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902.

A permit holder may make a request for seller’s permit inactivation by telephone. The department shall presume that the request was made at 12:01 a.m. on the day the department received the telephone call.

Note: A person requesting seller’s permit inactivation by telephone should call (608) 266-2776.

A permit holder may make a request for seller’s permit inactivation by electronic mail. The department shall presume that the request was made at 12:01 a.m. on the day the department received the electronic mail message.

Note: A person requesting seller’s permit inactivation by email should send its request to dorsalesanduse@wisconsin.gov.

A permit holder may make a request for seller’s permit inactivation in person at one of the department’s income, sales and excise tax division offices. The department shall presume that the request was made at 12:01 a.m. on the day the department received the request.

(b) A person who has requested inactivation of its seller’s permit may not qualify for the occasional sale exemption if the person contemplates resumption of those activities which would require that the person hold a seller’s permit, unless the person qualifies for exemption under sub. (3) (b).

(c) The fact that a business ceases operating and no longer conducts its day-to-day sales of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services does not result in the automatic inactivation of its seller’s permit.

(5) Cancellation of seller’s permit.

(a) Although a seller’s permit may be deemed to have been delivered and canceled on a postmark date under sub. (4), cancellation shall not be effective prior to the postmark date.

(b) If a permit is delivered to the department for cancellation, the permittee shall immediately qualify for the occasional sales exemption, even though the person contemplates a subsequent sale of fixtures or equipment. The person shall not qualify for the occasional sale exemption if the person contemplates resumption of those activities which would require that person to hold a seller’s permit.

(c) The fact that a business ceases operating and no longer conducts its day-to-day sales of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services may not result in the automatic cancellation of a seller’s permit.

Note: Refer to s. Tax 11.33 regarding the general occasional sales exemption. Refer to s. Tax 11.35 regarding the occasional sales exemption for nonprofit organizations.

Note: Section Tax 11.34 interprets ss. 77.51 (9) (a) and (am) and (14g) (h), 77.52 (12) and 77.54 (7), Stats.

Note: The interpretations in s. Tax 11.34 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The procedure in sub. (3) became effective May 4, 1976, and reflects the Wisconsin supreme court’s decision in Three Lions Supper Club, Ltd. vs. Dept. of Revenue (May 4, 1976), 72 Wis. 2d 546; (b) The exemption described in sub. (2) (b) became effective May 17, 1988, pursuant to 1987 Wis. Act 399; (c) The requirement that a person surrender its seller’s permit within 10 days after the last sale of tangible personal property for the sale of business assets to qualify as an occasional sale was repealed effective August 12, 1993, pursuant to 1993 Wis. Act 16; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (b) 2., 3. and (5) (c), r. (3) (b) 3., Register, April, 1994, No. 460, eff. 5-1-94; EmR0924: emerg. am. (2) (a), (3) (b) 1., 2., (4) (a) and (5) (c), eff. 10-1-09; CR 09-090: am. (2) (a), (3) (b) 1., 2., (4) (a) and (5) (c) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (3) (d), r. and recr. (4) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (1), (3) (a), (b) (intro.), cr. (3) (bg), (br) Register August 2012 No. 680, eff. 9-1-12; CR 16-053: am. (3) (bg) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (3) (bg) Register June 2020 No. 774, eff. 7-1-20.

Wis. Admin. Code § Tax 11.35 Occasional sales by nonprofit organizations {#sec-tax-11.35 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.35}

(1) Scope. This section describes the occasional sales exemption for nonprofit organizations as provided in s. 77.54 (7m), Stats.

(2) Definitions. In this section:

(a) “Admission event” means that access to the event involving entertainment is generally restricted to only those who pay a required fee, who make a required donation or who are required to make a purchase of some kind such as a meal or raffle ticket.

(b) “Entertainment” means entertainment provided at an admission event by all persons or groups who are paid in the aggregate more than $10,000 per event by all persons for performing, for reimbursement of expenses or for prize money.

(c) “Nonprofit organization” includes a neighborhood association, church, civic group, garden club, social club or similar organization not operated or organized for profit where no part of the net income inures to the benefit of any private shareholder or individual. A governmental unit described in s. 77.54 (9a), Stats., is considered a “similar organization” for purposes of this paragraph.

(d) “Sales price” means sales price as defined in s. 77.51 (15b), Stats., from all sales in Wisconsin of otherwise taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., and services after subtracting allowable exemptions.

(3) General. A nonprofit organization shall charge Wisconsin sales tax on sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services, unless the sales qualify as exempt occasional sales or are otherwise exempt. The occasional sales exemption does not apply to the sales price from the sale of bingo supplies to players or to the sale, rental or use of regular bingo cards, extra regular cards and special bingo cards.

(4) Standards. Under s. 77.54 (7m), Stats., a nonprofit organization shall meet all of the following standards for its sales to qualify as exempt occasional sales:

(a) The organization is not engaged in a trade or business.

(b) Entertainment is not involved at an event for which charges by the organization constitute admissions.

(5) Not engaged in a trade or business. A nonprofit organization is not engaged in a trade or business for purposes of sub. (4) (a) if it meets at least one of the following:

(a) Its sales of otherwise taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services or its events occur on 75 days or less during the calendar year, regardless of the dollar amount of sales. For events involving the sales of tickets, only the actual days of the events are counted, not the days of ticket sales.

Example: A boy scout troop takes orders for Christmas wreaths from August 1 through November 1. The wreaths are delivered by the troop on December 15 and 16. For purposes of determining whether its events meet the 75-day test, the troop should use the days of delivery rather than days orders are taken.

(b) Its taxable sales price for tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services for the calendar year are $50,000 or less, regardless of the number of days on which its sales or events occur. Sales that are nontaxable are not included for purposes of the $50,000 sales price test.

Examples: 1) A church sells frozen pizzas. Since sales of frozen pizzas are exempt from sales tax, the sales of the frozen pizzas are not counted as part of the sales price for purposes of the $50,000 receipts test.

2) A nonprofit organization, which sells hundreds of Christmas trees, sells 5 Christmas trees for $100 to a public school. Although Christmas trees are taxable tangible personal property, a public school can purchase tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., exempt from sales tax. As a result, this $100 exempt sale to the school is not counted as part of the sales price for purposes of the $50,000 receipts test.

(6) Entertainment.

(a) For a nonprofit organization’s sales to qualify as exempt occasional sales, entertainment may not be involved at an event for which charges by that nonprofit organization constitute admissions.

Examples: 1) Four different bands are paid $3,000 each to perform at various times during a 3-day event. There is an admission charge for access to the event. Since the total payment for entertainment ($12,000) exceeds the $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.

2) Two nonprofit organizations co-sponsor an admission event at which a band is hired to perform. Each organization pays the band $5,500. Since the total payment for entertainment ($11,000) exceeds the $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.

3) A nonprofit organization sponsors a dinner and dance in the high school gymnasium. The dance band is paid in excess of the $10,000 limit in sub. (2) (b). There is no separate admission charge. However, access to the dance is restricted to those who have purchased the meal. The “meal” charge constitutes an admission charge to an event involving entertainment. Therefore, sales by the nonprofit organization at this event are taxable.

4) A nonprofit organization holds a pig roast at the city park and hires a band to play at the park gazebo so that patrons, if they so wish, can be entertained while they eat. There is no admission charge and access to the band is open to anyone, whether they purchase the meal or not. Entertainment is deemed not to be involved. Therefore, the sales by the nonprofit organization may still qualify as exempt occasional sales.

5) Nonprofit Organization A sponsors an admission event at which a band is hired to perform. The band is paid more than $10,000. Nonprofit Organization A allows Nonprofit Organization B, a separate entity, to sell soft drinks and food at the event for consumption on the premises of the event. Although Nonprofit Organization A’s sales at the event do not qualify for the occasional sales exemption, Nonprofit Organization B’s sales at the event may qualify as exempt occasional sales. The admission charge to the event involving entertainment is made by Nonprofit Organization A, not Nonprofit Organization B.

(b) A nonprofit organization that would otherwise qualify for exempt occasional sales, except for the involvement of entertainment, may obtain a seller’s permit from the department for the day or days involving entertainment, pay the sales tax on that event and request inactivation of its seller’s permit after the event, and still have exempt occasional sales on days not covered by the seller’s permit. Days and receipts from events involving admissions to entertainment for which a seller’s permit was obtained are included with all other sales in determining the 75-day test and the $50,000 taxable receipts test described in sub. (5). A nonprofit organization that obtains a seller’s permit for an event and does not request inactivation of its seller’s permit after the event does not qualify for the occasional sale exemption while the seller’s permit is active, regardless of the number of days and dollar amount of its sales.

Examples: 1) A nonprofit organization plans 5 events covering 3 days each for the year for a total of 15 days. Entertainment will be involved at one event only. The sales by the nonprofit organization would qualify as exempt occasional sales, except for the involvement of entertainment at the one event. The nonprofit organization may obtain a seller’s permit for the one event involving entertainment and request inactivation of its seller’s permit after the event; thus allowing the other 4 events to qualify as exempt occasional sales.

2) A nonprofit organization holds several events during the year. For one of the events, the nonprofit organization obtains a seller’s permit because entertainment is involved, collects sales tax on its receipts of $5,000 from that event and requests inactivation of its seller’s permit after the event. Taxable receipts from its other events must be combined with the $5,000 of receipts from the event for which it held a seller’s permit for purposes of determining whether the $50,000 taxable receipts test is met.

(7) Holding a seller’s permit.

(a) A nonprofit organization is not required to hold a seller’s permit if its sales are exempt from sales and use taxation by meeting the provisions of sub. (4) (a) and (b). However, an organization required to hold a seller’s permit solely for the purpose of conducting bingo games may still qualify for the occasional sales exemption on nonbingo sales if it otherwise qualifies under the provisions of sub. (4) (a) and (b).

(b) If a nonprofit organization holds a seller’s permit in the current year, but intends or believes in good faith that its activities in the following year would qualify as exempt occasional sales except for its holding of a seller’s permit, it may request inactivation of its seller’s permit and its sales in the following year will qualify as exempt occasional sales provided it meets the standards in sub. (4) (a) and (b) in that following year.

Example: A nonprofit organization has held nineteen 4-day events for a total of 76 days each year for the past 5 years. Receipts were always over $50,000, and there were no admissions to entertainment events. One event has lost money for the past 2 years. The organization intends to discontinue that event for the following year; thus, it may anticipate coming under the 75-day standard and request inactivation of its seller’s permit in good faith.

(c) If a nonprofit organization did not hold or was not required to hold a seller’s permit or requested inactivation of its seller’s permit in good faith but later, due to unforeseen circumstances, exceeds the standards, only the sales occurring after the standards are exceeded do not qualify as exempt occasional sales and are subject to tax.

Examples: 1) A church held 73 days of events or sales in the current year. Receipts for the events equaled $70,000 and no entertainment was involved. The church expects to hold the same 73 days of events in the following year. It requests inactivation of its seller’s permit. However, in the middle of the following year, the church garage is destroyed by fire. An additional 4-day event is held to raise funds to help replace the garage. Only the receipts from days 76 and 77, the days exceeding the standard, are subject to sales tax.

2) A garden club is organized in the current year. The garden club is not required to hold a seller’s permit and does not apply for one. In the following year, the garden club holds 77 days of events with taxable receipts from the events of $70,000. Only receipts from days 76 and 77, the days exceeding the standard, are subject to sales tax.

(d) If a nonprofit organization has sales in the current year and then requests inactivation of its seller’s permit, sales made in the current year before requesting inactivation of the seller’s permit do not qualify as exempt occasional sales, even if the standards for exempt occasional sales in sub. (4) (a) and (b) are met.

Example: A nonprofit organization holds 70 days of sales in the current year. The organization holds a seller’s permit, files sales and use tax returns and pays sales tax on all its receipts in the current year. At the end of the current year, the organization realizes that its sales would have qualified as exempt occasional sales except for its holding of a seller’s permit. The organization may not claim a refund of taxes paid while it held a seller’s permit.

(8) When sales do not qualify for occasional sales exemption. If a nonprofit organization has sales of tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, and the sales do not qualify as exempt occasional sales, it is required to obtain a seller’s permit and collect and remit sales tax on its taxable sales.

Note: To obtain a seller’s permit, a nonprofit organization shall file Wisconsin form BTR-101, Application for Business Tax Registration, with the department. Form BTR-101 may be obtained from any department of revenue office, or by writing or calling Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, telephone (608) 266-2776.

Note: The interpretations contained in s. Tax 11.35 became effective January 1, 1989, pursuant to 1987 Wis. Act 399, except: (a) the $25,000 receipts standard and the $500 entertainment standard became effective January 1, 2006, pursuant to 2005 Wis. Act 25; (b) The change of the term ”gross receipts” to ”sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (c) the 75 day standard, the $50,000 receipts standard, and the $10,000 entertainment standard became effective January 1, 2017, pursuant to 2015 Wis. Act 364.

Note: Section Tax 11.35 interprets ss. 77.51 (9) and 77.54 (7m), Stats.

History

Cr. Register, June, 1991, No. 426, eff. 7-1-91; renum. (1) and (2) to be (2) and (1) and am. (2) (b), am. (3), (5) (b) and (6) (a), Register, October, 1997, No. 502, eff. 11-1-97; EmR0924: emerg. am. (2) (b), (3), (4) (c), (5) (a), (b), (6) (b), (7) (d) and (8), r. (2) (c), renum. (2) (d) to be (2) (c) and am., cr. (2) (d), eff. 10-1-09; CR 09-090: am. (2) (b), (3), (4) (c), (5) (a), (b), (6) (b), (7) (d) and (8), r. (2) (c), renum. (2) (d) to be (2) (c) and am., cr. (2) (d), Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (4) (b), (6) (b), (7) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (1) Register August 2012 No. 680, eff. 9-1-12; CR 19-112: am. (2) (b), (5) (a), (Example), (b), (Example 1), (Example 2), (6) (a), (Example 1), (Example 2), (Example 3), (Example 5), (b), (Example 2), (7) (b) (Example), (c) (Example 1), (Example 2), (d) (Example) Register June 2020 No. 774, eff. 7-1-20.

Subchapter VI Manufacturers and Producers

Wis. Admin. Code § Tax 11.38 Fabricating, processing, and printing {#sec-tax-11.38 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.38}

(1) Sales of fabricating, processing, and printing services. The producing, fabricating, processing, printing, or imprinting of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for a consideration for consumers who furnish directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting is subject to Wisconsin sales or use tax unless:

(a) The printing or imprinting is done on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that results in printed materials that are exempt under s. 77.54 (25), Stats., or catalogs and their mailing envelopes that are exempt under s. 77.54 (25m), Stats.

Example: Printer ABC prints an advertising flyer for Company DEF. Company DEF furnishes the paper and the ink. Company DEF will send the flyer to its customers outside Wisconsin. The charge by Printer ABC for printing the advertising flyer is not subject to Wisconsin sales tax provided Company DEF provides Printer ABC with a properly completed exemption certificate.

(b) An exemption under s. 77.54 or 77.55, Stats., applies.

Examples: 1) Company GHI is in the business of cleaning used oil. A Wisconsin municipality contracts with Company GHI to have all used oil it collects from residents cleaned by Company GHI. The charge by Company GHI to the municipality for cleaning the oil is not subject to Wisconsin sales or use tax because sales to Wisconsin municipalities are exempt from Wisconsin sales tax under s. 77.54 (9a), Stats.

2) The charge by a feed mill to grind a farmer’s corn that the farmer will use as feed is not subject to Wisconsin sales or use tax because the sale of feed to a farmer is not subject to Wisconsin sales or use tax under s. 77.54 (3m), Stats. The farmer must provide the feed mill with a properly completed exemption certificate.

3) The charge by a cooperative to age a cigar manufacturer’s tobacco is not subject to Wisconsin sales or use tax because a sale of tobacco to a cigar manufacturer is not subject to Wisconsin sales or use tax under s. 77.54 (2), Stats. The cigar manufacturer must provide the cooperative with a properly completed exemption certificate.

Example: Company JKL is in the business of custom making cabinets. A customer orders a cabinet from Company JKL. Due to time constraints, Company JKL is unable to make the cabinet. Therefore, Company JKL contracts with Company MNO to make the cabinet from materials provided by Company JKL. Company MNO is not subject to Wisconsin sales or use tax on the charge to Company JKL for making the cabinet if Company JKL provides Company MNO with a properly completed exemption certificate claiming resale.

(2) Examples of fabricating and processing services. Fabricating and processing services, where materials are furnished directly or indirectly by the customer, that are subject to Wisconsin sales or use tax include, except as provided in sub. (1) (a) to (c):

(a) Application of coating to pipe.

(b) Assembling kits to produce a completed product.

(d) Bookbinding.

(e) Caterer’s preparation of food.

(f) Cleaning used oil.

(g) Cutting lumber to specifications and producing cabinets, counter tops or other items from lumber for customers, often called “millending.”

(h) Cutting or crushing stones, gravel or other construction materials.

(i) Drying, planing or ripping lumber.

(j) Dyeing or fireproofing fabric.

(k) Fabricating steel which may involve cutting the steel to length and size, bending and drilling holes in the steel to specifications of a particular construction job.

(L) Firing of ceramics or china.

(m) Heat treating or plating.

(n) Laminating identification cards.

(o) Making a fur coat from pelts, gloves or a jacket from a hide.

(p) Making curtains, drapes, slip covers or other household furnishings.

(q) Production of a sound recording or motion picture.

(r) Retreading tires.

(s) Tailoring a suit.

(t) Threading pipe or welding pipe.

(3) Purchases by fabricators or processors. Persons providing fabricating, processing and printing services, including those services listed in sub. (2), may qualify as manufacturers. If the service provider qualifies as a manufacturer as provided in s. 77.51 (7h) (a), Stats., the following items may be purchased by the service provider without Wisconsin sales or use tax:

(a) Machinery and equipment used exclusively and directly in manufacturing.

Example: Company PQR is in the business of heat treating metal for steel manufacturers. Company PQR uses its machinery and equipment only in providing this heat treating to steel manufacturers. Company PQR is performing a manufacturing process in acting as a submanufacturer. Since the machinery and equipment is used exclusively and directly in manufacturing, it may be purchased without Wisconsin sales or use tax provided Company PQR gives its supplier a properly completed exemption certificate.

(b) Tangible personal property or items under s. 77.52 (1) (b), Stats., that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale and which becomes an ingredient or component part of the property or item destined for sale or is consumed or destroyed or loses its identity in the manufacture of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., in any form destined for sale, except for fuel and electricity as provided in s. 77.54 (30) (a) 6., Stats.

Example: Company VWX is an electroplater. Company STU is a manufacturer of car bumpers. Company STU hires Company VWX to electroplate the bumpers. Company VWX may purchase the caustic soda, boric acid, etc., that is consumed or destroyed in the electroplating without Wisconsin sales or use tax when acting as a submanufacturer. These items are consumed or destroyed in the manufacture of tangible personal property, bumpers, destined for sale.

Note: Section Tax 11.38 interprets ss. 77.51 (14) (f) and (h), 77.52 (2) (a) 10. and 11., 77.54 and 77.55, Stats.

Note: For information regarding what is manufacturing and exemptions for machinery and equipment and other items used in manufacturing, refer to ss. Tax 11.39, 11.40 and 11.41.

Note: The interpretations in s. Tax 11.38 are effective under the general sales and use tax law on and after September 1, 1969 except that (a) The exemption for catalogs and the envelopes in which they are mailed became effective April 1, 2009 pursuant to 2007 Wis. Act 20; and (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, October, 1976, No. 250, eff. 11-1-76; r. and recr. Register, June, 1993, No. 450, eff. 7-1-93; EmR0924: emerg. am. (title), (1) (title), (intro.), (a), (2) (e) and (3) (b), eff. 10-1-09; CR 09-090: am. (title), (1) (title), (intro.), (a), (2) (e) and (3) (b) Register May 2010 No. 653, eff. 6-1-10; correction in (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; correction in (2) made under s. 35.17, Stats., Register April 2019 No. 760.

Wis. Admin. Code § Tax 11.39 Manufacturing {#sec-tax-11.39 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.39}

(1) Definitions.

(a)

Manufacturing means the production by machinery of a new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., with a different form, use, and name from existing materials, by a process popularly regarded as manufacturing.
Manufacturing does not include storing raw materials or finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., research or development, delivery to or from the plant, or repairing or maintaining plant facilities.

(b) “Plant” as defined in s. 77.51 (10b), Stats., means a parcel of property or adjoining parcels of property, including parcels that are separated only by a public road, and the buildings, machinery, and equipment that are located on the parcel, that are owned by or leased to the manufacturer. Plant inventory does not include unsevered mineral deposits as provided in s. 77.51 (10c), Stats.

(2) Scope of manufacturing.

(a) Manufacturing:

Begins with conveying of raw materials and supplies from plant inventory to the place where the work is performed in the same plant and ends with conveying finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., to the point of first storage in the same plant.
Includes conveying work in progress directly from one manufacturing operation to another in the same plant.
Includes testing or inspecting, throughout the manufacturing process, the new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is being manufactured.
Includes storing work in progress in the same plant where the manufacturing occurs.
Includes assembling finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.
Includes packaging a new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., if the manufacturer or another person on the manufacturer’s behalf performs the packaging and if the packaging becomes part of the new article as it is customarily offered for sale by the manufacturer.

(b) Manufacturing does not include storing raw materials or finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., delivery to or from the plant, repairing or maintaining facilities, or research and development.

(3) Manufacturers. Manufacturers ordinarily include the following:

(a) Asphalt plants.

(b) Bakeries.

(d) Breweries and soda water bottling plants.

(e) Candy factories.

(f) Cement and concrete plants.

(fr) Cheese cutting and repackaging plants.

(g) Chemical processing plants.

(h) Concrete block and tile producers.

(i) Creameries and instant milk producers.

(j) Dairies and cheese plants.

(jd) Dental labs.

(jr) Ductwork fabricators.

(k) Electric generating companies.

(L) Flour and feed mills, including mobile units.

(m) Food processing plants, canning and freezing.

(n) Foundries.

(o) Glass making plants.

(oc) Grain dryers.

(om) Heat treaters and metal platers performing these services on semi-finished products furnished by manufacturers.

(os) Hide curers.

(p) Limestone calcination plants.

(q) Machine and equipment producers.

(r) Malting plants.

(s) Meat packing and processing plants.

(t) Motor vehicle and aircraft factories.

(u) Oil refineries.

(v) Paint factories.

(w) Paper making plants.

(wd) Persons engaged in snowmaking for a ski hill.

(wr) Photofinishers.

(x) Printers.

(y) Sawmills.

(z) Scrap processors.

(za) Shoe and clothing factories.

(zb) Smelting and steel mills.

(zc) Tanneries.

(zd) Tool and die making plants.

(ze) Persons engaged in crushing, washing, grading and blending sand, rock, gravel and other minerals.

(zf) Persons engaged in ore dressing, including the mechanical preparation, by crushing and other processes, and the concentration, by flotation and other processes, of ore, and beneficiation, including but not limited to the preparation of ore for smelting.

(zg) Tire retreaders.

(4) Nonmanufacturers. Nonmanufacturers ordinarily include the following:

(a) Contractors, when engaged in real property construction activities and installing or repairing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

(d) Fish hatcheries.

(e) Freezer and locker plants.

(f) Highway truckers.

(g) Hotels.

(h) Laundries and dry cleaners.

(i) Repairpersons.

(j) Restaurants.

(k) Television and radio stations.

(L) Persons engaged in:

Corn shelling.
Experimental and development activities.
Logging and forestry operations.
Mining.
Paper recycling.
Photography.
Popping corn.
The business of raising and breeding animals.
Real property construction activities.
Custom slaughtering of animals.
Vending machine operations.

Note: Section Tax 11.39 interprets ss. 77.51 (7h), (10b), and (10c) and 77.54 (2) and (6) (am) 1., Stats.

Note: The interpretations in s. Tax 11.39 are effective under the general sales and use tax law on and after September 1, 1969 except that (a) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., and certain leased property affixed to real property under s. 77.52 (1) (c), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (3) (j), (4) (c) and (r) 13., cr. (3) (om), Register, June, 1983, No. 330, eff. 7-1-83; am. (1), (3) (f), cr. (3) (ze), (zf) and (zg), r. (4) (p), (q) and (r) 10., Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (f), Register, July, 1987, No. 379, eff. 8-1-87; correction in (4) (m) made under s. 13.93 (2m) (b) 5., Register, April, 1994, No. 460; correction in (2) (a) made under s. 13.93 (2m) (b) 5., Stats., Register, October, 1995, No. 478; am. (2) (a), (3) (m), (ze), (zf), (4) (intro.), cr. (3) (fr), (jd), (jr), (oc), (os), (wd), (wr), r. (4) (a), (d), (r), 2. and 4., renum. (4) (b), (c), (e), (f), (g), (h), (i), (j), (k), (L), (m), (n), (o) and (r) to be (4) (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (L), (m) and (n) and am. (4) (a) and (k), Register, October, 1997, No. 502, eff. 11-1-97; EmR0924: emerg. r. and recr. (1) and (2), am. (4) (intro.) and (a), r. (4) (h) and (i), renum. (4) (j) to (n) to be (4) (h) to (L), eff. 10-1-09; CR 09-090: r. and recr. (1) and (2), am. (4) (intro.) and (a), r. (4) (h) and (i), renum. (4) (j) to (n) to be (4) (h) to (L) Register May 2010 No. 653, eff. 6-1-10; CR 14-006: am. (1) (b) Register August 2014 No. 704, eff. 9-1-14.; CR 20-018: r. (4) (b) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.40 Exemption of machines and processing equipment {#sec-tax-11.40 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.40}

(1) General.

(a) Section 77.54 (6) (am) 1., Stats., exempts the sales price from the sale of and the storage, use or other consumption of machines and specific processing equipment and repair parts or replacements thereof, exclusively and directly used by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., and safety attachments for those machines and equipment. “Exclusively,” as used in s. 77.54 (6) (am) 1., Stats., and in this section, means that the machines and specific processing equipment and repair parts or replacements thereof are used solely by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., to the exclusion of all other uses, except that the sales and use tax exemption will not be invalidated by an infrequent and sporadic use other than in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats. This exemption is to be strictly construed.

(b) Section 77.51 (7h) (a), Stats., provides that manufacturing means the production by machinery of a new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., with a different form, use, and name from existing materials by a process popularly regarded as manufacturing, and that begins with conveying raw materials and supplies from plant inventory to the place where work is performed in the same plant and ends with conveying finished units of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., to the point of first storage in the same plant.

(c) In determining whether a particular machine or piece of processing equipment is included in the exemption under s. 77.54 (6) (am) 1., Stats., ss. 77.51 (7h) and 77.54 (6) (am) 1., Stats., must be considered together.

(d) Section 77.54 (5) (d), Stats., provides an exemption for mobile mixing and processing units and the motor vehicle or trailer on which they are mounted, including accessories, attachments, parts, supplies and materials for those vehicles, trailers and units.

(e) Section 77.54 (5) (c) and (26m), Stats., provide exemptions for certain motor vehicles, machinery and equipment used in waste reduction and recycling processes.

Note: See s. Tax 11.11 for more information on waste reduction and recycling exemptions.

(2) Conditions for exemption and examples. The exemption under sub. (1) (a) shall apply if all the following conditions are met:

(a) Machines and processing equipment shall be used by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats. The exemption shall not apply to machines and processing equipment used in providing services or in other nonmanufacturing activities.

Example: Machines and equipment of a dry cleaner are not used by a manufacturer in manufacturing, because a dry cleaner provides a service and is neither a manufacturer nor producer of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

(b) Machines and processing equipment shall be used exclusively in manufacturing.

Example: A forklift truck used on a production line to move products from machine to machine and used regularly or frequently in a warehouse to move and stock finished products is not used exclusively in manufacturing.

(c) Machines and processing equipment shall be used directly in manufacturing. The exemption shall not apply if machines and processing equipment are not used directly in the step-by-step processes by which an end product results, even though the machine and equipment are indirectly related to the step-by-step processes. Machine foundations are real property improvements rather than personal property and do not qualify for exemption.

Example: Machines and equipment are not used directly in manufacturing if used for sweeping a plant; disposing of scrap or waste; plant heating or air conditioning; communications; lighting, safety, fire protection or prevention; research; storage; or delivery to or from a plant or repair or maintenance of machines, processing equipment or facilities. In addition, electric substations, tool storage facilities, water softening equipment, refrigerated storage facilities and catwalks that provide access to various parts of a building are not used directly in manufacturing.

(3) Other examples of the exemption. Other examples of application of the exemption are as follows:

(a) Small tools used exclusively and directly in the manufacturing process qualify as “processing equipment.” Small tools include hand tools such as drills, saws, micrometers and hammers. However, if the items are also used for machine repair or general maintenance, they are not exempt.

(b) The exemption applies if machines and processing equipment are used exclusively and directly by a manufacturer to produce other machines or processing equipment which, in turn, are used by the manufacturer to produce tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

Example: A lathe purchased by a manufacturer and used directly and exclusively to produce machines which are used on the manufacturer’s production line is exempt. However, if the lathe is used partly for production of the machines and partly for repair purposes, it is not exempt.

(c) The exemption applies if machines and processing equipment are used exclusively and directly by a manufacturer to produce component parts of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

(d) The exemption does not apply to machines or processing equipment used in whole or in part by a manufacturer before the manufacturing process has begun or after it has been completed.

Example: Machines or equipment used for storage, delivery to or from a plant, repair or maintenance of facilities or equipment, research, or crating or packaging of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., for shipment are not exempt.

(e) The exemption does not apply to tangible personal property or an item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., which is not machinery or equipment, but is used in a manufacturing plant.

Example: Sweeping compounds are factory supplies rather than processing equipment.

(4) Repair of exempt machinery and processing equipment. The sales price from the sale of and the storage, use or other consumption of repair or replacement parts and from repair service for exempt machines and processing equipment is exempt.

Example: Conveyor belts, grinding wheels, grinding balls, machine drills, auger bits, milling cutters, emery wheels, jigs, saw blades, machine tool holders, reamers, dies, molds and patterns used as replacement parts for exempt machines and processing equipment are exempt.

Note: Section Tax 11.40 interprets ss. 77.51 (7h) and 77.54 (5) (c) and (d), (6) (am) 1. and (cn), and (26m), Stats.

Note: The interpretations in s. Tax 11.40 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Mobile mixing units are exempt effective September 1, 1983, pursuant to 1983 Wis. Act 27; (b) Vehicles and machines used in waste reduction and recycling are exempt effective July 1, 1984, pursuant to 1983 Wis. Act 426; (c) Motor vehicles or trailers upon which mobile mixing units are mounted are exempt effective July 20, 1985, pursuant to 1985 Wis. Act. 29; (d) Safety attachments became exempt effective June 1, 1986, pursuant to 1985 Wis. Act 149; (e) The exemption in s. 77.54 (6) (am), Stats., shall be strictly construed effective October 1, 1989, pursuant to 1989 Wis. Act 31; (f) The definition of “manufacturing” and what is included in the scope of manufacturing is effective October 1, 2009, pursuant to 2009 Wis. Act 28; and (g) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (4) (e), Register, October, 1979, No. 286, eff. 11-1-79; am. (1) (a), (2) (b), (3) (a) to (c), Register, November, 1981, No. 311, eff. 12-1-81; am. (1) (a), Register, June, 1990, No. 414, eff. 7-1-90; am. (1) (a) and (c), (2), (3) (a), (b), (d), and (4), cr. (1) (d) and (e), Register, March, 1991, No. 423, eff. 4-1-91; reprinted to restore dropped copy in (1) (a), Register, April, 1994, No. 460; EmR0924: emerg. am. (1) (a) to (c), (2) (a), (3) (b), (c), (e) and (4), eff. 10-1-09; CR 09-090: am. (1) (a) to (c), (2) (a), (3) (b), (c), (e) and (4) Register May 2010 No. 653, eff. 6-1-10; correction in (1) (c) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; CR 10-094: am. (4) Register November 2010 No. 659, eff. 12-1-10; corrections in (1) (a), (c) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704.

Wis. Admin. Code § Tax 11.41 Exemption of property and items consumed or destroyed in manufacturing {#sec-tax-11.41 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.41}

(1) General.

(a) Tangible personal property and items under s. 77.52 (1) (b), Stats., that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale is exempt from Wisconsin sales or use tax under s. 77.54 (2), Stats., except as provided in s. 77.54 (30) (a) 6., Stats.

(b) Manufacturing is defined in s. 77.51 (7h), Stats., to mean the production by machinery of a new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., with a different form, use, and name from existing materials, by a process popularly regarded as manufacturing, and that begins with conveying raw materials and supplies from plant inventory to the place where work is performed in the same plant and ends with conveying finished units of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., to the point of first storage in the same plant.

(2) Property and items exempt.

(a) The following property and items are within the exemption provided by s. 77.54 (2), Stats., if the property or item is used exclusively and directly by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., destined for sale and is consumed, destroyed, or loses its identity in manufacturing the property or item that is destined for sale:

Acids.
Bleaching agents.
Chemicals.
Cleaning compounds and solvents for maintaining exempt manufacturing machinery whether used while the machinery is operating or while the machinery is idle.
Cutting and lubricating oils.
Filtering clay.
Fluxing material.
Foundry sand.
Greases.
Lapping and grinding compounds.
Purification agents.
Sandpaper.
Shielding gases.
Wood used to smoke products.
Gloves and other wearing apparel, including hair nets, beard nets and facemasks used by employees working on the production line to prevent contamination of the product while it is being manufactured.

Examples: 1) Employees of Manufacturer A wear gloves and aprons while grading, weighing, and slicing meat products within the scope of manufacturing as defined in s. Tax 11.39 (2). The gloves and aprons are used only in this manner and prevent the meat products being manufactured from being contaminated. The gloves and aprons worn by the employees to protect the meat products from contamination are used directly in manufacturing and qualify for exemption from Wisconsin sales and use tax under s. 77.54 (2), Stats.

2) Employees of Manufacturer B wear gloves and aprons while they are working on the production line. The gloves and aprons are used only in this manner. The gloves and aprons are worn to protect the employees’ clothing rather than to prevent contamination of the product while it is being manufactured. Although the gloves and aprons are used exclusively in manufacturing, the gloves and aprons are not used directly in manufacturing and do not qualify for exemption from Wisconsin sales and use tax under s. 77.54 (2), Stats.

(b) Tangible personal property and items under s. 77.52 (1) (b), Stats., used exclusively and directly by a manufacturer and which become an ingredient or component part of tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale as tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., is exempt from Wisconsin sales or use tax.

Examples: 1) Property and items sold to an automobile repair shop or other repair business to repair a customer’s product does not qualify for exemption under s. 77.54 (2), Stats., because the property or items are not used exclusively and directly by a manufacturer in manufacturing.

2) A manufacturer-contractor is not entitled to the exemption when purchasing tangible personal property or items under s. 77.52 (1) (b), Stats., consumed, destroyed or losing its identity in manufacturing building components which it, as a contractor, will affix to real property in a real property construction activity, because the item or property is not sold by the manufacturer-contractor as tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats.

(3) Property and items not exempt.

(a) An exemption under sub. (1) (a) is not allowed for property or items consumed or destroyed or losing their identity in manufacturing if any of the following apply:

The activity is not manufacturing or is not within the scope of manufacturing.
The property or item manufactured is not destined for sale as tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats.
The property or item is not used exclusively and directly by a manufacturer in manufacturing.

(b) The following property and items are not within the exemption provided by s. 77.54 (2), Stats., although the property or item may be exempt under s. 77.54 (6) (am) 1., Stats., if the property or item is a machine or specific processing equipment, or a part for that machine or equipment, used exclusively and directly in manufacturing, as described in s. Tax 11.40:

Machine drills and auger bits.
Milling cutters.
Grinding wheels.
Chucks, jigs, and dies.
Saw blades.
Machine tool holders.
Hand tools, including files, wrenches, hammers, saws, screwdrivers, planes, punches, chisels, and spray guns.
Wearing apparel for the comfort or welfare of the employee or for the protection of the employee’s clothing, such as helmets, hard hats, work gloves, aprons, coveralls, pants, coats, and fur-lined boots and jackets.

Example: Employees of Manufacturer C wear hard hats, as required by federal regulations, while working within the scope of manufacturing as defined in s. Tax 11.39 (2). The hard hats are worn to protect the employees. The hard hats are not used directly in manufacturing and do not qualify for exemption from Wisconsin sales and use tax under s. 77.54 (2), Stats.

Chemicals and cleaning agents used to clean the room where manufacturing takes place, including walls, ceilings, floors, drains, windows, and doors, even if the cleaning is required in order to meet sanitation standards required by state and federal regulatory agencies.

(4) Fuel and electricity.

(a) Fuel and electricity are specifically excluded from the exemption provided by s. 77.54 (2), Stats. However, an exemption is provided in s. 77.54 (30) (a) 6., Stats., for fuel and electricity consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., in this state. Consistent with s. 77.51 (7h), Stats., “fuel and electricity consumed in manufacturing” means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process and does not include fuel and electricity consumed in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, storing raw materials or finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., research and product development, delivery to or from the plant, repairing or maintaining plant facilities, or shipping, advertising, distribution, sales, or administrative department activities.

(b) Fuel includes:

Oxygen used to enrich the fuel mixture in an industrial furnace, or oxygen and acetylene used in a welding process.
Coal or coke used by a foundry, except the portion of the coke which actually becomes an ingredient or component part of any grey-iron produced.
Gasoline, fuel oil, kerosene, natural gas, liquid propane gas, also called LPG, or other natural or synthetic liquids used as fuel.

Note: Since “fuel” is not defined in the sales and use tax statutes, it shall be given its ordinary meaning as provided in a dictionary. Dictionaries generally define fuel as a material used to produce heat or power by burning, or something that feeds a fire.

Note: Section Tax 11.41 interprets ss. 77.51 (7h) and 77.54 (2), (6) (am) 1. and (cn), and (30) (a) 6., Stats.

Note: The interpretations in s. Tax 11.41 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) The exemption for wood residue was effective on September 1, 1987, pursuant to 1987 Wis. Act 27; (b) The exemption for fuel and electricity consumed in manufacturing was effective January 1, 2006 pursuant to 2003 Wis. Act 99; (c) The requirement that property and items which qualify for exemption under s. 77.54 (2), Stats., be consumed exclusively and directly by a manufacturer in manufacturing property and items destined for sale became effective August 1, 2009, pursuant to 2009 Wis. Act 28; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., and certain leased property affixed to real property under s. 77.52 (1) (c), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; cr. (3) (a) 15. and am. (4) (h), Register, October, 1979, No. 286, eff. 11-1-79; am. (3) (a) 4., Register, July, 1987, No. 379, eff. 8-1-87; am. (5) (intro.), Register, April, 1990, No. 412, eff. 5-1-90; am. (2) (intro.), (3) (b) and (4) (intro.), cr. (5) (c), Register, March, 1991, No. 423, eff. 4-1-91; r. and recr. (1), r. (2), (3) (b), cr. (2) (a) 4. b., (b), (4) (b) (intro.), renum. (3) (a) (intro.), 1. to 15., (4), (5) (intro.), (a), (b) and (c) to be (2) (a) (intro.), 1. to 4. a., 5 to 15., (3), (4) (a), (b) 1. to 3. and am. (2) (a) 4. a., (3) (intro.), (4) (a), Register, October, 1997, No. 502, eff. 11-1-97; am. (1) (b) 2. b., (3) (b) and (h), Register, August, 1999, No. 524, eff. 9-1-99; EmR0924: emerg. am. (title), (1) (a), (2) (title), (a) (intro.), (b) and (4) (a), r. and recr. (1) (b) and (3), eff. 10-1-09; CR 09-090: am. (title), (1) (a), (2) (title), (a) (intro.), (b) and (4) (a), r. and recr. (1) (b) and (3) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (a) (intro.), 15., (3) (a) (intro.), r. and recr. (2) (a) 4., cr. (3) (a) 3., (b) 9. Register November 2010 No. 659, eff. 12-1-10; correction in (3) (b) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 19-112: am. (4) (a) Register June 2020 No. 774, eff. 7-1-20.

Wis. Admin. Code § Tax 11.42 Fertilizer blending, feed milling, and grain drying operations {#sec-tax-11.42 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.42}

For purposes of s. 77.54 (6) (bn), Stats., primarily engaged in fertilizer blending, feed milling, or grain handling operations does not include the planting, harvesting, and tilling of grain, but may include the custom farming services of grain drying.

Examples: 1) Individual operates a dairy farm and also grows corn and soybeans. Individual conducts corn and soybean drying operations on the farm with respect to corn and soybeans grown and harvested by Individual. Individual also mills corn, soybeans, and other grains into feed for Individual’s dairy cattle. Individual’s primary activity is operating a dairy farm and the grain drying and feed milling operations are conducted as an incident to Individual’s grain growing and dairy farming activities. Individual is not a person described in s. 77.54 (6) (bn), Stats.

2) Business’ primary business activity is the operation of a grain dryer. For a fee, Business will dry grain owned by farmers. Business is primarily engaged in “grain handling operations which include grain drying operations” for purposes of this section. Drying grain owned by a farmer for a fee is a “custom farming service” as defined in s. Tax 11.12 (2) (b). Business’ drying of a farmer’s grain for a fee, while a “custom farming service,” constitutes being engaged in “grain handling operations which include grain drying operations” for purposes of this section.

Note: Section Tax 11.42 interprets s. 77.54 (6) (am) 4. and 5., (bn), and (cn), Stats.

Note: The interpretations in s. Tax 11.42 are effective under the general sales and use tax law on and after September 1, 1969, except that the exemption for fertilizer blending, feed milling, and grain drying operations became effective on April 19, 2014, pursuant to 2013 Wis. Act 324.

History

CR 16-054: cr. Register June 2018 No. 750, eff. 7-1-18.

Subchapter VII Types of Retailers

Wis. Admin. Code § Tax 11.45 Sales by pharmacies and drug stores {#sec-tax-11.45 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.45}

(1) Taxable sales. All sales of tangible personal property and items, property and goods under s. 77.52 (1) (b), (c) and (d), Stats., by a pharmacy or drug store are taxable under the general sales tax law unless exempted by a specific statute. The most common exemptions are described and enumerated in this section.

(2) Drugs and prescription drugs.

(a) “Drug” is defined in s. 77.51 (3pj), Stats., to mean a compound, substance, or preparation, or any component of them, other than food and food ingredients, dietary supplements, or alcoholic beverages, to which any of the following applies:

It is listed in the United States Pharmacopoeia, Homeopathic Pharmacopoeia of the United States, or National Formulary, or any supplement to any of them.
It is intended for use in diagnosing, curing, mitigating, treating, or preventing a disease.
It is intended to affect a function or structure of the body.

(b) Drugs are exempt from the tax if prescribed by a licensed physician, surgeon, podiatrist or dentist to a patient, who is a human being, for treatment and dispensed on prescription filled by a registered pharmacist in accordance with law.

Pills and capsules.
Powders.
Liquids, including sterile water and irrigation solutions.
Salves and ointments.
Insulin.
Other preparations consumed orally, injected or applied, including dermal fillers.
Parenteral nutrition formulas.
Enteral nutrition formulas that contain a drug facts box.
Suppositories.
Radioactive isotopes such as implanted seeds.
Dyes and other contrast media.
Other items which remain or dissolve in the body, such as birth control implants including intra-uterine devices (IUD).
Gases - medical grade, such as oxygen and nitrous oxide.
Vitamins.
Vaccines.
Oral contraceptives.
Medicated dressings.

(d) This exemption does not include:

Prosthetic devices, mobility-enhancing equipment, or durable medical equipment.
Non-medicated bandages, pads, compresses, supports, or dressings.
Alcoholic beverages.
Casts and casting materials.
Food and food ingredients, including dietary supplements and soft drinks.

(3) Prosthetic devices. The exemption for prosthetic devices under s. 77.54 (22b), Stats., applies to sales of all prosthetic devices, including repair and replacement parts, that are used for a human being. The exemption also includes accessories for exempt prosthetic devices.

Note: A listing that contains numerous items and descriptions of items that have been categorized as drugs, durable medical equipment, mobility-enhancing equipment and prosthetic devices can be found in the Streamlined Sales Tax Governing Board, Inc.’s Rules and Procedures, available at www.streamlinedsalestax.org.

(b) “Prosthetic devices” include the following items, as well as repair and replacement parts and accessories for those items, if they are implanted or worn on the body:

Trusses; post-operative shoes; orthopedic shoes, shoe lifts, inserts, arch supports, and heel protectors; braces including ankle, knee, neck, and back braces; knee immobilizers; traction devices; cervical collars; head halters; abdominal belts, binders, and supports; slings; suspensories; and bone pins, plates, nails, screws, wax, and cement.
Antiembolism elastic hose and stockings, and compression stockings and sleeves.
Pressure garments, including edema gloves, mast pants, and burn garments.
Artificial limbs; skin, shoulder, elbow, tendon, testicular, penile, hip, and knee implants and acetabular cups for hip implants; neuro, spinal, and joint membranes implants; adhesion barriers; artificial eyes; ocular, orbital, ear, nose, and throat implants; cochlear implants; maxillofacial devices; hands and feet implants; orthobiologics implants; surgical mesh implants; vena cava filters; artificial heart valves; artificial larynx; trachea tubes; grafts; sphincters; stump shrinkers; gastric bands and intragastric balloons; nasogastric tubes; stents; pacemakers and leads that are implanted or worn; defibrillator and leads that are implanted; and hearing aids and batteries.
Contact lenses and corrective eyeglasses (prescription and non-prescription).
Ostomy adhesives, barriers, catheters, collection bags and pouches, drain tubes, stoma caps, tubing, belts, hernia belts, and valves, but not barrier prep wipes, barrier powder, or lubricants.
Feeding, drainage, urinary and dialysis catheters, access ports, drains, and shunts.
Collagen implants, implanted tissue expanders, breast implants and prosthesis, and mastectomy surgical bras.
Casts and casting materials, splint and splint materials, staples, sutures, and suture alternatives.
Bone growth stimulators, CPAP machines, infuser pumps, programmable drug infusion devices, insulin pumps, penile pumps, electronic speech aids and tracheostomy speaking valves, tens units, and nerve stimulators implanted with leads.

(4) Mobility-enhancing equipment. The exemption for mobility-enhancing equipment under s. 77.54 (22b), Stats., applies to all mobility-enhancing equipment, including repair and replacement parts, that is for human use. The exemption also includes accessories for exempt mobility-enhancing equipment.

(b) “Mobility-enhancing equipment” includes the following items, as well as repair and replacement parts and accessories for those items:

Raised toilet seats and tub and shower stools.
Canes, crutches, walkers, wheelchairs including motorized wheelchairs and scooters, specialty chairs such as all terrain wheelchairs and pool wheelchairs, and wheelchair ramps.
Swivel seats which enable a disabled person to rotate his or her body, while seated, in order to get into position to rise from a chair.
Handrails and grab bars to assist in rising from the commode, tub, or shower.
Lift chairs, patient lifts, bed pull-ups including trapeze bars, and transfer belts and benches.
Mobility enhancing car seats which are car seats that provide restraint and support (five point harness) for disabled children who have outgrown standard size child car seats but still need the restraint and support provided by car seats.

(5) Durable Medical equipment. The exemption for durable medical equipment under s. 77.54 (22b), Stats., applies to all durable medical equipment, including repair and replacement parts, that is for use in a person’s home, if the equipment is used for a human being. The exemption also includes accessories for exempt durable medical equipment.

(b)

“Use in a person’s home” means that the equipment is sold to an individual for use where they are living, regardless of whether the individual resides in a single family home, apartment building, nursing home, assisted living center, convalescent home or school dormitory.
Durable medical equipment is not for use in a person’s home if it is purchased by a hospital, clinic, nursing home, assisted living center, convalescent home, dental office, chiropractor or optician’s office. In addition, purchases of durable medical equipment by a nursing home, assisted living center and convalescent home are not for use in a person’s home even if the equipment is purchased for use by the residents of the nursing home, assisted living center or convalescent home.

(c) “Durable medical equipment” includes the following equipment, as well as repair and replacement parts for the equipment if it is primarily and customarily used for a medical purpose related to a person, can withstand repeated use, is not generally useful to a person who is not ill or injured, and that is not placed in or worn on the body:

Anesthesia machines and ventilators; anti-thrombolytic pumps; artificial inhalation equipment; audiology equipment including audiometers and acoustic impedance meters or bridges; automatic external defibrillators; autotransfusion equipment; billie lights; bone growth stimulators that are not worn; cardiology machines; cauterization equipment; chair and sling scales; continuous passive motion devices; crash carts; exam and surgical tables and stirrups; electroencephalogram equipment; heat lamps and bulbs; intraaortic balloon pump; kidney dialysis machines and dialyzers; lithotripters; mammography equipment; monitors; MRI/CT machines; needleless drug delivery system injection guns; nerve stimulator programmer; external pacemakers; pacemaker programmers and transmitters; percussors; platelet separators; drug infusion pumps; radiology and ultrasound equipment; pulse oximetery equipment and blood parameter monitors; respiratory equipment; resuscitators; staplers; stretchers; suction regulators; tens units; tourniquets; traction equipment; vaporizers; and medical atomizers and instruments.
Apnea monitors and CPAP machines that are not worn.
Alternating pressure beds, incubators, hospital beds, kinetic therapy beds, kodel bed pads, pressure reduction therapy beds; blanket cradles, patient positioners, and overbed tables and trays.
Abduction, cervical, and orthotic pillows.
Enteral and parenteral feeding bags that are generally used for up to 24 hours which will encompass numerous feedings and are then disposed, and enteral and parenteral connectors, pumps, stands, and tubing and feeding plugs.
IV poles, stands and reusable therapy arm boards, but not disposable arm boards.
Oxygen delivery equipment, oxygen tents or beds, nebulizers, and respiratory bags.
Electronic speech aids.
Therapeutic heating or cooling pads or compresses or packs.
Thermometers; glucose meters; scopes and lasers including stethoscopes, ophthalmoscopes, otoscopes, and endoscopes; and blood pressure equipment.
Commodes and collection basins including bed pans, urine containers, and emesis basins.
Wheelchair cushions that are braces or supports that are not attached and do not become a component part of the wheelchair itself.
Portable over-the-tub whirlpool devices that are not available for sale to the general public and are specifically manufactured for a medical purpose.

(6) Medicare claims. The administrator of Medicare claims, such as surgical care-blue shield, is under contract to withdraw funds from the United States treasury to pay the providers of medical services or for medical supplies and equipment. If the provider of a taxable item bills the administrator directly in full or in part, the portion paid by the administrator is a tax exempt sale to the United States. If the provider of a taxable item bills an individual in full or in part who then seeks reimbursement from Medicare, the portion paid by the administrator to the individual is not an exempt sale to the United States.

Note: Section Tax 11.45 interprets ss. 77.51 (3pj), (3pm), (7m), and (11m) and 77.54 (14), (22b), and (28), Stats.

Note: The interpretations in s. Tax 11.45 are effective under the general sales and use tax law, on and after September 1, 1969, except: (a) Charges for oxygen equipment became exempt September 1, 1983, pursuant to 1983 Wis. Act 27; (b) Charges for motorized wheelchairs and scooters became exempt September 1, 1985, pursuant to 1985 Wis. Act 29; (c) Charges for apparatus or equipment for the injection of insulin or the treatment of diabetes and supplies used to determine blood sugar level became exempt March 1, 1989, pursuant to 1987 Wis. Act 399; (d) Charges for antiembolism elastic hose and stockings prescribed by a physician became exempt October 1, 1989, pursuant to 1989 Wis. Act 31; (e) Sales of parts and accessories for certain medical items became exempt effective August 15, 1991, pursuant to 1991 Wis. Act 39; (f) The definitions of “drug,” “durable medical equipment,” “mobility-enhancing equipment,” and “prosthetic devices” and the exemptions for these items became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (h) The clarification that a “prosthetic device” must be a replacement, corrective, or supportive device became effective July 2, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, October, 1976, No. 250, eff. 11-1-76; r. (2) (c) 5., am. (3) (intro.) and (e), Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (d), Register, July, 1987, No. 379, eff. 8-1-87; am. (3) (a) and (b) and (4), cr. (3) (c), renum. (3) (c) to (3) (d), renum. (3) (d) to (3) (e), renum. (3) (e) to (3) (f) and (g) and am., renum. (3) (f) to (3) (h), Register, March, 1991, No. 423, eff. 4-1-91; am. (1), (2) (a), (b) (intro.), (c) (intro.), (3) (intro.) to (e) and (4), r. and recr. (3) (h), Register, May, 1993, No. 449, eff. 6-1-93; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 14-006: am. (3) (a) Register August 2014 No. 704, eff. 9-1-14; CR 19-122: am. (4) (b) 3. Register July 2020 No. 775, eff. 8-1-20.

Wis. Admin. Code § Tax 11.46 Summer camps {#sec-tax-11.46 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.46}

(1) Definitions. In this section:

(a) “Agency camps” means camps operated by corporations or associations organized and operated exclusively for religious, charitable, or educational purposes when no part of the net earnings inure to the benefit of any private shareholder or individual.

Example: The YMCA and Boy Scouts of America are agency camps.

(b) “Private camps” means all other camps including those camps organized and operated with the expectation of profit, whether or not profit is actually realized.

(2) Taxable receipts. Receipts from the following are taxable, except as provided in sub. (4) or (5):

(a) Prepared foods, as defined in s. 77.51 (10m), Stats., soft drinks, as defined in s. 77.51 (17w), Stats., candy, as defined in s. 77.51 (1fm), Stats., dietary supplements, as defined in s. 77.51 (3n), Stats., and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., sold by agency camps or private camps.

(b) Lodging provided by private camps for a continuous period of less than one month.

(3) Exempt receipts. Receipts from the following are exempt, except as provided in sub. (5):

(a) All lodging provided by agency camps.

(b) Lodging provided by private camps for a continuous period of one month or more.

(c) Food and food ingredients, as defined in s. 77.51 (3t), Stats., excluding candy, soft drinks, dietary supplements, and prepared foods.

(4) Occasional sales.

(a) The sales price from the sale of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c) and (d), Stats., or taxable services by agency camps not engaged in a trade or business and not otherwise required to hold a seller’s permit are exempt from Wisconsin sales tax if entertainment, as defined in s. 77.54 (7m), Stats., is not provided.

(b) An agency camp is not engaged in a trade or business if its sales of otherwise taxable tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., or services or its events occur on 75 days or less during the calendar year or if its taxable receipts for the calendar year are $50,000 or less.

Note: See Wisconsin publication 206, sales tax exemption for nonprofit organizations, for more detailed information about when one is engaged in a trade or business or required to hold a seller’s permit.

(5) Combined charge.

(a) A summer camp’s charge for meals, lodging, and program access for one nonitemized price is not subject to tax. The exemption in s. 77.54 (51), Stats., applies.

(b) It is presumed that the price for the lodging, meals, and other taxable products provided by the summer camp is 10 percent or less of the total price of all the products in the transaction. It is also presumed that true object of the transaction is not just one of the items provided. Therefore, the transaction is not a bundled transaction as defined in s. 77.51 (1f), Stats.

Note: See s. Tax 11.985 for more information on bundled transactions.

(c) Summer camps are the consumers of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services provided as part of the combined charge. As consumers, summer camps are subject to Wisconsin sales or use tax on their purchases of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., or taxable services.

Example: Summer Camp A provides a 4-week long summer program. The camp costs each participant $4,000. The $4,000 charge is one nonitemized price that includes all camp activities, lessons, meals, lodging, and a tee shirt. The taxable products included in the transaction are the lodging services, the meals, and the tee shirt. Summer Camp A may presume that the taxable products included in the transaction are less than 10 percent of the total sales price or purchase price of all the products included in the transaction and therefore the transaction is not a bundled transaction. Summer Camp A’s $4,000 charge is not subject to Wisconsin sales or use tax, but Summer Camp A is the consumer of the items it purchases and uses or provides to each person attending the camp and is required to pay Wisconsin sales or use tax on its purchases of these items.

Note: Section Tax 11.46 interprets ss. 77.51 (1f), (1fm), (3n), (3t), (10m), and (17w), 77.52 (1), (2) (a) 1., and (20), and 77.54 (7m) and (51), Stats.

Note: The interpretations in s. Tax 11.46 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The provisions of sub. (4) became effective January 1, 1989, pursuant to 1987 Wis. Act 399; (b) The amount shown in sub. (5) (b) became effective January 1, 1991. From September 15, 1970 to December 31, 1990, the rate was $3 per person per night and prior to September 15, 1970, the rate was $2 per person per night; (c) The $25,000 receipts standard became effective January 1, 2006, pursuant to 2005 Act 25; and (d) The definitions of “bundled transactions,” “candy,” “dietary supplements,” “prepared food,” and “soft drinks” and the change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (1) (intro.) and (a) and (2) (intro), cr. (4), renum. (4) to be (5) and am., Register, June, 1991, No. 426, eff. 7-1-91; r. and recr. (3) (c) and am. (5) (intro.), Register, December, 1996, No. 492, eff. 1-1-97; EmR0924: emerg. am. (2) (a), (3) (c) and (4), r. and recr. (5, eff. 10-1-09; CR 09-090: am. (2) (a), (3) (c) and (4), r. and recr. (5) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a), (2) (intro.), (3) (intro.), cr. (2) (c), r. and recr. (5) Register November 2010 No. 659, eff. 12-1-10; CR 20-027: am. (4) (b) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.47 Commercial photographers and photographic services {#sec-tax-11.47 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.47}

(1) Taxable sales. Taxable services and sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., of commercial photographers and others providing photographic services, including video taping, include charges for:

(a) Taking, reproducing, and selling photographs and videos.

(b) Processing, developing, printing, and enlarging film.

(d) Processing exposed film into color transparencies, mounted or unmounted.

(e) Reproducing copies of documents, drawings, photographs, videos, or prints by mechanical and chemical reproduction machines, blue printing and process camera equipment.

(f) Sales of photographs to students through schools, even though school personnel may participate by collecting payments from students.

(2) Amounts included in sales price.

(a) The sales price subject to the tax includes charges for photographic and video materials, time and talent.

(b) Modeling fees, mileage charges, equipment rental and charges for props or similar items made by photographers shall not be deducted from the sales price subject to the tax, whether or not these charges are separately itemized on the billing to a customer.

(3) Purchases by persons providing photographic services.

(a) Commercial photographers and others providing photographic services, including video services, may purchase, without paying sales or use tax, any tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., which will be resold or which becomes a component part of an article of tangible personal property, or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale if a properly completed exemption certificate is given the seller. These items include:

Mounts, frames, and sensitized paper used in the finished photograph and transferred to the customer.
Videos and film, including colored transparencies and movie film, in which the negative and the positive are the same, and are permanently transferred to a customer as part of the taxable photographic service.
Containers, labels, or other packaging and shipping materials used to transfer merchandise to customers.

(b) Except as provided in par. (bm), photographers and others providing photographic services, including video services, are required to pay tax when purchasing tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which is used, consumed or destroyed in providing photographic services. These items include:

Chemicals.
Trays.
Film, other than exempted in par. (a) 2.
Plates.
Proof paper.
Cameras.
Other photographic equipment.
Video tape, other than exempted in par. (a) 2.

(bm) The items and property listed in par. (b) are exempt from tax if used by a manufacturer in manufacturing, as defined in s. 77.51 (7h), Stats., and the requirements for the exemptions provided in s. 77.54 (2), (2m), or (6) (am), Stats., are met.

(c) If a photographer or other person providing photographic services, including video taping, gives an exemption certificate for property, items, or goods to a seller and then uses the property, item, or good for a taxable purpose, the photographer or other person providing photographic services shall be liable for use tax at the time the property, item, or good is first used in a taxable manner.

Note: Section Tax 11.47 interprets ss. 77.51 (7h), (13) (e) and (f), and (15a) (b) 3., 77.52 (2) (a) 7., (2m) (b), and (13), 77.53 (10), and 77.54 (2), (2m), and (6) (am) 1., Stats.

Note: The interpretations in s. Tax 11.47 are effective under the general sales and use tax law on and after September 1, 1969, except (a) The exemption for property resold by a photographer is effective September 1, 1983, pursuant to 1983 Wis. Act 27 and (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (3) (a) (intro.), 2. and (b) 3., cr. (3) (c), Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (intro.), (a) and (e), (2) (a), (3) (a) (intro.), 2., (b) (intro.) and 3. and (c), cr. (3) (b) 8., Register, January, 1992, No. 433, eff. 2-1-92; EmR0924: emerg. am. (1) (title), (intro.) to (c), (e), (2), (3) (a), (b) (intro.) and (c), cr. (3) (bm), eff. 10-1-09; CR 09-090: am. (1) (title), (intro.) to (c), (e), (2), (3) (a), (b) (intro.) and (c), cr. (3) (bm) Register May 2010 No. 653, eff. 6-1-10; correction in (3) (bm) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704.

Wis. Admin. Code § Tax 11.48 Landlords, hotels and motels {#sec-tax-11.48 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.48}

(1) Landlords.

(a) Landlords are the consumers of household furniture, furnishings, equipment, appliances, or other items of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased by them for use by their tenants in leased or rented living quarters. The sales and use tax applies to a landlord’s purchases of all these items. The sales price from a landlord’s charges to the tenant for use of these items are not subject to the tax even though there may be a separate charge for them.

(b) The sales price from providing parking space for motor vehicles and aircraft and from providing docking and storage space for boats are taxable. If a separate charge is made for the parking, docking, or storage space, the charge is taxable. However, if a separate charge is not made and the price of a rental unit includes a charge for a parking, docking, or storage space, and if similar units are rented at a reduced price if the parking, docking, or storage space is not utilized, the difference between the rental price of the 2 similar units is taxable as a charge for parking, docking, or storage.

(c)

The furnishing of rooms or lodging through the sale of any kind of time-share property is not taxable.
The sale, furnishing or use of recreational facilities on a periodic basis and of other recreational rights, including membership rights, vacation services and club memberships, with respect to time-share property, is not taxable, if the facilities are not available to persons who have not purchased the time-share property, other than guests.

Example: If a golf course is available to the general public for a fee, charges for access to the golf course are taxable, even if the charges are made in connection with the sale or use of time-share property.

(d) The rental for a continuous period of one month or more of a mobile home, as defined in s. 101.91 (10), Stats., or a manufactured home, as defined in s. 101.91 (2), Stats., used as a residence is exempt from the sales and use tax, whether the mobile home or manufactured home is classified as real or personal property.

(2) Hotels and motels. The furnishing of rooms or lodging to transients by hotelkeepers, motel operators, and other persons furnishing accommodations to the public, regardless of whether membership is required for use of the accommodations, is a taxable service.

(a) “Transient” means any person residing at one location for a continuous period of less than one month. A continuing monthly rental of a particular room or rooms by a business, including a trucking company, railway, or airline, to be used by its employees for layover is not taxable.

(b) The rental of space for meetings, conventions, and similar activities that are not amusement, athletic, entertainment, or recreational in nature, is not taxable. However, the rental of hotel or motel rooms generally used as sleeping accommodations is taxable, regardless of the type of use.

Example: The rental of a motel sleeping room by a salesperson from 8:00 a.m. to 4:00 p.m. for use as a display room is taxable.

(c) Sales of lodging by hotels, motels, and inns to governmental agencies and nonprofit organizations described in s. 77.54 (9a), Stats., and the federal government or to their employees are exempt from sales and use tax if the following 3 conditions are met, regardless of whether the agency or the employee pays for the lodging:

The hotel, motel, or inn issues the invoice or billing document for the lodging in the name of the governmental agency or nonprofit organization.
The hotel, motel, or inn receives any of the following:

a. A purchase order or similar written document from the governmental agency.

b. The certificate of exempt status, CES, number of the nonprofit organization. The hotel, motel, or inn shall enter the CES number on its copy of the invoice or billing document.

The hotel, motel, or inn keeps a copy of the documents in subds. 1. and 2. to substantiate that the sale was exempt.

(d) Separately stated charges by hotels, motels, and inns for the rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., including televisions and refrigerators, are taxable.

(e) Hotels, motels, and inns are the consumers of all the property, items, and goods used to conduct their business, such as beds, bedding, equipment, advertising materials, supplies, items, and property consumed by the occupants of a room as part of the lodging service. The tax applies to their purchases of all these items.

(f)

Hotels, motels, and other lodging providers are deemed the consumers of telecommunications, ancillary, internet access, and cable TV services used in providing lodging services, even if the service provider charges its customer separately for such services.
The tax treatment of telecommunications, ancillary, internet access, and cable TV services is as follows:

a. Charges by a lodging provider for these services are not taxable.

b. The lodging provider’s purchases of these services are subject to tax, except internet access services are not taxable beginning July 1, 2020.

(3) Motels leased to operators.

(a) The owner of a motel often leases the complete unit, including real and personal property, to a second party who operates the motel. If the lease does not indicate the amount of the lease receipts derived from the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., as opposed to the realty and intangible property, the taxable receipts shall be determined by multiplying the total lease receipts of each reporting period by the ratio of the lessor’s purchase price of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to the lessor’s total gross investment in all real and personal property being leased to that operator, except as provided in par. (c). This ratio shall apply as long as the lease agreement between the lessor and lessee remains unchanged. However, the original ratio and any change in the ratio resulting from changes in the lease, due to additions to or removal of real or personal property leased, are subject to review by the department for reasonableness.

(b) The numerator of the ratio in par. (a) is the purchase price of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased by the lessor, except as provided in par. (c). This includes furniture, furnishings, equipment, or trade fixtures in an office, kitchen, restaurant, lounge, rooms, patio, and other indoor and outdoor areas; beds, bedding, linen, and towels; vending machines; and maintenance equipment.

Example: If the lessor’s purchase price of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., is $100,000, and the lessor’s gross investment is $500,000 for all real and personal property, items, and goods, taxable lease receipts shall be determined by applying a ratio of 20% ($100,000 ÷ $500,000) to the gross lease receipts for each sales tax reporting period.

(c) For purposes of par. (a), if the lessor of the property under s. 77.52 (1) (c), Stats., is also the lessor of the real property to which the property under s. 77.52 (1) (c), Stats., is affixed, the numerator of the ratio described in par. (a), does not include the lessor’s gross investment in such property, but the lessor is liable for the sales or use tax on its purchases of such property.

Note: Section Tax 11.48 interprets ss. 77.51 (13) (fm) and (n), 77.52 (1), (2) (a) 1., 2., 5., and 9., (2m), and (21), and 77.54 (36), Stats.

Note: The interpretations in s. Tax 11.48 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The provisions of sub. (1) (c) 1. are effective on or after August 9, 1989, pursuant to 1989 Wis. Act 31; (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (c) The clarification that a service provider who transfers tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., incidentally with a taxable service is the consumer of such property, items, or goods became effective July 2, 2013, pursuant to 2013 Wis. Act 20; (d) Clarification that a lodging provider is the consumer of telecommunication, internet, and cable TV services became effective June 23, 2017, pursuant to 2017 Wis. Act 17; and (e) Internet access services became nontaxable effective July 1, 2020, pursuant to 2017 Wis. Act 59.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1) (a) and (b), (2) (a) and (b) and (3) (b), cr. (1) (c) and (d), (2) (c) and (d), renum. (2) (c) to be (2) (e) and am., Register, March, 1991, No. 423, eff. 4-1-91; correction in (1) (d) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (1), (2) (intro.) to (b), (c) (intro.), 2. (intro.), b., 3., (d), (e) and (3), cr. (3) (c), eff. 10-1-09; CR 09-090: am. (1), (2) (intro.) to (b), (c) (intro.), 2. (intro.), b., 3., (d), (e) and (3), cr. (3) (c) Register May 2010 No. 653, eff. 6-1-10; CR 20-018: cr. (2) (f) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.49 Service stations and fuel oil dealers {#sec-tax-11.49 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.49}

(1) Taxable sales. Sales by service station operators and fuel oil dealers subject to the sales tax include the following:

(a) The sale of furnace or heating fuel to customers, other than for residential or farm use.

(b) The repair, service, alteration, fitting, cleaning, painting, coating, inspection, and maintenance of motor vehicles, including the total amount charged for parts and labor and including motor vehicles and truck bodies owned by nonresidents except as provided in sub. (2).

(c) The towing of motor vehicles, which includes the hauling of motor vehicles by a tow truck, as defined in s. 340.01 (67n), Stats.

Examples: 1) The charge to a customer for towing a vehicle to a repair facility is taxable.

2) The charge to a customer by a towing company for towing the customer’s vehicle from a no parking zone is taxable.

3) The charge to a customer by a towing company for towing a demolished vehicle to a junkyard is taxable.

4) The charge to a Wisconsin governmental unit by a towing company for towing is exempt from tax.

5) The charge to a repair facility by a towing company for towing a vehicle to the facility for repair which will be passed on to the customer is not taxable provided the repair facility gives the towing company a properly completed exemption certificate claiming resale. However, the charge for the towing service to the customer by the repair facility is taxable.

(d) Retail sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., including motor oil, antifreeze, motor vehicle parts and supplies, tobacco products, candy, and soft drinks by service stations except as provided in sub. (2).

(e) Charges for car washes, whether automated or not.

(f) Providing parking for motor vehicles. Providing temporary storage of a motor vehicle is considered parking if the vehicle is ready and available for immediate use.

(2) Exempt sales. Sales by service station operators and fuel oil dealers not subject to the sales tax include the following:

(a) Sales of gasoline, general aviation fuel and special fuel including diesel and L.P. fuel, which are subject to the Wisconsin motor vehicle fuel taxes under ch. 78, Stats. The holder of a Wisconsin special fuel license may issue an exemption certificate to purchase special fuel without sales tax. On special fuel which a licensee puts into highway motor vehicles, the licensee is required to pay the special fuel tax. If motor fuel or special fuel is purchased without tax under s. 77.54 (11), Stats., because it is subject to the excise tax imposed under ch. 78, Stats., and then the excise taxes are later refunded under s. 78.75, Stats., because the buyer does not use the fuel in operating a motor vehicle upon the public highways, the fuel is subject to the tax, unless otherwise exempt under s. 77.54 (1), (3), (5), (6) (am) 3., (9a), (12), (13), (30) (a), Stats., or other exemptions in subch. III of ch. 77, Stats.

(b) Sales made directly to this state or any agency thereof, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority; any county, city, village, town, or school district in this state; a county-city hospital established under s. 66.0927, Stats.; a sewerage commission organized under s. 281.43 (4), Stats., or a metropolitan sewerage district organized under ss. 200.01 to 200.15 or 200.21 to 200.65, Stats.; any other unit of government in this state or any agency or instrumentality of one or more units of government in this state; any federally recognized American Indian tribe or band in this state; any joint local water authority created under s. 66.0823, Stats.; any corporation, community chest fund, foundation, or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member, or corporation; certain title holding entities described under section 501 (c) (2) of the Internal Revenue Code that are exempt from federal income tax under section 501 (a) of the Internal Revenue Code and organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to an entity described under s. 77.54 (9a) (f), Stats.; a local exposition district under subch. II of ch. 229, Stats.; a local cultural arts district under subch. V of ch. 229, Stats. Sales to a cemetery company or corporation described under section 501 (c) (13) of the Internal Revenue Code, are exempt from sales and use tax if the cemetery company or corporation uses the items exclusively for the purposes of the company or corporation. Section 77.55 (1), Stats., provides an exemption for sales to the United States, its unincorporated agencies and instrumentalities, and any incorporated agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States. Sales to employees of these entities are not exempt, even though the entity may reimburse the employee for the expenditure.

(bg) Sales made to a state veterans organization, as defined in s. 45.41 (1) (b), Stats., except property and services used primarily in preparing, storing, serving, selling, or delivering food and beverages, including products and services for cleaning machinery and equipment used for the food and beverages that are sold by the veterans organization.

(c) Sales of accessories, attachments, parts, supplies, and highway fuel for common or contract carrier motor trucks, truck tractors, road tractors, buses, trailers, and semi-trailers used exclusively in common or contract carriage, including the urban mass transportation of passengers as defined in s. 71.38, Stats. This exemption applies to purchases for school buses operated under contract with a public or private school to transport students. A station wagon or van which is not registered as a bus or truck with the division of motor vehicles in the Wisconsin department of transportation does not qualify for this exemption.

(d) Sales to farmers of parts and repairs for tractors or farm machines used exclusively and directly in farming, but this exemption does not apply if these items are used in motor vehicles for highway use.

(e) Sales to farmers of fuel used in farming.

(f) Sales of general aviation fuel to persons using aircraft as certified or licensed carriers of persons or property in interstate commerce are exempt under s. 77.54 (5) (a), Stats.

(g) Sales of coal, fuel oil, propane, steam, peat, fuel cubes produced from solid waste, wood, and biomass as defined in s. 196.378 (1) (ar), Stats., used for fuel sold for residential use. In this paragraph, “residential use” means use in a structure or portion of a structure which is a person’s permanent residence as defined in s. Tax 11.57 (2) (q) 2. and 3.

(h) Sales of repairs, services, alterations, fitting, cleaning, painting, coating, towing, inspection, and maintenance services to common or contract carrier vehicles exempt under sub. (2) (c), mobile mixing and processing units and the vehicle or trailer on which they are mounted, and motor vehicles not required to be licensed for highway use which are exclusively and directly used in conjunction with waste reduction or recycling activities.

(i) Sales of accessories, attachments, parts, supplies, and materials for mobile mixing and processing units and the vehicle or trailer on which they are mounted, including highway fuel for units operated on public highways.

(j) Sales of any residue used for fuel in a business activity that results from the harvesting of timber or the production of wood products including slash, sawdust, shavings, edgings, slabs, leaves, wood chips, bark and wood pellets manufactured primarily from wood or wood residue.

(k) Sales of fuel consumed in manufacturing tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., in Wisconsin.

(L) Sales of fuel consumed in operating an industrial waste treatment facility.

(3) Purchases.

(a) Service station operators who repair motor vehicles may purchase, without tax, “for resale,” repair parts and materials used in the work which are physically transferred to their customers. This includes auto parts, chassis lubricants, wheel greases, car waxes, paints, paint hardeners, plastic body fillers, and welding rods.

(b) A service station operator’s purchases of equipment, tools, supplies, and other property, items, or goods not physically transferred to customers as part of the performance of a taxable service are subject to the sales and use tax. Supplies such as sandpaper, masking paper, masking tape, buffing pads, paint and lacquer thinner, clean and glaze compound, paint remover, tack rags, steel wool, metal conditioner, lacquer removing solvent, rubbing compound, wax and grease remover, fluxing materials, disc adhesives, and other property or items used or consumed in performing motor vehicle repair service are taxable.

Note: Section Tax 11.49 interprets ss. 77.52 (2) (a) 8m., 9., and 10. and (2m) (b) and 77.54 (3), (5), (9a), (9g), (11), and (30), Stats.

Note: The interpretations in s. Tax 11.49 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales of coal, fuel oil, propane, steam and wood used for fuel became exempt July 1, 1979, pursuant to Chapter 1, Laws of 1979; (b) Sales of jet fuel to persons who were not certified or licensed carriers were taxable prior to January 1, 1982; (c) If the excise tax on motor fuel or special fuel is refunded under s. 78.75, Stats., a tax is payable pursuant to 1985 Wis. Act 29, effective September 1, 1985; (d) The repair of motor vehicles used in waste reduction or recycling processes is exempt pursuant to 1983 Wis. Act 426, effective July 1, 1984; (e) The repair of mobile mixing and processing units and the vehicle or trailer on which mounted, as well as parts, accessories, attachments, supplies and materials are exempt pursuant to 1985 Wis. Act 29, effective July 20, 1985; (f) Peat and solid waste fuel cubes sold for residential use are exempt pursuant to 1985 Wis. Act 149, effective April 2, 1986; (g) Wood residue sold for fuel use in a business activity is exempt pursuant to 1987 Wis. Act 27, effective September 1, 1987; (h) Repair to nonresident vehicles not otherwise exempt is exempt pursuant to 1987 Wis. Act 27, effective September 1, 1987; (i) The exemption for fuel used in farming, other than in machines, became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (j) All towing services became taxable effective May 1, 1993; (k) Fuel consumed in manufacturing became exempt effective January 1, 2006, pursuant to 2003 Wis. Act 99; (L) Towing by a tow truck as defined in s. 340.01 (67n), Stats., became taxable effective July 1, 2009, pursuant to 2009 Wis. Act 28; (m) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (n) The exemption for certain title holding entities described under section 501 (c) (2) of the Internal Revenue Code was effective retroactively to September 1, 2017, pursuant to 2017 Wis. Act 231; and (o) The exemption for certain sales by a state veterans organization was effective July 1, 2018 pursuant to 2017 Wisconsin Act 190.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (a), cr. (2) (f), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a) and (e), Register, June, 1983, No. 330, eff. 7-1-83; am. (2) (a), Register, July, 1987, No. 379, eff. 8-1-87; correction in (2) (c) made under s. 13.93 (2m) (b) 7., Stats., Register, April, 1990, No. 412; am. (1) (b) and (d), (2) (b), (c) and (f) and (3) (a), cr. (2) (g), (h) and (i), Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (b) and (2) (d), renum. (1) (c) (intro.) and (2) (e) to (i) to be (1) (c) and (2) (f) to (j) and am. (1) (c), r. (1) (c) 1. to 3., cr. (1) (f) and (2) (e), Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (1) (b) to (e), (2) (a) to (c), (g) to (j) and (3), cr. (2) (k) and (L), eff. 10-1-09; CR 09-090: am. (1) (b) to (e), (2) (a) to (c), (g) to (j) and (3), cr. (2) (k) and (L) Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (2) (b), (d) Register August 2012 No. 680, eff. 9-1-12; CR 13-012: am. (2) (b) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (2) (b) Register August 2014 No. 704, eff. 9-1-14; correction in (2) (a) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 20-018: am. (2) (b), cr. (2) (bg) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.50 Auctions {#sec-tax-11.50 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.50}

(1) Statute. Section 77.51 (13) (b), Stats., provides that every person engaged in the business of making sales at auction of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., owned by the person making the sale or others is a “retailer.” The definition of “sale” contained in s. 77.51 (14) (a), Stats., includes any sale at an auction.

(2) Retailer. If an auction company provides complete auction service, it is the retailer. If an auctioneer contracts with the owner of the auctioned property and arranges for clerking the auction, the auctioneer is the retailer. Auctioneers and auction companies who are retailers are responsible for reporting the sales tax on auction receipts even if the owner of the property has a seller’s permit.

(3) Taxable auction receipts. Taxable receipts from auctions include the sales price received from:

(a) Auction sales of heavy equipment and going-out-of-business auction sales of retail stores, motels, wholesalers, manufacturers, contractors, and service enterprises, but not certain sales of personal farm property, as explained in sub. (4) (a). The household goods exemption does not apply to these sales.

(b) Auction sales, including radio and television auction sales held at a location where the auctioneer holds more than 5 auctions during the calendar year.

(c) Auctions sponsored by a nonprofit organization, except as provided in sub. (4) (c). The household goods exemption does not apply to these auctions.

(d) Auction sales of antiques and works of art except when sold with other household goods of which they were a part.

(e) Auction sales of professional or business inventories or equipment, except certain personal farm property as explained in sub. (4) (a), even though they may consist of household goods.

(f) Sheriffs’ sales and other auction sales made pursuant to orders of a Wisconsin court.

(g) Liquidation sales of an insolvent debtor’s assets which are made pursuant to the order of a federal bankruptcy court.

(h) All other auction sales which are not specifically exempt under the law.

(4) Exempt auction receipts. The receipts from the following auction sales are exempt:

(a) Except as provided in sub. (5), auction sales of personal farm property or household goods which are held at a location where the auctioneer holds 5 or fewer auctions during the calendar year. In this paragraph:

“Household goods” includes tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which is associated with maintaining a household and is for family use. “Household goods” does not include:

a. Highway motor vehicles or trailers, snowmobiles, all-terrain vehicles, utility terrain vehicles, off-highway motorcycles, mini bikes, aircraft, and boats.

b. Professional or business inventory or equipment.

Example: Household goods include furniture necessary or ornamental to a house in furnishing or fitting it for use by members of the household. Thus household goods include goods removed from a family home, such as tables, chairs, lamps, appliances, beds, clocks, musical instruments, dressers, lawn and garden equipment, jugs and fruit jars, sporting goods or hobby equipment including bats, balls, tennis racquets, golf clubs, guns and ammunition, and related hunting equipment, fishing equipment, camping equipment, photographic equipment, tools, bicycles, and personal collections of those items.

“Personal farm property” includes tractors, implements of husbandry, machines, equipment or other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., used by the owner in the business of farming. “Personal farm property” does not include racing, pleasure riding, or show horses, pets or other recreational animals not used in farming, highway vehicles and boats.

(b) Sales for resale or sales that are otherwise exempt. If such a sale is made at an auction, the person conducting the auction should obtain a properly completed exemption certificate from the purchaser.

(c) Auction sales by religious, charitable, educational, or civic organizations and other nonprofit organizations that conduct a fund raising event, if both of the following apply:

The auctioneer is not the retailer, because the auctioneer’s services are donated.
The sales qualify as exempt occasional sales under s. Tax 11.35 (4).

(5) Auction sales of motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), stats., trailers, semi-trailers, all-terrain vehicles, utility terrain vehicles, off-highway motorcycles, and aircraft.

(a) An auctioneer shall collect, report, and remit tax on its sales of any of the following items if the auctioneer is a retailer, unless an exemption applies:

Motor vehicles.
Boats.
Snowmobiles.
Recreational vehicles as defined in s. 340.01 (48r), Stats.
Trailers.
Semi-trailers.
All-terrain vehicles.

7m. Utility terrain vehicles.

Aircraft.
Off-highway motorcycles.

(b)

A buyer who purchases any of the items listed in par. (a) 1. to 8. from an auctioneer who is a retailer shall pay the tax to the auctioneer, unless an exemption applies. If the buyer does not pay the tax to the auctioneer, the buyer shall file a return and pay the tax, as prescribed by the department, prior to registering or titling the item in Wisconsin.
Auction sales of the items listed in par. (a) 1. to 8. do not qualify for exemption as occasional sales of personal farm property or household goods if the items are registered or titled or required to be registered or titled in Wisconsin. Auction sales of boats also do not qualify for exemption as occasional sales of personal farm property or household goods if the boats are registered or titled or required to be registered or titled under the laws of the United States.

Note: Section Tax 11.50 interprets ss. 77.51 (9) (e), (13) (b), and (14) (intro.) and (a), 77.52 (1), 77.54 (7), and 77.61 (1), Stats.

Note: The interpretations in s. Tax 11.50 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The standard in sub. (4) (d) 2. became effective January 1, 1989, pursuant to 1987 Wis. Act 399; (b) The occasional sale exemption for five or fewer auctions at a location became effective January 1, 2000, pursuant to 1999 Wis. Act 9; (c) The requirement for auctioneers to collect, report, and remit tax on sales of motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, semi-trailers, all-terrain vehicles, and aircraft, regardless of whether the auctioneer is a dealer of such items became effective October 1, 2009; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (3) (e), Register, December, 1983, No. 336, eff. 1-1-84; am. (4) (d) 3., Register, April, 1985, No. 352, eff. 5-1-85; am. (4) (d) 3., Register, December, 1987, No. 384, eff. 1-1-88; am. (2), (3) (a), (b), (c), (d) and (h) and (4) (a) (intro.), 1. (intro.), a. and 2. and (d) (intro.), 1. and 2., r. (4) (d) 3., renum. (4) (c) to be (3) (i), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 16-053: am. (4) (a) 1. a., (5) (title), cr. (5) (a) 7m. Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (4) (a) 1. a., (5) (title), cr. (5) (a) 9. Register June 2020 No. 774, eff. 7-1-20.

Wis. Admin. Code § Tax 11.51 Grocers’ guidelist {#sec-tax-11.51 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.51}

(1) General.

(a) All sales of tangible personal property and items, property and goods under s. 77.52 (1) (b), (c), and (d), Stats., are taxable except when a specific exemption applies. One of the exemptions is for “food and food ingredients,” which generally exempts all food and food ingredients for human consumption, except candy, soft drinks, dietary supplements, and prepared food. This exemption also does not include many items normally available in grocery and food stores, such as soft drinks, alcoholic beverages, tobacco products, paper products, and detergents.

(b) “Food and food ingredients” is defined in s. 77.51 (3t), Stats., to mean a substance in liquid, concentrated, solid, frozen, dried, or dehydrated form, that is sold for ingestion, or for chewing, by humans and that is ingested or chewed for its taste or nutritional value. “Food and food ingredient” does not include alcoholic beverages or tobacco.

(2) Guidelists.

(a) Taxable sales by grocers. Taxable sales include sales of the following items:

(b) Exempt sales by grocers. Exempt sales include sales of the following items, but not if the items meet the definition of candy, soft drinks, dietary supplements, or prepared foods:

(3) Explanations of some taxable and exempt sales by grocers. For purposes of sub. (2):

(a)

“Candy” is defined in s. 77.51 (1fm), Stats., to mean a preparation of sugar, honey, or other natural or artificial sweetener combined with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” does not include a preparation that contains flour or that requires refrigeration.
This definition is intended to be used when a person is trying to determine if a product that is commonly thought of as “candy” is in fact “candy.” The definition is not intended to be applied to every type of food product sold.

Example: Many products, such as meat products, breakfast cereals, potato chips, and canned fruits and vegetables are not commonly thought of as “candy.” The candy definition is not applicable to products such as these since they are not commonly thought of as candy.

Note: The definition of candy would be applied in a situation where a person is trying to determine if a product is “candy” as opposed to a cookie.

Note: A listing that determines whether various products meet the definition of “candy” was prepared by the Streamlined Sales Tax Governing Board (SSTGB) and can be found in the Rules and Procedures of the SSTGB at http://www.streamlinedsalestax.org.

Candy must be a “preparation” that contains certain ingredients, other than flour. A “preparation” is a product that is made by means of heating, coloring, molding, or otherwise processing any of the ingredients listed in the candy definition. For example, reducing maple syrup into pieces and adding coloring to make maple candy is a form of preparation.
Candy must be sold in the form of bars, drops, or pieces.

a. A “bar” is a product that is sold in the form of a square, oblong, or similar form.

Example: Company A sells one pound square blocks of chocolate. The blocks of chocolate are “bars.”

b. A “drop” is a product that is sold in a round, oval, pear-shaped, or similar form.

Example: Company B sells chocolate chips in a bag. Each individual chocolate chip contains all of the ingredients indicated on the label. The chocolate chips are “drops.”

c. A “piece” is a portion that has the same make-up as the product as a whole. Individual ingredients and loose mixtures of items that make up the product as a whole are not pieces. Exception: If a loose mixture of different items that make up the product as a whole are all individually considered candy and are sold as one product, that product is also candy.

Examples: 1) Company C sells jellybeans in a bag. Each jellybean is made up of the ingredients indicated on the label. Each jellybean is a “piece” or “drop.”

2) Company D sells trail mix in a bag. The product being sold (e.g., trail mix), is made up of a mixture of carob chips, peanuts, raisins, and sunflower seeds. The individual items that make-up the trail mix are not “pieces,” but instead are the ingredients, which when combined, make up the trail mix. Therefore, the trail mix is not sold in the form of bars, drops, or pieces.

3) Company E sells a product called “candy lover’s mix.” “Candy lovers mix” is a product that is made up of a loose mixture of jellybeans, toffee, and caramels. Individually, the jellybeans, toffee, and caramels are all candy. The sale of the mixture is the sale of candy since all of the individual items that make up the product are individually considered to be candy.

In order for a product to be treated as containing “flour,” the product label must specifically list the word “flour” as one of the ingredients. There is no requirement that the “flour” be grain-based and it does not matter what the flour is made from.

Examples: 1) The ingredient list for a breakfast bar lists “flour” as one of the ingredients. This breakfast bar is not “candy” since it contains flour.

2) The ingredient list for a breakfast bar lists “peanut flour” as one of the ingredients. This breakfast bar is not candy because it contains flour.

3) The ingredient list for a breakfast bar that otherwise meets the definition of “candy” lists “whole grain” as one of the ingredients, but does not specifically list “flour” as one of the ingredients. This breakfast bar is candy because the word “flour” is not included in the ingredient list.

4) Company E sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates identifies flour as one of the ingredients. The box of chocolates is not candy since flour is identified as one of the ingredients on the label.

5) Company F sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates, which otherwise meets the definition of “candy,” does not identify flour as one of the ingredients. The box of chocolates is candy.

“Other ingredients or flavorings,” as used in this definition, means other ingredients or flavorings that are similar to chocolate, fruits, or nuts. This phrase includes candy coatings such as carob, vanilla, and yogurt, flavorings or extracts such as vanilla, maple, mint, and almond, and seeds and other items similar to the classes of ingredients or flavorings. This phrase does not include meats, spices, seasonings such as barbecue or cheddar flavor, or herbs which are not similar to the classes of ingredients or flavorings associated with chocolate, fruits, or nuts, unless the product otherwise meets the definition of “candy.”

Examples: 1) Retailer A sells barbecue flavored peanuts. The ingredient label for the barbecue flavored peanuts indicates that the product contains peanuts, sugar, and various other ingredients, including barbecue flavoring. Since the barbecue flavored peanuts contain a combination of sweeteners and nuts, and flour is not listed on the label and the nuts do not require refrigeration, they are candy.

2) Retailer B sells barbecue potato chips. Potato chips are potatoes, a vegetable, and are not commonly thought of as candy. The barbecue potato chips are food and food ingredients and not candy. The fact that the ingredient label for the barbecue potato chips indicates that the product contains barbecue seasoning which contains a sweetener does not change the fact that the barbecue potato chips are not commonly thought of as candy.

The term “natural or artificial sweeteners” means an ingredient of a food product that adds a sugary sweetness to the taste of the food product and includes, but is not limited to, corn syrup, dextrose, invert sugar, sucrose, fructose, sucralose, saccharin, aspartame, stevia, fruit juice concentrates, molasses, evaporated cane juice, rice syrup, barley malt, honey, maltitol, agave, and artificial sweeteners.
A product that otherwise meets the definition of “candy” is not “candy” if it requires refrigeration. A product “requires refrigeration” if it must be refrigerated at the time of sale or after being opened. In order for a product to be treated as requiring refrigeration, the product label must indicate that refrigeration is required. If the label on a product that contains multiple servings indicates that it “requires refrigeration,” smaller size packages of the same product are also considered to “require refrigeration.” A product that otherwise meets the definition of “candy” is “candy” if the product is not required to be refrigerated, but is sold refrigerated for the convenience or preference of the customer, retailer, or manufacturer.

Examples: 1) A grocery store sells candy bars at room temperature or from a refrigerated display case. Unless the candy bar is required to be refrigerated, it is still candy, even if it was refrigerated when sold.

2) Company A sells sweetened fruit snacks in a bag that contains multiple servings. The label on the bag indicates that after opening, the sweetened fruit snacks must be refrigerated. The sweetened fruit snacks “require refrigeration” and therefore are not candy.

3) Company A sells sweetened fruit snacks in single serving containers. Other than for packaging, the sweetened fruit snacks are identical to the sweetened fruit snacks in Example 2 above. However, since this container of sweetened fruit snacks only contains one serving, it is presumed that it will be used immediately, and the label does not indicate that after opening, the product must be refrigerated. Even though the label does not contain the statement that after opening the sweetened fruit snacks must be refrigerated, these sweetened fruit snacks are considered to “require refrigeration” and therefore are not candy.

4) Company A sells chocolate truffles. The label on the truffles indicates to keep the product cool and dry, but does not indicate that the product must be refrigerated. Since the chocolate truffles are not required to be refrigerated, even though the label indicates to keep them cool, the chocolate truffles do not “require refrigeration.”

a. Products that are a combination of items that are defined as “candy” and items that are defined as “food and food ingredients” are “bundled transactions” when the items are distinct and identifiable, sold for one non-itemized price, and more than 50 percent of the items are “candy.” Such “bundled transactions” are subject to tax. For example, the sale of a bag of multiple types of individually wrapped bars of which more than 50 percent of the bars are “candy” that is sold for one non-itemized price is taxable.

b. If a package contains individually wrapped bars, drops, or pieces and the product label on the package separately lists the ingredients for each type of bar, drop, or piece included in the package, those bars, drops, or pieces that have “flour” listed as an ingredient are “food and food ingredients” and those bars, drops, or pieces which do not have “flour” listed as an ingredient are “candy.” The determination of whether the package as a whole meets the definition of a “bundled transaction” is based on the percentage of bars, drops, or pieces that meet the definition of “food and food ingredient” as compared to the percentage of bars, drops, or pieces that meet the definition of “candy.” For purposes of this subd. 9. b., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.

Examples: 1) Retailer A sells a package that contains 100 total pieces of food and food ingredients. There are 10 different types of foods and food ingredients in the package. Eight of the types of food and food ingredients included in the package meet the definition of “candy,” while two of the types included do not meet the definition of “candy.” It is a reasonable presumption that 20 (2/10 times 100) of the pieces are not “candy” and 80 (8/10 times 100) of the pieces are “candy.” Therefore, since 80 percent of the product is “candy,” the sales price of the entire package is taxable as a bundled transaction.

2) Retailer B sells bulk food and food ingredients by the pound. Each food and food ingredient is in a separate bin or container. Some of the food and food ingredients are “candy” and some of them are not because they contain flour. However, regardless of the items chosen, the retailer charges the customer $3.49 per pound. Customer C selects some items that are candy and some that are not and puts them in a bag. Since some of the items in the bag are “candy,” the retailer shall treat the entire package as a bundled transaction containing primarily “candy,” unless the retailer ascertains that 50 percent or less of the items in the bag are “candy.”

c. If a package contains individually wrapped bars, drops, or pieces and all of the ingredients for each of the products included in the package are listed together, as opposed to being listed separately by each product included as explained in subd. 9. b., and even if the ingredient lists “flour” as an ingredient, the product will be treated as “candy,” unless the retailer is able to ascertain that 50 percent or less of the products in the package are “candy.” For purposes of this subd. 9. c., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.

Products whose ingredients are a combination of various unwrapped food ingredients that alone are not candy, along with unwrapped food ingredients that alone are “candy,” such as breakfast cereal and trail mix with candy pieces, are considered “food and food ingredients,” but not “candy.” Sales of these products are not “bundled transactions” because there are not two or more distinct and identifiable products being sold. The combination of the ingredients results in a single product.

(b)

“Dietary supplement” is defined in s. 77.51 (3n), Stats., to mean a product other than tobacco, that is intended to supplement a person’s diet if all of the following apply:

a. The product contains a vitamin, mineral, herb or other botanical, amino acid, dietary substance that is intended for human consumption to supplement the diet by increasing total dietary intake, concentrate, metabolite, constituent, or extract, or any combination thereof.

b. The product is intended for ingestion in tablet, capsule, powder, soft-gel, gel-cap, or liquid form, or, if not intended for ingestion in such forms, is not represented as conventional food and is not represented for use as the sole item of a meal or diet.

c. The product is required to be labeled as a dietary supplement as required under 21 CFR 101.36.

Dietary supplements can be identified by the “Supplemental Facts” box found on the label as required by 21 CFR 101.36.
Dietary supplements include antioxidants, bee pollen, enzymes, garlic capsules, ginseng, herbal supplements, immune supports, lecithin, metabolic supplements, vitamins and minerals, and zinc lozenges.

(c) “Heated state” means sold at any temperature higher than the air temperature of the room or place where the product is sold.

(d)

“Soft drink” is defined in s. 77.51 (17w), Stats., to mean a beverage that contains less than 0.5 percent of alcohol and that contains natural or artificial sweeteners. “Soft drink” does not include a beverage that contains milk or milk products; soy, rice, or similar milk substitutes; or more than 50 percent vegetable or fruit juice by volume.
Soft drinks are beverages that are in liquid form and do not include items that are not in liquid form such as powdered fruit drinks, powdered teas and frozen drink concentrates.
Natural and artificial sweeteners include corn syrup, dextrose, invert sugar, sucrose, fructose, sucralose, saccharin, aspartame, stevia, maltitol, molasses, evaporated cane juice, rice syrup, barley malt, and honey.

a. Water and tea that contain any sweeteners are soft drinks.

b. Water and tea that are unsweetened are not soft drinks, even if carbonated or flavored.

(e)

Deli foods sold unheated by weight or volume are exempt, unless utensils are provided, as explained in sub. (4) (d).
Deli foods sold in a heated state are prepared foods.

Examples: 1) A grocer’s deli sells potato salad, fruit salad, cheese, ham, coleslaw, corned beef and fresh rolls at room temperature. These items are sold by weight or volume and utensils are not provided. The sale of these items is not taxable.

2) A grocer’s deli sells a serving of each of the following for $3.59: potato salad, fruit salad, cheese, ham, coleslaw, corned beef and fresh rolls and provides utensils. The sale is taxable as a sale of prepared food.

3) A grocer’s deli sells party trays by weight or volume in an unheated condition and for which utensils are not provided. The types of party trays include shrimp and sauce, meats, fresh vegetables, fresh fruits, cheeses or cookies. The sale of these party trays is not subject to tax.

(4) Prepared food. “Prepared food” is defined in s. 77.51 (10m), Stats., to mean any of the following:

(a) Food and food ingredients sold in a heated state.

Example: A retailer sells heated sandwiches to a customer. The heated sandwich is prepared food.

(b) Food and food ingredients heated by the retailer, except for the following:

Two or more food ingredients that are mixed or combined by a retailer for sale as a single item, if the retailer’s primary classification in the North American Industry Classification System (NAICS), 2002 edition, published by the federal office of management and budget is manufacturing under subsector 311, but not including bakeries and tortilla manufacturing under industry group number 3118.

Example: A food manufacturer classified under industry code 31161 of the North American Industry Classification System (NAICS), 2002 edition, makes hot dogs by mixing and combining 2 or more food ingredients, heating the hot dogs so that they are fully cooked and then packaging the hot dogs for sale once they have cooled. Although the hot dogs were heated by the retailer while they were being manufactured, they are not prepared food because they meet the exception in par. (b) 1., assuming the hot dogs do not meet any of the other definitions of prepared food.

Bakery items made by a retailer, including breads, rolls, pastries, buns, biscuits, bagels, croissants, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.

Examples: 1) A bakery mixes ingredients together to make a cake. The cake mix is then heated (baked). Once the cake cools, it is decorated and sold to a customer. Although the cake was heated by the retailer, it is not prepared food because it meets the exception in par. (b) 2., assuming the cake does not meet any of the other definitions of prepared food.

2) A bakery mixes 2 or more ingredients together to make a bagel. The bagel is then heated and placed in a heated display case for sale to a customer. The bagel is prepared food since it is sold heated. Although the bagel would meet the exception provided in par. (b) 2., since it is sold heated, it is prepared food.

Two or more food ingredients mixed or combined by a retailer for sale as a single item, sold unheated, and sold by volume or weight.

Example: Grocery Store A prepares potato salad for sale to its customers. Grocery Store A boils the potatoes, cuts the potatoes up, and combines the potatoes with various other ingredients to make potato salad. Once the potato salad has cooled, Grocery Store A sells the potato salad for $2 per pound. Although the potatoes were previously heated by the retailer when the potato salad was being made, the potato salad is not prepared food since it is sold unheated by weight, assuming the potato salad does not meet any of the other definitions of prepared food.

(c) Two or more food ingredients mixed or combined by the retailer for sale as a single item, except if any of the following apply:

The retailer’s primary classification in the North American Industry Classification System, 2002 edition, published by the federal office of management and budget is manufacturing under subsector 311, but not including bakeries and tortilla manufacturing under industry group number 3118.
The item is sold unheated and by volume or weight.
The item is a bakery item made by the retailer, including breads, rolls, pastries, buns, biscuits, bagels, croissants, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.

Examples: 1) Restaurant A purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make cakes with an ice cream layer. Restaurant A makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layers are baked and cooled, Restaurant A covers one of the cake layers with a layer of fudge and cookie bits. Restaurant A then places another cake layer over the fudge and cookie bits and covers the second cake layer with a layer of ice cream. Restaurant A decorates the top of the cake according to instructions provided by its customer. Although this cake is two or more ingredients mixed or combined by the retailer for sale as a single item, it is excluded from the definition of prepared food because it is primarily a bakery item and is not subject to Wisconsin sales or use tax, assuming the cake does not meet any of the other definitions of prepared food.

2) Restaurant B purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make a layered ice cream cake. Restaurant B makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layer is baked and cooled, Restaurant B places the cake layer between two layers of ice cream. Restaurant B decorates the top of the cake according to instructions provided by its customer. This cake is prepared food and subject to Wisconsin sales or use tax since Restaurant B mixed or combined 2 or more ingredients to make the cake, and the ice cream cake is not primarily a bakery item.

The food and food ingredients are only sliced, repackaged, or pasteurized by the retailer.

Example: Grocer C sells cheese trays. The cheese trays are put together by the grocer selecting the various types of cheeses and slicing the amount of each type of cheese it wants to include, placing each type of sliced cheese on the tray, and then wrapping the cheese tray. The cheese tray is not prepared food since the cheese on the tray was only sliced and repackaged, assuming the cheese tray does not meet any of the other definitions of prepared food.

The item contains eggs, fish, meat, or poultry in raw form that requires cooking by the consumer, as recommended by the food and drug administration in chapter 3, part 401.11 of its food code to prevent food-borne illnesses.

(d)

Food and food ingredients sold with eating utensils that are provided by the retailer of the food and food ingredients, including plates, bowls, knives, forks, spoons, glasses, cups, napkins, or straws. However a “plate” does not include a container or packaging used to transport the food and food ingredients. Eating utensils are provided by the retailer if:

a. The eating utensils are available to the purchasers and the retailer’s sales of food and food ingredients as described in pars. (a), (b), and (c) and food for which plates, bowls, glasses, or cups are necessary to receive the food are more than 75 percent of the retailer’s total sales of all food and food ingredients at that establishment; or

b. The retailer’s customary practice is to physically give or hand the utensils to the purchaser, except that plates, bowls, glasses, or cups that are necessary for the purchaser to receive the food and food ingredients need only be made available to the purchaser.

Examples: 1) Deli A has a self-service salad bar. Customers go to the salad bar, pick up a clam shell container at the salad bar, and place the items they would like in the clam shell container. The clam shell container is a plate or bowl necessary for the customer to receive the food and is made available to the customer. Therefore, sales from the self-service salad bar are sales of prepared food.

2) Retailer X has a self-service milk machine. Customers go to the milk machine, pick-up a disposable cup, and fill it with whatever kind of milk they want. The cup is necessary for the customer to receive the milk and is made available to the customer. Therefore, sales of milk in this manner are sales of prepared food.

a. The numerator of the percentage described in subd. 1. a. includes only sales of prepared food as defined in pars. (a), (b), and (c) and food for which plates, bowls, glasses, or cups are necessary to receive the food, but not including alcoholic beverages.

b. The denominator of the percentage described in subd. 1. a. includes all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks, but not including alcoholic beverages.

a. If the percentage determined under subd. 2. is 75 percent or less, utensils are considered to be provided by the retailer if the retailer’s customary practice is to physically give or hand the utensils to the purchaser or, in the case of plates, bowls, glasses, or cups that are necessary to receive the food, to make such items available to the purchaser.

b. If the percentage determined under subd. 2. is greater than 75 percent, utensils are considered to be provided by the retailer if the utensils are made available to the purchaser.

a. For a retailer whose percentage determined under subd. 2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does not become prepared food simply because the retailer makes utensils available to the purchaser of the item.

b. For a retailer whose percentage determined under subd. 2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does become prepared food if the retailer physically gives or hands utensils to the purchaser of the item, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food, need only be made available to the purchaser.

c. For purposes of subd. 4. a. and b., serving sizes are based on the information contained on the label of each item sold, except that, if the item sold has no label, the serving size is based on the retailer’s reasonable determination.

a. Except as provided in subd. 5. b., if a retailer sells food items that have a utensil placed in a package by a person other than the retailer, the utensils are considered to be provided by the retailer.

b. Except as provided in subds. 3. and 4., if a retailer sells food items that have a utensil placed in a package by a person other than the retailer and the person’s primary classification in the North American Industrial Classification System (NAICS), 2002 edition, published by the federal office of management and budget, is manufacturing under subsector 311, the utensils are not considered to be provided by the retailer.

a. For purposes of subd. 1. a., a retailer shall determine the percentage for the retailer’s tax year or business fiscal year based on the retailer’s data from the retailer’s prior tax or business fiscal year as soon as practical after the retailer’s accounting records are available, but no later than 90 days after the day on which the retailer’s tax or business fiscal year begins.

b. For retailers with more than one establishment in Wisconsin, a single determination under subd. 1. a. that combines the information for all of the retailer’s establishments in Wisconsin shall be made annually, and will apply to all of the retailer’s establishments in Wisconsin.

c. If a retailer has no prior tax or business fiscal year in Wisconsin, the retailer shall make a good faith estimate of its percentage under subd. 1. a. for the retailer’s first tax or business fiscal year and shall adjust the estimate prospectively after the first 3 months of the retailer’s operations if the actual percentage is materially different from the estimated percentage.

(5) Federal Supplemental Nutrition Assistance Program (SNAP). A grocer’s receipts from SNAP, formerly known as the federal food stamp program, are not subject to sales tax even if the items purchased by the consumer are not exempt food or food ingredients under s. 77.54 (20n), Stats.

Note: Section Tax 11.51 interprets ss. 77.51 (1fm), (3n), (3t), (10m), and (17w), 77.52 (1), and 77.54 (15) and (20n), Stats.

Note: The interpretations in s. Tax 11.51 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales of cigarettes became taxable on September 1, 1975, pursuant to Chapter 39, Laws of 1975; (b) Magazines and periodicals sold over-the-counter became taxable on September 1, 1983, pursuant to 1983 Wis. Act 27; (c) The definitions of “meals” and “sandwiches” and the tax treatment of prepackaged food combinations became effective August 1, 1997, pursuant to 1997 Wis. Act 237; The definitions of “candy,” “dietary supplement,” “food and food ingredient,” “prepared food,” and “soft drink,” and the exemption for food and food ingredients became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (2) (b), Register, June, 1983, No. 330, eff. 7-1-83; am. (2) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (1), (2) (a), (b) and (c) (intro.), 2., 3., and 4., cr. (2) (c) 5. and (3), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (a) and (b), Register, December, 1992, No. 444, eff. 1-1-93; am. (1) and (2) (a) and (b), Register, December, 1996, No. 492, eff. 1-1-97; am. (1) and (2) (a) and (b), r. (2) (c) (intro.), renum. (2) (c) 1. to 4. to be (3) (a) to (d), (2) (c) 5. to be (3) (g) 1., (3) to be (4) and am. (3) (c) and (d), (3) (g) 1.; cr. (3) (intro.), (e), (f), (g) 2. and (h), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction in (2) (a) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; CR 10-094: am. (2) (a), (3) (a) 2., (d) 3., (e) 2., (5) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (2) (a), (b), r. and recr. (3) (a) 2., cr. (3) (a) 3. to 10., am. (4) (b) 1. (Example), 2. (Example 1), cr. (4) (b) 3. (Example), (c) 3. (Examples), 4. (Example), am. (4) (d) 1. (intro.), a., b., cr. (4) (d) 1. b. (Examples) Register August 2012 No. 680, eff. 9-1-12; CR 16-053: am. (2) (a), (b) Register June 2018 No. 750, eff. 7-1-18.

Wis. Admin. Code § Tax 11.52 Coin-operated vending machines and amusement devices {#sec-tax-11.52 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.52}

(1) Scope. This section applies to all sales from coin-operated machines, except those located on army, air force, navy, or marine corps exchanges where the operator leases the machines to those exchanges which acquire title to and sell the merchandise through the machines to authorized purchasers from those exchanges.

(2) Definitions. In this section:

(a) “Heated” means the food or beverages have been prepared for sale in a heated condition and which are sold at any temperature higher than the air temperature of the room or place where they are sold.

(b) “Operator” has the meaning in s. 77.52 (1m), Stats.

Any person who owns or possesses coin-operated vending machines or amusement devices, who controls the operations of the machines as by stocking or removing the receipts from the machines or devices, who has access to the machines or devices for any purpose connected with the sale of merchandise or services through the machines or devices, and whose compensation is based, in whole or in part, upon receipts from sales made through the machines or devices.
A person who is responsible for providing laundry, dry cleaning, photographic, photocopy, or other taxable services through vending machines.

Note: If there is a question of who is the retailer for a single machine or device, a determination regarding who is the retailer liable for tax may be obtained by writing to: Wisconsin Department of Revenue, PO Box 8902, Madison, WI 53708-8902.

(3) Seller’s permits.

(a) Retailers of tangible personal property, items, property and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services sold through coin-operated vending machines or devices dispensing taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services shall obtain a seller’s permit. One permit shall be sufficient for all the machines of each retailer.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(b) A notice must be affixed to each coin-operated machine or device showing the retailer’s name, address and seller’s permit number.

(4) Taxable receipts. Taxable receipts include receipts from:

(a) Coin-operated machines dispensing tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., such as:

Candy.
Chewing gum.
Dietary supplements.
Heated foods and beverages.

4m. Prepared foods, such as sandwiches prepared by the retailer.

Soft drinks.
Non-edible items such as:

a. Beauty supplies, such as make-up, hair spray, nail polish, and combs.

b. Cameras, film, and photography supplies.

c. Cigars, cigarettes, other tobaccos products, and lighters.

d. Drugs and other medical supplies, such as aspirin, bandages, and suntan lotion.

e. Hygiene products, such as soap and shampoo.

f. Photocopies.

g. Photographs.

h. Reading materials.

i. Toys and games.

j. Videos.

k. Wearing apparel, such as gloves, hosiery, shoelaces, and sunglasses.

(b) Coin-operated machines which provide a taxable service, such as telephones, car washes, televisions, vacuums, parking meters, shoe shine machines, bowling ball cleaning machines and coin-operated amusement devices such as juke boxes, pinball machines, shuffleboards, pool tables, slot racing, mechanical rides and games, and penny arcades.

(c) Coin-operated machines of non-governmental retailers located on army, navy, or air force installations, hospitals, or other facilities of the United States government.

(5) Nontaxable receipts. Receipts from the following are not taxable:

(a) Laundry, dry cleaning and pressing machines when the service is performed by the customer through the use of self-service machines.

(b) Coin-operated storage lockers, pay toilets, and scales.

(d) Hospitals sales from vending machines of food and food ingredients, except soft drinks to patients, staff, or visitors.

(e) Sales from a vending machine of food and food ingredients except, candy, soft drinks, dietary supplements, and prepared foods.

(5m) Prizes awarded through amusement devices.

(a) Tangible personal property sold to a person who provides a taxable service through an amusement device, as defined in s. 77.54 (65m) (b), Stats., is exempt from sales and use tax if the property is used exclusively as a prize awarded or transferred through the use of the amusement device.

(b) An amusement device operator shall pay sales or use tax on purchases of tangible personal property that is used to play an amusement device but not awarded as a prize. Examples include tokens used to play the amusement device and paper tickets dispensed from the amusement device and redeemed for prizes.

(6) Reporting and record keeping.

(a) The receipts from the sale of taxable property, items, goods, or services from vending machines and amusement devices are subject to sales tax. Thus, taxable receipts include, for example, receipts from property, items, goods, and services selling for one, 5, and 10 cents and more. No deduction shall be permitted for the cost of the property, item, good, or service sold, materials used, labor or service cost, or any other expense, including commissions paid to place machines in an establishment.

(b) Sales tax collected from customers may be deducted from the total receipts before computing the tax payable, if customers are notified the prices include sales tax. If customers are not notified that the prices include sales tax, no deduction shall be allowed. The notification of the customer may be made by either:

Conspicuously posting the bracket system charts issued by the department.
Conspicuously posting a sign that states “Prices Include Sales Tax.”

The location of each machine.
The serial number of each machine.
Purchases and inventories of all merchandise sold through machines.
Receipts from sales of exempt merchandise.
Purchase records of all machines and the cost of all supplies of which the retailer is deemed to be the user or consumer.

Example: Purchase records shall be maintained for a vending machine or juke box, including repairs and parts, and records or compact discs used in the juke box.

(7) Sale, license, lease, or rental of machines.

(a) Except as provided in pars. (b), (c), (d) and (e), receipts from the sale, lease, rental, or license to use coin-operated machines and attachments, parts and supplies for the machines are subject to the sales tax. Taxable receipts include sales to persons providing a service, such as laundry and dry cleaning service. If the machines, attachments, parts, or supplies are purchased for use in Wisconsin from an unregistered out-of-state supplier, the purchaser shall remit the use tax directly to the department.

(b) Nontaxable receipts include the lease of coin-operated machines by non-governmental retailers to exchanges of the army, air force, navy, or marine corps which acquire title to and sell merchandise through the machines to authorized purchasers from such exchanges.

(c) Machines purchased exclusively for license, lease, or rental to others may be purchased by the lessor without tax if the lessor gives an exemption certificate to the lessor’s supplier. If the lessor intends to make any use of the machines other than license, lease, or rental, an exemption certificate claiming resale may not be given. In either event, the lessor’s rental receipts are taxable.

(d) Music sold in a tangible or digital form to a person described in s. 77.54 (63), Stats., for use in a jukebox is exempt from sales and use tax if the music is used exclusively for the jukebox. When the music is sold with a jukebox, the music is exempt as a separate sale from the jukebox if the sales price of the music is stated separately from the sales price of the jukebox on the invoice or bill of sale the seller gives to the purchaser.

(e)

A video or electronic game sold in a tangible or digital form to a person in the business of providing a taxable service through an amusement device, as defined in s. 77.54 (65m) (b), Stats., is exempt from sales and use tax if the video or electronic game is used exclusively for the amusement device. For exemption, the sales price of the video or electronic game shall be stated separately from the amusement device on the invoice, bill of sale, or similar document the seller gives to the purchaser.
Persons that are not in the business of providing taxable services through amusement devices are required to pay sales or use tax on purchases of video or electronic games used for amusement devices.
The operator of any device, machine, or game that is illegal to operate in Wisconsin, is required to pay sales or use tax on the purchase of the video or electronic game that is used for such device, machine, or game.

Examples: 1) Distributor is in the business of providing taxable admission services through amusement devices. Distributor owns an arcade game console that is an amusement device. The arcade game console is placed in a tavern. The tavern owner gives the receipts from customers playing arcade games on the console to Distributor, less a commission. Distributor purchases a software upgrade that is an electronic game played on the console, but does not replace the arcade game console. Distributor’s purchase of the software upgrade is exempt.

2) Arcade purchases a pinball machine it used in providing taxable admission services. The invoice to Arcade separately states the purchase price of the pinball machine from the video game component of the pinball machine. Arcade’s purchase of the video game that is used in the pinball machine is exempt from tax because it is separately stated on the invoice. Arcade’s purchase of the pinball machine is taxable.

3) Tavern purchases a dart board that is an amusement device. Customers insert $1 to use the dart board. Although Tavern’s primary business is selling food and drinks, its business also includes taxable admission services. Tavern’s purchase of the dart board is taxable. Tavern’s purchase of the dart board’s game component is not taxable if separately stated on the invoice.

4) Distributor is in the business of providing taxable admission services through amusement devices. Distributor purchases a video gambling machine that will be placed in a tavern. A commission will be paid to the tavern based on receipts from the video gambling machine. Distributor’s invoice for the video gambling machine separately states the purchase price of the video gambling machine from the electronic game that is a component of the video gambling machine. Distributor’s purchase of the video gambling machine and the electronic game is taxable, even though the electronic game is separately stated. The video gambling machine is not an amusement device because it is a device, machine, or game that is illegal to operate in Wisconsin. The operation of video gambling machines is in violation of Wisconsin law, as provided in ss. 945.03 and 945.04, Stats.

Note: Section Tax 11.52 interprets ss. 77.51 (1fm), (3n), (3t), (13), and (17w), 77.52 (1), (1m), (2) (a) 2., 6., 7., 10., and 11., and (2m), and 77.54 (20n), (63), and (65m), Stats.

Note: The interpretations in s. Tax 11.52 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The definitions of “candy,” “dietary supplement,” “food and food ingredient,” and “soft drink,” the exemption for food and food ingredients, the change of the term “gross receipts” to “sales price,” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (b) Receipts from all self-service laundry, dry cleaning, pressing, and dyeing machines, including those that are not coin-operated, are not taxable effective October 1, 2013, pursuant to 2013 Wis. Act 20; (c) The exemption for music sold to a jukebox operator for use in jukeboxes in s. 77.54 (63), Stats., became effective June 1, 2016, pursuant to 2015 Wis. Act 251; and (d) The exemptions for a video or electronic game sold to an amusement device operator for use in the amusement device and prizes awarded or transferred through the use of the amusement device under s. 77.54 (65m) became effective December 1, 2017, pursuant to 2017 Wis. Act 59.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (3) (a) 1. and r. (4) (c), Register, December, 1983, No. 336, eff. 1-1-84; am. (1) (intro.), (3) (a) 1., (5) (c) 5. and (6) (a), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction to numbering of (4) (a) 4m. made under s. 13.92 (4) (b) 1., Stats., Register May 2010 No. 653; CR 14-006: am. (5) (a) Register August 2014 No. 704, eff. 9-1-14; CR 19-112: cr. (7) (d) Register June 2020 No. 774, eff. 7-1-20; correction in (7) (d) made under s. 35.17, Stats., Register June 2020 No. 774; CR 20-018: cr. (5m), am. (7) (a), cr. (7) (e) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.53 Temporary events {#sec-tax-11.53 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.53}

(1) Definition. In this section, “temporary event” means an activity at one place of operation for a brief duration where taxable sales are made. A place of operation includes a fair, carnival, circus, festival or portable roadside stand.

(2) Permits for temporary events. Except as provided in sub. (3), a person conducting business as a retailer at a temporary event shall hold a seller’s permit.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(3) Exception. Persons, other than nonprofit organizations, who do not hold and are not otherwise required to hold a seller’s permit who have total taxable sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., or taxable services of less than $2,000 during the calendar year are not required to hold a seller’s permit. Sales by such persons are exempt occasional sales. However, a person’s purchases of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services which when resold are exempt occasional sales under this section, are taxable purchases by that person.

(4) Security. Application for a seller’s permit shall be on a form prescribed by the department. The applicant shall be subject to security requirements of s. 77.61 (2), Stats., and may be required to deposit security in an amount determined by the department, but not in excess of $15,000.

(5) Returns. Sales and use tax returns due from persons holding seller’s permits are subject to the provisions of s. 77.58, Stats. The returns shall report the tax due for the period of time or event covered by the returns and shall be due quarterly, on the last day of the next month following a calendar quarter unless notified by the department to file on some other basis under s. 77.52 (19) or 77.58 (1) and (2), Stats., and shall include on the return receipts from all temporary events and other taxable transactions of the permittee during the reporting period.

(6) Violation. Under s. 77.52 (12), Stats., any person required to hold a seller’s permit who operates without a permit is guilty of a misdemeanor and shall immediately cease selling when requested by a department representative.

(7) Operator reporting requirements. An operator of a swap meet, flea market, craft fair, or similar event shall report to the department for each event, the legal and business name, address, telephone number, e-mail address, tax account number, if available, social security number and federal employer identification number, if applicable, for each vendor selling merchandise at the swap meet, flea market, craft fair, or similar event as provided in s. Tax 11.535.

Note: Section Tax 11.53 interprets ss. 73.03 (38) and (50), 77.51 (9), 77.52 (1), (7), (9), (11), (12), and (19), 77.54 (7), 77.58, and 77.61 (2), Stats.

Note: The interpretations in s. Tax 11.53 are effective under the general sales and use tax law effective on and after September 1, 1969, except: (a) The security amounts given in sub. (4) became effective February 1, 1982; (b) The provisions of sub. (7) became effective May 17, 1988, pursuant to 1987 Wis. Act 399; (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (d) The threshold for exempt occasional sales was changed to less than $2,000 in annual sales, effective for sales beginning January 1, 2018, pursuant to 2017 Wis. Act 59.

History

Cr. Register, 1965, No. 114, eff. 7-1-65; am. Register, May, 1966. No. 125. eff. 6-1-66; am. (1), Register, June, 1975, No. 234, eff. 7-1-75; renum. from Tax 11.01, Register, January, 1978, No. 265, eff. 2-1-78; r. and recr., Register, January, 1982, No. 313, eff. 2-1-82; am. (1) (c), cr. (3) and (7), renum. (3) to be (4) and am., renum. (4) and (5) to be (5) and (6) and am. (5) (a) 1., Register, March, 1991, No. 423, eff. 4-1-91; r. (1) (a), (b), (e), renum. (1) (c) and (d) to be (1) (a) and (b) and am. (1) (a), r. and recr. (2) and (5), am. (3), (4) and (6), Register, August, 1999, No. 524, eff. 9-1-99; correction in (1) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, August, 1999, No. 524; EmR0924: emerg. r. and recr. (1), renum. (2) (intro.) to be (2) and am., r. (2) (a) and (b), am. (3) to (5) and (7), eff. 10-1-09; CR 09-090: r. and recr. (1), renum. (2) (intro.) to be (2) and am., r. (2) (a) and (b), am. (3) to (5) and (7) Register May 2010 No. 653, eff. 6-1-10; CR 20-018: am. (3) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.535 Operators of a swap meet, flea market, craft fair, or similar event {#sec-tax-11.535 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.535}

(1) Purpose. This section clarifies requirements and establishes a time standard for the reports required under s. 73.03 (38), Stats., which authorizes the department to require operators of swap meets, flea markets, craft fairs, and similar events to report to the department specific identifying information of each vendor selling merchandise at these events.

(2) Definitions. In this section:

(a) “Event” means an occurrence, occasion, activity, or function at which merchandise is sold or traded.

(b) “Operator” means a person who, or an entity such as an association, partnership, corporation, or nonprofit organization, which arranges, organizes, promotes, or sponsors an event.

(c) “Selling merchandise” means the sale, rental, license, lease, exchange, trade or barter of, or taking orders for, merchandise, goods, or products for money or other consideration, or both.

(d) “Similar events” means events which are similar to swap meets, flea markets and craft fairs and includes tradeshows, carnivals, fairs, and fund-raising events.

(e) “Vendor” means a person or entity selling merchandise at retail at an event. An operator might also be a vendor at an event.

(3) Report required. Each operator shall furnish to the department within 10 days following the close of an event, the name, address, telephone number and e-mail address of the operator; the name of the event; the date or dates of the event; and the location of the event; and the legal name, business name, address, telephone number, e-mail address, tax account number, if available, social security number and the federal employer identification number of each vendor, if applicable.

(4) Forms. Operators shall report the information required by sub. (3) on forms provided by the department or in a format similar to that form.

Note: Copies of Form S-240, “Wisconsin Temporary Event Report”, may be obtained from the department's website at www.revenue.wi.gov, at any Department of Revenue office, by calling (608) 266-1961, by email at dorformsrequests@wisconsin.gov, or by writing to Wisconsin Department of Revenue, Post Office Box 8949, Madison, WI 53708-8949.

(5) Alternative reporting method. Operators of continuing or successive events may report all vendors for each event or may report under an alternative method approved by the department. Any operator may request approval from the department of an alternative method of reporting which will provide the department with the required information on all vendors at each event. The request shall be made in writing to: Wisconsin Department of Revenue, Temporary Events Program, PO Box 8902, Madison, WI 53708-8902. It shall list the dates and locations of events to be held during the calendar year and the proposed method for reporting the information required.

Note: Section Tax 11.535 interprets s. 73.03 (38), Stats.

History

Cr. Register, June, 1990, No. 414, eff. 7-1-90; correction in (1) (a) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (title), (1), (2) (b) to (d), (3), and (5), eff. 10-1-09; CR 09-090: am. (title), (1), (2) (b) to (d), (3), and (5) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (c) Register November 2010 No. 659, eff. 12-1-10; CR 20-027: am. (5) Register July 2021 No. 787, eff. 8-1-21; correction in (5) made under s. 13.92 (4) (b) 6., Stats., Register December 2024 No. 828.

Wis. Admin. Code § Tax 11.54 Temporary amusement, entertainment, or recreational events or places {#sec-tax-11.54 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.54}

(1) Definitions. In this section:

(a) “Admission” means the right or privilege to have access to or use of a place, facility or location in Wisconsin where amusement, entertainment, or recreation is provided.

(b) Pursuant to s. 77.51 (10), Stats., “person” includes any natural person, firm, partnership, limited liability company, joint venture, joint stock company, association, public or private corporation, the United States, the state, including any unit or division of the state, any county, city, village, town, municipal utility, municipal power district, or other governmental unit, cooperative, unincorporated cooperative association, estate, trust, receiver, personal representative, any other fiduciary, any other legal entity, and any representative appointed by order of any court or otherwise acting on behalf of others.

(c) “Places of amusement, entertainment or recreation” include auditoriums, race tracks, street fairs, rock festivals, or other places where there is any show or exhibition for which any charge is made including the sale of tickets, gate charges, seat charges, entrance fees, and motor vehicle parking fees.

(2) General. The receipts from the sale of admissions to amusement, entertainment, and recreational events or places are subject to sales tax.

(3) Entrepreneurs, promoters, sponsors, or managers.

(a) Entrepreneurs, promoters, sponsors, or managers of an amusement, entertainment, or recreational event shall be regarded as retailers for the purposes of s. 77.51 (13) (c), Stats., if the entrepreneurs, promoters, sponsors, or managers have control and direction of the event including activities such as controlling the sale of admissions or admission tickets; controlling or regulating the admittance of all persons to the event or place; determining the nature of the amusement, entertainment, or recreation to be offered; deciding the scale of the prices to be charged for admission; receiving the proceeds from ticket sales, including amounts from ticket agents or brokers; and deciding, or having the right to decide, the disposition of the net profits, if any, realized from the event.

(b) As retailers, the entrepreneurs, promoters, sponsors, or managers are persons liable for the sales tax and are required to hold a seller’s permit for each place of operations pursuant to s. 77.52 (7), Stats., and may be required to post security as provided in s. 77.61 (2), Stats. The retailers are required to have a seller’s permit on the first date on which tickets or admission to an event to be conducted in this state are offered for sale.

(4) Exceptions. This section does not apply to:

(a) Traveling attractions which perform in stadiums, theaters, or other places where the permanent management of the stadium, theater, or other location holds a valid seller’s permit, controls the sale of tickets or admissions, and assumes the liability for the payment of the sales tax.

(b) Churches or other nonprofit groups which operate within the occasional sale limitations provided in s. 77.54 (7m), Stats.

(c) Sales of admissions or tickets by any baseball team affiliated with Wisconsin department of American legion baseball.

(d) Sales of admissions by a nonprofit organization to participate in any sports activity in which more than 50 percent of the participants are 19 years old or younger.

Note: Section Tax 11.54 interprets ss. 77.51 (10) and (13) (c), 77.52 (2) (a) 2., (7), and (19), 77.54 (35), and 77.61 (2), Stats.

Note: The interpretations in s. Tax 11.54 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for sales by a baseball team of the Wisconsin department of American legion baseball pursuant to 1985 Wis. Act 29, is effective September 1, 1985; and (b) The exemption for certain sales of admissions by a nonprofit organization to participants in sports activities became effective July 1, 2009, pursuant to 2009 Wis. Act 28.

History

Cr. Register, March, 1976, No. 243, eff. 4-1-76; renum. from Tax 11.02; Register, January, 1978, No. 265, eff. 2-1-78; cr. (1) (intro.), (2) and (4) (c), renum. (1) to be (1) (a) and am., renum. (2) and (3) to be (1) (c) and (b) and am., renum. (4), (5) and (6) to be (3) (a), (b) and (4) and am., Register, March, 1991, No. 423, eff. 4-1-91; EmR0924: emerg. am. (title), (1) (a) to (c), (2), (3), (4) (a) and (b), cr. (4) (d, eff. 10-1-09; CR 09-090: am. (title), (1) (a) to (c), (2), (3), (4) (a) and (b), cr. (4) (d) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.55 Repossessions and sales of property to enforce liens {#sec-tax-11.55 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.55}

(3) Enforcement of liens. Pawnbrokers, storage persons, and others selling tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to enforce a lien are retailers with respect to such sales, and tax applies to the receipts from such sales.

(4) Repossessions. Repossessions of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., by a seller from a purchaser when the only consideration is cancellation of the purchaser’s obligation to pay for the property, item, or good is not a taxable transaction. However, sales at retail of repossessed property (e.g., by finance companies, insurance companies, banks and other financial institutions) are taxable sales.

Note: Section Tax 11.55 (1) and (2) were repealed and recreated in s. Tax 11.555.

Note: Section Tax 11.55 interprets s. 77.51 (1fd), (13) and (14g) (f), Stats.

Note: The interpretations in s. Tax 11.55 are effective under the general sales and use tax law on and after September 1, 1969, except that the change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, May, 1978, No. 269, eff. 6-1-78; EmR0924: emerg. am. (title), (1), (2) (a), (3) and (4), eff. 10-1-09; CR 09-090: am. (title), (1), (2) (a), (3) and (4) Register May 2010 No. 653, eff. 6-1-10; CR 22-017: r. and recr. (title), r. (1), (2) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.555 Marketplace providers and sellers {#sec-tax-11.555 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.555}

(1) Definitions. In this section:

(a) “Marketplace provider” has the meaning given in s. 77.51 (7i), Stats.

(b) “Marketplace seller” has the meaning given in s. 77.51 (7j), Stats.

(2) General. Except as provided in sub. (4), a marketplace provider is required to collect and remit Wisconsin sales or use tax on all sales of taxable products and services that the marketplace provider facilitates on behalf of a marketplace seller. The amount subject to tax is the entire amount charged to the purchaser, including any amount charged by the marketplace provider for facilitating the sale.

(3) Notification and liability.

(a) A marketplace provider is required to notify the marketplace seller that it is collecting and remitting the tax on all taxable sales in Wisconsin. The department does not prescribe a required form or method for such notification.

(b) Only the marketplace provider can be audited and held liable for Wisconsin sale or use tax on sales facilitated on behalf of a marketplace seller, unless one of the following applies:

The marketplace provider has been granted a waiver by the department from collecting and remitting the tax, as provided in sub. (4).
The marketplace provider can demonstrate to the satisfaction of the department that the error in collecting and remitting the tax is due to insufficient or incorrect information provided by the marketplace seller. This subdivision does not apply if the marketplace provider and marketplace seller are related entities, as defined in s. 71.01 (9am), Stats.

(c) If a marketplace provider demonstrates that par. (b) 2. applies, the marketplace seller providing the insufficient or incorrect information may be audited and held liable for the tax.

(4) Waivers.

(a) A marketplace provider may apply for a waiver from collecting and remitting Wisconsin sales or use tax if its only activities are facilitating sales of products or services on behalf of marketplace sellers that are operating under a hotel, motel, or restaurant brand name shared with the marketplace provider.

(b) The waiver may be granted if the department is satisfied that the marketplace seller will collect and remit the tax on the entire amount charged to the purchaser.

(c) The department may grant waivers to other types of marketplace providers if there is evidence that the marketplace sellers have a history of reliably collecting and remitting to the department or there is other evidence that the marketplace sellers will reliably collect and remit the tax to the department.

(d) Marketplace providers shall apply to the department using Form S-102, “Application for Marketplace Provider Waiver,” and the application must contain the following:

The name and address of all marketplace sellers selling or furnishing tangible personal property or services in Wisconsin that the marketplace provider is requesting the waiver.
Each marketplace seller’s Wisconsin sales or use tax permit number and any other information necessary to ensure the entire amount of tax will be collected and remitted by the marketplace seller.

(e) Within 60 days from a written request from the department, a marketplace provider that is granted a waiver must submit updated information provided in par. (d) 1. and 2. for all marketplace sellers selling or furnishing such tangible personal property or services in Wisconsin. The department can require the marketplace provider to provide any other information to ensure the tax is being collected and remitted on the entire amount charged to the purchaser by the marketplace sellers.

(f) If a waiver is granted, the department may require the marketplace provider to notify each marketplace seller that the marketplace seller is liable for the tax on the entire sales price charged to the purchaser for taxable products and services in Wisconsin through that marketplace provider.

(g) The department may regard the marketplace seller as a retailer required to collect and remit the tax for sales facilitated on its behalf by a marketplace provider, when it determines that it is necessary for the efficient administration of Wisconsin sales and use taxes, pursuant to ss. 77.51 (13) (c) and 77.52 (3m) (c), Stats. The department may require the marketplace seller to notify each marketplace provider that the marketplace seller is liable for the tax on the entire sales price charged to the purchaser for taxable products and services in Wisconsin made through that marketplace provider.

(5) Physical marketplace. A marketplace provider includes a person that facilitates a sale on behalf of a seller at a storefront or other physical location. Brokers, dealers, consignors, and other persons that operate a physical location, advertise or list a seller’s product for sale, and process the payment are marketplace providers.

Examples: 1) A convenience store sells admission tickets to a concert for another organization. Customers of the convenience store purchase the tickets at the register in the convenience store. The convenience store forwards all money received from ticket sales to the other organization. The convenience store is a marketplace provider that is required to collect and remit sales tax on the admission tickets.

2) An antique store displays and sells antiques in its store that are owned by the antique store and by others. When making sales of antiques owned by other persons, the antique store collects the money from the purchaser and provides the sale amount, less a commission, to the owner of the antiques. The antique store is a marketplace provider that is required to collect and remit the sales tax on the entire sales price charged to the purchaser from the sale of the antiques.

(6) Reporting and other provisions.

(a) Filing tax returns.

A marketplace provider reports its own sales, and the sales it facilitates on behalf of marketplace sellers, on its sales and use tax return.
A marketplace seller shall include all of its sales, including sales facilitated on its behalf by a marketplace provider, in total sales on its sales and use tax return. The marketplace seller may claim a deduction on its return for sales amounts that are made through the marketplace provider and for which the marketplace seller received notification under s. 77.523 (2), Stats.

(b) Exemption certificates. A marketplace provider is required to obtain and maintain fully completed exemption certificates from purchasers claiming an exemption from Wisconsin sales or use tax for sales facilitated on behalf of a marketplace seller. The marketplace provider is also required to obtain and maintain exemption certificates for sales made on its own behalf.

A marketplace provider is allowed to claim a bad debt deduction on a sales transaction if it collects and remits Wisconsin sales or use tax on behalf of the marketplace seller, and either the marketplace provider or marketplace seller is eligible to claim the deduction under section 166 of the Internal Revenue Code for the worthless amount of the transaction.
For an eligible bad debt deduction under subd. 1., a marketplace provider shall claim the bad debt deduction on its Wisconsin sales and use tax return for the period in which the marketplace provider or marketplace seller writes off the amount as uncollectible in its books and records.
A marketplace seller may not claim a bad debt deduction on a sales transaction if the marketplace provider claims a bad debt deduction on that same transaction.

(d) Small seller exception. A marketplace provider or marketplace seller with no physical presence or activities in Wisconsin other than making sales into Wisconsin may qualify for the small seller exception under s. 77.51 (13gm), Stats. A retailer that qualifies for the small seller exception may, but is not required to, collect and remit Wisconsin sales and use tax. In determining the annual gross sales amount for purposes of the small seller exception, the following apply:

Gross sales includes both taxable and nontaxable sales.
A marketplace provider’s gross sales include sales made into Wisconsin on its own behalf and on behalf of other sellers.
A marketplace seller’s gross sales includes sales made into Wisconsin on its own behalf and made on its behalf by a marketplace provider.

(e) Nonprofit occasional sales.

A marketplace provider is required to collect and remit Wisconsin sales or use tax on taxable sales it facilitates on behalf of a nonprofit organization. Although the nonprofit organization’s own sales may be an exempt occasional sale under s. 77.54 (7m), Stats., the exemption does not apply or extend to sales by a marketplace provider, unless the marketplace provider is a nonprofit organization that qualifies for the occasional sales exemption.
A nonprofit organization does not include sales facilitated by a marketplace provider in determining if it is engaged in a trade or business for purposes of the occasional sales exemption.

Note: Section Tax 11.55 interprets ss. 77.51 (7i), (7j), (11d), (13), (13g), (13gm), (14) (n) 7., and (17) (g), 77.52 (3m) and (14) (c), 77.523, 77.54 (7m), and 77.585 (1g) and (11), Stats.

Note: 2019 Wis. Act 10 relating to marketplace providers and sellers became effective January 1, 2020.

History

CR 22-017: cr. Register June 2023 No. 810, eff. 7-1-23; correction in (3) (b) 2. made under s. 13.92 (4) (b) 7., Stats., and corrections in (4) (g), (6) (d) 2. made under s. 35.17, Stats., Register June 2023 No. 810.

Wis. Admin. Code § Tax 11.56 Printing industry {#sec-tax-11.56 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.56}

(1) Definitions. In this section:

(a) “Manufacturer” includes a printer or other person who performs any one or more of the processes in manufacturing printed matter, provided that the printer or other person qualifies as being engaged in manufacturing under s. 77.51 (7h), Stats., whether or not the printed matter is sold.

(b) “Manufacturing printed matter” includes either of the following processes by a manufacturer:

Initial typesetting and composition, producing a paste-up, combining photographs with words, making page makeups and taking pictures of them, making proofs and paper for editing, producing negatives which go to the stripping department for assembly of the flat and taking a picture, either positive or negative, of a flat which after it is finally proofed is known as plate-ready film, and producing an image carrier which is installed on a printing press, or using equivalent prepress technology to produce an image carrier, and the bindery/finishing stage.
Using computers, scanners, proofers, typesetters, photographic equipment, film processors, and direct-to-plate equipment exclusively in performing any of the processes listed in subd. 1. “Manufacturing printed matter” does not include using the equipment described in this subdivision to design, write, or compose an original document to be printed.

(c) “Typesetting” includes converting images into standardized letter forms of a certain style which usually are hyphenated, justified and indented automatically by means of machinery and equipment. Typesetting machinery and equipment includes fonts, video display terminals, tape and disc making equipment, computers, and typesetters which are interconnected to operate essentially as one machine. A system shall be considered to operate essentially as one machine whether or not the tape or disc is automatically fed to the typesetter.

(2) Printers’ taxable sales. Taxable receipts of printers include receipts from the following, unless otherwise exempt:

(a) Charges for printing, lithography, photolithography, rotogravure, gravure, letter press, silk screen printing, imprinting, multilithing, mimeographing, photostating, steel die engraving, and similar operations for customers, whether or not the paper and other materials are furnished by the customers. A printer’s charge for printing on paper furnished by a customer to produce printed matter not to be sold is subject to the tax.

(b) Charges for services in connection with the sale of printed matter, such as overtime and set-up charges, die cutting, embossing, folding, and binding operations, and charges for painting signs, show cards, and posters, whether the materials are furnished by the printer or by the customer.

(3) Taxable sales by others.

(a) Sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., by persons who are not printers, including so-called “trade shops” such as typesetters, image reproduction manufacturers, color separators and binders, or finishers are taxable unless the sales qualify for a statutory exemption, including the following:

Section 77.54 (2), Stats., which exempts from tax the sales price of tangible personal property or items under s. 77.52 (1) (b), Stats., that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale, except as provided in s. 77.54 (30) (a) 6., Stats.
Section 77.54 (2m), Stats., which exempts from tax the sales price of tangible personal property or services that are used exclusively and directly by a manufacturer in manufacturing shoppers guides, newspapers, or periodicals and that become an ingredient or component of shoppers guides, newspapers, or periodicals or that are consumed or lose their identity in the manufacture of shoppers guides, newspapers, or periodicals, whether or not the shoppers guides, newspapers, or periodicals are transferred without charge to the recipient. The exemption does not apply to advertising supplements that are not newspapers.

(b) Tangible personal property and items under s. 77.52 (1) (b), Stats., include typed matter, whether or not combined with artwork, such as typeset output, a paste-up, mechanical, assembly, camera-ready copy, flat, or a photoreproduction, including film plates.

(4) Nontaxable sales.

(a) Tax does not apply to charges, if stated separately on invoices and in the accounting records, for mailing services such as:

Addressing printed matter by hand or mechanically for the purpose of mailing.
Enclosing, sealing, and preparing for mailing.
Mailing letters or other printed matter.

(b) Tax also does not apply to a printer’s sales of:

Catalogs, as defined in s. Tax 11.19 (5m) (b), and the envelopes in which the catalogs are mailed.
Printed advertising materials for out-of-state use, as provided in s. Tax 11.19 (4) (a).
Advertising and promotional direct mail, as defined in s. Tax 11.19 (5s) (b).

(5) Exempt printing machinery and equipment. Section 77.54 (6) (am) 1., Stats., provides that machines and specific processing equipment and repair parts or replacements thereof, exclusively and directly used by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., and safety attachments for those machines and equipment are exempt from the sales or use tax. This includes machinery and equipment and repair parts or replacements of the machinery and equipment used exclusively and directly by a manufacturer in the printing process to manufacture tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

Note: Interpretations of s. 77.54 (6) (am) 1., Stats., are contained in s. Tax 11.40.

(6) Purchases for use in manufacturing printed matter for sale.

(a) Persons engaged in manufacturing printed matter for sale may purchase the following property and items without tax under the statutes indicated:

Section 77.54 (2), Stats. Property and items, such as paper stock or printing ink, used exclusively and directly in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale.
Section 77.54 (2), Stats. Property and items such as chemicals, emulsions, acids, raw film, lubricating oils, greases, nonoffset spray, finished art, color separations, plate-ready film, other positives and negatives, flats, and similar items, used exclusively and directly in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale and which are consumed, destroyed, or lose their identity in the manufacture of tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., destined for sale.

Example: A printer’s purchases of positives and negatives which are used exclusively and directly to produce catalogs and shoppers guides it sells to other persons are exempt from the tax.

Section 77.54 (6) (am) 2., Stats. Containers and packaging and shipping materials for use in packing, packaging, or shipping printed matter to their customers.

(b) The exemption under s. 77.54 (2), Stats., described in par. (a) 1. and 2., applies to property and items purchased by a person who does not use the property other than to provide it to a manufacturer described in par. (a) for use by the manufacturer exclusively and directly in manufacturing tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., to be sold. The exemption under s. 77.54 (2), Stats., does not apply if the manufactured tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., is not to be sold by the manufacturer to its customer or by the customer.

Examples: 1) A paper manufacturer’s purchases of negatives which it transfers to a printer, who uses the negatives exclusively and directly to produce printing which the printer sells to the paper manufacturer are exempt from the tax.

2) An advertising agency’s purchases of color separations which are furnished to a commercial printer who uses the color separations exclusively and directly to produce advertising material the printer sells to the advertising agency are exempt from the tax.

(7) Purchases for use in manufacturing printed matter not for sale.

(a) The exemption under s. 77.54 (2m), Stats., applies to tangible personal property or services that are used exclusively and directly by a manufacturer in manufacturing shoppers guides, newspapers, or periodicals and that become an ingredient or component of the shoppers guides, newspapers, or periodicals or that are consumed or lose their identity in the manufacture of the shoppers guides, newspapers, or periodicals, whether or not they are transferred without charge to a recipient.

Examples: Examples of nontaxable purchases for use in manufacturing printed matter include:

1) A shoppers guide publisher, who distributes the publication without charge, purchases paper and furnishes it to a printer who charges for the printing of the shoppers guide.

2) A shoppers guide publisher purchases paper it uses to print a shoppers guide which it distributes without charge to recipients.

(b) Section 77.54 (43), Stats., provides that Wisconsin sales or use tax is not imposed on raw materials if both of the following conditions are met:

The raw materials are processed, fabricated, or manufactured into, attached to, or incorporated into printed materials.
The resulting printed materials will be transported and used solely outside Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin use tax.

2) Assume the same facts as 1) above, except that the company selling the paper is located in Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin sales tax.

3) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print catalogs for Company B. The catalogs are provided without charge to customers outside Wisconsin. The charge by the advertising agency to Company B is exempt from Wisconsin sales and use tax even though the printer is not selling tangible personal property because the finished artwork is used for processing, fabricating or manufacturing printed material that is transported and used solely outside Wisconsin.

(bm) Section 77.52 (2) (a) 11., Stats., provides that the tax does not apply to the service of printing or imprinting tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that results in printed material, catalogs, or envelopes that are exempt under s. 77.54 (25), (25m), or (59), Stats.

Example: Company Z purchases paper that is used to print catalogs that are designed to advertise and promote the sale of Company Z’s merchandise. The paper is delivered to Company X, a Wisconsin printer, that prints the catalogs for Company Z. The catalogs are shipped both in and outside Wisconsin. The charge by Company X to Company Z for the printing of the catalogs is not taxable. However, Company Z owes tax on its purchase of the paper that it provides to Company X for those catalogs that are not shipped outside Wisconsin for use solely outside Wisconsin. Company Z’s purchase of the paper for those catalogs that are shipped outside Wisconsin is exempt as provided in par. (b).

(c) The tax applies to purchases of artwork, single color or multicolor separations, negatives, flats, and similar items if those purchases are used in the manufacture of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., not to be sold, other than items exempt under par. (a) or (b). A printer who does not supply paper used in printing tangible personal property is not selling tangible personal property but rather, is selling a service.

Example: 1) A retailer purchases color separations which are used in its own printing plant to produce advertising material it distributes to its customers in Wisconsin. The sale of the color separations is subject to Wisconsin sales or use tax because the advertising materials manufactured are not destined for sale.

2) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print flyers that are not catalogs for Company B. The flyers are provided without charge to customers in Wisconsin. The charge by the advertising agency to Company B is subject to Wisconsin sales and use tax. The exemption under s. 77.54 (2), Stats., does not apply because the printer is not selling tangible personal property or an item, or property under s. 77.52 (1) (b) or (c), Stats., and the exemption under s. 77.54 (43), Stats., does not apply because the flyers are used in Wisconsin.

(8) Purchases of fuel and electricity for use in manufacturing printed matter. Section 77.54 (30) (a) 6., Stats., provides an exemption for fuel and electricity consumed in manufacturing tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., in this state. “Manufacturing” is defined in s. 77.51 (7h), Stats.

(9) Additional exemptions for printing industry.

(a) Definitions. In s. 77.54 (61), Stats., and this subsection:

1g. “Book printing” means activities described under 323117 of the North American Industry Classification System.

1r. “Commercial printing, except screen printing and book printing, without publishing, except grey goods printing” means activities described in 2012 North American Industry Classification 323111.

“Copies of the product” means finished artwork in a digital form that is generated, furnished, and used for the purpose of printing; represents the object, such as a book, catalog, pamphlet, or magazine, as it is to appear in a printed form; and includes files containing instructions or other information required by the printer for printing the product, such as instructions for plate-making or setting ink-levels at the printing press, whether these instructions or other information are furnished to the printer or derived by the printer from the finished art files.
“Finished artwork” has the meaning given in s. 77.51 (3rm), Stats.
“Primarily” means more than 50 percent.
“Stored” has the meaning of the term “storage” as defined in s. 77.51 (18), Stats.

8m. “Support activities for printing” means activities described under 323120 of the North American Industry Classification System.

“Used” has the meaning of the term “use” as defined in s. 77.51 (22), Stats.

(b) Exemptions. Section 77.54 (61), Stats., provides exemptions for purchases of tangible personal property described under s. 77.54 (61) (a) and (b), Stats., by a person primarily engaged in commercial printing, book printing, or support activities for printing, as determined by the department.

Commercial printing, except screen printing and book printing, without publishing, except gray goods printing.
Printing or printing and binding books and pamphlets without publishing.
Performing prepress and postpress services in support of printing activities.

Examples: (1) Newspaper publishes a daily edition of a newspaper. Newspaper operates its own printing plant. The printing plant prints Newspaper’s publications as well as printing under contract for third parties. More than 50 percent of Newspaper’s sales are from sales of its newspaper and advertising revenues associated with sales of its newspaper. Newspaper’s primary activity is described by NAICS code 511110: Newspaper Publishers. Newspaper does not qualify for the exemptions under s. 77.54 (61), Stats.

(2) Insurance Company operates its own printing plant. Insurance Company’s primary source of revenues is insurance premiums. Insurance Company’s primary NAICS code is described within NAICS subsector code 524: Insurance Carriers and Related Activities. Insurance Company does not qualify for the exemptions under s. 77.54 (61), Stats.

(3) Business is engaged in screen printing of T-shirts, caps, and jackets. This is Business’ only activity and source of revenue. Business’ primary activity is described by NAICS code 323113: Commercial Screen Printing. Business does not qualify for the exemptions under s. 77.54 (61), Stats.

(4) Company is primarily engaged in the business of printing on fabric grey goods. Company’s primary activity is described by NAICS code 313310: Textile and Finishing Mills. Company does not qualify for the exemptions under s. 77.54 (61), Stats.

(5) Printer is primarily engaged in commercial printing as described in NAICS code 323111. Company B contracts with Advertising Agency to produce finished artwork that represents Company B’s holiday catalog and to furnish the finished artwork to Printer in the formats specified by Printer. Company B contracts with Printer to print and mail the catalogs to addresses Company B furnishes to Printer. Printer uses the finished artwork in the printing of the catalog. Printer owns servers that it uses primarily to store the finished artwork it receives from its customers. The servers are exempt under s. 77.54 (61), Stats.

(6) Printer is primarily engaged in commercial printing and binding of books, as described in NAICS code 323117. Publisher enters into a contract with Printer to print and bind one of Publisher’s books. Publisher provides Printer with the finished artwork files in the formats specified by Printer. Printer has computer programs that translate the finished artwork files into files that are sent to and used by a plate-making machine to make the plates for printing the book, and into files that are sent to and used by the printing press to print the pages in the book. The computers and server used by Printer to store Publisher’s finished artwork are primarily used by Printer to store copies of products printed or to be printed by Printer. The computers and servers used to store the finished art furnished to Printer by Publisher are exempt under s. 77.54 (61), Stats.

(7) Printer has printing plants in Wisconsin and Minnesota. Printer places an order for office supplies from an out-of-state seller. The office supplies are delivered to Printer’s location in Wisconsin. The office supplies are to be used in Printer’s offices in Wisconsin and Minnesota. Printer sets aside the office supplies it will deliver to its Minnesota office, and delivers these supplies to that office one week later. During the week the office supplies being sent to Minnesota are in Wisconsin and prior to being delivered to Minnesota, the office supplies were only stored, remained idle, and were not used by Printer. Printer’s purchase of the office supplies delivered to it in Wisconsin and then delivered by Printer to its office in Minnesota are exempt under s. 77.54 (61), Stats.

(8) Printer has printing plants in Wisconsin, Iowa, and Indiana. Printer is primarily engaged in activities described by NAICS code 323111. Printer is moving a printing press from its Indiana plant to its Iowa plant. The printing press was originally purchased by Printer in Indiana. The printing press is used exclusively and directly by Printer in manufacturing. Printer has the printing press shipped to its Wisconsin facility. The press is in Wisconsin for not more than 180 days before it is transported to Iowa. While in Wisconsin, Printer performs repairs to the press. Printer’s purchase of the printing press is not subject to Wisconsin use tax. Repair of the printing press while in Wisconsin is a use of the printing press in Wisconsin by the printer. However, Printer is not liable for Wisconsin use tax on its purchase of the printing press as the printing press is an exempt manufacturing machine under s. 77.54 (6) (am) 1., Stats.

Note: Section Tax 11.56 interprets ss. 77.51 (7h), (8), (11), and (14) (h), 77.52 (1) and (2) (a) 11., and 77.54 (2), (2m), (6) (am) 1. and 2., (25), (25m), (30) (a) 6., (43), (59), and (61), Stats.

Note: The interpretations in s. Tax 11.56 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales of typeset material shall first be considered sales of tangible personal property on April 1, 1983; (b) The exemption in sub. (3) (b) 2. for ingredients of publications became effective July 2, 1983, pursuant to 1983 Wis. Act 27; (c) The definition of storage and use for purposes of imposing use tax does not include storing or using raw materials becoming printed materials to be shipped outside Wisconsin effective October 1, 1993, pursuant to 1993 Wis. Act 16; (d) The sales and use tax exemption for raw materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (e) The exemption for fuel and electricity consumed in manufacturing became effective January 1, 2006, pursuant to 2003 Wis. Act 99; (f) The exemption for catalogs and the envelopes in which they are mailed became effective April 1, 2009 pursuant to 2007 Wis. Act 20; (g) The requirement that property and items which qualify for exemption under s. 77.54 (2) and (2m), Stats., be consumed exclusively and directly by a manufacturer in manufacturing property and items destined for sale became effective August 1, 2009 pursuant to 2009 Wis. Act 28; (h) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (i) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; (j) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20; (k) The additional printing exemptions under s. 77.54 (61), Stats., became effective October 1, 2013, pursuant to 2013 Wis. Act 20; and (L) Amendments to the additional printing exemptions under s. 77.54 (61), Stats., became effective retroactively to October 1, 2013, pursuant to 2013 Wis. Act 145.

History

Cr. Register, March, 1983, No. 327, eff. 4-1-83; am. (3) (a), renum. (3) (b) to be (3) (b) 1., cr. (3) (b) 2., r. and recr. (7), Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (a) and (c), (5) and (6) (a) 1., (b) (intro.) 1. and 2. and (7) (b), r. (6) (b) 3., cr. (6) (c), Register, April, 1994, No. 460, eff. 5-1-94; r. (1) (a) and (6) (b) 1. and 2., renum. (1) (b) and (c) to be (1) (c) and (a) and am. (c), (3) (a), (b) 1. and 2. and (c) to be (3) (a) (intro.), 1. and 2. and (b) and am. (a) (intro.) 1. and 2., (6) (b) (intro.) to be (6) (b) and am., (6) (c) and (7) (b) to be (7) (b) and (c) and am., cr. (1) (b), am. (2) (a), (5), (6) (a) 2., Register, January, 1999, No. 517, eff. 2-1-99; EmR0924: emerg. am. (1) (a), (b) 2., (c), (2) (intro.), (b), (3), (5), (6), (7) (a), (b) (intro.), 1., and (c), r. and recr. (4), cr. (7) (bm) and (8), eff. 10-1-09; CR 09-090: am. (1) (a), (b) 2., (c), (2) (intro.), (b), (3), (5), (6), (7) (a), (b) (intro.), 1., and (c), r. and recr. (4), cr. (7) (bm) and (8) Register May 2010 No. 653, eff. 6-1-10; CR 13-011: cr. (4) (b) 3. Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (7) (bm), cr. (9) Register August 2014 No. 704, eff. 9-1-14; corrections in (5), (6) (a) 3. made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 16-053: cr. (9) (a) 1g., renum. (9) (a) 1. to 1r., r. (9) (a) 4., 6., 7., cr. (9) (a) 8m., r. and recr. (9) (b) (intro.) Register June 2018 No. 750, eff. 7-1-18; correction in (9) (b) (intro.) made under s. 35.17, Stats., Register June 2018 No. 750.

Wis. Admin. Code § Tax 11.57 Utilities {#sec-tax-11.57 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.57}

(1) Taxable sales. Sales of the following tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services provided by utilities are taxable:

(a) Utility services billed to household, industrial, or commercial customers, with any adjustments for discounts taken by customers in the utility’s next reporting period.

Example: An early payment discount is adjusted for in the next reporting period.

(b) Excess use charges and minimum or idle service charges.

(d) Parking space rentals.

(e) Rentals of transformers located on a customer’s property.

(f) Labor and materials to install or repair conversion burners.

(g) The rental of water heaters.

(h) Sales of scrap, gravel, or timber sold for removal.

(i) Sales of tools, used equipment, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to employees or other purchasers.

(j) Pilot relights for furnaces, such as “no heat” calls, or replacing appliance fuses.

(k) Sale of a utility overhead transmission or distribution line in place, if installed under easement or license on land owned by others.

Note: See s. Tax 11.86 for more information.

(L) Charges to builders to put in “temporary services.”

(2) Nontaxable sales. The following sales to customers are not subject to the tax:

(a) Connection or reconnection charges for natural gas, electricity, and water.

(b) Utility services delivered to Indians living on an Indian reservation, or services delivered on the reservation to an Indian tribal governing board.

(d) Services coincidental with house moving.

(e) Pilot relight of yard gas lamp.

(f) Contributions in aid of construction, such as payments by a customer to have a line extended to the customer’s property.

(g) The installation charge for a pole sold to a customer, which is installed on land owned by the customer.

(h) “Wheeling” energy for another utility.

(i) Sales of fuel and electricity for use in farming, including agriculture, dairy farming, horticulture, floriculture, silviculture, beekeeping, and custom farming services.

(im) Sales of fuel and electricity consumed in manufacturing tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., in Wisconsin.

(j) Labor charged a customer for the installation of a complete furnace or built-in appliance.

(k) Water delivered to customers through mains.

(L) Coal, fuel oil, propane, steam, peat, fuel cubes produced from solid waste and wood used for fuel, sold for residential use.

(m) Biomass, as defined in s. 196.378 (1) (ar), Stats., that is used for fuel sold for residential use.

(n) Electricity and natural gas sold during the months of November, December, January, February, March, and April for residential use. For purposes of this exemption, s. 77.54 (30) (b), Stats., provides that electricity or natural gas is considered sold at the time of billing. If the billing is by mail, the time of billing is the day on which the billing is mailed. In any event, a qualifying customer shall receive only 6 months of service exempt from taxation during the November through April period.

(o) Low-income assistance fees that are charged under s. 16.957 (4) (a) or (5) (a), Stats.

(p) If fuel or electricity is sold to a person partly for an exempt use and partly for a use that is not exempt, no tax shall be collected by the seller on the portion of the sales price of the fuel or electricity that is used for an exempt purpose, as specified on an exemption certificate provided by the purchaser to the seller, as described in par. (q).

(q)

Where a building, that contains residential quarters and commercial operations, is heated by one central heating plant, it is necessary to determine the portion of the fuel purchased which qualifies for the “residential use” exemption. The percentage of residential use may be computed by dividing the number of square feet used for residential purposes, excluding common areas, by the total area heated, excluding common areas. If this does not produce a reasonable result, any other reasonable method of estimating may be used. The resulting percentage should be rounded to the nearest 10%.
In this subsection, “residential use” means use in a structure or portion of a structure that is a person’s permanent principal residence. Use in a residence includes heating or cooling the premises, heating water, operating fans or other motors, providing lighting, and other ordinary uses by the purchaser in a residence. Residential use includes use in single-family homes, duplexes, townhouses, condominiums, mobile homes, rooming houses, apartment houses, nursing homes, and farm houses, if the structure is used as a person’s permanent principal residence. Residential use includes use in apartment houses, nursing homes, and farm houses even though they are on a commercial or rural meter.
“Non-residential use” is use other than “residential use” as defined in subd. 2., and includes any use in the conduct of a trade, business or profession, whether the trade, business or profession is carried on by the owner of the premises or some other person. It includes use in secondary residences, motor homes not used as a permanent principal residence, travel trailers, other recreational vehicles, and transient accommodations. “Transient accommodations” include hotels, motels, inns, travel homes, tourist houses, summer cottages, apartment hotels, or resort lodges or cabins, and any accommodation which is rented for a continuous period of less than one month.

Examples: 1) A person owns a home in Wisconsin where he resides for 7 months each year and a cottage, also in Wisconsin, where he resides for 5 months each year. The home is his principal residence and the cottage is his secondary residence.

2) A person is a resident of Florida and has a home in Florida. The person also retains a home in Wisconsin. The person’s Florida home is her principal residence and her Wisconsin home is her secondary residence.

A “continuous” certification designation is provided on the exemption certificate, form S-211, and, if claimed, the form remains in effect until replaced or revoked. A new certificate shall be filed if there is a change in the percentage of exempt use.

(r)

Service provided by an electric cooperative to another electric cooperative, or by a telecommunications utility to another telecommunications utility, for disaster relief work performed during a disaster period.
In this paragraph:

a. “Disaster period” has the meaning given in s. 77.54 (68) (b) 2., Stats.

b. “Disaster relief work” has the meaning given in s. 77.54 (68) (b) 3., Stats.

c. “Electric cooperative” has the meaning given in s. 76.48 (1g) (c), Stats.

d. “State of emergency” has the meaning given in s. 77.54 (68) (b) 4m., Stats.

e. “Telecommunications utility” has the meaning given in s. 196.01 (10), Stats.

The exemption in this paragraph does not apply to materials and supplies used in performing exempt disaster relief services.

(3) Taxable purchases.

(a) Persons engaged in the business of providing electrical or gas utility service are consumers of the tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services used in providing the utility services. The tax applies to the sales of the property, items, goods, or services to them, except where a specific exemption applies, such as the exemptions shown in sub. (4).

(b) The purchase, license, lease, or rental of the following property, items, goods, and services by a utility are subject to the tax:

Transformers, substation equipment, and other tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., used to construct, improve, or repair a transmission or distribution line.
A contractor’s charges for the construction, improvement, or repair of an overhead utility transmission or distribution line installed under easement or license on land owned by others.

Note: See s. Tax 11.86 for more information.

Charges for coating pipe or creosoting poles.
Charges for X-ray testing of welding joints in the construction of overhead utility facilities.
Gas or electricity purchased for resale but used by a utility, but not gas used as a fuel in producing electricity or steam.
Charges for aerial photographs and maps.

(4) Nontaxable purchases. The following purchases, licenses, leases, or rentals by utilities are not subject to the tax:

(a) Fuel converted to electrical energy, gas or steam by utilities, as provided under s. 77.54 (6) (am) 3., Stats.

(b) A steam generator or other machines and equipment exclusively and directly used in manufacturing electricity or steam. The manufacturing process begins when the coal starts moving by conveyor directly to the boiler bunker, and it ends at the generator bus duct. An overhead crane used for the installation and repair of a turbine, and a fuel storage tank are not directly used in manufacturing.

(c) Any residue used as a fuel in a business activity that results from the harvesting of timber or the production of wood products, including slash, sawdust, shavings, edgings, slabs, leaves, wood chips, bark and wood pellets manufactured primarily from wood or wood residue.

(d) Charges for X-ray testing of welding joints in the pipe as part of the construction of underground utility pipelines.

(5) Waste treatment facilities. The sales price from the sales of and the storage, use or other consumption of tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., which becomes a component part of an industrial waste treatment facility that is exempt or that would be exempt under s. 70.11 (21), Stats., if the property or items were taxable under ch. 70, Stats., is exempt from sales and use tax.

(6) Transfer of transmission facilities. Excluded from the definition of “sale,” for sales and use tax purposes, is the transfer of transmission facilities, as defined in s. 196.485 (1) (h), Stats., to a transmission company, as defined in s. 196.485 (1) (ge), Stats., after the organizational start-up date, as defined in s. 196.485 (1) (dv), Stats., of such company in exchange for securities, as defined in s. 196.485 (1) (fe), Stats.

Note: Section Tax 11.57 interprets ss. 77.51 (14g) (fm), 77.52 (1) and (2) (a) 10., and 77.54 (3), (6) (am) 1. and 3., (17), (26m), (30), (44), and (68), Stats.

Note: The interpretations in s. Tax 11.57 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for sales of coal, fuel oil, propane, steam and wood became effective July 1, 1979, pursuant to Chapter 1, Laws of 1979; (b) The six-month exemption for electricity and gas became effective November 1, 1979, pursuant to Chapter 1, Laws of 1979; (c) The exemption for fuel converted to electrical energy, gas or steam by utilities became effective October 1, 1981, pursuant to Chapter 20, Laws of 1981; (d) The exemption for peat and fuel cubes produced from solid waste became effective April 2, 1986, pursuant to 1985 Wis. Act 149; (e) The exemption for wood residue became effective September 1, 1987, pursuant to 1987 Wis. Act 27; (f) The exemption for component parts of an industrial waste treatment facility became effective July 1, 1989, pursuant to 1983 Wis. Act 426, later clarified effective May 17, 1988, pursuant to 1987 Wis. Act 399; (g) The sale of gas or other fuel used to heat farm buildings, including greenhouses, that are not exempt machinery under s. Tax 11.12became taxable July 1, 1991; (h) All fuel used in farming became exempt October 1, 1991, pursuant to 1991 Wis. Act 39; (i) The exemption for electricity sold for use in farming became effective May 1, 2000, pursuant to 1999 Wis. Act 9; (j) The exclusion from the definition of sale for certain sales of transmission facilities became effective October 29, 1999, pursuant to 1999 Wis. Act 9; (k) The exemption for fuel and electricity consumed in manufacturing became exempt January 1, 2006, pursuant to 2003 Wis. Act 99; (L) The exemption for certain low-income assistance fees became effective July 1, 2007, pursuant to 2005 Wis. Act 141; (m) The exemption for biomass sold for residential use became effective December 1, 2007, pursuant to 2007 Wis. Act 20; (n) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (o) The exemption for services performed during a disaster period became effective January 1, 2017, pursuant to 2017 Wis. Act 290; and (p) The exemption for fuel and electricity used in ”beekeeping” became effective December 1, 2017, pursuant to 2017 Wis. Act 59.

History

Cr. Register, January, 1979, No. 277, eff. 2-1-79; cr. (2) (L), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a) and (4) (a), Register, June, 1983, No. 330, eff. 7-1-83; cr. (4) (c), Register, April, 1990, No. 412, eff. 5-1-90; am. (2) (e) 1., Register, June, 1990, No. 414, eff. 7-1-90; am. (1) (a), (i), (j) and (k), (2) (f), (g), (i) and (L) 7. and 8., (3) (a) and (b) 1., 2. and 4. and (4) (a), cr. (4) (d) and (5), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (i), Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (title), (1) (intro.), (a), (h), (i), (2) (intro.), (a), (i), (3) (a), (b) (intro.), 1., 2., (4) (intro.), (d) and (5), cr. (2) (im), (m) to (q) and (6), r. and recr. (2) (L) and (4) (c), eff. 10-1-09; CR 09-090: am. (title), (1) (intro.), (a), (h), (i), (2) (intro.), (a), (i), (3) (a), (b) (intro.), 1., 2., (4) (intro.), (d) and (5), cr. (2) (im), (m) to (q) and (6), r. and recr. (2) (L) and (4) (c) Register May 2010 No. 653, eff. 6-1-10; correction in (4) (a) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 20-018: am. (2) (i), cr. (2) (r) Register July 2021 No. 787, eff. 8-1-21.

Subchapter VIII Service Enterprises

Wis. Admin. Code § Tax 11.61 Veterinarians and their suppliers {#sec-tax-11.61 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.61}

(1) Sales by veterinarians.

(a) Charges made by veterinarians which are exempt from the sales tax include charges for the following:

Medical services.
Hospitalization services.
Drugs.
Services performed to animals which are livestock or poultry as defined in s. Tax 11.12 (2) (j), bees, or farm work stock as defined in s. Tax 11.12 (2) (e), regardless of whether the service is a veterinary service.

(b) Charges made by veterinarians which are subject to the sales tax include charges for the following activities for animals:

Boarding.
Grooming.
Clipping.

(c) Sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., by veterinarians which shall be taxable include the following:

Leashes, collars, and other pet equipment.
Pets.
Pet food, other than medicated pet food.

(2) Purchases by veterinarians.

(a) Sales to veterinarians of drugs for animals and sales to veterinarians of other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to be used or furnished by them in the performance of their professional services to animals shall be subject to the sales or use tax, except as provided in par. (b).

(b)

Veterinarians’ purchases of drugs used on farm livestock, bees, and farm work stock are exempt from tax.
Veterinarians’ purchases of animal identification tags from the Wisconsin department of agriculture, trade and consumer protection are exempt from tax. Purchases of animal identificationtags from other suppliers which veterinarians provide to customers in performing professional services to animals are subject to tax.
Veterinarians’ purchases of property used by the veterinarian in performing custom farming services as defined in s. Tax 11.12 (2) (b), and that qualify for exemption under s. 77.54 (3) (a) or (c), or (3m), Stats., are exempt from tax.

Note: See Publication 224, Veterinarians: How Do Wisconsin Sales and Use Taxes Affect Your Business?, for additional information on performing custom farming services by veterinarians. Publication 224 is available on the department’s web site at http://www.revenue.wi.gov/html/taxpubs.html#sales.

(c) If the tax on sales to veterinarians is not collected by a supplier, the veterinarians shall be responsible for and shall report and pay a use tax on those purchases directly to the department.

Example: A veterinarian purchases drugs for pets from an out-of-state supplier not registered to collect Wisconsin sales or use tax. The veterinarian is subject to Wisconsin use tax on the purchase price of the drugs.

Note: Section Tax 11.61 interprets ss. 77.51 (1bm), (2d), (3pj), and (13) (m) and (o), 77.52 (2) (a) 10., and 77.54 (3), (3m), (33), and (42), Stats.

Note: The interpretations in s. Tax 11.61 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Chapter 333, Laws of 1973, effective June 24, 1974, provided that a veterinarian is the consumer of all the animal medicines purchased. Prior to June 24, 1974, those purchases were exempt purchases for resale if sold independent of the performance of veterinarian services; (b) The exemption for medicines used on farm livestock, but not workstock, became effective July 1, 1986, pursuant to 1985 Wis. Act 29; (c) The exemption for animal identification tags purchased from the Wisconsin department of agriculture, trade and consumer protection became effective October 1, 1993, pursuant to 1993 Wis. Act 16; (d) The definition of “drug” is effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (e) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, August, 1976, No. 248, eff. 9-1-76; am. (2) (a), Register, January, 1978, No. 265, eff. 2-1-78; am. (2) (a), Register, June, 1990, No. 414, eff. 7-1-90; am. (2) (a), renum. (2) (b) to be (2) (c), cr. (2) (b) 1. and 2., Register, April, 1994, No. 460, eff. 5-1-94; EmR0924: emerg. am. (1) (a) (intro.), (c) (intro.), 3., (2) (a) and (b) 1., cr. (1) (a) 3., eff. 10-1-09; CR 09-090: am. (1) (a) (intro.), (c) (intro.), 3., (2) (a) and (b) 1., cr. (1) (a) 3. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a) (intro.), (b) (intro.), (c) 1., (2) (a), (b) 1., cr. (1) (a) 4., (2) (b) 3. Register November 2010 No. 659, eff. 12-1-10; CR 20-027: am. (1) (a) 4., (2) (b) 1. Register July 2021 No. 787, eff. 8-1-21; correction in (2) (b) 1. made under s. 35.17, Stats., Register July 2021 No. 787.

Wis. Admin. Code § Tax 11.62 Barber or beauty shop operator {#sec-tax-11.62 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.62}

(1) Nontaxable sales and services. Charges by a barber or beauty shop operator for services on human beings are not subject to sales tax.

(2) Taxable sales and services.

(a) Sales of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., including packaged cosmetics, hair tonics, lotions, shampoo, wigs, falls, and toupees, and their charges for servicing wigs, hair pieces, or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are subject to sales tax. Except as provided in par. (b), a barber or beauty shop operator who engages in sales subject to sales tax under this subsection shall register as a retailer and is responsible for collecting and remitting to the department the tax on taxable sales or charges.

(b) A barber or beauty shop operator’s sales are not subject to Wisconsin sales tax if the barber or beauty shop operator does not hold and is not required to hold a Wisconsin seller’s permit. A barber or beauty shop operator is not required to hold a seller’s permit and register as a retailer to collect Wisconsin sales tax if the barber or beauty shop operator’s total taxable receipts from sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services are less than $2,000 during the calendar year.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit and the 15-day time period within which the department is required to act on permit applications.

Note: Refer to s. Tax 11.33 for additional information relating to occasional sales.

(3) Taxable and nontaxable purchases.

(a) A barber or beauty shop operator’s purchases of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services, which when resold are exempt occasional sales under sub. (2) (b) are taxable purchases of property, items, goods, and services.

(b) Persons who register and collect sales tax under sub. (2) (a) may purchase tangible personal property, such as hair pieces, for resale without paying tax by issuing their supplier a properly completed exemption certificate, claiming resale.

(c) Tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased by a barber or beauty shop operator and used in providing services are subject to sales or use tax.

(d) If a barber or beauty shop operator gives an exemption certificate claiming resale for tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to a supplier and then uses or consumes the property, item, or good in providing services, the barber or beauty shop operator is liable for use tax at the time the property, item or good is first used in a taxable manner.

Note: Section Tax 11.62 interprets ss. 77.51 (9) and (13) (i), 77.52 (2) (a) 10., 77.54 (7), and 77.57, Stats.

Note: The interpretations in s. Tax 11.62 are effective under the general sales and use tax law on and after September 1, 1969; except (a) the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2 and (b) The threshold for exempt occasional sales was changed to less than $2,000 in annual sales, effective for sales beginning January 1, 2018, pursuant to 2017 Wis. Act 59.

History

Cr. Register, August, 1976, No. 248, eff. 9-1-76; am. (1) (b), Register, August, 1985, No. 356, eff. 9-1-85; r. and recr., Register, March, 1991, No. 423, eff. 4-1-91; EmR0924: emerg. am. (2) and (3), eff. 10-1-09; CR 09-090: am. (2) and (3) Register May 2010 No. 653, eff. 6-1-10; CR 20-018: am. (2) (b) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.63 Radio and television stations {#sec-tax-11.63 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.63}

(1) Nontaxable products and services. Sales of the following products and services are not subject to the sales and use tax:

(a) Air time.

(b) Advertising space.

(c) Motion picture film or tape, and motion pictures or radio or television programs for listening, viewing, or broadcast, and advertising material related to such film or tape or programs, which are sold, leased, or rented to a motion picture theater or to a radio or television station.

(d) The lease of space on a broadcast tower if the radio or television station owns both the broadcast tower and the land on which the tower is located.

(2) Taxable sales.

(a) Charges by a radio or television station for art work, slides, films, tapes, or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), and (d), Stats., which the station prepares or produces for its advertisers or sponsors are subject to the sales and use tax. The charges are taxable even though a station may retain possession of the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., because “sale” is defined to include the transfer of not only title to and possession of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., but also the transfer of enjoyment of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats. If an advertiser maintains any control over the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., prepared or produced, such as the right to determine when the property, item, or good will be used for advertising purposes, the advertiser is deemed to have received the enjoyment of the property, item, or good.

(b) Sales from a radio or television auction are subject to the sales and use tax.

Example: A radio station has a program where the announcer places items of merchandise of local retailers or sponsors up for bid to the station’s listeners. The successful bidder, chosen by the radio station, delivers the purchase price of the merchandise to the radio station and receives a purchase certificate that allows him to redeem the merchandise from the retailer or sponsor. The purchase money is retained by the radio station, although the retailer is compensated by the station for its participation in the form of radio advertising. The radio station is subject to sales tax on the receipts from the program.

(c) When a radio or television station advertises on behalf of persons to sell merchandise or taxable services, the station is a marketplace provider and shall collect and remit tax on the sales if the station directly or indirectly, through agreements or arrangements with third parties, processes the payment from the purchaser for the retail sale, regardless of whether the station receives compensation or other consideration in exchange for the services provided by the station.

(d) Charges by a radio or television station for access to a website that provides news or other information products. This is the sale of an additional digital good, regardless of whether sold for a one-time use or sold on a subscription.

(e) Sales of program material, except as provided in sub. (1) (c).

(f) The lease of space on a broadcast tower if the radio or television station owns the broadcast tower, but does not own the land on which the broadcast tower is located.

(3) Nontaxable purchases.

(a) Purchases of the following products and services are not subject to the sales and use tax:

Products exempt from the sales and use tax under s. 77.54 (23m), Stats., including sales of blank or raw video or audio tapes to television or radio stations.
Tangible personal property and property exempt from the sales and use tax under s. 77.54 (23n), Stats., including:

a. Computers, software, and monitors used to draft the program material.

b. Printers used to print scripts.

c. Graphics generators used to prepare weather forecasts and other on-screen graphics for a newscast.

d. Traffic monitors to monitor traffic on a highway.

e. Edit equipment.

f. Audio monitoring speakers.

g. Servers used solely to store current program material.

h. Alarms that go off if there is a problem with the signal.

i. Radio modulation monitoring equipment to ensure that the signal is compliant with the legal requirements.

j. Decoders in a satellite control room.

k. Satellite receivers.

L. Equipment used at mobile news sites by camera persons and reporters, such as cameras, data cards to store video images, microphones, headsets, and two-way radios.

m. Motor vehicles, including microwave and satellite trucks and other vehicles used solely to bring reporters, camera persons, and other personnel to a location where live or recorded material is filmed or transmitted back to the radio or television station.

n. Fuel and electricity.

(b) Purchases of the following products and services are not included in the exemption in s. 77.54 (23n), Stats.:

Real property improvements.
Property that is not used directly in the manner described in par. (b), such as desks and chairs where program material is drafted, surge protectors and external power supplies for equipment, backup servers, and general lighting.
Property that is not used exclusively in the manner described in par. (b), such as servers used to store current and archived program material, computer software used to draft program material and to create station advertising materials, and an intercom system to communicate with the studio and others in the building.
Property that is used in the transmission of finished program material, such as transmitters and antennas used to transmit signals.
Fuel and electricity used in providing building heating, cooling, air conditioning, communications, general lighting, safety and fire prevention, storage, sales, advertising or administrative department activities, or used in transmitting the final program material.

(4) Taxable purchases. Radio and television stations are consumers of equipment, materials, and supplies used to conduct their businesses and shall pay sales or use tax on purchases of this tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., except as provided in sub. (3).

(5) Broadcasting towers. Commercial broadcasting towers constituting the transmission antenna system of a radio or television station are deemed, for sales and use tax purposes, either real estate improvements if installed on land owned by the station or tangible personal property if installed on land owned by others. Contractors engaged in construction of broadcasting towers that are real estate improvements are the consumers of building materials used by them in constructing, altering, or repairing those towers and shall pay tax on the cost of the materials. Contractors engaged in construction of broadcasting towers that are tangible personal property may purchase materials used by them in constructing, altering, or repairing those towers without tax for resale. The charge by the contractor to the purchaser is subject to tax.

Note: Section Tax 11.63 interprets ss. 77.51 (14), 77.52 (2) (a) 11., and 77.54 (23m) and (23n), Stats.

Note: The interpretations in s. Tax 11.63 are effective under the general sales and use tax law on and after September 1, 1969, except (a) the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2 and (b) the exemption for tangible personal property and property under s. 77.52 (1) (c), Stats., used in the origination and integration of certain program material became effective July 1, 2014, pursuant to 2013 Wis. Act 346.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (2) (a) and (c) (intro.), (3), (4) and (5), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1) (intro.), (b), (2) (a), (b), (c) 2., (3), (4) and (5), eff. 10-1-09; CR 09-090: am. (1) (intro.), (b), (2) (a), (b), (c) 2., (3), (4) and (5) Register May 2010 No. 653, eff. 6-1-10; CR 16-053: am. (1) (intro), cr. (1) (c), (d), (2) (d), (e), r. (3), cr. (3) Register June 2018 No. 750, eff. 7-1-18; correction in (3) (a) 1. made under s. 35.17, Stats., Register June 2018 No. 750; CR 22-044: renum. (2) (c) (intro.) to (2) (c) and am., r. (2) (c) 1., 2. Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.64 Background music {#sec-tax-11.64 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.64}

(1) General. Persons in the business of providing background music commonly utilize one or both of the methods set forth below. The sales and use tax consequences depend upon the method used.

(2) Music played at central studio. The receipts from the furnishing of background music to business, industry, and others from a central studio over telephone circuits or by FM radio are subject to the sales or use tax as a digital audio work. The persons who provide such service are the consumers of the tapes, tape players, transmitters, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., used to provide the service, and their purchases of these items, as well as telecommunication services from the telephone company, are taxable. In addition, the receipts from equipment leased or rented to the customer as part of providing this service are taxable. An exemption for resale may be claimed on the purchase of such leased or rented equipment, if the equipment is used exclusively for lease or rental and if the customer has the option of receiving the digital audio work from the retailer, without also being required to purchase, lease, or rent the equipment from that same retailer.

(3) Music played by customer. The lease, rental, hire or license to use all tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., comprising a background music system are taxable when the system is operated by the customer. Any charge for installing the system is taxable. The sale of the tapes, equipment, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to the person providing the system (e.g., the lessor or licensor) is exempt as a sale for resale, if the equipment is used exclusively for lease, license, or rental.

Note: Section Tax 11.64 interprets ss. 77.51 (3pa), (14) (intro) and (j), and (17x) and 77.52 (1) (d), Stats.

Note: The interpretations in s. Tax 11.64 are effective under the general sales and use tax law on and after September 1, 1969, except that the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; EmR0924: emerg. am. (2) and (3), eff. 10-1-09; CR 09-090: am. (2) and (3) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.65 Admissions {#sec-tax-11.65 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.65}

(1) Taxable sales.

(a) The sale of admissions to amusement, athletic, entertainment, or recreational events or places and the furnishing for dues, fees or other considerations, the privilege of access to clubs or the privilege of having access to or the use of amusement, entertainment, athletic, or recreational facilities are taxable. This includes admissions to movies, ballets, musical and dance performances, ball games, campgrounds, circuses, carnivals, plays, hockey games, ice shows, fairs, snowmobile and automobile races, and pleasure tours or cruises.

(b) The sales tax applies to the receipts of organizations which have as an objective the supplying of amusement, athletic, entertainment, or recreational facilities to their members such as country clubs, golf clubs, athletic clubs, swimming clubs, yachting clubs, tennis clubs, and flying clubs. Taxable sales include the sale, furnishing or use of recreational facilities on a periodic basis and other recreational rights, including but not limited to membership rights, vacation services, and club memberships. The proceeds received from initiation fees, special assessments, dues, and stock sales of clubs supplying amusement, athletic, entertainment, or recreational facilities to members are charges for the privilege of obtaining access to the clubs and are taxable receipts of the clubs.

(c) Admissions to customer participation events such as swimming, skiing, bowling, skating, bingo, golfing, curling, dancing, card playing, hayrides, hunting, fishing, and horseback or pony riding, including entry fees for leagues, tournaments, and contests, are taxable.

(d) The charge for the privilege of fishing in fish ponds is taxable, even if the charge is based in whole or in part on the pounds or size of fish caught. The charge for the privilege of hunting in shooting preserves, pheasant farms, and fenced area bird and animal farms is also taxable, even if the charge is based in whole or in part on the number of game birds or animals taken.

(e) A person who provides boat, tackle, bait, and guide service provides a combination of recreational items which are subject to the tax, but guide service alone is not taxable.

(f) The sales tax applies to the receipts from conducting bingo games.

(g) The receipts from the sale or furnishing of access to campgrounds, other than Wisconsin state park campgrounds, are taxable, whether the fees are collected on a daily, weekly, annual, or other basis.

(h) The sale of admissions to pleasure tours and cruises, including a cruise originating in Wisconsin by boat on a body of water on the border of Wisconsin, is taxable regardless of whether a portion of the cruise takes place on out-of-state waters.

(2) Nontaxable sales. The following are nontaxable admissions:

(a) The dues of civic, fraternal, religious, patriotic, and lodge type organizations which are not organized for the purpose of furnishing amusement, athletic, entertainment, or recreational facilities to their members.

(b) Admissions to museums of history, art, or science, and to auto or trade shows, if professional entertainment is not provided at the show. Also, all admission fees to any museum operated by a nonprofit corporation under a lease agreement with the state historical society, such as the circus world museum.

(c) Admissions to antique shows unless the admission charge can be used as a credit against the price of merchandise purchased.

(d) Entry fees in contests if the primary motive of the majority of the persons entering the contest is “business” and not “recreation.” Generally, entry fees are not taxable for:

Professional golfers entering a major tournament.
Professional riders entering a rodeo.
Professional stock car drivers entering an auto race.
Large snowmobile races where the entrants are primarily manufacturers’ representatives.

(e) The sales price from the sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., tickets or admissions by any baseball team affiliated with the Wisconsin department of American legion baseball.

(f) Campground fees in Wisconsin state parks.

(g) Admissions to events conducted by nonprofit organizations when the event does not involve entertainment as provided in s. 77.54 (7m), Stats., the organization is not engaged in a trade or business as defined in s. 77.54 (7m), Stats., and the organization is not otherwise required to hold a seller’s permit. Sales of admissions to events conducted by a nonprofit organization that otherwise meets the requirements of s. 77.54 (7m), Stats., are not subject to tax, even if the nonprofit organization holds a seller’s permit solely for the purpose of conducting bingo games.

(h) Admissions to places or events located outside Wisconsin.

(i) Sales of and admissions to time-share property as follows:

The furnishing of rooms or lodging to a person for a continuous period of less than one month through the sale of any kind of time-share property.
The sale, furnishing, or use of recreational facilities on a periodic basis and of other recreational rights, including membership rights, vacation services, and club memberships, with respect to time-share property, if the facilities are not available to persons who have not purchased the time-share property, other than guests.

(j) Sales of admissions by a nonprofit organization to participate in any sports activity in which more than 50 percent of the participants are 19 years old or younger.

(k) Sales of admissions by a gun club, including the sale of a gun club membership, if the gun club is a nonprofit organization and if the gun club provides safety classes to at least 25 individuals in the calendar year.

(L) Sightseeing flights.

(3) Prize money. The amounts of taxable tournament and league entrance fees advertised and set aside for prize money are exempt from tax.

(4) Donations.

(a) Persons conducting recreational events occasionally assert that the receipts are not taxable because they are donations and not charges for admission. To qualify as a donation, a payment shall be totally voluntary and no restriction whatsoever may be placed on the entrance of persons not making a donation. The facts surrounding the requests for the donation shall be obvious that admittance is not restricted to those making a donation. A set amount for the donation, such as through newspaper publicity or signs at the entrance, a turnstile, or restrictive device that shall be passed through, or an attendant requesting a donation at the door shall be presumptive evidence that the charge is not a donation but that the payment is required.

(b) When a charge to a patron bears little or no relationship to the actual value received, the tax may be based on the reasonable value of the tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services received. The retailer is responsible for determining the reasonable value and showing that the charge to the patron bears little or no relationship to the actual value received.

Examples: 1) Company A puts on a fundraising dinner. Individuals wishing to attend the dinner must pay $300 per person to attend. The actual value of the dinner received is $50. Company A may compute the tax that must be remitted on the $50 since that is the actual value of the dinner received. The actual value in this example is based on the amount that an individual would be required to pay for this dinner if it was not a fundraising dinner.

2) Company B puts on a fundraising dinner and dance. Individuals wishing to attend the dinner and dance must pay $300 per person to attend. The actual value of the dinner received is $50 and the actual value of admission to the dance is $25. Company B may compute the tax that must be remitted on the $75 since that is the actual value of the dinner and admission to the dance that is received. The actual values in this example are based on the amount that an individual would be required to pay for the dinner and to attend the dance if this was not a fundraising dinner and dance.

(5) Location of event. The receipts from sales of admissions to places of amusement or athletic events that are located or take place in Wisconsin are taxable, even though some of the sales may be made out-of-state. The receipts from sales of admissions to places of amusement or athletic events that are located or take place out-of-state are not subject to Wisconsin sales tax, even though some of the sales may be made in Wisconsin.

Example: Sales by the University of Wisconsin of football tickets for games played in Wisconsin are taxable. However, if the University of Wisconsin, as agent, sells tickets for the University of Michigan for a game played in Michigan, the receipts are not subject to the Wisconsin sales tax.

Note: Section Tax 11.65 interprets ss. 77.52 (1) and (2) (a) 2. and 77.54 (7m), (10), (35), and (65m), Stats.

Note: The interpretations in s. Tax 11.65 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Bingo receipts became taxable December 30, 1973, pursuant to Chapter 156, Laws of 1973; (b) The exemption for admissions to museums operated under a lease with the State Historical Society became effective July 20, 1985, pursuant to 1985 Wis. Act 29; (c) The exemption for admissions to American Legion baseball became effective September 1, 1985, pursuant to 1985 Wis. Act 29; (d) Recreational facilities and rights sold in connection with the sale of time-share property became taxable May 17, 1988, pursuant to 1987 Wis. Act 399; (e) The exemption for state park campground fees became effective September 1, 1989, pursuant to 1989 Wis. Act 31; (f) The exemption for admissions to certain gun clubs became effective July 1, 2007, pursuant to 2005 Wis. Act 327; (g) The exemption for sales of admissions by nonprofit organizations to certain youth sports activities became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (h) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (i) The exemption for tournament or league entrance fees advertised and set aside as prize money in s. 77.54 (65m) (a) 3., Stats., became effective December 1, 2017, pursuant to 2017 Wis. Act 59.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (d), cr. (1) (g) and (h), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (b), cr. (2) (e), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (b), (e), (f) and (g) and (4) (a) and (b), cr. (2) (f) and (g), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1) (a), (b), (d) to (g), (2) (a), (b), (e), (g), (3), (4) and (5), cr. (2) (h) to (k), eff. 10-1-09; CR 09-090: am. (1) (a), (b), (d) to (g), (2) (a), (b), (e), (g), (3), (4) and (5), cr. (2) (h) to (k) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (5) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: cr. (2) (L), am. (4) (b), cr. (4) (b) (Examples) Register August 2012 No. 680, eff. 9-1-12; CR 20-018: am. (1) (c), (3) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.66 Telecommunications and telecommunications message services {#sec-tax-11.66 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.66}

(1) Definitions. In this section:

(a) “Air-to-ground radio telephone service” means a radio service in which common carriers are authorized to offer and provide radio telecommunications service for hire to subscribers in aircraft.

(b) “Ancillary services” are those services that are associated with or incidental to providing telecommunications services, including detailed telecommunications billing, directory assistance, vertical service, and voice mail services.

(c) “Call-by-call basis” means any method of charging for telecommunications services by which the price of such services is measured by individual calls.

(d) “Communications channel” means a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points.

(e) “Conference bridging service” means an ancillary service that links 2 or more participants of an audio or video conference call and may include providing a telephone number, but does not include the telecommunications services used to reach the conference bridge.

(f) “Customer,” for purposes of this section, means a person who enters into a contract with the seller of telecommunications services or, in any transaction for which the end user is not the person who entered into a contract with a seller of telecommunications services, the end user of the telecommunication services. “Customer” does not include a person who resells telecommunications services or, for mobile telecommunications services, a serving carrier under an agreement to serve a customer outside the home service provider’s licensed service area.

(g) “Customer channel termination point” means the location where a customer inputs or receives communications.

(h) “Detailed telecommunications billing service” means an ancillary service that separately indicates information pertaining to individual calls on a customer’s billing statement.

(i) “Directory assistance” means an ancillary service that provides telephone numbers or addresses.

(j) “Eight hundred service” means a telecommunications service that allows a caller to dial a toll-free number without incurring a charge for the call and is marketed under “800,” “855,” “866,” “877,” or “888” toll-free calling, or any other number designated as toll-free by the federal communications commission.

(k) “End user” means the person who uses a telecommunications service. In the case of an entity, “end user” means the individual who uses the telecommunications service on the entity’s behalf.

(L) “Fixed wireless service” means a telecommunications service that provides radio communications between fixed points.

(m) “Home service provider” means a home service provider under section 124 (5) of P.L. 106-252, the Mobile Telecommunications Sourcing Act. Section 124 (5) of P.L. 106-252 provides that “home service provider” means the facilities-based carrier or reseller with which the customer contracts for the provision of mobile telecommunications services.

(n) “International telecommunications services” means telecommunications services that originate or terminate in the United States, including the District of Columbia and any U.S. territory or possession and originate or terminate outside of the United States, including the District of Columbia and any U.S. territory or possession.

(o) “Internet access services” means sending messages and information transmitted through the use of local, toll, and wide-area telephone service; channel services; telegraph services; teletypewriter; computer exchange services; cellular mobile telecommunications services; specialized mobile radio; stationary two-way radio; paging service; or any other form of mobile and portable one-way or two-way communications; or any other transmission of messages or information by electronic or similar means between or among points by wire, cable, fiber optics, laser, microwave, radio, satellite, or similar facilities. “Internet access services” does not include telecommunications services to the extent that such services are taxable under s. 77.52 (2) (a) 5. am., Stats.

(p) “Interstate telecommunications services” means telecommunications services that originate in one state or U.S. territory or possession and terminate in a different U.S. state or territory or possession.

(q) “Intrastate telecommunications services” means telecommunications services that originate in one state or U.S. territory or possession and terminate in the same state or U.S. territory or possession.

(r) “Mobile telecommunications service” means a mobile telecommunications service under 4 USC 116 to 126, as amended by P.L. 106-252, the Mobile Telecommunications Sourcing Act. “Mobile telecommunications service” is defined in 4 USC 116 to 126, as amended by P.L. 106-252, to mean commercial mobile radio service, as defined in 47 CFR 20.3 as in effect on June 1, 1999. “Commercial mobile radio service” is defined in 47 CFR 20.3 to mean a mobile service that is either of the following:

A mobile service that is all of the following:

a. Provided for profit, that is, with the intent of receiving compensation or monetary gain.

b. An interconnected service.

c. Available to the public, or to such classes of eligible users as to be effectively available to a substantial portion of the public.

The functional equivalent of a mobile service described in subd. 1.

(s) “Nine hundred service” means an inbound toll telecommunications service purchased by a subscriber that allows the subscriber’s customers to call the subscriber’s prerecorded announcement or live service. “Nine hundred service” does not include any charge for collection services provided by the seller of the telecommunications services to the subscriber or for any product or service the subscriber sells to the subscriber’s customers. A “nine hundred service” is designated with the “900” number or any other number designated by the federal communications commission.

(t) “Paging service” means a telecommunications service that transmits coded radio signals to activate specific pagers and may include messages or sounds.

(u) “Place of primary use” means the residential street address or the primary business street address of the customer. In the case of mobile telecommunications services, “place of primary use” means a street address within the licensed service area of the home service provider.

(v) “Postpaid calling service” means a telecommunications service that is obtained by paying for it on a call-by-call basis using a bankcard, travel card, credit card, debit card, or similar method, or by charging it to a telephone number that is not associated with the location where the telecommunications service originates or terminates. “Postpaid calling service” includes a telecommunications service, not including a prepaid wireless calling service, that would otherwise be a prepaid calling service except that the service provided to the customer is not exclusively a telecommunications service.

(w) “Prepaid calling service” means the right to exclusively access telecommunications services, if that right is paid for in advance of providing such services, requires using an access number or authorization code to originate calls, and is sold in predetermined units or dollars that decrease with use in a known amount.

(x) “Prepaid wireless calling service” means a telecommunications service that provides the right to utilize mobile wireless service as well as other nontelecommunications services, including the download of digital products delivered electronically, content, and ancillary services, and that is paid for prior to use and sold in predetermined units or dollars that decrease with use in a known amount.

(y) “Private communication service” means a telecommunications service that entitles the customer to exclusive or priority use of a communications channel or group of communications channels, regardless of the manner in which the communications channel or group of communications channels is connected, and includes switching capacity, extension lines, stations, and other associated services that are provided in connection with the use of such channel or channels.

(z) “Radio service” means a communication service provided by the use of radio, including radiotelephone, radiotelegraph, paging, and facsimile service.

(zb) “Radiotelegraph service” means transmitting messages from one place to another by means of radio.

(zf) “Radiotelephone service” means transmitting sound from one place to another by means of radio.

(zk) “Service address” as defined in s. 77.51 (17m), Stats., means any of the following:

The location of the telecommunications equipment to which a customer’s telecommunications service is charged and from which the telecommunications service originates or terminates, regardless of where the telecommunications service is billed or paid.
If the location under subd. 1. is not known by the seller who sells the telecommunications service, the location where the signal of the telecommunications service originates, as identified by the seller’s telecommunications system or, if the signal is not transmitted by the seller’s telecommunications system, by information that the seller received from the seller’s service provider.
If the locations described under subds. 1. and 2. are not known by the seller who sells the telecommunications service, the customer’s place of primary use.

(zp) “Telecommunications services” as defined in s. 77.51 (21n), Stats., means electronically transmitting, conveying, or routing voice, data, audio, video, or other information or signals to a point or between or among points. “Telecommunications services” includes the transmission, conveyance, or routing of such information or signals in which computer processing applications are used to act on the content’s form, code, or protocol for transmission, conveyance, or routing purposes, regardless of whether the service is referred to as a voice over Internet protocol service or classified by the federal communications commission as an enhanced or value-added nonvoice data service. “Telecommunications services” does not include any of the following:

Data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered to a purchaser by an electronic transmission, if the purchaser’s primary purpose for the underlying transaction is the processed data.
Installing or maintaining wiring or equipment on a customer’s premises.
Tangible personal property.
Advertising, including directory advertising.
Billing and collection services provided to 3rd parties.
Internet access services.
Radio and television audio and video programming services, regardless of the medium in which the services are provided, including cable service, as defined in 47 USC 522 (6), audio and video programming services delivered by commercial mobile radio service providers, as defined in 47 CFR 20.3, and the transmitting, conveying, or routing of such services by the programming service provider.
Ancillary services.
Digital products delivered electronically, including software, music, video, reading materials, or ringtones.

(zs) “Value-added nonvoice data service” means a service that otherwise meets the definition of telecommunications services, in which computer processing applications are used to act on the form, content, code, or protocol of the information or data provided by the service and are used primarily for a purpose other than for transmitting, conveying, or routing data.

(zw) “Vertical service” means an ancillary service that is provided with one or more telecommunications services and allows customers to identify callers and to manage multiple calls and call connections, including conference bridging services.

(zy) “Voice mail service” means an ancillary service that allows a customer to store, send, or receive recorded messages, not including any vertical service that the customer must have to use the voice mail service.

(2) Taxable services. Receipts that are subject to Wisconsin sales and use tax include receipts from the following services, if the services are sourced to Wisconsin as provided in sub. (3):

(a) Telecommunications services, including the following:

Intrastate telecommunications services.
Interstate telecommunications services.
International telecommunications services.
Private communication services.
800 services, except interstate 800 services.
900 services.
Fixed wireless services.
Mobile wireless services.
Stationary two-way radio services.
Paging services.
Facsimile, or FAX, transmission services.
Prepaid wireless calling services.
Value-added non-voice data services.
Residential communications services.
Coin-operated telephone services.

(b) Ancillary services, including the following:

Conference bridging services.
Directory assistance services.
Call forwarding services.
Voice mail services.
Caller ID services.
Call waiting services.

Note: Sales of internet access services are not subject to Wisconsin sales or use tax after June 30, 2020.

(cm) Prepaid calling services.

(d) Telecommunications message services that consist of recording telecommunications messages and transmitting them to the purchaser of the service or at that purchaser’s direction, but not including services that are taxable under par. (a), (b), or (c), or services that are incidental, as defined in s. 77.51 (5), Stats., to another service that is not taxable under subch. III of ch. 77, Stats., and sold to the purchaser of the incidental service. Telecommunications message services include the following:

Nonmechanical telephone answering services.

Examples: 1) A real estate business, whose employees spend considerable periods of time away from its office, contracts with Company A to answer incoming telephone calls during periods when employees are not available to answer the telephone. Employees of Company A receive the calls to the real estate office by telephone, take messages from incoming callers, and transmit the messages to the real estate company or particular employees in that company. The service provided by Company A is not incidental to another service sold by the company that is not a taxable service. Company A’s charge for this service is subject to Wisconsin sales or use tax.

2) Company B employs an office management service that provides receptionist, typing, filing, scheduling, bookkeeping, and similar services. Employees of the office management service also answer and route incoming telephone calls. When calls cannot be routed, the office management service takes and transmits messages to the appropriate person. This answering service is only a small part of the total services provided.

The telephone answering service provided as a part of the office management service is not subject to Wisconsin sales or use tax because it is incidental to the office management service provided and that office management service is not taxable.

Security monitoring services that consist of recording a telecommunications message and notifying the customer or local authorities of the message.
Electronic mail services.
Mechanical or electronic voice messaging and telephone answering services, except ancillary services.

Example: Company A provides its customers access to an office message system computer through which a customer can deposit or retrieve telephone messages using a touch-tone telephone. The service may be used as a message center, a call forwarding service, or an answering service. Messages are stored in the computer, and the customer may send or retrieve messages, reply to a message directly, reroute messages to others, broadcast messages to a wider group, save selected messages, and cancel messages no longer needed. The service is available 24 hours a day, and the customer accesses the computer through either a toll-free telephone number or a local telephone number. The service provided by Company A is not incidental to another service sold by the company that is not a taxable service and is not associated with or incidental to providing telecommunications services. Company A’s charges for this service are subject to Wisconsin sales or use tax.

(3) Sourcing. This subsection describes the sourcing of telecommunications services, ancillary services, and telecommunications message services.

(a) Telecommunications services.

Except as provided in subds. 3. to 7., the sale of a telecommunications service that is sold on a call-by-call basis is sourced to the taxing jurisdiction:

a. where the call originates and terminates, if the call originates and terminates in the same taxing jurisdiction; or

b. where the call either originates or terminates and where the service address is located, if the call does not originate and terminate in the same taxing jurisdiction.

Except as provided in subds. 3. to 7., the sale of a telecommunications service that is sold on a basis other than a call-by-call basis is sourced to the customer’s place of primary use, as defined in sub. (1) (u).
The sale of a mobile telecommunications service, except an air-to-ground radiotelephone service and a prepaid calling service, is sourced to the customer’s place of primary use, as defined in sub. (1) (u).
The sale of a postpaid calling service is sourced to the location where the signal of the telecommunications service originates, as first identified by the seller’s telecommunications system or, if the signal is not transmitted by the seller’s telecommunications system, by information that the seller received from the seller’s service provider.
The sale of a prepaid calling service or a prepaid wireless calling service is sourced to the location determined under s. Tax 11.945 (2).
The sale of a prepaid wireless calling service is sourced to the location determined under s. Tax 11.945 (2), except that if the location cannot be determined under s. Tax 11.945 (2) (a) to (d), the prepaid wireless calling service occurs at the location determined under s. Tax 11.945 (2) (e) 3., or the location associated with the mobile telephone number, as determined by the seller.

a. The sale of a private communication service for a separate charge related to a customer channel termination point is sourced to the location of the customer channel termination point.

b. The sale of a private communication service in which all customer channel termination points are located entirely in one taxing jurisdiction for sales and use tax purposes is sourced to the taxing jurisdiction in which the customer channel termination points are located.

Example: Company A contracts with Telecommunications Provider B for private communication service to send data from Company A’s bank, located in Milwaukee, Wisconsin, to Company A’s automated teller machines or “ATMs,” located in Milwaukee, Wisconsin, and to send data from its ATMs in Milwaukee to its bank in Milwaukee. The charge by Telecommunications Provider B to Company A is based on a certain amount of dedicated channel capacity available to Company A on the communications channel, regardless of the volume of data transmitted or number of transmissions made by Company A. Since all of the customer channel termination points are located in Milwaukee, Wisconsin, the entire service is sourced to Milwaukee.

c. If the segments are charged separately, the sale of a private communication service that represents segments of a communications channel between 2 customer channel termination points that are located in different taxing jurisdictions for sales and use tax purposes is sourced in an equal percentage to both jurisdictions.

Example: Company B contracts with Telecommunications Provider C for private communication service to send data from Company B’s bank, located in Milwaukee, Wisconsin, to Company B’s automated teller machine (ATM) located in Waukesha, Wisconsin. Telecommunications Provider C charges Company B based on the location of the segments of the channel termination points. Since Company B has 2 customer channel termination points that are located in different taxing jurisdictions, one located in Milwaukee and the other located in Waukesha, the charge by Telecommunications Provider C to Company B is sourced equally between the Milwaukee taxing jurisdiction and the Waukesha taxing jurisdiction.

d. If the segments are not charged separately, the sale of a private communication service for segments of a communications channel that is located in more than one taxing jurisdiction for sales and use tax purposes is sourced to each jurisdiction in a percentage determined by dividing the number of customer channel termination points in that jurisdiction by the number of customer channel termination points in all jurisdictions where segments of the communications channel are located.

Example: Company JKL, headquartered in Milwaukee, Wisconsin, has branch offices in Madison, Wisconsin, Green Bay, Wisconsin, Chicago, Illinois and Minneapolis, Minnesota. Company JKL contracts with a telecommunications company for private communication service to send messages between and among its Milwaukee office and the branch offices. Company JKL has exclusive use of the channels while using them. The telecommunications company sells use of the communications channels to other parties while Company JKL is not using them. The charges by the telecommunications company to Company JKL are based on a certain amount of dedicated channel capacity available to Company JKL on the communications channels. The telecommunications company does not bill separately for the segments of the communications channels. Increasing capacity requires a higher charge. The telecommunications company refers to this service as “private line service.” Of the charges by the telecommunications company to Company JKL for this service, 60% are subject to Wisconsin sales or use tax because 3 of the 5 customer channel termination points are located in Wisconsin.

e. No credit for tax paid to another state is allowed where the other state apportions the service in a manner similar to that provided in subd. 7. c. and d.

(b) Ancillary services. Except for detailed telecommunications billing services, ancillary services are sourced to the customer’s place of primary use, as defined in sub. (1) (u).

(d) Exceptions. For purposes of pars. (a) and (b), if the location of the customer’s service address, channel termination point, or place of primary use is not known, the location where the seller receives or hands off the signal shall be considered, for purposes of this rule, the customer’s service address, channel termination point, or place of primary use.

(e) Telecommunications message services. Telecommunications message services are sourced to the location determined under s. Tax 11.945 (2), which will generally result in the sale being sourced to the location where the customer, or someone at the direction of the customer, receives the message.

(4) Nontaxable services. The sales price from the sale of or charge for the following services are not taxable:

(a) Interstate or international telecommunications service if the service is sourced to a location outside Wisconsin.

(b) Revenues collected under s. 256.35 (3), Stats., and the police and fire protection fees under s. 196.025 (6), Stats.

(c) Transfers of telecommunications services to resellers who purchase, repackage and resell the services to customers. The reseller is liable for sales tax on its final retail sales of those services.

(d) Interstate 800 services.

(e) Transfers of services, commonly called “access services,” to an interexchange carrier which permit the origination or termination of telephone messages between a customer in Wisconsin and one or more points in another telephone exchange, and which are resold by the interexchange carrier. The interexchange carrier is liable for sales tax on its final retail sales of those services.

(f) Detailed telecommunications billing services, as defined in sub. (1) (h).

(5) Credit for tax paid to another state. Any person who is subject to the tax under s. 77.52 (2) (a) 5., Stats., on telecommunications services that terminate in Wisconsin and who has paid a similar tax on the same services to another state may reduce the amount of the tax remitted to Wisconsin by an amount equal to the similar tax properly paid to another state on those services or by the amount due Wisconsin on those services, whichever is less. That person shall refund proportionally to the persons to whom the tax under s. 77.52 (2) (a) 5., Stats., was passed on an amount equal to the amounts not remitted.

(6) Purchases by persons providing service. Persons engaged in the business of providing telecommunications services are consumers, not retailers, of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., used by them or transferred incidentally by them in providing those services. The tax applies to the sale of the property, items, or goods to them.

Note: Section Tax 11.66 interprets ss. 77.51 (1ba), (1r), (3c), (3pe), (3pn), (3rn), (5d), (5f), (5n), (5r), (7k), (8m), (9s), (10d), (10f), (11c), (13rn), (17m), (21n), (24), (25), and (26), 77.52 (2) (a) 5. and 5m., 77.522 (4), 77.525, and 77.54 (37), Stats.

Note: The Dane County Circuit Court’s decision of May 22, 1981 in Wisconsin Department of Revenue v. North-West Services Corporation and North-West Telephone Company held that a telephone company may purchase without tax tangible personal property leased or rented to customers in conjunction with an activity open to competition with others who are not public utilities.

Note: The interpretations in s. Tax 11.66 are effective under the general sales and use tax law on or after September 1, 1969, except: (a) Chapter 39, Laws of 1975, effective July 31, 1975, expanded the telephone services subject to the tax to include “telephone services of whatever nature”; (b) Chapter 317, Laws of 1981, imposed the tax on interstate telegraph and telephone service, effective May 1, 1982; (c) “911” service became exempt on August 1, 1987, pursuant to 1987 Wis. Act 27; (d) Telecommunications services originating in Wisconsin and charged to a subscriber in Wisconsin became taxable October 1, 1989, pursuant to 1989 Wis. Act 31; (e) Telecommunications services originating in Wisconsin and charged to a service address in Wisconsin became taxable October 1, 1991, pursuant to 1991 Wis. Act 31; (f) The repeal of the exemption for equipment in central offices of telephone companies became effective September 1, 1995, pursuant to 1995 Wis. Act 27; (g) Telecommunications services paid for by the insertion of coins in a coin-operated telephone became taxable August, 1, 1996, pursuant to 1995 Wis. Act 351; (h) Certain telecommunications message services became taxable December 1, 1997, pursuant to 1997 Wis. Act 27; (i) Telecommunications services originating outside Wisconsin, terminating in Wisconsin and charged to a service address in Wisconsin, except certain services obtained by means of a toll-free number, became taxable December 1, 1997, pursuant to 1997 Wis. Act 27; (j) Credit for sales tax properly paid to another state on interstate telecommunications services became effective October 14, 1997, pursuant to 1997 Wis. Act 27; (k) Sales of rights to purchase telecommunications services became taxable August 1, 1998, pursuant to 1997 Wis. Act 237; (L) The exemption for interstate private line services no longer applies, effective December 1, 2002; (m) The definitions of air-to-ground radio telephone service, ancillary services, call-by-call basis, communications channel, conference bridging service, customer, customer channel termination point, detailed telecommunications billing services, directory assistance, eight hundred service, end user, fixed wireless service, home service provider, international telecommunications services, internet access services, interstate telecommunications services, intrastate telecommunications services, mobile telecommunications service, nine hundred service, paging service, place of primary use, postpaid calling service, prepaid calling service, prepaid wireless calling service, private communications service, radio service, radiotelegraph service, radiotelephone service, service address, telecommunications service, value-added nonvoice data service, vertical service, and voice mail service became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (n) The specific imposition of tax on ancillary services and interstate, intrastate, and international telecommunications services became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (o) The sourcing provisions related to telecommunications services became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (p) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (q) The definition of “primary place of use” was amended to replace the reference to federal law with specific language, and the definition of “prepaid wireless calling service” was amended, pursuant to 2013 Wis. Act 20; and (r) The imposition of tax on internet access services under s. 77.52 (2) (a) 5. a., Stats., is repealed effective July 1, 2020, pursuant to 2017 Wis. Act 59.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (1) (a), (b), (d) and (e), (2), Register, January, 1983, No. 325, eff. 2-1-83; cr. (1) (f), Register, July, 1987, No. 379, eff. 8-1-87; emerg. r. and recr. (1) (a) and (b), eff. 10-1-89; r. and recr. Register, April, 1990, No. 412, eff. 5-1-90; renum. (3) (d) and (e) to be (4) (f) and (3) (d), Register, March, 1991, No. 423, eff. 4-1-91; r. and recr., Register, September, 1993, No. 453, eff. 10-1-93; am. (2) (intro.) and (5), Register, September, 1997, No. 501, eff. 10-1-97; CR 99-101: r. and recr. (1) (a) and (3), renum. (1) (b), (2), (4) (intro.) to (c), (f), and (5) to be (1) (d), (2) (a), (5) (intro.) to (c), (e) and (8) and am. (2) (a) (intro.), 1., 2. (intro.), (5) (intro.), (a), (c) and (e), cr. (1) (b), (c) and (e), (2) (intro.) and (b), (4), (5) (d), (6) and (7), r. (4) (d) and (e), Register November 2002 No. 563, eff. 12-1-02; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction in (2) (d) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; CR 10-094: am. (2) (intro.) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: r. (2) (a) 9., cr. (2) (cm), am. (3) (a) 2., 3., (b), (c) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: r. and recr. (1) (u), am. (1) (x) Register August 2014 No. 704, eff. 9-1-14; CR 20-018: am. (4) (b) Register July 2021 No. 787, eff. 8-1-21; CR 22-044: am. (3) (intro.), r. (3) (c), am. (3) (d) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.67 Service enterprises {#sec-tax-11.67 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.67}

(1) General. When a transaction involves the transfer of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., along with the performance of a service, and the transaction is neither a bundled transaction, as defined in s. Tax 11.985, nor a transaction to which s. 77.52 (2m) (b), Stats., applies, the true objective of the purchaser shall determine whether the transaction is a sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or the performance of a service with the transfer of the property, item, or good being incidental to the performance of the service. If the objective of the purchaser is to obtain the personal property, item, or good, a taxable sale of that property, item, or good is involved. However, if the objective of the purchaser is to obtain the service, a sale of a service is involved even though, as an incidence to the service, some tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., may be transferred.

Example: A person performing business advisory, record keeping, payroll, and tax services for small businesses is providing a service even though this person may provide forms and binders without charge as part of the service. The person is the consumer, not the seller, of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., furnished as an incidence to the service.

(2) Receipts and purchases of persons providing services.

(a) Since persons engaged in the business of furnishing services are consumers, not retailers, of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which they use in rendering their services, tax applies to the sale of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to them.

Example: Persons engaged in the business of furnishing services include physicians, lawyers and accountants.

(b) A person who performs a nontaxable service in conjunction with the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is a retailer with respect to the sale, and the tax applies to the total sales price from the sale without any deduction for the work, labor, skill, time spent, or other expense of producing the property, item, or good.

(c)

If there is a single charge for providing both taxable and nontaxable services that are not a bundled transaction as defined in s. 77.51 (1f), Stats., the entire charge is subject to the tax, unless it is determined by the department that another method, such as allocation or primary purpose of the transaction, more accurately reflects the tax. If the charges for taxable and nontaxable services are separately stated on an invoice, the tax applies only to the charge properly attributable to the taxable services, unless it is determined by the department that the primary purpose of the transaction method for computing the tax more accurately reflects the tax.
If there is a single charge for providing both taxable and nontaxable services in a transaction that is a bundled transaction as defined in s. 77.51 (1f), Stats., the entire charge is subject to the tax, except as provided in s. 77.52 (20) (b), Stats.

(3) Special situations.

(a) Hospitals and clinics. Hospitals and medical clinics generally provide nontaxable professional services. They are, therefore, the consumers of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., used in rendering the services. Hospitals and clinics which, in addition to rendering professional services, also sell tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services are retailers and shall obtain a seller’s permit and report the tax on these sales.

Examples: 1) Sales of drugs by a hospital or clinic pharmacy are taxable if they are not dispensed under a prescription.

2) Sales of parking for motor vehicles by a hospital or clinic are taxable.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(b) Original manuscripts or musical arrangements. The transfer to a publisher of an original manuscript or musical arrangement for publication is not a sale of tangible personal property or a digital good under s. 77.52 (1) (d), Stats., and is not subject to the tax. However, the sale of copies of an author’s or composer’s work is a sale of tangible personal property or a digital good under s. 77.52 (1) (d), Stats., and is taxable. The sale of a manuscript is taxable if the manuscript itself is of particular value as an item of tangible personal property or as a digital good under s. 77.52 (1) (d), Stats., and the purchaser is buying the property or good, and not the service which went into it.

(d) Interior designer’s fee.

An interior designer’s fee is taxable when the designer’s services are part of a sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats. If a designer bills a client only for the full list price of the property, item, or good sold and then receives the equivalent of a fee through the designer’s supplier in the form of a trade discount, the designer shall pay a tax on the full amount billed the client without any deduction for services performed.

Example: A designer’s fee is taxable when it is added to the bill for tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., on a cost-plus arrangement.

A designer’s fee is not taxable if the fee is solely for services rendered and there is no sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., involved with the transaction.
If there is a separate charge for the designer’s fee in addition to a separate and optional charge for any tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the designer sells to the client, the designer’s fee is not part of the sales price of the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., if the client had all of the following choices:

a. Purchasing the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., from the designer for an additional, optional, fee.

b. Purchasing the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., from another party.

c. Not purchasing the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

Example: Designing a decorative scheme, advising clients or recommending colors, paints, wallpaper, fabrics, brands, or sources of supply are nontaxable services.

(e) Research and development.

The development of information pursuant to a research and development contract is a sale of a service which is not subject to the sales tax. Although the person performing the research and development may be under contract to provide plans, designs, and specifications, or to test and evaluate a proposed product, the primary objective of the customer is to obtain the results of the technical skill and the experimental and research work of the engineers and other technicians of the researcher.
In certain instances under a research and development contract, the information cannot be developed without the production of a prototype. In this situation, if the primary objective of the customer in the transaction is to obtain tangible personal property or an item under s. 77.52 (1) (b), Stats., such as a prototype, the researcher may purchase the material used to construct the prototype without tax as property for resale. The subsequent sale of the prototype by the researcher to the customer is subject to tax unless an exemption applies. If the primary objective of the customer is to obtain the information resulting from production of the prototype, the prototype is considered transferred to the customer incidental to the research and development services. The researcher is subject to tax on the material purchased and used to construct the prototype. Determinations shall be made on a case-by-case basis.

(f) Recording studios. When a recording studio agrees to furnish or supply records, acetates, compact discs, or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., which becomes the property, item, or good of others, the tax applies to the total sales price resulting from the sale of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats. The sales price may not be reduced for labor or service costs, including charges for the use or rental of studio facilities, even though those costs may be itemized in billing the customer.

(g) Architects. Fees paid to architects, except fees paid to architects for landscaping planning, to design buildings or structures are for services performed, and are not subject to the tax. If, however, an architect has blueprints made from original drawings, the sale of the blueprints is subject to the tax.

(h) Drafting. Charges made by a self-employed person for commercial drafting are subject to the tax when the charge is for detailed drawings based entirely on specifications and data supplied by architects, engineers, or other business firms. These charges are taxable if the concepts, ideas, specifications, or designs depicted in the drawings produced are the customer’s and the person performing the drafting simply transfers the details supplied by the customer to paper thereby producing a drawing, which is tangible personal property, for use by the customer. It would also be taxable if it is transferred electronically to the purchaser since it is an additional digital good. When the person performing drafting services uses his or her own concepts and ideas in producing detailed drawings for a customer, the sale of the drawings is not a sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

(i) Enuresis alarms. Charges for rental of bed-wetting alarm systems are taxable charges for the use of tangible personal property, not charges for a service, whether or not the lessor analyzes information about the user and completes a report based on the information.

(j) Detonating explosives. Detonating explosives is a non-taxable service. A person who performs that service and furnishes the explosives used in conjunction with the service is the consumer of the explosives.

(k) Taxidermists. The sales price from services taxidermists perform on tangible personal property is subject to the tax.

(L) Car washes. The sales price received by persons providing car wash services, including those providing coin-operated self-service car washes consisting of a pressurized spray of soap and water, are taxable. These persons are the consumers of the tangible personal property such as soap, brushes, and towels they purchase, except for the wax, air freshener, and protectants physically transferred to a customer’s vehicle. Thus, suppliers may accept an exemption certificate claiming resale for the wax, air freshener, protectants, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., sold to car wash operators, which will be physically transferred to the car wash operator’s customers. Car wash operators are liable for sales or use tax on their purchases of supplies that they use in providing their services unless those items are physically transferred to their customers.

(m) Soliciting advertising for telephone directories. Persons who solicit advertising for telephone books and who, as an incident of the service, provide telephone books to telephone companies or their subscribers, are the consumers of and shall pay tax on all the telephone books they distribute in Wisconsin.

Example: Company B located in Wisconsin solicits advertising for telephone books yellow pages and compiles, publishes, and delivers the directories to the subscribers of telephone companies. Company B contracts with an out-of-state corporation to print the directories. The printer delivers a portion of the directories to the U.S. Postal Service for delivery directly to telephone subscribers in Wisconsin. The remaining directories are delivered to Company B who in turn distributes them to subscribers in Wisconsin. Company B is subject to use tax on the directories delivered by the U.S. Postal Service as well as on the directories which it distributes to subscribers.

Note: Section Tax 11.67 interprets ss. 77.51 (1f), (12), (12m), (13), (14) (intro.) and (h), (15a), (15b), (20), and (22) (a) and (b) and 77.52 (1), (2) (a), (2m) (a) and (b), (20), and (21), Stats.

Note: The interpretations in s. Tax 11.67 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) The fees paid to architects performing landscaping planning became taxable effective May 1, 1982, pursuant to Chapter 317, Laws of 1981; (b) The definition of bundled transactions became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (d) The clarification that a service provider who transfers tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., incidentally with a taxable service is the consumer of such property, items, or goods became effective July 2, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (3) (n), Register, June, 1983, No. 330, eff. 7-1-83; r. (3) (k) and am. (3) (n), Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (h), Register, April 1990, No. 412, eff. 5-1-90; am. (1), (2) (b) and (c), (3) (a), (d) 1. and 2., (e) 1. and 2., (g), (L), (m) and (n), Register, November, 1993, No. 455, eff. 12-1-93; am. (2) (a), (3) (e) 2., (f), (h) and (j), r. (3) (e) 3., renum. (3) (L) to (n) to be (3) (k) to (m) and am. (3) (L), Register, April, 2000, No. 532, eff. 5-1-00; EmR0924: emerg. am. (1), (2) (a), (b), (3) (a), (b), (d), (e), (f), (h), (i), (k) and (L), renum. (2) (c) to be (2) (c) 1. and am., cr. (2) (c) 2., eff. 10-1-09; CR 09-090: am. (1), (2) (a), (b), (3) (a), (b), (d), (e), (f), (h), (i), (k) and (L), renum. (2) (c) to be (2) (c) 1. and am., cr. (2) (c) 2. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1), (2) (b), (3) (d) (title), 1., 2., cr. (3) (d) 3. Register November No. 659, eff. 12-1-10; correction in (1) made under s. 13.92 (4) (b) 7., Stats., Register November 2010 No. 659.

Wis. Admin. Code § Tax 11.68 Construction contractors {#sec-tax-11.68 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.68}

(1) Definition. In this section, “real property construction activities” means activities that occur at a site where tangible personal property or items or goods under s. 77.52 (1) (b) or (d), Stats., that are applied or adapted to the use or purpose to which real property is devoted are affixed to that real property, if the intent of the person who affixes that property, item, or good is to make a permanent accession to the real property. “Real property construction activities” do not include affixing property subject to tax under s. 77.52 (1) (c), Stats., to real property or affixing to real property tangible personal property that remains tangible personal property after it is affixed.

Note: The definition of real property construction activities was revised effective for sales of property pursuant to contracts entered into on or after December 1, 1997, to:

(a) Reverse the effect of the Wisconsin Supreme Court decision in the case of Wisconsin Department of Revenue vs. Sterling Custom Homes (283 N.W. 2d 573 (1979)) prospectively from the effective date of this revision, and

(b) Provide by statute those criteria that were used by the Supreme Court in the case of Dept. of Revenue vs. A.O. Smith Harvestore Products, Inc. (72 Wis. 2d 60, (1976)), for purposes of determining whether tangible personal property becomes real property. The meaning of each of the criteria is explained in the Supreme Court’s decision.

(2) General.

(a) Construction contractors may be retailers with respect to some activities and consumers with respect to others. When a construction contractor acts as a retailer, the contractor shall obtain a seller’s permit and pay the tax on its receipts from retail sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services. When the contractor acts as a consumer, the contractor shall pay the tax on its purchases of property, items, and goods consumed.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(b) Contractors are retailers of:

Property, items, and goods it installs which retain their character as personal property after sale and installation.

Note: Refer to subs. (5) and (7) for the classification of property.

Labor or services furnished in installing tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which retain their character as personal property after installation.

Note: Refer to subs. (5) and (7) for the classification of property.

Labor and material furnished in the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of items of real property which retain their character as tangible personal property for repair purposes.

Note: Refer to sub. (11) for a description of real property which retains its character as tangible personal property for repair purposes.

Tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., sold.

(c) Contractors are consumers of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., they use when engaged in real property construction activities, such as altering, repairing, or improving real property.

(3) Real property construction contractors.

(a) Generally, real property construction contractors are persons who perform real property construction activities and include persons engaged in activities such as building, electrical work, plumbing, heating, painting, steel work, ventilating, paper hanging, sheet metal work, bridge or road construction, well drilling, excavating, wrecking, house moving, landscaping, roofing, carpentry, masonry and cement work, plastering, and tile and terrazzo work.

(b) A retailer may also be a real property contractor, such as a department store which sells and installs tangible personal property and items or goods under s. 77.52 (1) (b) or (d), Stats., which becomes a part of real property after installation.

Example: A water heater or water softener sold and installed in a purchaser’s residence by a retailer becomes real property after installation. The retailer is considered to be a real property contractor.

(4) Purchases by contractors.

(a) Materials used in real property. Under s. 77.51 (2), Stats., contractors who perform real property construction activities are the consumers of building materials which they use in altering, repairing, or improving real property. Therefore, suppliers’ sales of building materials to contractors who incorporate the materials into real property in performing construction activities are subject to the tax. This includes raw materials purchased outside Wisconsin that are used by a contractor in manufacturing tangible personal property or items under s. 77.52 (1) (b), Stats., outside Wisconsin, or that are fabricated or altered outside Wisconsin by a contractor so as to become different or distinct items of tangible personal property or items under s. 77.52 (1) (b), Stats., from the constituent raw materials, and are subsequently stored, used, or consumed in Wisconsin by that contractor.

Note: Prior to August 12, 1993, raw materials purchased outside Wisconsin that were used by a contractor in manufacturing tangible personal property outside Wisconsin or that were fabricated or altered outside Wisconsin by a contractor so as to become different or distinct items of tangible personal property from the constituent raw materials, and were subsequently stored, used, or consumed in Wisconsin by that contractor were not subject to tax pursuant to the Circuit Court of Dane County decision in Morton Buildings, Inc. vs. Wisconsin Department of Revenue (2/10/92).

(b) Materials sold as personal property.

Tangible personal property and property, items, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which a construction contractor will resell as personal property may be purchased without tax for resale. This includes personal property furnished as part of a real property construction activity when the personal property retains its character as personal property after installation. This also includes personal property furnished as part of a real property construction activity when provided as part of a taxable landscaping service.

Note: Refer to subs. (5) and (7) for the classification of property.

Taxable services which a construction contractor will resell may be purchased without tax for resale.

(c) Machinery and tools purchased by contractors. Machinery and equipment, including road building equipment, tunnel shields, construction machines, and cement mixers, tools, including power saws and hand tools, and supplies, including machine lubricating and fuel oils, form lumber, and industrial gases, purchased by a construction contractor for the contractor’s use are generally either consumed in the process of construction or are removed when the project is completed. The contractor is the consumer of the personal property and shall pay the tax on its purchases of the property. However, an exemption is provided in s. 77.54 (5) (d), Stats., for mobile cement mixers used for mixing and processing and the motor vehicle or trailer on which a mobile mixing unit is mounted, including accessories, attachments, parts, supplies, and materials for the vehicles, trailers, and units.

(d) Waste treatment facilities. Under s. 77.54 (26), Stats., contractors may purchase without sales or use tax tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., which become a component part of an industrial waste treatment facility that would be exempt under s. 70.11 (21), Stats., if the property were taxable under ch. 70, Stats., or a municipal waste treatment facility, even though they are the consumers of the property and items.

Note: Refer to s. Tax 11.11 regarding industrial and municipal waste treatment facilities.

(e) Waste reduction and recycling. Under s. 77.54 (26m), Stats., contractors may purchase without sales or use tax waste reduction and recycling machinery and equipment, including parts, which are exclusively and directly used for waste reduction and recycling activities which reduce the amount of solid waste generated, reuse, recycle, or compost solid waste, or recover energy from solid waste, even though they are the consumers of the property.

Examples: 1) Equipment used in a foundry to clean sand so that the sand can be reused qualifies for exemption.

2) Equipment used to remove impurities from lubricating oil used in manufacturing machines so that the oil can continue to be used by the manufacturer qualifies for exemption.

3) Equipment used to produce fuel cubes qualifies for exemption. This equipment shreds waste paper and cardboard, removes foreign objects, blends the materials with a binding agent, adds moisture if necessary and then compresses the materials into fuel cubes which are burned by homeowners or others to replace wood.

4) A roto-mill machine that mines old pavement and grinds up the mined materials to be reused in construction activities qualifies for exemption.

5) Large steel waste collection containers, including dumpsters, which may be picked up and dumped into waste collection trucks or hauled away on flatbed trucks, or which may mechanically compact the waste in the container do not qualify for exemption.

(f) Sports and entertainment home stadiums. Under s. 77.54 (41), Stats., contractors, subcontractors, or builders may purchase without sales or use tax building materials, supplies, and equipment acquired solely for or used solely in the construction, renovation, or development of property that would be exempt under s. 70.11 (36), Stats. Section 70.11 (36), Stats., exempts property consisting of or contained in a sports and entertainment home stadium, including but not limited to parking lots, garages, restaurants, parks, concession facilities, transportation facilities, and functionally related or auxiliary facilities and structures; including those facilities and structures while they are being built; constructed by, leased to, or primarily used by a professional athletic team that is a member of a league that includes teams that have home stadiums in other states, and the land on which that stadium and those structures and facilities are located.

(g) Modular and manufactured homes used outside Wisconsin. Under s. 77.54 (5) (am), Stats., contractors and subcontractors may purchase without sales and use tax modular homes, as defined in s. 101.71 (6), Stats., and manufactured homes as defined in s. 101.91 (2), Stats., that are used in real property construction activities outside Wisconsin.

(h) Fertilizer blending, feed milling, and grain drying operations. Under s. 77.54 (6) (bn), Stats., contractors and subcontractors may purchase without sales and use tax the items described in s. 77.54 (6) (am) 4. and 5., Stats., and used by the contractor or subcontractor in real property construction activities which satisfy the conditions described in s. 77.54 (6) (am) 4. and 5. and (bn), Stats., regarding a fertilizer blending, feed milling, or grain drying operation.

(i) Building materials for facilities owned by local governmental units and certain nonprofit organizations.

Under s. 77.54 (9m), Stats., contractors may purchase without sales or use tax building materials that the contractor, in fulfillment of a real property construction activity, transfers to a qualifying exempt entity if the materials become part of a facility in Wisconsin that is owned by the entity.
The following provisions apply to the exemption under s. 77.54 (9m), Stats.:

a. “Qualifying exempt entity” means an entity described in s. 77.54 (9a) (b), (c), (d), (em), and (f), and (fc), and (9g), Stats., a technical college district, the Board of Regents of the University of Wisconsin System, an institution, as defined in s. 36.05 (9), Stats., a college campus, as defined in s. 36.05 (6m), Stats., or the University of Wisconsin-Extension.

b. “Facility” means any building, shelter, parking lot, parking garage, athletic field, athletic park, storm sewer, water supply system, or sewerage and waste water treatment facility. “Facility” does not include highways, streets, roads, sidewalks or paths, regardless of whether located within a facility.

Examples: 1) Materials that become a component part of the road, curb, gutters, or sidewalk are not part of a facility, such as black top, cement, and road base materials.

2) Materials that become a component part of a storm sewer facility and the materials necessary to stabilize those items are part of the storm sewer facility, such as piping, fittings, gravel and other fill necessary to bury the storm sewer piping to protect it from the road. Any road base material used to bring the road to elevation, and the road surface itself, is not part of a facility.

3) Pipes, pipe liner material, manhole structures, manhole covers, manhole liners, and manhole coatings become a component part of the storm sewer facility.

c. A Wisconsin organization described under s. 77.54 (9a) (f), Stats., shall hold a Wisconsin Certificate of Exempt Status number. A non-Wisconsin organization described under s. 77.54 (9a) (f), Stats., and a state veterans organization described in s. 77.54 (9g), Stats., are not required to hold a Wisconsin Certificate of Exempt Status number.

d. A contractor’s purchase of building materials transferred to a county, city, village or town, a state governmental unit, or a federal governmental unit outside Wisconsin are not exempt.

e. A contractor’s purchase of building materials transferred to a person other than a qualifying entity is exempt if the person does not use the facility for any purpose other than to transfer it to the qualifying entity.

Example: Building materials for the construction of a parking ramp that will be owned and operated by a developer prior to transfer to a municipality, does not qualify for the exemption.

f. A subcontractor’s purchase of building materials is exempt if the materials are transferred to a qualifying entity and, upon completion of the facility, the materials become a part of the facility in Wisconsin that is owned by the qualifying entity, pursuant to a contract between a general contractor and the qualifying entity, and the general contractor does not use the facility for any purpose other than to transfer it to the entity.

g. The exemption applies to contracts entered into on or after January 1, 2016. The exemption does not apply to purchases of building materials after January 1, 2016, for a contract that was entered into prior to January 1, 2016, even if the change order relating to those materials was executed after January 1, 2016.

Note: The effective date is different for contracts with certain exempt qualifying entities. Contracts with certain title holding companies became effective September 1, 2017. Contracts with technical colleges, the UW System, and state veterans organization became effective July 1, 2018.

(j) Electronics and information technology manufacturing zone facilities. Under s. 77.54 (65), Stats., owners, lessees, contractors, subcontractors, or builders may purchase without sales or use tax building materials, supplies, equipment, and landscaping services if both of the following apply:

The property or landscaping service is acquired solely for or used solely in, the construction or development of a facility located in an electronics and information technology manufacturing zone designated under s. 238.396 (1m), Stats.
The capital expenditures for the construction or development of the facility may be claimed as a credit under s. 71.07 (3wm) (bm) or 71.28 (3wm) (bm), Stats., as certified by the Wisconsin Economic Development Corporation.

(5) Classification of property after installation.

(a) Contractors shall determine whether a particular contract or transaction results in an improvement to real property or in the sale and installation of personal property. In determining whether personal property becomes a part of real property, the following criteria shall be considered:

Actual physical annexation to the real property.
Application or adaptation to the use or purpose to which the real property is devoted.
An intention on the part of the person making the annexation to make a permanent accession to the real property.

Note: See Dept. of Revenue vs. A. O. Smith Harvestore Products, Inc.(1976), 72 Wis. 2d 60, regarding determining whether personal property becomes a part of real property.

(b) Certain types of property that have a variety of functions may be personal property in some instances and additions to real property in others, including boilers, furnaces, stand-by generators, pumps, substations, and transformers. When this property is installed primarily to provide service to a building or structure and is essential to the use of the building or structure, it is a real property improvement. However, when similar property is installed in a manufacturing plant to perform a processing function, it may, as machinery, retain its status as personal property.

(6) Personal property which becomes a part of realty. A construction contractor is the consumer of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., such as building materials, which is incorporated into or becomes a part of real property, and sales of this personal property to a contractor are subject to the tax. Personal property which becomes a part of real property includes the following:

(a) Boilers and furnaces for space heating.

(b) Built-in household items such as kitchen cabinets, dishwashers, fans, garbage disposals, central vacuum systems, and incinerators.

(bm) Casework, tables, counters, cabinets, lockers, sinks, athletic and gymnasium equipment attached to the structure in apartment buildings, convalescent homes, or other residential buildings.

(d) Personal property that is used to construct buildings, and structural and other improvements to buildings, including awnings, canopies, carpeting, foundations for machinery, floors, including computer room floors, partitions and movable walls attached in any way to realty, holding structures used in fertilizer blending, feed milling, or grain drying operations, underground wiring, general wiring and lighting facilities, roofs, stairways, stair lifts, sprinkler systems, storm doors and windows, door controls, air curtains, loading platforms, central air conditioning units, building elevators, sanitation and plumbing systems, and heating, cooling, and ventilation systems.

(e) Fixed or year-around wharves and docks.

(f) Personal property that is used to construct improvements to land. “Improvements to land,” as used in this section, include retaining walls, roads, walks, bridges, fencing, railway switch tracks, ponds, dams, ditches, wells, underground irrigation systems except systems sold to and for use by farmers, drainage, storm, and sanitary sewers, and water supply lines for drinking water, sanitary purposes, and fire protection.

(g) Residential water heaters, water softeners, intercoms, incinerators, and garage door opening equipment, except portable equipment.

(h) Personal property that is used to construct silos and the building portion of grain elevators.

(i) Swimming pools, wholly or partially underground.

(j) Storage tanks constructed on the site.

(k) Street and parking lot lighting.

(L) Truck platform scale foundations.

(m) Walk-in cold storage units becoming a component part of a building.

(7) Property which remains personal property and construction contract exemption.

(a) Property which remains personal property. Contractors shall obtain a seller’s permit and report for taxation the sales price received from the sale and installation of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., which retains its character as personal property after installation, such as:

Furniture, radio and television sets and antennas, washers and dryers, portable lamps, home freezers, portable appliances, and window air conditioning units.
Communication equipment, including intercoms, pneumatic tube systems, roof mounted antennas, CATV wiring, and music and sound equipment in business, industrial, or commercial buildings, schools, and hospitals, but not in apartment buildings, convalescent homes, or other residential buildings.
Casework, tables, counters, cabinets, lockers, sinks, athletic and gymnasium equipment, and related easily movable property attached to the structure in schools, laboratories, and hospitals, except if attached to the structure in the bathrooms of such facilities.
Machinery, including safety attachments, equipment, tools, appliances, process piping and wiring, and grain handling equipment and grain elevator legs used exclusively by manufacturers, industrial processors, and others performing a processing function with the items.
Office, bank, and savings and loan association furniture and equipment, including office machines, safe deposit boxes, drive-up and walk-up windows, night depository equipment, remote TV auto teller systems, camera security equipment except when used to monitor for unauthorized entry to a building or room in a building, and vault doors.
Personal property used to carry on a trade or business, including fixtures and equipment installed in stores, taverns, night clubs, restaurants, ice arenas, bowling centers, hotels and motels, barber and beauty shops, figure salons, theaters, and gasoline service stations. Underground storage tanks at gasoline service stations are real property.
Shades, curtains, drapes, venetian blinds, and associated hardware.

7m. Satellite dish systems installed on residential and commercial buildings, but not satellite dish systems that are installed by permanently affixing the satellite dish to a concrete foundation in apartment buildings, convalescent homes, or other residential buildings.

Radio, television, and cable television station equipment, but not broadcasting towers installed on their owner’s land.
Except as provided in ss. 77.51 (12m) (b) 7. and (15b) (b) 7. and 77.54 (31), Stats., mobile homes, as defined in s. 101.91 (10), Stats., and manufactured homes, as defined in s. 101.91 (11) and (12), Stats., located in a mobile home park on land owned by a person other than the mobile home or manufactured home owner. Exemptions are provided by s. 77.51 (12m) (b) 7. and (15b) (b) 7., Stats., for 35% of the total amount for which a new manufactured home, as defined in s. 101.91 (11), Stats., is sold. No credit may be allowed for trade-ins and the exemption does not apply to a lease or rental. The exemption provided in s. 77.54 (31), Stats., applies to the sale of, but not the lease or rental of, used mobile homes as defined in s. 101.91 (10), Stats., and used manufactured homes as defined in s. 101.91 (12), Stats.
Advertising signs, except their underground concrete foundations. A foundation is underground even though a portion of the foundation extends above the grade.
Buildings and standing timber sold for removal.
Utility transmission and distribution lines installed above ground on land owned by others as provided in s. Tax 11.86 (1), and oil and gas pipeline pumping station equipment.
Commercial and industrial incinerators which do not become an integral part of the building.
Seating in auditoriums and theaters, and theater stage lights and projection equipment.
Stop and go lights, railroad signs and signals, and street identification signs.

(b) Construction Contract Exemption.

In this paragraph:

a. “Construction contract” has the meaning given in s. 77.54 (60) (d) 1., Stats., and includes both fixed price contracts and time and materials contracts.

b. “Prime contractor” has the meaning given in s. 77.54 (60) (d) 2., Stats.

c. “Products” as defined in s. 77.51 (11d), Stats., includes property, goods, and services.

d. “Subcontractor” has the meaning given in s. 77.54 (60) (d) 3., Stats.

The sales price of products sold by a prime contractor as a part of a construction contract is not taxable if more than 90 percent of the total amount of the construction contract relates to real property construction activities. The calculation is made without regard for exemptions that may be claimed by the customer (e.g., manufacturing, farming). Change orders and additional work billed are included in this calculation. Except as provided in subd. 6., the prime contractor is the consumer of the products and shall pay tax on its purchase of the taxable products.
The sales price of products sold by a subcontractor to a prime contractor, or to another subcontractor for eventual sale to the prime contractor, as part of the subcontractor’s construction contract is not taxable if either of the following apply:

a. The total sales price related to the subcontractor’s real property construction activities is more than 90 percent of the total amount of the construction contract.

b. The subcontractor received a fully completed exemption certificate from the prime contractor, or another subcontractor, claiming that the products are sold by the prime contractor or the other subcontractor as part of a construction contract that is exempt under s. 77.54 (60), Stats.

a. A subcontractor is liable for tax on its purchases of materials it uses in real property construction activities.

b. Except as provided in subd. 6., a subcontractor is liable for tax on its purchase of taxable products sold as part of a construction contract in which subd. 3. a. or b. applies.

The prime contractor shall make a determination at the start of the construction contract whether it provides the subcontractor with an exemption certificate claiming resale or the construction contract exemption in s. 77.54 (60), Stats., but not both. The prime contractor is liable for tax on its purchases of materials it uses in real property construction activities. The liability for tax on products not used in real property construction activities depends, in part, on whether the prime contractor gives an exemption certificate for its purchases, as follows:

a. If the prime contractor does not give the subcontractor an exemption certificate or gives an exemption certificate claiming resale, and the contract qualifies for exemption under s. 77.54 (60), Stats., the prime contractor is liable for tax on its purchase price of the taxable products purchased from the subcontractor.

b. If the prime contractor does not give the subcontractor an exemption certificate or gives an exemption certificate claiming the exemption under s. 77.54 (60), Stats., and the contract does not qualify for the exemption, the prime contractor is liable for sales or use tax on the sales price of the taxable products sold. The prime contractor may collect the tax from its customer.

c. If the subcontractor receives an exemption certificate from the prime contractor claiming resale, and the prime contractor’s contract qualifies for exemption under s. 77.54 (60), Stats., the subcontractor is not liable for tax on its purchase price of the materials sold as products to the prime contractor as a part of the construction contract. Rather, the prime contractor is liable for the tax on its purchase price of the taxable products and services purchased from the subcontractor.

d. If the subcontractor receives an exemption certificate from the prime contractor claiming the exemption under s. 77.54 (60), Stats., and the contract does not qualify for the exemption, the subcontractor may claim a refund of any tax paid on the purchase of materials sold as products to the prime contractor as a part of the construction contract. The claim for refund shall substantiate that the prime contractor’s contract did not qualify for the construction contract exemption, that the tax on sales to the prime contractor were reported to the department by the subcontractor or the prime contractor, and that the prime contractor’s purchases qualified for the resale exemption. The subcontractor may not claim a refund of tax on its purchase of materials used in real property construction activities.

e. If the subcontractor does not receive an exemption certificate from the prime contractor, the subcontractor is not liable for tax on its purchase price of materials sold as products to the prime contractor. The subcontractor’s sale of taxable products and services to the prime contractor is taxable.

Examples: 1) A refrigerator and drapes are included in the construction contract to build a new house. No separate charge is made for the refrigerator and drapes, which are taxable products. Based on a reasonable allocation, the sales price of the real property construction activities is more than 90 percent of the total amount of the construction contract. Therefore, the prime contractor’s sale to its customer of the refrigerator and drapes is not subject to tax. The prime contractor shall pay sales or use tax on its purchase of the refrigerator and drapes, in addition to the products consumed in the real property construction activities.

2) Landscaping services are included in a construction contract to build a building. Based on a reasonable allocation, the sales price for the construction of the building is 80 percent of the total amount of the construction contract. Since the total sales price to construct the building is not more than 90 percent of the total amount of the construction contract, the prime contractor is required to make an allocation between the taxable landscaping services and the other nontaxable charges included in the contract. The prime contractor is required to charge Wisconsin sales tax on the sales price of the landscaping services.

3) Landscaping services are included in a construction contract to build a building. Based on a reasonable allocation, the sales price for the construction of the building is 95 percent of the total amount of the construction contract. Since the total sales price to construct the building is more than 90 percent of the total amount of the construction contract, the prime contractor’s sale is not taxable. The prime contractor is the consumer of the products and shall pay sales or use tax on its purchases of taxable products, including landscaping materials.

4) Same facts as Example 3, except the prime contractor hires a subcontractor to provide the landscaping services and to install a retaining wall. The prime contractor’s sale is not taxable. The prime contractor may provide its subcontractor with a fully completed exemption certificate claiming the exemption under s. 77.54 (60), Stats. The subcontractor is performing real property construction activities when installing the retaining wall and providing products when performing landscaping services. The landscaping subcontractor should not charge the prime contractor tax on its sale. The landscaping subcontractor is the consumer of the products consumed in the landscaping service and retaining wall installation as part of its construction contract with the prime contractor and shall pay sales or use tax on its purchases of taxable products, including landscaping materials.

5) Same facts as Example 4, except the prime contractor does not provide the subcontractor with an exemption certificate claiming the exemption under s. 77.54 (60), Stats. The subcontractor’s sales price of the real property construction activities of the construction contract is 80 percent of the subcontractor’s total contract price so the construction contract exemption does not apply to the subcontractor’s contract with the prime contractor. The landscaping subcontractor is the consumer of and shall pay sales or use tax on its purchases of taxable products used in the retaining wall installation. The subcontractor is a retailer and shall charge sales tax to the prime contractor on the taxable landscaping services that make up 20 percent of the construction contract.

6) A subcontractor enters into a construction contract with a prime contractor to install a parking lot and provide landscaping. The prime contractor’s contract with its customer does not meet the construction contract exemption criteria. The subcontractor is performing real property construction activities when installing the parking lot and providing products when performing landscaping services. The subcontractor’s sales price of the real property construction activities of the construction contract with the prime contractor is more than 90 percent of the subcontractor’s total contract price so the construction contract exemption applies to the subcontractor’s contract with the prime contractor. The subcontractor does not charge the prime contractor sales tax. The subcontractor shall pay sales or use tax on its purchases of taxable products, including landscaping materials.

If the construction contract is entered into with an entity that is exempt from taxation under s. 77.54 (9a), Stats., the following apply:

a. The prime contractor is the consumer of all products used by the prime contractor in real property construction activities, but the prime contractor may purchase without tax, for resale, products that are sold by the prime contractor to the entity as part of the construction contract and that are not consumed by the prime contractor in real property construction activities.

b. A subcontractor of the prime contractor is the consumer of all products used by the subcontractor in real property construction activities, but the subcontractor may purchase without tax, for resale, products that are sold by the subcontractor to the prime contractor or another subcontractor, as part of the subcontractor’s construction contract under subd. 3., for resale to the entity and that are not consumed by the subcontractor in real property construction activities.

(8) Property, items, and goods purchased by a person who performs both real property construction activities and sells tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., at retail, when destination of property, item, or good purchased is unknown at time of purchase. Section 77.51 (2), Stats., provides in part that a contractor engaged primarily in real property construction activities may use resale certificates only with respect to purchases of tangible personal property or items or goods under s. 77.52 (1) (b) or (d), Stats., which the contractor has sound reason to believe the contractor will sell to customers for whom the contractor will not perform real property construction activities involving the use of such tangible personal property or items or goods under s. 77.52 (1) (b) or (d), Stats. However, some construction contractors who also sell construction supplies at retail do not know when they purchase these supplies whether they will be consumed in construction contracts or resold to others. In these instances, a construction contractor may do one of the following at the time of making purchases:

(a) Give an exemption certificate claiming resale to suppliers and purchase the property, item, or good without tax. If the contractor later resells the property, item, or good, the contractor shall report the sales and collect and remit the tax on the sales price to customers. If the property, item, or good is used in fulfillment of a construction contract, the contractor shall pay a use tax on its purchase price.

(b) Pay sales tax to suppliers on all property, items, and goods purchased. If the property, item, or good is later consumed in fulfilling a real property construction contract, the tax obligation is taken care of. If the property, item, or good is resold at retail, the contractor shall collect and remit sales tax on these retail sales, but may take as a credit against the sales tax any tax paid to suppliers on the purchase of such property, item, or good.

(9) Property, items, and goods purchased to fulfill a contract with an exempt entity.

(a) Except as provided in s. 77.54 (9m), Stats., the sales tax exemption provided to governmental units and other exempt entities, such as churches and nonprofit hospitals, does not apply to building materials purchased by a contractor for use under a construction contract to alter, repair, or improve real property for the exempt entity. The sales price received from sales of these building materials to a contractor is subject to the tax if the building materials become part of real property after construction or installation.

Example: A contractor shall pay the tax to its supplier of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased to construct a bridge or road, since the property, item, or good becomes a part of realty after installation.

(b) A contractor may purchase without tax for resale tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which retain their character as personal property after installation as described in sub. (7), and taxable services, even though the resale of the property, item, good, or taxable service by the contractor is exempt when sold to a governmental unit or other exempt entity having a Wisconsin certificate of exempt status. This property includes furniture; processing machinery or equipment used in a municipal sewerage or water treatment plant; classroom laboratory sinks, tables, and other equipment; and seating for an auditorium. Taxable services include landscaping services. This exemption does not apply to property, items, goods, or taxable services which become a part of real property as described in sub. (6) and par. (a).

(10) Use of property, items, and goods purchased outside Wisconsin.

(a) If a construction contractor, when the contractor acts as a consumer, purchases property, items, or goods outside Wisconsin for use in Wisconsin, the contractor shall pay the Wisconsin use tax, but may claim a credit against this use tax for any sales or use tax legally due and paid in the state where the purchase was made.

(b) If a construction contractor purchases property, items, or goods outside Wisconsin which will be stored in Wisconsin and subsequently used in real property construction activities outside Wisconsin, the contractor shall pay the Wisconsin use tax on those purchases, but may claim a credit against this use tax for any sales or use tax legally due and paid in the state where the purchase was made or where the property, item, or good was used prior to being stored in Wisconsin.

(c) If Wisconsin has jurisdiction over the out-of-state supplier, the supplier shall collect the use tax and remit it to the department. If the supplier fails to collect the tax, the contractor shall report and pay the tax to Wisconsin.

Note: The use tax as provided for in sub. (10) does not apply prior to August 12, 1993, to raw materials purchased outside Wisconsin that are, prior to being stored, used or consumed in Wisconsin, manufactured into tangible personal property by that contractor outside Wisconsin, or that are fabricated or altered outside Wisconsin by that contractor so as to become different or distinct items of tangible personal property from the constituent materials pursuant to the Circuit Court of Dane County decision in Morton Buildings, Inc. vs. Wisconsin Department of Revenue (2/10/92).

(11) Construction and repair services.

(a) A contractor who performs real property construction activities may not add tax to any charge for labor or material, since the sales price received from these activities is not taxable. The tax which a contractor pays on its purchases of materials consumed in real property construction increases its cost of the materials and becomes a cost of doing business.

(b) A contractor’s charges for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of all tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., are taxable. Solely for the purpose of imposing the tax on these services, numerous items that in other circumstances and for other purposes are deemed part of real property are deemed to retain their character as tangible personal property. Accordingly, any construction contractor who is engaged in the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of any items listed in par. (c) or other items of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., shall register as a retailer and pay the tax on the sales price received from the performance of these services except that the tax does not apply to the original installation or complete replacement of an item listed in par. (c), if that installation or replacement is a real property construction activity under s. 77.51 (2), Stats.

(c) Section 77.52 (2) (ag), Stats., provides in part that the following items shall be considered to have retained their character as tangible personal property for purposes of repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance, regardless of the extent to which the item is fastened to, connected with or built into real property:

Furnaces.
Boilers.
Stoves.
Ovens, including associated hoods and exhaust systems.
Heaters.
Air conditioners.
Humidifiers.
Dehumidifiers.
Refrigerators.
Coolers.
Freezers.
Water pumps.
Water heaters.
Water conditioners and softeners.
Clothes washers.
Clothes dryers.
Dishwashers.
Garbage disposal units.
Radios and radio antennas.
Incinerators.
Television receivers and antennas.
Record players.
Tape players.
Jukeboxes.
Vacuum cleaners.
Furniture and furnishings.
Carpeting and rugs.
Bathroom fixtures.
Sinks.
Awnings.
Blinds.
Gas and electric logs.
Heat lamps.
Electronic dust collectors.
Grills and rotisseries.
Bar equipment.
Intercoms.
Recreational, sporting, gymnasium, and athletic goods and equipment including the following:

a. Bowling alleys.

b. Golf practice equipment.

c. Pool tables.

d. Punching bags.

e. Ski tows.

f. Swimming pools.

Equipment in offices, business facilities, schools, and hospitals but not in residential facilities including personal residences, apartments, long-term care facilities, as defined under s. 16.009 (1) (em), Stats., state institutions, as defined under s. 101.123 (1) (i), Stats., Type 1 juvenile correctional facilities, as defined in s. 938.02 (19), Stats., or similar facilities including the following:

a. Lamps.

b. Chandeliers.

c. Fans.

d. Venetian blinds.

e. Canvas awnings.

f. Office and business machines.

g. Ice and milk dispensers.

h. Beverage-making equipment.

i. Vending machines.

j. Soda fountains.

k. Steam warmers and tables.

L. Compressors.

m. Condensing units and evaporative condensers.

n. Pneumatic conveying systems.

Laundry, dry cleaning, and pressing machines.
Power tools.
Burglar alarm and fire alarm fixtures.
Electric clocks.
Electric signs.

(d) Charges for tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., such as a repair part, incorporated into property listed in par. (c) being repaired are taxable. Because the item repaired is deemed personal property, any tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., incorporated into it may be purchased by the contractor without tax for resale.

Example: If a contractor is engaged to repair a refrigerator, whether free-standing personal property or built-in so as to be a part of real property, in a home, the repair service and any charge for parts are taxable.

(12) Repair services contrasted with replacement services. Section 77.52 (2) (a) 10., Stats., provides that the sales price received for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of all items of tangible personal property or items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., is taxable, except that the tax does not apply to the original installation or complete replacement of an item listed in s. 77.52 (2) (ag), Stats., if that installation or replacement is a real property construction activity under s. 77.51 (2), Stats. When a contractor performs an original installation or complete replacement of an item listed in s. 77.52 (2) (ag), Stats., and that activity is a real property construction activity, the contractor’s charges for the installation of the item is not subject to tax imposed under s. 77.52 (2) (a) 10., Stats., and the contractor must pay tax on its purchase of the materials used in making the real property improvement, as described in sub. (4) (a), unless an exemption applies.

Example: A contractor furnishes and installs a new furnace as part of a contract to build a new home for an individual. The installation of the furnace is a real property construction activity. The contractor is the consumer of the furnace, and is liable for tax on its purchase of the furnace. The tax imposed under s. 77.52 (2) (a) 10., Stats., does not apply to the contractor’s charges for installing the furnace.

(13) County tax on building materials.

(a) Section 77.71 (3), Stats., imposes excise taxes upon a contractor engaged in construction activities, which includes constructing, altering, repairing, or improving real property within any county that has adopted the county sales and use tax. The taxes are measured by the purchase price of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., used in constructing, altering, repairing, or improving real property which becomes a component part of real property in that county, unless the contractor has paid the county tax of a county in Wisconsin or a similar local sales tax in another state on the purchase of that property, item, or good.

(b) Building materials which become a component part of real property are used and consumed at the job site.

(c) In providing the services to property subject to taxation under s. 77.52 (2) (a) 10., Stats., a contractor may purchase without county tax for resale tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., physically or electronically transferred to the customer in conjunction with providing such services.

(d) Section 77.77 (3), Stats., provides that the sales tax under s. 77.71 (1), Stats., and the county tax under s. 77.71 (3), Stats., on the sale of building materials to contractors engaged in the business of constructing, altering, repairing, or improving real estate for others are not imposed, if the materials are affixed and made a structural part of real estate and the amount payable to the contractor is fixed without regard to the costs incurred in performing a written contract that was irrevocably entered into prior to the effective date of the county ordinance or special district resolution, or that resulted from the acceptance of a formal written bid accompanied by a bond or other performance guaranty that was irrevocably submitted before that date.

(e) The county tax under s. 77.71 (3), Stats., on building materials used in real property construction activities are not imposed if the contractor purchased the building materials before the effective date of the county tax of that county or has paid the sales tax of another county in Wisconsin in purchasing the building materials.

Note: Section Tax 11.68 interprets ss. 77.51 (2), (12m) (b) 7., (12t), (14) (intro.), (15a) (b) 1. and 4., (15b) (b) 7., 77.52 (2) (a) 10., 11., and 20. and (2m), 77.53 (1), 77.54 (5) (d), (6) (am) 1., 4., and 5., (9m), (26), (26m), (31), (41), (60), (62m), and (65), 77.71 (3), and 77.77 (3), Stats.

Note: The interpretations in s. Tax 11.68 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Vault doors were not considered personal property until August 1, 1975; (b) Service station equipment such as underground tanks, gasoline pumps and hoists installed in or securely attached to their owner’s land was real property, but the property was personal property if the personal property and land were owned by different persons prior to August 1, 1975; (c) Advertising signs were real property if erected on and securely attached to the owner’s land prior to August 1, 1975; (d) Landscaping services became taxable effective May 1, 1982, pursuant to Chapter 317, Laws of 1981; (e) The exemption for waste reduction and recycling machinery and equipment became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (f) The exemption for mobile units used for mixing and processing became effective July 20, 1985, pursuant to 1985 Wis. Act 29; (g) The credit for local sales taxes paid to other states became effective April 1, 1986, pursuant to 1987 Wis. Act 27; (h) The exemption for safety attachments for manufacturing machines became effective June 1, 1986, pursuant to 1985 Wis. Act 149; (i) The exemption of 35% of the selling price of new mobile homes and 100% of the selling price of used mobile homes became effective January 1, 1987, pursuant to 1985 Wis. Act 29; (j) The exemption for property used in constructing professional sports and home entertainment stadiums became effective October 1, 1991, pursuant to 1991 Wis. Act 37; (k) The 35% reduction in gross receipts for new mobile homes transported in 2 unattached sections became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (L) Tangible personal property purchased outside Wisconsin, stored in Wisconsin and subsequently used outside Wisconsin became taxable October 1, 1991, pursuant to 1991 Wis. Act 39; (m) Raw materials purchased outside Wisconsin, manufactured, fabricated or otherwise altered by the contractor outside Wisconsin and used in real property construction by the contractor in Wisconsin became subject to use tax effective August 12, 1993, pursuant to 1993 Wis. Act 16; (n) In Tom Kuehne Landscape Contractor, Inc. vs. Wisconsin Department of Revenue, Wisconsin Court of Appeals, District IV, No. 86-1813, October 29, 1987 (CCH 202-919), highway signs, sign bridges, delineator posts and guardrails were found to remain tangible personal property after installation; (o) The stadium tax on building materials became effective January 1, 1996, pursuant to 1995 Wis. Act 56; (p) The change to the definition of ”real property construction activities” to include only those activities that take place at a site where tangible personal property is affixed to real property became effective for sales of property pursuant to contracts entered into on or after December 1, 1997, pursuant to 1997 Wis. Act 27; (q) The clarification of the tax treatment of the original installation or complete replacement of certain deemed items became effective on October 1, 2001, pursuant to 2001 Wis. Act 16; (r) The changes in the use of the terms mobile homes and manufactured homes became effective January 1, 2008, pursuant to 2007 Wis. Act 11; (s) The change of the term ”gross receipts” to ”sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (t) The exemption for modular homes and manufactured homes used in real property construction activities outside Wisconsin became effective September 1, 2011 pursuant to 2011 Wis. Act 32; and (u) The exemption for lump sum contracts first applied to contracts entered into on or after October 1, 2013, pursuant to 2013 Wis. Act 20; (v) The exemption for building materials acquired solely for holding structures used in a fertilizer blending, feed milling, or grain drying operation became effective April 19, 2014, pursuant to 2013 Wis. Act 324; (w) The exemption for building materials, supplies, and equipment used in the construction or development of sports and entertainment arena facilities became effective August 14, 2015, pursuant to 2015 Wis. Act 20; (x) The exemption for building materials that become a part of a facility owned by a local government or exempt nonprofit organization first applies to contracts entered into January 1, 2016, pursuant to 2015 Wis. Act 126; (y) The exemption for products used in constructing or developing a facility in the electronics and information technology manufacturing zone became effective September 20, 2017, pursuant to 2017 Wis. Act 58; (z) The exemption for building materials that become a part of a facility owned by certain title holding companies described in s. 501 (c) (2) of the Internal Revenue Code became effective for contracts entered into on or after September 1, 2017, pursuant to 2017 Wis. Act 231, and to technical colleges and the UW System, and state veterans organization for contracts entered into on or after July 1, 2018, pursuant to 2017 Wis. Acts 59 and 190, respectively; and (za) The exemption for lump sum contracts was amended to apply to time and materials construction contracts and to subcontractors for construction contracts entered into or extended, modified, or renewed on or after December 1, 2017.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (5) (d), (6) (a) 2. and 12., (10) (b), Register, December, 1983, No. 336, eff. 1-1-84; reprinted to correct error in (10) (b), Register, January, 1984, No. 337; emerg. cr. (12), eff. 3-24-86; cr. (12), Register, October, 1986, No. 370, eff. 11-1-86; am. (9) (a), Register, July, 1987, No. 379, eff. 8-1-87; am. (5) (g) and (12) (a), Register, April, 1990, No. 412, eff. 5-1-90; am. (1) (b) 1., 2. and 3., (2) (a) and (b), (3) (b) and (c), (4) (a) (intro.) and (b), (5) (intro.), (b), (e), (f), (h) and (j), (6) (a) 2., 4., 5., 6., 9. and 10. and (b), (7), (8), (9) (a), (10) (a), (b) and (d) and (11), cr. (3) (d) and (e), Register, June, 1991, No. 426, eff. 7-1-91; renum. (9) (b) to be (c); cr. (2) (c), (3) (f) and (9) (b), am. (6) (a) (intro.), 9., 10., (10) (a), (c), and (12) (c), Register, December, 1992, No. 444, eff. 1-1-93; am. (3) (a), Register, April, 1994, No. 460, eff. 5-1-94; am. (4) (a) 2., (5) (L) and (10) (c), cr. (6) (a) 15., Register, October, 1997, No. 502, eff. 11-1-97; renum. (1), (2) (a) and (b) and (3) (a), (b), (c) to (f) and (4) to (12) to be (2), (3) (a) and (b), and (4) (a), (b) 1., (c) to (f) and (5) to (13) and am. (2) (b) 1., (4) (f), (7) (a) 6., 9., (b), (9) (b), (11) (c), (13) (a) and (c) to (e), cr. (1) and (4) (b) 2., r. (2) (c), Register, June, 1999, No. 522, eff. 7-1-99; EmR0924: emerg. am. (1), (2) (a), (b) 1. to 4., (c), (3), (4) (a), (b) 1., (c) to (f), (5) (b), (6) (intro.), (b), (d), (f), (7) (a) (intro.), 1. to 9., 15., (b), (8), (9), (10), (11) (a), (b), (d), (13) (title), (a) and (c) to (e), cr. (6) (bm), r. (6) (g), renum. (6) (h) to (n) to be (6) (g) to (m) and am. (6) (g), r. and recr. (11) (c) and (12), eff. 10-1-09; CR 09-090: am. (1), (2) (a), (b) 1. to 4., (c), (3), (4) (a), (b) 1., (c) to (f), (5) (b), (6) (intro.), (b), (d), (f), (7) (a) (intro.), 1. to 9., 15., (b), (8), (9), (10), (11) (a), (b), (d), (13) (title), (a) and (c) to (e), cr. (6) (bm), r. (6) (g), renum. (6) (h) to (n) to be (6) (g) to (m) and am. (6) (g), r. and recr. (11) (c) and (12) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am (6) (f), (7) (b) Register November 2010 No. 659. eff. 12-1-10; CR 12-014: cr. (4) (g), am. (13) (title), (a), (c) to (e) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: r. and recr. (7) (b) Register August 2014 No. 704, eff. 9-1-14; CR 16-053: cr. (4) (h), am. (6) (d), (h), (7) (a) 2., 4., cr. (7) (a) 7m., am. (11) (c) (intro.) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: cr. (4) (a) (title), (b) (title), (c) (title), (d) (title), (e) (title), (f) (title), (fm), (g) (title), (h) (title), (i) Register June 2020, No. 774, eff. 7-1-20; correction in (4) (fm), (i) 1. b. made under s. 35.17 Register June 2020, No. 774; CR 20-018: r. and recr. (4) (i). cr. (4) (j), am. (7) (title), cr. (7) (a) (title), am. (7) (a), r. and recr. (7) (b), am. (9) (a), (Example 1), r. (9) (a) (Example 2) Register July 2021 No. 787, eff. 8-1-21; correction in (4) (i), (7) (b) 1. a., 4. b. made under s. 35.17, Stats., Register July 2021 No. 787; CR 22-044: r. (4) (fm), am. (13) (title), (a), (c) to (e) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.69 Financial institutions {#sec-tax-11.69 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.69}

(1) Definition. In this section, “financial institution” includes a bank, savings and loan association, savings bank, or credit union.

(2) Exempt sales. Financial institutions are primarily engaged in providing nontaxable services. Those services include charges to customers for cashier’s checks, money orders, traveler’s checks, checking accounts, and the use of safe deposit boxes.

(3) Taxable sales. A financial institution, except for a federally chartered credit union, shall obtain a seller’s permit and file the required sales and use tax returns if it has taxable sales. Taxable sales by a financial institution include the following:

(a) Providing parking space for motor vehicles.

(b) Coin savings banks.

(d) Commemorative medals.

(e) Gold and silver bullion.

(f) Prepared foods, candy, dietary supplements, and soft drinks in the institution’s cafeteria.

(g) Personalized imprinted checks, except where the check printer is the retailer of the checks to customers. A check printer is the retailer of checks where it sets the price for the checks, provides the order forms for the checks and invoices or bills the customer for the checks, even though the financial institution collects the order from the customer, charges the customer’s account on behalf of the check printer, and remits the amount due from the account to the check printer.

(h) Repossessed merchandise.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(4) Purchases.

(a) A financial institution’s purchases subject to sales or use tax include office furniture and equipment, such as desks, chairs, couches, writing tables, office machines, safe deposit boxes, drive-up and walk-up windows, night depository equipment, vault doors, remote TV auto teller systems, and camera security equipment except camera security equipment used to monitor for unauthorized entry to a building or a room in a building.

(b) Any tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., purchased by a financial institution to be given away to a customer, whether or not based upon the amount of a deposit, is taxable at the time it is purchased. This includes calendars, playing cards, plat books, maps, and any other property, items, or goods transferred to customers to promote business. Checking account and savings account forms provided to customers free of charge are also subject to the tax.

(c) Purchases of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that the financial institution will resell, rather than give away, may be purchased without tax by giving its supplier a properly completed exemption certificate claiming resale.

(d) If a financial institution is not required to have a seller’s permit and has a use tax obligation because purchases are made without tax, it shall apply for a consumers’ use tax registration certificate and report the tax on the purchases.

(5) Special provisions.

(a) Sales to state chartered credit unions and to federal and state chartered banks, savings and loan associations, and savings banks are taxable, unless resold by the credit union, bank, savings and loan association, or savings bank.

(b) The use tax may not be imposed directly on a federal credit union due to federal restrictions.

Note: Section Tax 11.69 interprets ss. 77.51 (13) (a), (14) (intro.), (15a), and (20) and 77.52 (1) and (2) (a) 9., Stats.

Note: The interpretations in s. Tax 11.69 are effective under the general sales and use tax law on and after September 1, 1969, except that the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (5) (a), Register, January, 1983, No. 325, eff. 2-1-83; renum. (1) to be (2), renum. (2) (title), (intro.), (a), (b), (c), (d), (e), (f), (g) and (h) to be (3) (title), (intro.), (b), (d), (c), (e), (h), (f), (a) and (g), renum. (3) (title), (a), (b) and (c) to be (4) (title), (a), (b) and (d), renum. (4) to be (1), am. (1), (2), (3) (g), (4) (a), (b) and (d) and (5) (a), cr. (4) (c), Register, October, 1996, No. 490, eff. 11-1-96; EmR0924: emerg. am. (1), (2), (3) (intro.), (a), (f), (g), (4) (a) to (c) and (5) (a), eff. 10-1-09; CR 09-090: am. (1), (2), (3) (intro.), (a), (f), (g), (4) (a) to (c) and (5) (a) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.70 Advertising agencies {#sec-tax-11.70 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.70}

(1) Definitions. In this section:

(a) “Advertising and promotional direct mail” means direct mail that has the primary purpose of attracting public attention to a product, person, business, or organization or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization.

(b) “Catalog” means a printed and bound, stitched, sewed, or stapled book containing a list and description of property or services for sale, regardless of whether a price is specified.

(c) “Direct mail” means printed material that is delivered or distributed by the U.S. postal service or other delivery service to a mass audience or to addressees on a mailing list provided by or at the direction of the purchaser of the printed material, if the cost of the printed material or any tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., included with the printed material is not billed directly to the recipients of the printed material. “Direct mail” includes any tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., provided directly or indirectly by the purchaser of the printed material to the seller of the printed material for inclusion in any package containing the printed material, including billing invoices, return envelopes, and additional marketing materials. “Direct mail” does not include multiple items of printed material delivered to a single address.

(d) “Finished artwork” means the final artwork used for actual reproduction by photomechanical or other processes or for display purposes, but does not include web site or home page designs. Finished artwork also includes drawings, paintings, designs, photographs, lettering, paste-ups, mechanicals, assemblies, charts, graphs, and illustrative materials, regardless of whether such items are reproduced.

(e) “Preliminary artwork” means artwork prepared solely for presenting an idea to a client or prospective client. Preliminary artwork includes roughs, visualizations, sketches, layouts, and comprehensives.

(2) Taxable sales. The following sales are subject to Wisconsin sales or use tax, unless an exemption in sub. (3) applies:

(a) Charges for finished artwork. Finished artwork is tangible personal property, unless it is transferred electronically. Finished artwork that is transferred electronically is an additional digital good, as provided in s. 77.51 (1a), Stats.

(b) Charges for preliminary artwork all or any part of which results in the production of finished artwork or other tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., by the advertising agency. This preliminary artwork is tangible personal property or an item or good under s. 77.52 (1) (b) or (d), Stats.

Examples: 1) Company A contracts with an advertising agency to produce an advertising campaign for Company A’s product. The advertising agency develops 10 ideas or suggestions, in the form of preliminary artwork, for an advertising flyer. Company A selects one of the ideas, and it is developed into finished artwork, which is used to produce flyers.

The charges by the advertising agency for the production of preliminary artwork for all 10 ideas are subject to tax, provided an exemption does not apply to the sale of the finished artwork, because one idea was selected and was used to produce finished artwork.

2) Company B contracts with an advertising agency to produce a radio commercial. The agency produces a demonstration tape (demo) which contains several different jingles which could be used in the commercial. Company B selects one of the jingles, and the commercial is produced.

The charge by the agency for the demo is subject to tax. The demo is preliminary artwork. Since finished artwork was produced from the preliminary artwork, the charge is subject to tax, unless an exemption applies to the sale of the finished artwork.

(c) Sales of signs, circulars, business cards, stationary showcards, banners, posters, bulletins, brochures, commercials, tapes, or other items of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

Examples: 1) Company C contracts with an advertising agency to have 10,000 advertising flyers produced. The advertising agency prepares preliminary artwork. Company C decides on one theme and the finished artwork is produced. The advertising agency has the flyers printed and delivered to Company C. Company C mails the flyers to its Wisconsin customers.

The entire charge to Company C by the advertising agency for the flyers, which includes preliminary artwork, finished artwork, and the flyers, is subject to tax.

2) Assume the same facts as Example 1, except that Company C mails 90% of the flyers to customers outside Wisconsin and 10% to customers in Wisconsin.

Ten percent of the total charge to Company C by the advertising agency for the flyers, including the preliminary artwork, finished artwork, and flyers, is subject to tax.

3) Company D decides to have a radio advertising campaign and contracts with an advertising agency. The advertising agency produces several advertising jingles on a “demo” tape, and Company D selects one jingle. The advertising agency then produces a master tape at its Wisconsin sound production studio. The master tape remains at the studio, and 10 copies or “dubs” are produced by the advertising agency. One dub is given to Company D, and the other 9 dubs are mailed by the advertising agency directly to various Wisconsin radio stations. The air time is arranged by Company D.

The entire charge by the advertising agency for the production of the master tape and dubs is subject to tax.

4) Assume the same facts as Example 3, except that 5 dubs are mailed by the advertising agency to radio stations outside Wisconsin.

Fifty percent of the entire charge by the advertising agency for the production of the master tape and dubs is subject to tax. The remaining 50% is not subject to tax because that portion of the sale took place outside Wisconsin.

(d) Photographic services or photostats.

(e) Producing, fabricating, processing, printing, or imprinting tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for clients for a consideration, even though the client may furnish the materials used in producing, fabricating, processing, printing, or imprinting the property, items, or goods. However, the tax does not apply to the printing or imprinting of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that results in printed material, catalogs, or envelopes that are exempt under s. 77.54 (25), (25m), or (59), Stats.

(3) Nontaxable sales. Charges for the following are not subject to Wisconsin sales or use tax:

(a) Preliminary artwork that does not result in the production of finished artwork or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

Example: Company E contracts with an advertising agency for an ongoing advertising campaign. The agency submits several suggestions, in the form of preliminary artwork, for a spring advertising campaign. These ideas are rejected by Company E. The charge by the advertising agency for preliminary artwork not chosen for further development is not subject to tax, because the preliminary artwork was not developed into finished artwork.

(b) Writing original manuscripts or news releases.

(d) Consultation, market research, and compiling statistical or other information.

(e) Recommendations for advertising themes or merchandising plans.

(f) Obtaining media space and time.

(g) Printed material, other than catalogs and the envelopes in which the catalogs are mailed, which is designed to advertise and promote the sale of merchandise, or to advertise the services of individual business firms, which is purchased and stored for the purpose of subsequently transporting it outside Wisconsin by the client for use thereafter solely outside Wisconsin.

Example: Company F contracts with an advertising agency to have 10,000 advertising flyers produced. The advertising agency prepares preliminary artwork. Company F decides on one theme and the finished artwork is produced. The advertising agency has the flyers printed and delivered to Company F. Company F mails the flyers to its customers located outside Wisconsin.

The entire charge to Company F by the advertising agency for the flyers, which includes preliminary artwork, finished artwork, and the flyers, is exempt from tax because the printed advertising material is transported outside Wisconsin by Company F for use by Company F outside Wisconsin.

(gm) Catalogs and the envelopes in which the catalogs are mailed, if the catalogs are designed to advertise and promote the sale of merchandise or to advertise the services of individual business firms.

Example: Company A contracts with an advertising agency to have 5,000 catalogs that advertise Company A’s products produced. The advertising agency has the catalogs printed. Some of the catalogs are delivered to Company A in Wisconsin and other catalogs are shipped directly to Company A’s prospective customers in and outside Wisconsin.

The entire charge to Company A by the advertising agency for the catalogs, which includes any charges for preliminary artwork, finished artwork, and the catalogs, is exempt from tax because catalogs and the envelopes in which they are mailed are exempt from tax, regardless of whether the catalogs are delivered in or out of Wisconsin.

(h) Printing or imprinting tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which will be subsequently transported outside Wisconsin for use outside Wisconsin by the client for advertising purposes.

Example: Company G contracts with an advertising agency to produce an advertising flyer. The advertising agency prepares preliminary artwork. Company G decides on one theme, and the finished artwork is prepared. Company G provides the finished artwork, paper, and ink to a Wisconsin printer who prints 10,000 copies of the flyer. The flyers are mailed by Company G to addresses outside Wisconsin.

The charge to Company G by the printer for the printing of the flyers is exempt from tax because the flyers are transported outside Wisconsin for use outside Wisconsin by Company G for advertising purposes.

(i) Tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that will be resold by the client.

Example: Company H has an advertising agency produce specification sheets for Company H’s products. The specification sheets are included with the products when sold to Company H’s customers. The advertising agency produces the finished artwork and has the printing done. Company H receives an itemized bill from the advertising agency which shows a charge for the finished artwork and the printing.

The entire charge by the advertising agency to Company H is exempt from tax because the specification sheets are included with Company H’s products which will be sold to customers. Company H may claim a resale exemption for the specification sheets by providing the agency with a properly completed exemption certificate claiming resale.

(j) Tangible personal property and items under s. 77.52 (1) (b), Stats., used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and becoming an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or which is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., in any form destined for sale.

Examples: 1) Company I contracts with a Wisconsin advertising agency to produce an advertising flyer. The advertising agency prepares preliminary artwork. Company I decides on one theme and the finished artwork is prepared. Company I takes the finished artwork to a Wisconsin printer and has 10,000 flyers printed. The printer uses its own paper and ink to print the flyers. The flyers are mailed by the printer to addresses in Wisconsin.

The charge to Company I by the advertising agency for the preliminary artwork and finished artwork is exempt from Wisconsin sales tax because the finished artwork is consumed in the production of flyers which are sold by the printer to Company I.

2) Assume the same facts as Example 1, except that Company I provides the paper to the printer, in addition to the finished artwork.

The charge to Company I by the Wisconsin advertising agency for the preliminary artwork and finished artwork is subject to Wisconsin sales tax. The printer is selling a printing service, and not tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., to Company I. The destined for sale requirement is not met and exemption from tax does not apply. Even though Company I is furnishing a printing service, however, it is still considered to be engaged in manufacturing, and its machinery and equipment, if used exclusively and directly in manufacturing, qualify for exemption under s. 77.54 (6) (am) 1., Stats.

(k) Tangible personal property or services that are used exclusively and directly by a manufacturer in manufacturing shoppers guides, newspapers, or periodicals and that become an ingredient or component of shoppers guides, newspapers, or periodicals or that are consumed or lose their identity in the manufacture of shoppers guides, newspapers, or periodicals, whether or not the shoppers guides, newspapers, or periodicals are transferred without charge to the recipient. This exemption does not apply to advertising supplements that are not newspapers.

Example: Company J contracts with an advertising agency to produce a shoppers guide advertisement. The advertising agency produces layouts and roughs for approval by Company J. Company J approves, and the finished artwork for the shoppers guide advertisement is produced. The preliminary artwork and finished artwork charges are billed to Company J for the job. Company J deals directly with the shoppers guide publisher to run the advertisement in a shoppers guide. The advertising agency bills Company J $1,000 for preliminary artwork and $3,000 for finished artwork.

The total $4,000 charge is exempt from Wisconsin sales or use tax because the preliminary artwork results in finished artwork and the finished artwork becomes an ingredient or component part of a shoppers guide, or is consumed or loses its identity in the manufacture of shoppers guides.

(L) Containers, labels, sacks, cans, boxes, drums, bags, or other packaging and shipping materials for use in packing, packaging, or shipping tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., if the containers, labels, sacks, cans, boxes, drums, bags, or other packaging and shipping materials are used by the purchaser to transfer merchandise to customers. Also exempt are meat casing, wrapping paper, tape, containers, labels, sacks, cans, boxes, drums, bags, or other packaging and shipping materials for use in packing, packaging, or shipping meat or meat products, regardless of whether these items are used to transfer merchandise to customers.

Example: An advertising agency produces finished artwork to be used on Company K’s shipping boxes. The boxes are used by Company K to ship its products to its customers. The advertising agency delivers the finished artwork to a printer who uses the finished artwork to print and produce the boxes which the advertising agency resells to Company K.

The entire charge for the finished artwork and boxes is exempt from Wisconsin sales or use tax because the boxes are used by Company K in packing, packaging, or shipping merchandise to customers. Company K should provide the agency with a properly completed exemption certificate.

(m) Raw materials processed, fabricated, or manufactured into, attached to, or incorporated into printed materials that are transported and used solely outside Wisconsin.

Example: Company A, located in Wisconsin, publishes flyers it gives away to potential customers. Company A purchases paper from a company who delivers it to a Wisconsin printer that prints the flyers for Company A. The flyers are transported and used solely outside Wisconsin.

The paper purchased by Company A for the flyers is exempt from Wisconsin sales or use tax.

(n) Advertising and promotional direct mail.

Example 1: Company B, located in Wisconsin, contracts with a printer to have 10,000 advertising flyers that are designed to promote Company B’s products printed. Once the printer finishes printing the advertising flyers, the printer mails the flyers to the addresses on a mailing list provided by Company B. The addresses are in and outside Wisconsin. The charge by the printer to Company B is exempt from Wisconsin sales and use tax since the advertising flyers are advertising and promotional direct mail.

Example 2: Same as Example 1, except the flyers are sent by the printer to Company B, the purchaser, and Company B mails the flyers to the addresses on the mailing list. The flyers are not advertising and promotional direct mail because the seller/printer is not delivering the flyers to a mass audience or to addresses on a mailing list at the direction of the purchaser.

(4) Measure of tax.

(a) Tax applies to an advertising agency’s total sales price from the sale of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services without any deduction for any cost element which becomes a part of the sales price. These elements include consultation, research, copy, supervision, model fees, rentals, photostats, typesetting, postage, express, telephone, travel, agency service fees, or any other labor or service cost incurred in the production of that property. No deduction may be taken even though the costs are separately itemized in a billing to the client.

(b) Tax applies to in-progress billings for production work which ultimately results in the production of finished artwork or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.

(5) When and where sale occurs.

(a) The tax applies to an agency’s sales price from a sale of or the storage, use, or consumption of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., sourced to Wisconsin under s. 77.522, Stats., regardless of whether:

The transfer is to the advertiser or to a third party at the direction of or on behalf of the client.
The client is located in or outside Wisconsin.

Example: An agency’s billing to a client in Minnesota for finished artwork transferred to a business in Wisconsin is taxable.

(b) The sale of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services occurs when the advertising agency transfers possession of the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., to the client or the client realizes the economic benefits of the property’s, item’s, or good’s use, even though the property, item, or good may not be physically transferred to the client.

(6) Fees added to billings. When an amount billed as an agency “fee,” “retainer,” “service charge,” or “commission” represents services rendered which are a part of the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the amount is taxable. If it clearly represents a charge or a part of a charge for any nontaxable service rather than for the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., it is not taxable. A fee representing both taxable and nontaxable sales shall be reasonably allocated between taxable and nontaxable sales, unless the fee is a bundled transaction, as defined in s. 77.51 (1f), Stats.

(7) Purchases by agencies.

(a) An advertising agency is the seller of, and may purchase without tax for resale, any item that:

Is resold before use by the advertising agency.

Example: Company L is an advertising agency. Company L purchases various art equipment such as paint brushes, easels, etc., that it uses in its operations. A portion of the art equipment is sold to the general public for use. The art equipment Company L sells to the general public may be purchased by Company L without Wisconsin sales or use tax as property for resale, provided Company L gives its supplier a properly completed exemption certificate claiming resale.

Physically becomes an ingredient or component part of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., the advertising agency produces and sells.

Example: Company M is an advertising agency that produces displays for customers. The displays are usually framed or matted photographs or prints. Company M may purchase the frames, matting, and paper for photographs and prints without Wisconsin sales or use tax as property for resale, provided it gives its supplier a properly completed exemption certificate claiming resale.

(b) An advertising agency is the consumer of all tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased by the agency, other than tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased for immediate sale to customers or that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or the item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale. As the consumer, the advertising agency is subject to Wisconsin sales or use tax on the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased.

Example: Company N purchases various office equipment, such as typewriters, computers, tables and cabinets which it uses in its advertising agency office. Company N purchases the equipment from an out-of-state supplier that is not required to collect Wisconsin sales or use tax. Company N is subject to Wisconsin use tax on its purchase of the office equipment.

Note: Exemption certificates and their instructions may be obtained free of charge from the department’s web site at www.revenue.wi.gov, by writing to Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, or by calling (608) 266-2776.

Note: Section Tax 11.70 interprets ss. 77.51 (1f), (1fr), (3rm), (14) (intro.) and (h), 77.52 (1) and (2), 77.522, 77.54 (2), (2m), (6) (am) 2., (25), (25m), (43), and (59), and 77.585 (8), Stats.

Note: The interpretations in s. Tax 11.70 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for printing or imprinting of tangible personal property furnished by customers and used out-of-state for advertising became effective March 1, 1970; (b) The exemption for printed advertising material used out-of-state became effective May 21, 1972; (c) The exemption for ingredients or components of shoppers guides, newspapers, and periodicals became effective July 7, 1983; (d) The sales and use tax exemption for raw materials for printed materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (e) The exemption for catalogs and their mailing envelopes became effective April 1, 2009, pursuant to 2007 Wis. Act 20; (f) The provision that items must be consumed exclusively and directly by a manufacturer in manufacturing property or items destined for sale became effective August 1, 2009, pursuant to 2009 Wis. Act 28; (g) The definitions of bundled transaction and finished artwork became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (h) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (i) The definition of “direct mail” became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (j) The definition of “advertising and promotional direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; (k) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; and (L) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; r. and recr. Register, April, 1993, No. 448, eff. 5-1-93; cr. (3) (m), Register, June, 1999, No. 522, eff. 7-1-99; EmR0924: emerg. renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a) and (3) (gm), am. (2) (a) to (c), (e), (3) (a), (d), (g) to (m), (4), (5) (a) (intro.), (b), (6), (7) (a) 2. and (b), eff. 10-1-09; CR 09-090: renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a) and (3) (gm), am. (2) (a) to (c), (e), (3) (a), (d), (g) to (m), (4), (5) (a) (intro.), (b), (6), (7) (a) 2. and (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (c), (e) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (7) (a) 2. Register August 2012 No. 680, eff. 9-1-12; CR 13-011: renum. (1) (a) to (c) to (1) (b), (d), (e), cr. (1) (a), (c), am. (2) (c), (3) (gm), cr. (3) (n) Register August 2013 No. 692, eff. 9-1-13; correction in (1) (c) made under s. 13.92 (4) (b) 7., Stats., Register August 2013 No. 692; CR 13-012: am. (2) (e) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (2) (e) Register August 2014 No. 704, eff. 9-1-14; correction in (3) (j) (Example [2]) Register August 2014 No. 704.

Wis. Admin. Code § Tax 11.71 Computer industry {#sec-tax-11.71 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.71}

(1) Definition of terms. In this section:

(a) “Application” means the specific job performance by an automatic data processing installation.

(b) “Automatic data processing equipment” includes computers used for data processing purposes and their peripheral equipment as well as punched card tabulating machines. It does not include tape-controlled automatic drilling, milling, or other manufacturing machinery or equipment.

(c) “Coding” means the list, in computer code, of the successive computer instructions for successive computer operations for solving a specific problem.

(d) “Computer” means an electronic device that accepts information in digital or similar form and that manipulates such information to achieve a result based on a sequence of instructions.

(e) “Computer software” means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.

(em) “Computer software maintenance contract” means a contract that obligates a vendor of computer software to provide a customer with future updates or upgrades to computer software, computer software support services, or both.

(f) “Data processing” means the recording and handling of information by means of mechanical or electronic equipment, commonly referred to as automatic data processing.

(g) “Input” means the information or data transferred, or to be transferred, from external storage media including punched cards, punched paper tape, and magnetic media into the internal storage of the computer.

(h) “Keypunching” means recording information in cards, paper tapes, or magnetic tapes, disc, or drum by punching holes or otherwise entering information in the cards, tapes, discs, or drums, or recording data on any media to represent letters, digits, and special characters. Keypunching includes the necessary preliminary encoding or marking of the source documents.

(i) “Keystroke verifying” means the use of a machine known as a punched card verifier or tape transcriber, which has a keyboard, to ensure that information punched in a punch card or transcribed on a tape during the keypunching operation has been punched properly.

(j) “Load-and-leave” means delivery to a purchaser by using a tangible storage media that is not physically transferred to the purchaser.

(k) “Prewritten computer software” is defined in s. 77.51 (10r), Stats., to mean computer software, including prewritten upgrades, that is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of 2 or more “prewritten computer software” programs or prewritten portions of computer software does not cause the combination to be other than “prewritten computer software.” “Prewritten computer software” includes software designed and developed by the author or other creator to the specifications of a specific purchaser if it is sold to a person other than the specific purchaser. If a person modifies or enhances computer software of which the person is not the author or creator, the person is the author or creator only of the person’s modifications or enhancements. “Prewritten computer software” or a prewritten portion of computer software that is modified or enhanced to any degree, with regard to a modification or enhancement that is designed and developed to the specifications of a specific purchaser, remains “prewritten computer software,” except that if there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for the modification or enhancement, the modification or enhancement is not “prewritten computer software.”

(L) “Processing a client’s data” means the developing of original information from raw data furnished by a client. Automatic data processing operations which develop original information include summarizing, computing, extracting, sorting, sequencing, or the updating of a continuous file of information maintained for a client by a service bureau.

(m) “Program” means the complete plan for the solution of a problem, i.e., the complete sequence of automatic data processing equipment instructions necessary to solve a specific problem. It includes both systems and application programs and subdivisions, such as assemblers, compilers, routines, generators, and utility programs. For purposes of this section a program is either a prewritten or custom program.

(n) “Reformatting of data” means the rearranging of data by mechanical or electronic equipment.

(o) “Service bureau” means a business rendering automatic data processing services.

(p) “Source document” means a document from which basic data are extracted, such as a sales invoice.

(2) Taxable receipts. Receipts from the following transactions involving automatic data processing equipment, computer software, output, and services are taxable:

(a) The retail sale, license, lease, or rental of new or used automatic data processing equipment and charges for the installation, service, and maintenance of this equipment. In this subsection, the following applies to licenses, leases, and rentals:

License, lease, or rental includes a contract by which a licensee or lessee, for a consideration, obtains the full or partial use of equipment if the licensee’s or lessee’s employees operate the equipment. License, lease, or rental does not include obtaining remote access to equipment by telephone or other means when that person’s employees do not operate the equipment or control its operations. License, lease, or rental also does not include any transaction in which the licensor or lessor of the equipment provides the operator of the equipment and the operator does more than maintain, inspect, or set up the equipment.
Subleasing receipts are taxable without any deduction or credit for sales or use tax paid by the original lessee to the lessor if the original lessee uses the equipment in addition to subleasing it. If the original lessee uses the equipment solely for lease or rental to others, the lessor’s charge to the original lessee is exempt as a purchase for resale.

(b) The retail sale, lease, rental, or license to use prewritten computer software, regardless of how it is delivered to the purchaser. The tax applies to the total charge for prewritten computer software, including:

The consideration received for the temporary transfer of possession of prewritten computer software for the purpose of direct use or to be recorded by the customer.
The consideration received for prewritten computer software in the form of license fees or royalty payments, present or future, whether for a minimum use or for extended periods.
The consideration received for designing, producing, implementing, testing, and installing the prewritten computer software.

(bm) The sale of computer software maintenance contracts for prewritten computer software, unless the sale, license, lease, or rental in Wisconsin of the software to which the maintenance contract relates is or was exempt from tax to the purchaser of the contract.

(c) The sale of training materials, such as books and manuals, including digital books and manuals furnished to trainees for a specific charge. However, separately stated training services are not taxable, unless they are a service necessary to complete the sale of a taxable product.

Examples: 1) Company A sells prewritten computer software to Customer B for $1,000. Company A also offers optional training on how to use the prewritten computer software for an additional $100. Customer B chooses to purchase the training service. The $1,000 sale of the prewritten computer software is subject to Wisconsin sales tax but the $100 charge for the training is not subject to tax since the training was not required by the seller or the purchaser as a service necessary to complete the sale.

2) Company C sells prewritten computer software to Customer D for $1,000. In addition, Company C also requires that any customer that purchases the prewritten computer software, must also purchase the training services on how to use the software for $100. Since Company C requires that Customer D purchase the training services as a part of the sale of the prewritten computer software to Customer D, the training services are a service necessary to complete the sale and Company C must charge Wisconsin sales tax on the entire $1,100 it charges Customer D.

(d) The charge for additional copies of records, reports, or tabulations, including copies produced by means of photocopying, multi-lithing, or by other means. “Additional copies” means all the copies in excess of copies produced on multipart carbon paper simultaneous with the production of the original and on the same printer, whether the copies are prepared by rerunning the same program, by using multiple simultaneous printers, by looping a program so that a program is run continuously, by using different programs to produce the same output product, or by other means.

(e) The sale of mailing lists as set forth in s. Tax 11.82, including listings in the form of mailing labels produced as result of a computer run. However, the tax does not apply to the charge for addressing material to be mailed with names and addresses furnished by a customer, or maintained by a service bureau for the customer, by the use of automatic data processing equipment.

(3) Nontaxable computer and data processing services. The sales price from the following computer or data processing services are not taxable:

(a) Processing a client’s data.

Note: A contract to process a client’s data by the use of computer software or through an electrical accounting machine programmed by a wired plugboard will usually include receiving the client’s source documents, recording data in machine readable form such as in punch cards or on magnetic media, making corrections, rearranging or creating new information as the result of the processing, and then providing tabulated listings or recording output on other media. This service is not taxable, even though the total charge is broken down into specific charges for each step.

Note: If a client furnishes data and computer software for processing the data and the processing is under the direction and control of the person providing the service, the processing service is not taxable, even though charges for the service may be based on computer time. The true object of this arrangement is considered to be a service, even though some tangible personal property may be incidentally transferred to the client.

(b) Providing computer software that is not prewritten computer software.

(c) Providing program technical support, error correction services, and maintenance and enhancement to computer software that is not prewritten computer software.

(d) Providing time-sharing services which permit persons at different locations to access the same computer through remote access by telephone lines, microwave, or other means. Nontaxable time-sharing exists when a person or that person’s employees, who have access to the equipment, are not located on the premises where the equipment is located and do not operate the equipment or control its operation.

(e) Miscellaneous services which are not part of the sale of prewritten computer software or other tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., including:

Designing and implementing computer systems including determining equipment and personnel required and how they will be utilized.
Designing storage and data retrieval systems including determining what data communications and high-speed input-output terminals are required.
Consulting services including study of all or part of a data processing system.
Feasibility studies including studies to determine what benefits would be derived if procedures were automated.
Evaluation of bids including studies to determine which proposal for computer equipment would be most beneficial.

(f) Keypunching and keystroke verifying services, including:

Keypunching only, keypunching and keystroke verification, or keypunching and providing a proof list or verification data, or both. Charges for these services are not taxable, whether the cards or tapes are furnished by the customer or by a service bureau.
Recording data from source documents directly on magnetic tape, off-line. This operation may include keystroke verifying or proof listing of data, or both, and is comparable to the punch card operation.
Imprinting characters on a document to be used as the input medium in an optical character recognition system, whether paper tape or other media are used in the operation.
Reformatting of data.

Note: Section Tax 11.71 interprets ss. 77.51 (1n), (1p), (1pd), (7), (7g), (10r), (14) (h) and (j), and (20) and 77.52 (1) and (2) (a) 10. and 13m., Stats.

Note: The interpretations in s. Tax 11.71 are effective under the general sales and use tax law on and after September 1, 1969, except that (a) Computer and data processing services were taxable under s. 77.52 (2) (a) 13., Stats., Laws of 1977, from August 1, 1977, through June 30, 1978; (b) The definition of prewritten computer software became effective March 6, 2009, pursuant to 2009 Wis. Act 2; (c) The definitions of computer, computer software, computer software maintenance contract and load and leave became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

Note: In Janesville Data Center, Inc. v. Department of Revenue (1978), 84 Wis. 2d 341, the Wisconsin Supreme Court held that the transfer of customer data onto tangible personal property and the verification of customer data is not subject to the sales and use tax as a transfer of tangible personal property or a taxable service.

History

Cr. Register, February, 1986, No. 362, eff. 3-1-86; am. (1) (e) 6., (2) (a) (intro.), 1. and (b) (intro.), Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (1) (b), (2) (intro.), (a) (intro.), 1., (b) to (d), (3) (intro.), (b) to (e) (intro.), (f) 1. and 2., r. (1) (c), (g) and (n), renum. (1) (d), (h) to (j) and (o) to (q) to be (1) (c), (g) to (i) and (n) to (p) and am. (1) (g), (h) and (p), cr. (1) (d), (em), (j) and (2) (bm), r. and recr. (1) (e) and (k), eff. 10-1-09; CR 09-090: am. (1) (b), (2) (intro.), (a) (intro.), 1., (b) to (d), (3) (intro.), (b) to (e) (intro.), (f) 1. and 2., r. (1) (c), (g) and (n), renum. (1) (d), (h) to (j) and (o) to (q) to be (1) (c), (g) to (i) and (n) to (p) and am. (1) (g), (h) and (p), cr. (1) (d), (em), (j) and (2) (bm), r. and recr. (1) (e) and (k) Register May 2010 No. 653, eff. 6-1-10, CR 12-014: am. (2) (c) (Example 2) Register August 2012 No. 680, eff. 9-1-12.

Wis. Admin. Code § Tax 11.72 Laundries, dry cleaners, and linen and clothing suppliers {#sec-tax-11.72 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.72}

(1) Laundries and dry cleaners.

(a) The sales price received from selling, performing, or furnishing laundry, dry cleaning, pressing, and dyeing services is taxable, except as provided in par. (b).

(b) The sales price from selling, performing, or furnishing laundry, dry cleaning, pressing, and dyeing services is exempt from tax when:

The services are performed on raw materials or goods in process destined for sale.
The services are performed by the customer through the use of self-service machines.
The services are performed on cloth diapers by a diaper service. “Cloth diaper” means a cloth diaper used for sanitary purposes. “Diaper service” means a business primarily engaged in the lease or rental, delivery or laundering of cloth diapers.

(2) Linen and clothing suppliers. The sales price received by lessors from leasing, licensing, or renting clothing, including uniforms, towels, linens, or similar items, including cloth diapers, to commercial establishments or household users under agreements which provide for furnishing items and cleaning the items when they become soiled is subject to the tax. However, the items furnished to customers under these agreements may be purchased by the lessor without paying sales or use tax and the charge for cleaning cloth diapers by a diaper service is not subject to tax.

(3) Purchases.

(a) Laundries, dry cleaners, and linen or clothing suppliers are the consumers of and shall pay tax on their purchases of all items transferred to customers incidentally in providing laundry and dry cleaning services, including solvents, soaps, detergents, spotting compounds, water repellents, disinfectants, fabric softeners, starch, dyes, mat compounds, fire repellent compounds, and marking tags they use for identification purposes. They also shall pay tax on their purchases of items transferred to customers with clean linen or clothes, such as hangers, handkerchiefs, bags, boxes, shirt boards, shoulder guards, twisters, and pins. The tax applies to the sales price on the sale of these items to laundries, dry cleaners, and linen and clothing suppliers.

(b) The tax applies to the sales price from sales, licenses, leases, or rentals of machinery and equipment to persons engaged in performing or furnishing laundry, dry cleaning, pressing, and dyeing services, and to persons leasing, licensing, or renting linens, towels, and clothing to industrial, commercial, or household users.

Note: Section Tax 11.72 interprets ss. 77.51 (1m), (3m), (13) (e) and (f), and (15a) and 77.52 (2) (a) 6. and (2m) (a), Stats.

Note: The interpretations in s. Tax 11.72 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Laundries and dry cleaners became the consumers of, and pay tax on the purchases of, items transferred to customers effective September 1, 1983, pursuant to 1983 Wis. Act 27; (b) The exemption for diaper services and cloth diapers became effective July 1, 1990, pursuant to 1989 Wis. Act 335; (c) The repeal of the exemption for cloth diapers became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (d) The change of the term “gross receipts” to “sales price” became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (e) The exemption for coin-operated, self-service laundry machines was expanded to include all self-service machines effective October 1, 2013, pursuant to 2013 Wis. Act 20.

History

Cr. Register, December, 1979, No. 288, eff. 1-1-80; am. (3) (a) and r. (3) (c), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) and (3) (a), cr. (1) (b), renum. (1) to be (1) (a) and am., Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1) (a), (b) (intro.), (2) and (3), eff. 10-1-09; CR 09-090: am. (1) (a), (b) (intro.), (2) and (3) Register May 2010 No. 653, eff. 6-1-10; CR 19-112: am. (1) (b) 2. Register June 2020 No. 774, eff. 7-1-20.

Subchapter IX Types of Tangible Personal Property and Items, Property, and Goods Under s. 77.52 (1) (b), (c), and (d), Stats.

Wis. Admin. Code § Tax 11.78 Stamps, coins, and bullion {#sec-tax-11.78 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.78}

(1) Taxable sales. Retail sales of the following tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., are subject to the sales and use tax:

(a) Cancelled United States and foreign postage stamps.

(b) Uncancelled United States postage stamps when sold or traded as collectors’ items above their face value.

(d) Postage charges which are billed by the seller of the tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., to the purchaser in connection with the sale and delivery of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., if the sale of the property, item, or good is subject to the tax.

(e) Foreign coins and paper currency when sold or traded as collectors’ items.

(f) United States coins and paper currency when sold or traded as collectors’ items above their face value.

(g) Silver bullion and gold bullion if the sale is sourced to a location in Wisconsin under s. 77.522, Stats., whether the sales contract is entered into in or outside of Wisconsin. Sales of silver and gold bullion sourced to a location outside Wisconsin are subject to the use tax when the bullion is brought into Wisconsin.

(h) Commemorative medals.

(2) Nontaxable sales. Retail sales of the following tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., are not subject to the sales and use tax:

(a) United States coins and paper currency sold at face value.

(b) The portion of the selling price attributable to postage in the sale of prestamped envelopes if the nontaxable postage is separately itemized to the customer.

(c) Sales of bullion to persons in Wisconsin if the sale is sourced to a location outside Wisconsin under s. 77.522, Stats.

(d) Foreign coins and paper currency in current circulation, when sold at face value and when acquired as a medium of exchange.

(e) Uncancelled United States postage stamps intended for use as postage even if sold for an amount above face value.

Note: Section Tax 11.78 interprets ss. 77.51 (15b) and (20) and 77.522, Stats.

Note: The interpretations in s. Tax 11.78 are effective under the general sales and use tax law on and after September 1, 1969, except that the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, January, 1977, No. 253, eff. 2-1-77; am. (2) (a), cr. (2) (e), Register, March, 1991, No. 423, eff. 4-1-91; EmR0924: emerg. am. (1) (intro.), (d), (g), (2) (intro.) and (c), eff. 10-1-09; CR 09-090: am. (1) (intro.), (d), (g), (2) (intro.) and (c) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (title), (1) (g) Register November 2010 No. 659, eff. 12-1-10.

Wis. Admin. Code § Tax 11.79 Leases of highway vehicles and equipment {#sec-tax-11.79 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.79}

(1) General rule. The sales price received from the license, lease, or rental of motor vehicles and mobile equipment used on a highway is subject to the sales and use tax.

Note: See s. Tax 11.32 for additional information explaining what is included in the “sales price.”

(2) Deductions from sales price. In determining a lessor’s taxable receipts under sub. (1), the cost of the following items may be deducted if they meet the conditions in sub. (3):

(a) Motor vehicle fuel.

(b) Vehicle license fees.

(d) Public liability insurance furnished by the lessor solely for the protection of the lessee but not including collision and comprehensive coverage.

(3) Conditions for deductions.

(a) The items listed in sub. (2) may be deducted if:

The charge is reasonable.
The charge is separately stated in the lease agreement, billing, or invoice.
The lessor is willing and able to lease the motor vehicle or mobile equipment without providing the items listed in sub. (2).

(b) The deduction is limited to the lessor’s cost of the items furnished with the leased equipment.

(4) Nondeductible items. In determining a lessor’s taxable sales price under sub. (1), the cost of the following may not be deducted:

(a) Amounts spent for the lessor’s own protection or for the protection of leased property, including collision or other insurance protection.

(b) Maintenance or repair charges incurred by the lessor.

(d) Dispatch service.

(5) Multistate use.

(a) The sales price received from the license, lease, or rental of motor vehicles and mobile equipment used on a highway is taxable in Wisconsin if the license, lease, or rental payments are sourced to Wisconsin under s. 77.522, Stats., as described in pars. (b) and (c).

(b) A license, lease, or rental of a motor vehicle, trailer, semitrailer, or aircraft that only requires one payment, is sourced as follows:

If the motor vehicle, trailer, semitrailer, or aircraft is received by the lessee or licensee at the lessor’s or licensor’s business location, the payment is sourced to the lessor’s or licensor’s business location.
If the motor vehicle, trailer, semitrailer, or aircraft is not received by the lessee or licensee at the lessor’s or licensor’s business location, the payment is sourced to the location where the lessee or licensee or the lessee’s or licensee’s designated donee receives the product. This would include the location indicated by instructions known to the lessor or licensor for delivery to the lessee or licensee or the lessee’s or licensee’s designated donee. The delivery may be made by the lessor or licensor or by a shipping company hired by the lessee or licensee.
If the location cannot be determined under subds. 1. and 2., the payment is sourced to the lessee’s or licensee’s address as indicated by the lessor’s or licensor’s business records, if the records are maintained in the ordinary course of the lessor’s or licensor’s business and if using that address to establish the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subd. 1., 2., or 3., the payment is sourced to the lessee’s or licensee’s address as obtained during the consummation of the license, lease, or rental, including the address indicated on the lessee’s or licensee’s payment instrument, if no other address is available and if using that address to determine the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subd. 1., 2., 3., or 4., the payment is sourced to the location from which the motor vehicle, trailer, semitrailer, or aircraft was shipped.

(c) Except as provided in par. (b), licenses, leases, and rentals of motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment, as defined in s. 77.522 (1) (a) 2., Stats., are sourced to the primary location of such property as indicated by an address for the property that is provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith.

(6) Exempt leases. The sales price from the license, lease, or rental of the following property shall be exempt from sales and use tax provided the lessor receives a properly completed exemption certificate as described in s. Tax 11.14:

(a) Highway vehicles, except automobiles, leased to common or contract carriers who use the vehicles exclusively in common or contract carriage, including urban mass transportation of passengers as defined in s. 71.38, Stats.

(b) Motor vehicles not licensed for highway use which are used exclusively and directly in conjunction with waste reduction or recycling activities described in s. 77.54 (5) (c), Stats.

(c) Mobile units used for mixing and processing, including the motor vehicle or trailer on which the unit is mounted. Accessories, attachments, parts, supplies, and materials for the mobile unit, vehicle, and trailer are also exempt.

(d) Leases of highway vehicles and equipment for resale.

Note: Section Tax 11.79 interprets ss. 77.51 (13) (k) and (14) (intro.) and (j), 77.522, 77.54 (5) (c) and (d) and (26m), and 77.58 (6), Stats.

Note: The interpretations in s. Tax 11.79 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for vehicles and equipment used in waste reduction or recycling activities became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (b) The exemption for mobile mixing units became effective July 20, 1985, pursuant to 1985 Wis. Act 29; (c) The sourcing provisions under s. 77.522, Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (d) The change of the term “gross receipts” to “sales price” became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, January, 1977, No. 253, eff. 2-1-77; cr. (4) (d), Register, September, 1984, No. 345, eff. 10-1-84; cr. (6), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1), (2) (title), (intro.), (a), (4) (intro.), (6) (intro.) and (c), renum. (3) to be (3) (a) and (b) and am. (3) (a) 2., r. and recr. (5), eff. 10-1-09; CR 09-090: am. (1), (2) (title), (intro.), (a), (4) (intro.), (6) (intro.) and (c), renum. (3) to be (3) (a) and (b) and am. (3) (a) 2., r. and recr. (5) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.80 Sales of ice {#sec-tax-11.80 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.80}

(1) Ice, including dry ice, is tangible personal property, the retail sale of which is subject to sales tax, unless sold in an exempt transaction. Ice is sold at retail when it is sold for use or consumption but not for resale.

Example: Ice used for refrigeration purposes is consumed in the process of refrigeration. Ice used in drinks is purchased for resale by the seller of the drink.

(2) Taxable sales of ice include:

(a) Sales of ice blocks through vending machines.

(b) Sales of ice blocks and ice cubes to restaurants, taverns, grocery stores, and meat markets when the ice is consumed in cooling bottled drinks or preserving foods.

(3) Nontaxable sales of ice include:

(a) Sales of ice cubes to be used in drinks, including sales to restaurants, taverns, and individuals.

Note: Ice sold by a food retailer in cubes or crushed form can be ingested for taste. Therefore, a seller may exempt the sale of such ice. If the purchaser uses the ice to keep food or beverages cold rather than ingesting or chewing it, the purchaser is subject to tax on the purchase of the ice.

(b) Sales to manufacturers, producers, or food processors for use inside the shipping cases of merchandise being transferred to a customer. The sales are exempt as “shipping material” under s. 77.54 (6) (am) 2., Stats.

(bm) Sales of ice for use inside shipping cases for meat or meat products, regardless of whether such items are used to transfer merchandise to customers. The sales are exempt as “shipping materials” under s. 77.54 (6) (am) 2m., Stats.

(c) Ice sold to manufacturers which is used exclusively and directly by the manufacturer in manufacturing an article of tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., in any form destined for sale.

(4)

(a) If ice is sold to a person who will use it both for a taxable purpose and nontaxable purpose, such as for refrigeration and for resale, the purchaser may either purchase the ice without tax by providing a properly completed exemption certificate and then pay the applicable use tax on the ice used in a taxable manner or pay tax on the entire purchase price of the ice and then claim a credit on its sales and use tax return for that portion of the ice that is used in a manner that is not subject to tax.

(b) Ice purchased without payment of the tax and subsequently used in a taxable manner is subject to the use tax or sales tax pursuant to s. Tax 11.14 (2) (c).

Note: Section Tax 11.80 interprets ss. 77.52 (1), 77.53 (1), and 77.54 (2) and (6) (am) 2m., Stats.

Note: The interpretations in s. Tax 11.80 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The clarification that items must be consumed exclusively and directly by a manufacturer in manufacturing property or items destined for sale became effective August 1, 2009, pursuant to 2009 Wis. Act 28; and (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (4) (b), Register, July, 1987, No. 379, eff. 8-1-87; am. (1), (2) (intro.), (3) (intro.), (a) and (b) and (4) (a), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1), (2) (a), (b), (3) (a) to (c), cr. (3) (bm), r. and recr. (4) (a), eff. 10-1-09; CR 09-090: am. (1), (2) (a), (b), (3) (a) to (c), cr. (3) (bm), r. and recr. (4) (a) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (b), (3) (a) Register November 2010 No. 659. eff. 12-1-10; corrections in (3) (b), (bm) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704.

Wis. Admin. Code § Tax 11.81 Industrial gases, welding rods, fluxing materials, and fuels {#sec-tax-11.81 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.81}

(1) General statement. The tax status of retail sales of industrial gases, welding rods, and fluxing materials depends upon the use of the property by the purchaser. Section 77.54 (2), Stats., exempts from the sales tax the sales price from the sales of and the storage, use or other consumption of tangible personal property or item under s. 77.52 (1) (b), Stats., that is used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale, except as provided in s. 77.54 (30) (a) 6., Stats. Section 77.54 (30) (a) 6., Stats., exempts from sales and use tax fuel and electricity consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., in this state. Therefore, the sale of industrial gases, welding rods, fluxing materials, or fuels shall be:

(a) Exempt if they are used exclusively and directly by a manufacturer in manufacturing and become ingredients or component parts of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., destined for sale.

(b) Exempt if they are used exclusively and directly by a manufacturer in manufacturing and are consumed, destroyed, or lose their identity in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., destined for sale.

(bm) Exempt under s. 77.54 (30) (a) 6., Stats., if they are a fuel consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., in Wisconsin. A fuel is a material used to produce heat or power by burning, or is something that feeds a fire.

(2) Industrial gases. Common types of industrial gases are argon, helium, hydrogen, nitrogen, acetylene, carbon dioxide, and oxygen.

(a) Sales of industrial gases which are exempt if they are used exclusively and directly by a manufacturer in manufacturing and become an ingredient or component part of an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale by the purchaser include:

Carbon dioxide used to produce dry ice or carbonated soft drinks.
Gases such as neon, helium, or argon used as a filler in the production of light bulbs and tubes.
Hydrogen used in hydrogenating vegetable oils.
Acetylene used as a base in the manufacture of synthetic materials.
Oxygen used in the chemical industry for oxidation processes, when not used as a fuel to produce heat.

(b) Exempt sales of gases used by a manufacturer as fuel include:

Oxygen used in industrial furnaces that are used in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., in Wisconsin.
Acetylene or other gases used in torches that are used in the manufacture of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.

Acetylene or other gases used by automobile body shops or by other repair establishments.
Gases used in mining or quarrying.
Nitrogen used by telephone companies in underground cables.

(3) Welding rods. Since welding rods, such as stick electrode and filler rods, are physically transferred and become a part of an item produced or repaired, their sale is exempt if used by the purchaser in producing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., destined for sale or in repairing tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for a consideration. The sale of welding rods to manufacturers who use them in repairing their machinery used directly and exclusively in manufacturing is exempt. However, the sale of these rods to construction contractors for use in fulfilling real property construction contracts is taxable.

(4) Fluxing materials. Fluxing materials sold to a manufacturer for use exclusively and directly in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., destined for sale are exempt because they are consumed in the manufacturing process. When fluxing materials are sold for use by a manufacturer to repair its own production machinery or equipment, a nonmanufacturing activity, they are taxable. Fluxing materials sold to a repair shop or to a real property construction contractor or to any other nonmanufacturer are taxable.

Note: Section Tax 11.81 interprets s. 77.54 (2) and (30) (a) 6., Stats.

Note: The interpretations in s. Tax 11.81 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for fuel and electricity consumed in manufacturing became exempt January 1, 2006, pursuant to 2003 Wis. Act 99; (b) The clarification that items must be consumed exclusively and directly by a manufacturer in manufacturing property or items destined for sale became effective August 1, 2009, pursuant to 2009 Wis. Act 28; and (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (3) and (4), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (title), (1) (intro.), (a), (b), (2) (intro.), (a) (intro.), 2., (b), (3) and (4), cr. (1) (bm), eff. 10-1-09; CR 09-090: am. (title), (1) (intro.), (a), (b), (2) (intro.), (a) (intro.), 2., (b), (3) and (4), cr. (1) (bm) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.82 Mailing lists and mailing services {#sec-tax-11.82 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.82}

(1) Mailing lists.

(a) In this subsection, “mailing list” means a written or printed list, series, set, group, or aggregation of names or addresses or both or other information concerning persons which is used in circulating material by mail. A mailing list may be in the form of a manuscript list, directory, Cheshire tape, Dick tape, magnetic tape, gummed labels, index cards, or other similar means of identification.

(b) A mailing list is tangible personal property, except for written, typed, or printed lists of names and addresses and lists stored in machine-readable form, such as microfilm and computer tapes and disks, and the sales and use tax shall apply to the sales price from the sale of and the storage, use, or other consumption of mailing lists in the form of tangible personal property, including the rental of or the granting of a license to use those lists. Taxable mailing lists include mailing lists which are physically attached to the envelopes, such as Cheshire tapes, gummed labels, and heat transfers.

(c) Persons in the business of providing mailing lists are the consumers of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., they purchase and use in producing these lists. However, any tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., becoming a component part of mailing lists when the mailing lists are physically transferred to a customer by either sale, rental, lease, or license may be purchased for resale and without tax if the purchaser gives the seller a properly completed exemption certificate.

(2) Mailing services.

(a) In this subsection, “addressing” means the preparation of property, items, and goods to be mailed by writing, typewriting, printing, imprinting, or affixing addresses or names and addresses to the property, items, or goods. Addressing includes the preparation of Cheshire tapes, Dick tapes, cards, gummed labels, or similar items which are to be affixed to, or enclosed in, property, items, or goods to be mailed for the purpose of serving as addresses for the property, item, or good. However, addressing does not include these tapes, cards, or labels when they are used for some other purpose, such as reproduction or reference.

(b) The tax does not apply to charges for services rendered in preparing material for mailing, including addressing, enclosing, sealing, metering, affixing stamps, sorting, tying, and sacking in compliance with postal rules and regulations, if the charges are stated separately on invoices and in accounting records. The sales price from charges for envelopes is taxable, but not separately stated charges for postage in the sale of prestamped envelopes.

(c) Persons in the business of providing mailing services are consumers of the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., they purchase and use in performing these services. Consequently, they shall pay the tax when purchasing the property.

Note: Section Tax 11.82 interprets ss. 77.51 (20), 77.52 (1), and 77.53 (1), Stats.

Note: The interpretations in s. Tax 11.82 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Written or typed lists of names and addresses are not tangible personal property effective January 1, 1979, pursuant to the Minnesota Supreme Court’s decision in Fingerhut Products Company et al. vs. Commissioner of Revenue, 258 N.W. 2d 606 (1977); (b) Mailing lists stored in machine-readable form are not tangible personal property, pursuant to the Wisconsin Tax Appeals Commission decision in A-K Corporation and Profile Publishing Co. dba Miles Kimball vs. Wisconsin Department of Revenue (1/15/87); (c) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1) (b), Register, December, 1978, No. 276, eff. 1-1-79; am. (1) (b), (c) and (2), Register, January, 1994, No. 457, eff. 2-1-94; EmR0924: emerg. am. eff. 10-1-09; CR 09-090: am. Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.83 Motor vehicles {#sec-tax-11.83 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.83}

(1) Definitions. In this section:

(a) “Actively participates” means the person performs services for the motor vehicle dealership, including selling, accounting, managing, and consulting, for more than 500 hours in a taxable year for which the person receives compensation. “Actively participates” does not include services performed only in the capacity of an investor, including studying and reviewing financial statements or reports on the operation of the business, preparing or compiling summaries or analyses of the finances of the business for the investor’s own use, or monitoring the finances or operations of the activity in a nonmanagerial capacity.

(am) “Mobility-enhancing equipment” means equipment, including the repair parts and replacement parts for the equipment, that is primarily and customarily used to provide or increase the ability of a person to move from one place to another; that may be used in a home or motor vehicle; and that is generally not used by a person who has normal mobility. “Mobility-enhancing equipment” does not include a motor vehicle or any equipment on a motor vehicle that is generally provided by a motor vehicle manufacturer. “Mobility-enhancing equipment” does not include durable medical equipment.

(b) “Motor vehicle” means a self-propelled vehicle, such as an automobile, truck, truck-tractor, or motorcycle, designed for and capable of transporting persons or property on a highway. In this section, “motor vehicle” does not include a self-propelled vehicle which is not designed or used primarily for transportation of persons or property, and is only incidentally operated on a public highway, such as a farm tractor, snowmobile, all-terrain vehicle, utility terrain vehicle, off-highway motorcycle, fork lift truck, or road machinery as defined in s. 340.01 (52), Stats. “Motor vehicle” does not include a vehicle which is not self-propelled, such as a trailer or semitrailer.

(2) Retailers’ taxable sales. The following sales in Wisconsin are taxable:

(a) The sale of a motor vehicle minus any trade-in allowance, if the sale and trade-in are one transaction. A separate or independent sale of a motor vehicle by either the buyer or seller of another motor vehicle is not a trade-in, even if the proceeds from the sale are immediately applied by the seller to a purchase of another motor vehicle. A dealer does not realize taxable receipts from a transaction in which one motor vehicle is traded for another of lesser value, called a “trade-down,” unless cash or services are received by the dealer.

Examples: 1) Dealer A sells a motor vehicle to Individual B and accepts the trade-in of two motor vehicles owned by Individual B. The selling price of the new vehicle is $20,000. The values of the two motor vehicles traded in by Individual B are $8,000 and $9,000. The sales price subject to sales tax is $3,000, the $20,000 selling price less the $8,000 and $9,000 trade-ins.

2) Dealer A sells two motor vehicles to Individual C and accepts the trade-in of a motor vehicle owned by Individual C. The selling prices of the new vehicles are $10,000 and $12,000. The value of the motor vehicle traded in is $15,000. The sales price subject to sales tax is $7,000, the $22,000 selling price less the $15,000 trade-in.

(am) The sale of motor vehicles by any retailer registered or required to be registered to collect Wisconsin sales or use tax, regardless of whether the retailer is a motor vehicle dealer.

Example: Landscaper A is registered to collect and remit Wisconsin sales and use tax on its landscaping services. Landscaper A sells a motor vehicle that it had used in its landscaping business. Landscaper A must collect Wisconsin sales tax on its sale of the motor vehicle and remit the tax to the Department of Revenue on its Wisconsin sales and use tax return.

(b) The delivery, handling, and preparation of a motor vehicle being sold and the sale of a warranty, relating to the sale of a motor vehicle that is taxable.

Note: See s. Tax 11.27 for information regarding the sales and use tax treatment of warranties.

(c) The sale of equipment and accessories with a motor vehicle. However, equipment that is not generally provided by a motor vehicle manufacturer, but which is added to a motor vehicle may qualify for exemption under s. 77.54 (22b), Stats., as mobility-enhancing equipment, as defined in sub. (1) (am).

(d) Sales of parts and labor for repair, service, and maintenance performed on a motor vehicle, including charges for installation of accessories or attachments, except charges for mobility-enhancing equipment, as described in par. (c).

Example: Charges for installation of a radio or air conditioner into a motor vehicle are taxable.

(e) Towing or hauling a motor vehicle by a tow truck, as defined in s. 340.01 (67n), Stats.

(3) Occasional sale or purchase of motor vehicles from non-retailers.

(a) The occasional sale of a motor vehicle is taxable, unless one of the following applies:

The transfer is to the spouse, parent, stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or daughter-in-law of the transferor or is transferred from an individual to a corporation which is solely owned by the individual; and the motor vehicle has been previously registered or titled in Wisconsin in the name of the transferor, if required to be registered or titled; and the transferor is not engaged in the business of selling motor vehicles.
The motor vehicle is sold by a nonprofit organization meeting the requirements in s. Tax 11.35 (4).

(b) No motor vehicle shall be registered or titled in Wisconsin unless the registrant presents proof that the sales or use taxes imposed by this subchapter have been paid or the registrant pays the tax due to the department of transportation at the time the vehicle is registered for use in this state.

(c) A Wisconsin resident purchasing a motor vehicle in a foreign country, or for delivery in a foreign country, shall pay the Wisconsin use tax when the resident registers the vehicle in Wisconsin for use in Wisconsin, subsequent to use in the foreign country. The tax is measured by the full “purchase price,” as defined in s. 77.51 (12m), Stats., of the vehicle.

(d) When one co-owner transfers an interest in a motor vehicle to the other co-owner, tax shall apply on the transfer of the interest. The measure of the tax shall be the cash or its equivalent paid for the equity transferred plus the selling co-owner’s share of the liabilities assumed by the buying co-owner.

(4) Purchases by nonresidents.

(a) The sales price from the sales of motor vehicles or truck bodies to nonresidents of Wisconsin, including members of the armed forces, who will not use the vehicles or trucks for which the truck bodies were made in Wisconsin other than in their removal from Wisconsin is exempt. Truck bodies include semi-trailers. However, the separate sale of a “slide-in” camper to a nonresident is taxable if the sale is sourced to Wisconsin as provided s. 77.522, Stats.

(b) The sales price from charges for the repair by a Wisconsin retailer of a nonresident’s motor vehicle or truck body is subject to tax.

(c) A motor vehicle, trailer, semi-trailer, all-terrain vehicle, off-highway motorcycle, or recreational vehicle as defined in s. 340.01 (48r), Stats., purchased outside Wisconsin by a nonresident of Wisconsin 90 days or more before bringing the unit into Wisconsin, in connection with a change of residence to Wisconsin by the individual, is not subject to the Wisconsin use tax.

(d) Except as provided in par. (c), nonresidents, including armed forces personnel stationed outside this state pursuant to military orders, who purchase motor vehicles outside this state, shall pay the Wisconsin use tax at the time the vehicle is registered with the Wisconsin department of transportation. However, a tax credit may be claimed as described in sub. (6).

(5) Temporary use in Wisconsin. Motor vehicles purchased outside Wisconsin, which are not registered or titled or required to be registered or titled in Wisconsin, brought into Wisconsin by a nondomiciliary for that person’s own storage, use, or other consumption while temporarily in Wisconsin are not subject to use tax when the motor vehicle is not stored, used, or otherwise consumed in Wisconsin in the conduct of a trade, occupation, business, or profession or in the performance of personal services for wages or fees.

(6) Tax credit for vehicle purchased outside Wisconsin. A motor vehicle purchased outside Wisconsin and registered in Wisconsin is subject to Wisconsin use tax, except as noted in sub. (4) (c). However, if the purchase was subject to a sales or use tax by the state, the District of Columbia, or the Commonwealth of Puerto Rico, in which the purchase was made, sales or use tax paid to the other state, the District of Columbia, or the Commonwealth of Puerto Rico may be applied as a credit against and deducted from the Wisconsin use tax. This credit does not apply to taxes paid to another country or to motor vehicle registration fees.

(7) Transfer by inheritance, gift, or prize.

(a) The distribution of a motor vehicle to the heir or heirs of an estate is not a transfer subject to the Wisconsin sales or use tax. However, the sale of a motor vehicle by a personal representative of an estate is subject to the tax, and the purchaser shall pay the tax to the department of transportation at the time of registration.

(b) A motor vehicle transferred as a gift or as a prize in a contest or drawing is exempt when registered with the department of transportation by the recipient or prize winner. However, the sale of the vehicle to the donor of the gift or prize is taxable, unless the donor is an organization described in s. 77.54 (9a), Stats.

(c) A motor vehicle donated to an organization described in s. 77.54 (9a), Stats., is not subject to Wisconsin use tax if the motor vehicle has been purchased by the donor tax-free for resale or upon the presentation of a valid exemption certificate, and if the donor has made no other use of the motor vehicle.

(8) Vehicles used by licensed Wisconsin motor vehicle dealers.

(a) General. Motor vehicles purchased without tax for resale by a Wisconsin motor vehicle dealer licensed under ss. 218.0101 to 218.0163, Stats., and used for a purpose in addition to retention, demonstration, or display, except motor vehicles loaned to any school or school district for a driver training educational program conducted by the school or school district, are subject to Wisconsin use tax. Motor vehicles used by the dealership solely for retention, demonstration, and display, while holding them for sale in the regular course of business, or solely for leasing to others, such as customers and employees, are not subject to Wisconsin use tax.

(b) Amount subject to use tax. The amount subject to use tax on a motor vehicle used by a licensed motor vehicle dealer for a purpose in addition to retention, demonstration, or display is one of the following:

Motor vehicles held for sale which are assigned to and used by a specific dealer employee subject to withholding from federal income tax on wages are subject to Wisconsin use tax on $140 per motor vehicle registration plate per month. The $140 amount is effective January 1, 2009 and is subject to change annually as explained in the notes following par. (b).
Motor vehicles held for sale which are assigned to and used by persons holding an ownership interest in Wisconsin licensed motor vehicle dealerships who are not subject to withholding for federal income tax purposes, but who actively participate in the day-to-day operation of the dealership, are subject to Wisconsin use tax on $140 per motor vehicle registration plate per month. The $140 amount is effective January 1, 2009 and is subject to change annually as explained in the notes following this subdivision.

Note: As provided in s. 77.53 (1m), Stats., the department will annually adjust the amount per plate to the nearest whole dollar to reflect the annual percentage change in the U.S. consumer price index for all urban customers, U.S. city average, as determined by the United States department of labor, for the 12 months ending on June 30 of the year before the change. The department will publicize any rate change in an issue of the Wisconsin Tax Bulletin and Sales and Use Tax Report prior to the January 1 that the change becomes effective.

Note: The amount per plate subject to use tax under par. (b) 1. and 2. was $96 for the period September 1, 1995 through December 31, 1996, $99 for the period January 1, 1997, and $102 for the period January 1, 1998 through December 31, 1998.

Motor vehicles used by the dealer or any person other than an employee of the dealer and which are held for sale and not assigned to and used by a specific dealer employee subject to federal withholding on wages are subject to Wisconsin use tax on the lease value of the motor vehicle computed on a calendar month basis. If a motor vehicle is used by the dealer for a period of less than one calendar month, the amount subject to use tax is the daily lease value calculated by multiplying the applicable monthly lease value by a fraction, the numerator of which is the number of days used by the dealer for a purpose in addition to retention, demonstration, or display and the denominator of which is the number of days in the calendar month. Lease value is computed using the internal revenue service lease value table contained in 26 CFR 1.61-21 (d) (2). In the lease value table, the “automobile fair market value” is one of the following:

a. The amount an individual would have to pay in an arm’s length transaction to purchase the motor vehicle. The amount includes all amounts attributable to the purchase of the automobile such as sales tax and title fees.

b. The motor vehicle dealer’s cost of purchasing the automobile, including all expenses attributable to that purchase, provided the automobile is owned by the dealer and the purchase was made at arm’s length.

Motor vehicles not held for sale, including motor vehicles properly capitalized for Wisconsin income or franchise tax purposes, are subject to use tax based on the purchase price of the motor vehicle as defined in s. 77.51 (12m), Stats.

(c) Recordkeeping. It is presumed that all dealer plates issued by the department of transportation to a licensed motor vehicle dealer are used each month on motor vehicles assigned to employees subject to withholding for federal income tax purposes or owners who actively participate in the day-to-day operations of the dealership for a purpose in addition to retention, demonstration, or display and are subject to use tax as provided in par. (b) 1. and 2., unless one of the following applies:

The motor vehicle dealer keeps adequate records showing that the dealer plates were not used during the month on motor vehicles for a purpose in addition to retention, demonstration, or display.
The motor vehicle to which the dealer plate is assigned is subject to use tax as computed in par. (b) 3. or 4.

(9) Sales by dealers to their salespersons or other employees. When a licensed Wisconsin motor vehicle dealer sells a motor vehicle to one of the dealer’s salespersons or other employees, the transaction is subject to the sales tax.

(10) Heavy equipment dealers. Heavy equipment dealers who are not registered with the Wisconsin department of transportation as motor vehicle dealers because their sales are too few in number to require registration, but who are retailers that hold a Wisconsin seller’s permit, must charge the sales tax on their sales of motor vehicles. The heavy equipment dealers may purchase motor vehicles they are going to resell without tax for resale by providing a properly completed exemption certificate.

(11) Motor vehicle repair parts and supplies.

(a) Motor vehicle dealers with body shops and any other person engaged in motor vehicle repair may purchase for resale without tax tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which are physically transferred to the customer’s vehicle and which leave the repair facility with the customer. The property includes paints, paint hardeners, plastic fillers, welding rods, and auto parts.

(b) Tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., not physically transferred to a customer’s motor vehicle and which do not leave the repair facility with the customer are subject to tax. The property includes tools, equipment, and supplies used or consumed in performing motor vehicle repair service. Taxable supplies include sandpaper, masking paper and tape, buffing pads, paint and lacquer thinner, clean and glaze compound, disc pads, paint remover, paint masks, tack rags, steel wool, industrial gases, metal conditioner, brushes, lacquer removing solvent, rubbing compound, wax and grease remover, fluxing materials, disc adhesive, and all other items not physically transferred to the customer even though a separate charge may be made to the customer for these supplies.

(12) Exemption for mixing and processing units. Sales, licenses, leases, and rentals of mobile units used for mixing and processing, and the motor vehicles or trailers on which the units are mounted, including accessories, attachments, parts, supplies, and materials for those vehicles, trailers, and units, are exempt from sales and use tax.

(13) Exemption for vehicles used in waste reduction or recycling. The sales price from the sale, license, lease, or rental of vehicles which are not required to be licensed for highway use and which are used exclusively and directly in waste reduction or recycling activities is exempt from sales and use tax.

(14) Refunds under “lemon law.” Sales tax refunds made under s. 218.0171 (2) (f), Stats., the “lemon law,” are normally made in the same manner as the other sales tax refunds. However, when a defective motor vehicle is returned to the manufacturer for a refund of the purchase price, the purchaser is permitted to collect a sales tax refund directly from the department if the manufacturer fails to refund the tax.

(15) Vegetable oil and animal fat. Sales of vegetable oil and animal fat to an individual that will be converted to motor vehicle fuel for use in that individual’s personal motor vehicle are exempt from sales and use tax if the individual does not sell any of that fuel during the year. This exemption only applies if the motor vehicle fuel is exempt from the motor vehicle fuel tax under s. 78.01 (1), Stats.

Note: Section Tax 11.83 interprets ss. 77.51 (7m), (13) (am), (14) (j), and (15b) (b) 6., 77.52 (1), (2) (a) 10. and 13m., and (15), 77.53 (1), (1m), (16), (17), and (18), 77.54 (5) (a), (c) and (d), (7) and (22b), 77.56 (2) and (3), 77.61 (1), 77.71 (2) and (4), and 77.73, Stats.

Note: The interpretations in s. Tax 11.83 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for a transfer from an individual to a corporation solely owned by an individual became effective January 1, 1983, pursuant to Chapter 264, Laws of 1981; (b) The exemption for motor vehicles used in waste reduction and recycling became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (c) The exemption for mobile mixing and processing units became effective July 20, 1985, pursuant to 1985 Wis. Act 29; (d) The exemption for adaptive equipment for disabled persons to enter, operate or leave a vehicle became effective June 1, 1990, pursuant to 1989 Wis. Act 238; (e) The exemption for motor vehicles donated to exempt organizations became effective August 9, 1989, pursuant to 1989 Wis. Act 31; (f) The exemption for transfers of motor vehicles to in-laws became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (g) The exemption for parts and accessories for adaptive equipment for motor vehicles of disabled persons became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (h) The measure of use tax on motor vehicles as described in sub. (8) (b) 1., 3. and 4. became effective September 1, 1995, pursuant to 1995 Wis. Act 27; (i) The use of the amount per plate rather than the lease value, as described in sub. (8) (b) 2., as the measure of use tax for motor vehicles assigned to owners of a dealership became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (j) The trade-in provisions related to lemon law refunds became effective June 1, 2002, pursuant to 2001 Wis. Act 45; (k) The imposition of tax on towing and hauling motor vehicles by a tow truck became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (L) The exemption for mobility-enhancing equipment became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (m) The requirement to collect the tax by persons who are not dealers but who hold a Wisconsin seller’s permit became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (n) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (7) (a) and (8), Register, May, 1981, No. 307, eff. 6-1-81; am. (4) (c), Register, September, 1984, No. 345, eff. 10-1-84; am. (7) (a) 1. and 2., Register, February, 1986, No. 362, eff. 3-1-86; emerg. am. (7) (a) 1. and 2., eff. 3-24-86; am. (7) (a) 1. and 2., Register, October, 1986, No. 370, eff. 11-1-86; cr. (11), Register, July, 1987, No. 379, eff. 8-1-87; am. (1), (2) (a), (c) and (d), (3) (a) and (4) (a) and (c), cr. (5), (13) and (14), renum. (5) to be (6), renum. (6) to (11) to be (7) to (12) and am. (8) (a), (9), (10), and (11) (a), (b) and (c) 1., Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (a), (c), (d), (3) (a), (4) (a), (b), (6), (7) (a), (b), (8) (b), (10) and (14), cr. (7) (c), Register, April, 1993, No. 448, eff. 5-1-93; am. (1), (2), (3) (d), (4) (b), (5), (6), (7) (a), (11) (c) and (12), r. and recr. (8), Register, February, 1997, No. 494, eff. 3-1-97; renum. (1) and (8) (b) 2. and 3. to be (1) (b) and (8) (b) 3. and 4. and am. (1) (b), am. (8) (b) 1., (c) 2. and (d), cr. (1) (a), (8) (b) 2., Register, August, 1999, No. 524, eff. 9-1-99; corrections in (8) (a) and (14) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (1) (a), (b), (2) (title), (intro.), (b) to (d), (3) (title), (a) to (c), (4) (a) to (c), (5), (6), (7) (title), (a), (c), (8) (a), (b) (intro.) to 3. (intro.), 4., (c) (intro.), 1., (10), (11) (a), (b), (12) and (13), cr. (1) (am) and (2) (am), r. (8) (d) and (11) (c), eff. 10-1-09; CR 09-090: am. (1) (a), (b), (2) (title), (intro.), (b) to (d), (3) (title), (a) to (c), (4) (a) to (c), (5), (6), (7) (title), (a), (c), (8) (a), (b) (intro.) to 3. (intro.), 4., (c) (intro.), 1., (10), (11) (a), (b), (12) and (13), cr. (1) (am) and (2) (am), r. (8) (d) and (11) (c) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (title), cr. (2) (e) Register November 2010 No. 659, eff. 12-1-10; correction in (2) (e) made under s. 13.92 (4) (b) 7., Stats., Register November 2010 No. 659; CR 12-014: renum. (3) (a) to be (3) (a) 1. and am., cr. (3) (a) (intro.), 2., am. (11) (a), (b), cr. (15) Register August 2012 No. 680, eff. 9-1-12; CR 16-053: am. (1) (b) Register June 2018 No. 750, eff. 7-1-18; CR 19-112: am. (1) (b) Register June 2020 No. 774, eff. 7-1-20; CR 20-018: am. (4) (c) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.84 Aircraft {#sec-tax-11.84 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.84}

(1) General.

(a) The sales and use tax applies to the sales price from the sale, license, lease, or rental of aircraft. The sales and use tax also applies to the sales price from the sale of accessories, components, attachments, parts, supplies, and materials for aircraft, unless the item qualifies as a “part used to modify or repair an aircraft” as provided in sub. (3) (c).

(b) The occasional sale of an aircraft in Wisconsin is taxable unless one of the following applies:

The transfer is to the spouse, parent, stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or daughter-in-law of the transferor; the aircraft was previously registered or titled in Wisconsin in the transferor’s name, if required to be registered or titled; and the transferor is not engaged in the business of selling aircraft.
The sale is by a nonprofit organization meeting the requirements in s. Tax 11.35 (4).

(c) Section 77.61 (1) (a), Stats., provides that no aircraft may be registered in Wisconsin unless the registrant presents proof that the sales tax has been paid or a valid exemption was claimed. If the registrant does not present proof that the tax has been paid, the registrant shall pay the tax to the department of transportation at the time the aircraft is registered or titled in Wisconsin. The tax applies to aircraft registered or customarily hangared or both in Wisconsin, even though the aircraft also may be used out-of-state. If the purchase of an aircraft subject to Wisconsin use taxes was subject to a sales or use tax in the state in which the purchase was made or in a state where the aircraft was stored, used, or consumed prior to being stored, used, or consumed in Wisconsin, the amount of the sales or use taxes paid to the other state or states shall be applied as a credit against and deducted from, to the extent thereof, the Wisconsin state and county use taxes imposed on the storage, use, or consumption of the aircraft in Wisconsin.

(d) The use tax does not apply to aircraft for an individual’s personal use purchased by a nonresident outside this state 90 days or more before bringing the aircraft into Wisconsin in connection with a change of domicile to this state.

(e) The use tax does not apply to aircraft registered in Wisconsin when all of the following requirements are fulfilled:

The aircraft is purchased in another state, as determined under s. 77.522, Stats.
The aircraft’s owner or lessee has paid all of the sales and use taxes imposed in respect to it by the state where it was purchased.
The owner or lessee is one of the following:

a. A corporation, and that corporation and all corporations with which that corporation may file a consolidated return for federal income tax purposes, neither is organized under the laws of Wisconsin nor has real property or other tangible personal property, except aircraft and property such as hangars, accessories, attachments, fuel, and parts required for operation of aircraft, in Wisconsin at the time the aircraft is registered in Wisconsin.

b. A partnership, and all the corporate partners fulfill the requirements in subd. 3. a., none of the general partners or limited partners who have management or control responsibilities is domiciled in Wisconsin and the partnership has no other tangible personal property and no real property, except aircraft and property such as hangars, accessories, attachments, fuel, and parts required for operation of aircraft, in Wisconsin at the time the aircraft is registered in Wisconsin.

bm. A limited liability company and all of the corporate members fulfill the requirements under subd. 3. a., and none of the managers and none of the members who has management or control responsibilities is domiciled in Wisconsin and the limited liability company has no other tangible personal property and no real property, except aircraft and property such as hangars, accessories, attachments, fuel, and parts required for operation of aircraft, in Wisconsin at the time the aircraft is registered in Wisconsin.

c. An individual not domiciled in Wisconsin.

d. An estate, trust, cooperative, or unincorporated cooperative association, and that estate, that trust and its grantor or that cooperative or association does not have real property or other tangible personal property, except aircraft and property such as hangars, accessories, attachments, fuel, and parts required for operation of aircraft, in Wisconsin at the time the aircraft is registered in Wisconsin.

The department has not determined that the owner, if the owner is a corporation, trust, partnership, or limited liability company, was formed to qualify for the exemption from Wisconsin use tax.

(2) Taxable sales.

(a) Aircraft, supplies, accessories, and ground equipment. The sales price received from the following shall be taxable:

The sale, license, lease, or rental of aircraft by any retailer registered or required to be registered to collect Wisconsin sales or use tax, regardless of whether the retailer is an aircraft dealer.
The sale and delivery in Wisconsin of oil and other supplies, accessories, and ground equipment for aircraft, regardless of where the aircraft is flown or used. Sales of general aviation fuel subject to taxation under ch. 78, Stats., are exempt from the sales and use tax.

Examples: 1) Engine oil, gear lubricants, hydraulic fluids, fuel additives, anti-seize coatings, deicing and anti-icing fluids, oxygen, cleaners, and waxes and polishes are examples of supplies for aircraft.

2) Pens, kneeboards, maps, charts, logbooks, flashlights, flight bags, headsets, tools, first-aid kits, life jackets, inflatable rafts, and items such as radios, avionics, coolers, air conditioners, fire extinguishers, carbon monoxide detectors and oxygen equipment, when such items are portable rather than built into the aircraft, are examples of accessories for aircraft.

3) Equipment used to deice aircraft, aircraft tugs, engine preheaters, wheel chocks, tie-down equipment, aircraft covers and repair tools and diagnostic equipment are examples of ground equipment for aircraft.

(b) Parking.

Section 77.52 (2) (a) 9., Stats., imposes the tax on “Parking or providing parking space for motor vehicles and aircraft for a consideration....” “Parking” includes occupying space in a hangar when an aircraft is available for use without requiring a substantial expenditure of time or effort to make it operational.

Examples: 1) A ready-to-fly aircraft occupying space in a hangar and available for immediate use is parked.

2) An aircraft occupying space in a hangar with its wings off is not parked, since it would require a substantial expenditure of time or effort to make it operational.

Indoor parking, such as single or multiple “T” hangar parking, and outdoor, or “tie-down,” parking are taxable.

Aerial photographs and maps.
Towing a banner that is not provided by the person towing it.

(3) Exempt sales of aircraft and parts used to modify or repair aircraft.

(a) Section 77.54 (5) (a) 1., Stats., provides an exemption for the sale of aircraft, including accessories, attachments, and fuel therefor, to persons using the aircraft as certified or licensed carriers of persons or property in interstate or foreign commerce. Scheduled air carriers and commuter carriers with air carrier operating certificates shall qualify for this exemption. This exemption does not apply to persons with air worthiness certificates which indicate certain safety standards have been met, if they do not otherwise qualify.

(b) Section 77.54 (5) (a) 2., Stats., provides an exemption for sales of aircraft to persons who are not residents of this state who will not use such aircraft in this state other than to remove the aircraft from this state. The exemption also applies to repair or other services performed on the aircraft.

(c) Section 77.54 (5) (a) 3., Stats., provides an exemption for sales of parts used to modify or repair aircraft. For purposes of this exemption, the following definitions apply:

“Part” means a durable unit of definite, fixed dimensions that is attached to the aircraft.
“Parts used to modify or repair aircraft” include tires, oil filters, spark plugs, engine cowls, built-in radios and avionics equipment, strobes, and flap cable. “Parts used to modify or repair aircraft” does not include supplies, accessories, or ground equipment in sub. (2) (a) 2., and does not include parts used in the original construction of an aircraft as such parts are not used to modify or repair an aircraft.

(4) Nontaxable services. Amounts received from the following services are not taxable:

(a) Except as provided in sub. (2) (c), transporting customers or property for hire when the customer only designates the time of departure and destination while the owner retains control over the aircraft in all other respects.

(b) Flight instruction when the fees for the instruction are separately stated from the charge for the rental of the aircraft.

(c) Advertising promotions such as skywriting and banner towing if the person towing the banner also provides it, except when the aircraft is leased to a person who provides the person’s own pilot.

(d) Emergency rescue service, forest fire spotting, and pipeline inspection service, except where the aircraft is leased to a company which provides its own pilot.

(e) Crop dusting, spraying, fertilizing, and seeding a farmer’s crops. A person in the business of crop dusting, spraying, fertilizing, and seeding for farmers may purchase weed killers, fertilizer, and seed without tax for resale, if these items are used in conjunction with but not incidental to providing the service.

(f) Landing fees.

(g) Sightseeing flights.

(h) Carrying a skydiver.

(i) Towing a hang glider and pilot.

(j) Repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of any aircraft or any part used to modify or repair an aircraft.

Note: Section Tax 11.84 interprets ss. 77.52 (2) (a) 9. and 10., 77.53 (16), (17r), and (18), 77.54 (5) (a) and (7) and 77.61, Stats.

Note: The interpretations in s. Tax 11.84 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) the exemption for federal aviation fuel is effective January 1, 1982, pursuant to Chapter 20, Laws of 1981; (b) The exemption for aircraft brought into Wisconsin by new residents became effective August 1, 1987, pursuant to 1987 Wis. Act 27; (c) The exemption for certain nonresidents’ aircraft became effective May 15, 1988, pursuant to 1987 Wis. Act 399; (d) The exemption for transfers of aircraft to in-laws became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (e) The requirement to collect the tax on sales of aircraft by persons who are not dealers but who hold a Wisconsin seller’s permit became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (f) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of aircraft and aircraft parts, under s. 77.52 (2) (a) 10., Stats., became nontaxable effective July 1, 2014, pursuant to 2013 Wis. Act 185; and (h) The exemption for parts used to modify or repair aircraft under s. 77.54 (5) (a) 3., Stats., became effective July 1, 2014, pursuant to 2013 Wis. Act 185.

History

Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (2) (b) 1. and 2., Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a) 2. and (3), Register, June, 1983, No. 330, eff. 7-1-83; am. (4) (e), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (b) 3., cr. (1) (d), Register, April, 1990, No. 412, eff. 5-1-90; am. (1) (c), cr. (1) (e) and (3) (b), renum. (3) (intro.) to be (3) (a), Register, June 1991, No. 426, eff. 7-1-91; am. (1) (b) 1., (c), (2) (b), (3), (4) (intro.) and (b), Register, April, 1993, No. 448, eff. 5-1-93; CR 02-128: am. (1) (b) 1. and 2., (c) and (4) (a) and (c), renum. (2) (c) to be (2) (c) (intro.) and am., cr. (2) (c) 1. to 4., Register July 2003 No. 571, eff. 8-1-03; EmR0924: emerg. am. (1) (a), (b) 1., (c), (e) 1., 3. a., b., d., 4., (2) (a), (c) (intro.), (3), (4) (intro.) and (c) to (e), cr. (1) (e) 3. bm., eff. 10-1-09; CR 09-090: am. (1) (a), (b) 1., (c), (e) 1., 3. a., b., d., 4., (2) (a), (c) (intro.), (3), (4) (intro.) and (c) to (e), cr. (1) (e) 3. bm. Register May 2010 No. 653, eff. 6-1-10; CR 12-014: r. and recr. (1) (b), r. (2) (c) 2., 3., am. (2) (c) 4., cr. (4) (g) to (i) Register August 2012 No. 680, eff. 9-1-12; CR 16-053: am. (1) (a), (c), (2) (a) (title), 2., r. (2) (a) 3., am. (3) (title), (a), r. and recr. (3) (b), cr. (3) (c), (4) (j) Register June 2018 No. 750, eff. 7-1-18; CR 22-044: am. (1) (c) Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 11.85 Boats, vessels, and barges {#sec-tax-11.85 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.85}

(1) Taxable sales. Taxable receipts involving boats include the following:

(a) The receipts from the sale, license, lease, or rental of boats and boat accessories, and of attachments, parts, supplies, and materials therefor, by any retailer registered or required to be registered to collect Wisconsin sales or use tax, regardless of whether the retailer is a boat dealer.

(b) Charges for services involved in installing an item on a boat for a consumer.

(c) Charges for repair, service, alteration, fitting, cleaning, painting, coating, towing, inspecting, and maintaining boats and their accessories or component parts. Services purchased outside Wisconsin, which would be taxable if purchased in Wisconsin, with respect to property later used in Wisconsin, are subject to use tax.

Example: Individual A, a resident of Wisconsin, takes his boat to Illinois to have it repaired. No Illinois tax is charged to Individual A on the repair services. Individual A brings the boat back to Wisconsin where it is used. Individual A owes Wisconsin use tax on the purchase of the repair services performed in Illinois.

(d) Charges for docking and storing boats. The tax applies to boat storage in public storage warehouses.

(2) Exempt sales.

(a) The sale of a boat not required to be registered in Wisconsin with the Wisconsin department of natural resources or documented under the laws of the United States may qualify as an exempt occasional sale if the transferor does not hold and is not required to hold a seller’s permit.

(b) Sales of boats to the spouse, parent, stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or daughter-in-law of the transferor are exempt if the boat was previously registered or titled with the Wisconsin department of natural resources, if required to be registered or titled, or documented under the laws of the United States in the transferor’s name and if the transferor is not engaged in the business of selling boats.

(bm) The sale of a boat by a nonprofit organization meeting the requirements in s. Tax 11.35 (4).

(c) Vessels and barges primarily engaged in interstate or foreign commerce or commercial fishing that are documented under the laws of the United States showing a net volumetric tonnage of 50 tons or more are exempt from the tax. Accessories, attachments, and parts attached to the vessel or barge and fuel for the vessels and barges are also exempt.

(d) A boat purchased outside Wisconsin by a nonresident and used by the nonresident while temporarily in Wisconsin shall be exempt from the tax if the boat is not used in Wisconsin in the conduct of a trade, occupation, business, or profession or in the performance of personal services for wages or fees. The use tax does not apply to a boat for an individual’s personal use purchased by a nonresident outside this state 90 days or more before bringing the boat into Wisconsin in connection with a change of domicile to this state.

(e) A boat purchased by a Wisconsin or federal governmental unit or by certain nonprofit organizations is exempt from the tax, regardless of the boat’s size or kind, pursuant to s. 77.54 (9a) or 77.55 (1), Stats.

(f) Section 77.53 (17m), Stats., exempts a boat purchased in a state contiguous to this state, as determined under s. 77.522, Stats., by a person domiciled in that state if the boat is berthed in this state’s boundary waters adjacent to the state of the domicile of the purchaser and if the transaction was an exempt occasional sale under the laws of the state in which the purchase was made.

(g) Section 77.54 (30) (a) 7., Stats., exempts fuel sold for use in motorboats that are regularly employed in carrying persons for hire for sport fishing in and upon the outlying waters, as defined in s. 29.001 (63), Stats., and the rivers and tributaries specified in s. 29.2285 (2) (a) 1. and 2., Stats., if the owner and all operators are licensed under s. 29.514, Stats., to operate the boat for that purpose.

(3) Payment of tax.

(a) No boat may be registered in Wisconsin unless the registrant presents proof that the sales or use tax has been paid or that the transaction was exempt. If the registrant does not present proof that the tax has been paid, the registrant shall pay the tax at the time the boat is registered or titled in Wisconsin, even though the boat may also be used out-of-state.

(b) A boat purchased outside Wisconsin which is required to be registered under Wisconsin law is subject to the Wisconsin use tax, regardless of the state of domicile of the person bringing the boat into Wisconsin or the use of the boat in Wisconsin, unless exempt under sub. (2) (d).

(c) A credit is permitted against the Wisconsin use tax for the sales or use tax imposed by and paid to the state in which the boat was purchased.

(d) The “boat” subject to the use tax at the time the boat is registered in this state includes all accessories affixed or attached to the boat when in use. Anchors, boat cushions, marine radios, radar equipment, and other similar accessories are included in the measure of the tax.

Note: In a decision dated July 25, 1983, in the case of Alan G. Dwyer vs. Wisconsin Department of Revenue, the Wisconsin Tax Appeals Commission held that the tax applies to boat accessories, including the anchor, boat cushions, and marine radio, in addition to the bare hull of the boat.

(4) Taxable supplies. Sales of consumable supplies or furnishings not attached to the vessel or barge are not exempt from sales or use tax under s. 77.54 (13), Stats.

Note: Sales of bedding, linen, table and kitchenware, tables, chairs, lubricants, work clothes, acetylene gas, paper towels, etc., used on commercial vessels or barges of 50 ton burden or over engaged primarily in interstate or foreign commerce or commercial fishing are subject to sales and use tax.

(5) Sales to ships. Sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services delivered to operators of foreign flag ships or ships under the U.S. flag in a Wisconsin harbor are subject to tax, unless the retailer receives a properly completed exemption certificate from the purchaser.

Example: The operator of the ship may purchase without tax fuel and repair parts for a ship which exceeds 50-ton burden under s. 77.54 (13), Stats.

Note: Section Tax 11.85 interprets ss. 77.51 (13) (am), 77.52 (2) (a) 9. and 10., 77.53 (17), (17m), and (18), 77.54 (7), (13), and (30) (a) 7., and 77.61 (1), Stats.

Note: The interpretations in s. Tax 11.85 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Boats documented under laws of the United States do not qualify for the occasional sale exemption effective February 28, 1979, pursuant to Chapter 1, Laws of 1979; (b) Charges by governmental units for docking and storing boats became taxable effective June 1, 1980, pursuant to Chapter 221, Laws of 1979; (c) The exemption for boats of nonresidents kept in waters contiguous to the nonresident’s state of domicile became effective September 1, 1985, pursuant to 1985 Wis. Act 29, later amended effective June 1, 1988, pursuant to 1987 Wis. Act 268; (d) The exemption for boats brought into Wisconsin by new residents became effective August 1, 1987, pursuant to 1987 Wis. Act 27; (e) The exemption for transfers to in-laws became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (f) The exemption for fuel used in motorboats by persons regularly employed in carrying persons for hire for sport fishing became effective July 1, 2009, pursuant to 2009 Wis. Act 28; and (g) The requirement to collect the tax on sales of boats by persons who are not dealers but who hold a Wisconsin seller’s permit became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (h) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, December, 1978, No. 276, eff. 1-1-79; am. (1) (d), (2) (a) and (b), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a), Register, September, 1984, No. 345, eff. 10-1-84; cr. (2) (f), Register, July, 1987, No. 379, eff. 8-1-87; am. (2) (b) to (e), cr. (3) (d) and (4), Register, April, 1990, No. 412, eff. 5-1-90; am. (2) (a), (c) and (f) and (3) (b), cr. (4), renum. (4) to be (5), r. (1) (e), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (b) and (3) (a), Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (title), (1) (intro.), (a), (c), (2) (a) to (d), (f), (3) (a), (d) and (5), cr. (2) (g), eff. 10-1-09; CR 09-090: am. (title), (1) (intro.), (a), (c), (2) (a) to (d), (f), (3) (a), (d) and (5), cr. (2) (g) Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (2) (b), cr. (2) (bm) Register August 2012 No. 680, eff. 9-1-12.

Wis. Admin. Code § Tax 11.86 Utility transmission and distribution lines {#sec-tax-11.86 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.86}

(1) Definitions. In this section:

(a) “Utility facilities” include telephone, telegraph, and television lines; electrical, water, and gas transmission and distribution lines; and poles, transformers, and towers, including pipes, conduits, sleeves, risers for cable television lines, or other property by which lines are supported or in which they are contained or connected.

(b) “Real property” includes underground utility facilities; lines, poles, foundations, towers, gravel, and any buildings of a substation located on a utility’s own land; and concrete foundations, anchors, crushed rock, and backfill whether or not on land owned by the utility.

(c) “Tangible personal property” includes overhead utility facilities and circuit breakers and other equipment, but not their foundations, installed to control the flow of electricity. It also includes other overhead property by which lines are supported or in which they are contained or connected if erected or installed under an easement or license, including authorizations under ss. 86.16 and 182.017, Stats., on land owned by a person other than the utility.

(2) General.

(a) The sales price from the installation, license, lease, rental, repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is subject to sales tax.

(b) Materials used in construction or forming of real property are taxable when purchased by the contractor.

Examples: 1) The charges by a contractor for the construction and installation of an overhead utility facility, or a portion of an overhead utility facility, and from a sale “in place” of the facility, if installed under an easement on land owned by a person other than the utility, are taxable. Materials used in the construction or installation of the property may be purchased without tax for resale.

2) The charges by a utility for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of an overhead utility facility, or a portion of an overhead facility of another utility are taxable. Materials used in the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, maintenance, or installation may be purchased without tax for resale.

3) Charges for the installation, sale, license, lease, rental, repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance and removal of underground utility facilities are not subject to sales or use tax. However, the materials used in the construction or installation of the underground utility facilities cannot be purchased for resale and are subject to tax at the time of purchase unless otherwise exempt.

4) X-ray testing of weld joints in the pipe as part of the construction of an underground utility pipeline is part of the construction process and the charges are not subject to sales or use tax. However, materials used in the X-ray testing of the underground utility pipeline cannot be purchased for resale and are subject to tax at the time of purchase unless otherwise exempt.

(3) Related expenses. The taxable receipts from the performance of a lump sum contract for the construction of an overhead utility facility, which is tangible personal property, may not be reduced by expenses in performing the contract, such as payments for crop damage, site preparation, restoration work, tree trimming, line clearing, relocating existing lines, engineering and design work, surveying, purchasing a right-of-way, and unloading and hauling materials.

Note: The related expenses described in sub. (3) are costs of performing the contract and do not affect the amount of taxable receipts.

(4) Equipment charges.

(a) The taxable receipts from a contract to construct or repair an overhead utility facility which is tangible personal property may not be reduced by the amount of hourly charges for the use of equipment.

(b) The charges for the rental of equipment used in the construction or repair of a utility line to a utility are taxable.

Note: See s. Tax 11.29 (5) for more information.

(5) Nontaxable services.

(a) The sales price received from tree and shrub trimming services for a utility for the purpose of keeping the overhead transmission and distribution lines free from interference from nearby trees and shrubs or inaccessible to children is not taxable under s. 77.52 (2) (a) 20., Stats.

(b) The sales price received under a separate contract for tree trimming and line clearing in connection with the construction of a new utility line is not taxable.

(d)

The sales price received for a service provided by an electric cooperative to another electric cooperative, or by a telecommunications utility to another telecommunications utility, for disaster relief work performed during a disaster period.
In this paragraph:

a. “Disaster period” has the meaning given in s. 77.54 (68) (b) 2., Stats.

b. “Disaster relief work” has the meaning given in s. 77.54 (68) (b) 3., Stats.

c. “Electric cooperative” has the meaning given in s. 76.48 (1g) (c), Stats.

d. “State of emergency” has the meaning given in s. 77.54 (68) (b) 4m., Stats.

e. “Telecommunications utility” has the meaning given in s. 196.01 (10), Stats.

The exemption in this paragraph does not apply to materials and supplies used in performing exempt disaster relief services.

(6) Landscaping services. The sales price received from landscaping and lawn maintenance services is taxable. Except as provided in sub. (5) (a) and (b), landscaping and lawn maintenance services include:

(a) Landscape planning and counseling.

(b) Lawn and garden services, such as planting, mowing, spraying, and fertilizing.

(d) Spreading topsoil and installing sod or planting seed where trenches have been dug or sump pump, transmission, and distribution lines have been buried in residential, business, commercial, and industrial locations, cemeteries, golf courses, athletic fields, stadiums, parking lots, and other areas, and along highways, streets, and walkways.

Note: Section Tax 11.86 interprets ss. 77.51 (20), 77.52 (2) (a) 10., 11. and 20., 77.54 (68), 86.16 and 182.017, Stats.

Note: The interpretations in s. Tax 11.86 are effective on and after September 1, 1969, except: (a) Underground utility facilities were determined not to be tangible personal property, effective September 1, 1970; (b) Landscaping services described in sub. (6) became taxable effective May 1, 1982, pursuant to Chapter 317, Laws of 1981; (c) The Wisconsin Tax Appeals Commission decision in Capital City Tree Experts, Inc., dated June 19, 1987, later modified by stipulation and order of the Circuit Court of Dane County dated September 21, 1987, held that the service of trimming trees on a utility right-of-way to prevent interference and to make inaccessible to children is not a taxable landscaping service; d) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (e) The exemption for services performed during a disaster period became effective January 1, 2017, pursuant to 2017 Wis. Act 290.

History

Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (4) (a) and cr. (5), Register, September, 1984, No. 345, eff. 10-1-84; r. and recr., Register, June, 1991, No. 426, eff. 7-1-91; emerg. r. and recr. (6), eff. 5-18-97; r. and recr. (6), Register, October, 1997, No. 502, eff. 11-1-97; correction in (6) made under s. 13.93 (2m) (b) 1., Stats., Register, May, 1999, No. 521; EmR0924: emerg. am. (1) (a), (b), (2) (a), (3), (4), (5), (6) (intro.), (b) and (d), eff. 10-1-09; CR 09-090: am. (1) (a), (b), (2) (a), (3), (4), (5), (6) (intro.), (b) and (d) Register May 2010 No. 653, eff. 6-1-10; CR 20-018: cr. (5) (d) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.87 Prepared food, food and food ingredients, and soft drinks {#sec-tax-11.87 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.87}

(1) Definitions. In this section:

(a) “Community-based residential facility” has the meaning in s. 50.01 (1g), Stats.

(b) “Exempt food” means food and food ingredients that are exempt from the sales and use tax as provided in s. 77.54 (20n), Stats.

(d) “Nursing home” has the meaning in s. 50.01 (3), Stats.

(e) “Personal care” means assistance with the activities of daily living, including eating, dressing, bathing, and ambulation.

(em) “Prepared food” has the meaning provided in s. Tax 11.51 (4).

(f) “Retirement home” means a nonprofit residential facility, which as its primary function provides personal care above the level of room and board to retired persons, where 3 or more unrelated adults or their spouses have their principal residence and where support services, including meals from a common kitchen, are available to residents.

(g) “Sanatorium” means an institution for the recuperation and treatment of the victims of physical or mental disorders.

(h) “Taxable food” means food and food ingredients, including candy, dietary supplements, prepared food, soft drinks, and alcoholic beverages subject to the sales and use tax.

Note: See s. Tax 11.51 to determine which items are exempt food and which items are taxable food.

(2) Taxable sales.

(a) General. Generally, the sales price from sales of food or beverages shall be taxable when sold by restaurants, cafeterias, lunch counters, coffee shops, snack bars, eating houses, hotels, motels, lodging houses, sororities, fraternities, drug stores, diners, taverns, drive-ins, mobile sales units, clubs, young men’s christian associations, young women’s christian associations, and similar businesses, organizations, or establishments.

(b) Sales by generally exempt seller. Certain foods that have been prepared by a seller by cooking, baking, or other methods shall be taxable as “prepared food” even though the seller is principally engaged in the sale of exempt food. Heated food or beverages mean those products, items, or components which have been prepared for sale in a heated condition and which are sold at any temperature which is higher than the air temperature of the room or place where they are sold.

Example: When a supermarket roasts chickens on a rotisserie and sells them in a heated condition, the roasted chickens are taxable because they are prepared food.

Examples: 1) Retailer A sells heated food and heated beverages. Heated foods and heated beverages are prepared food and Retailer A’s sales of the heated foods and heated beverages are subject to tax.

2) Restaurant B sells prepared foods and also other foods and food ingredients, including cartons of milk, cookies, and candy. Restaurant B’s sales of prepared foods, based on Restaurant B’s prior tax year, are more than 75% of its total sales of food and food ingredients. Restaurant B makes napkins and straws available to the purchaser. Restaurant B’s sales of the food and beverages, including the cartons of milk are subject to tax since (a) Restaurant B’s sales of prepared foods are more than 75% of Restaurant B’s total sales of food and food ingredients, based on Restaurant B’s prior tax year; and (b) napkins and straws are available to the purchaser.

3) Same as Example 2, except that the seller is a convenience store instead of a restaurant. The answer is the same as in Example 2.

4) Convenience Store C sells prepared foods and other foods and food ingredients, including cartons of milk, cookies, soft drinks, and candy. Convenience Store C’s sales of prepared foods, based on its prior tax year, are less than 75% of its total sales of food and food ingredients. Convenience Store C makes napkins and straws available to the purchaser, but does not physically hand or give the straws or napkins to the purchaser. Convenience Store C’s sales of heated food, heated beverages, soft drinks, and candy are subject to tax, but Convenience Store C’s sales of milk and cookies are not subject to tax since (a) Convenience Store C’s sales of prepared foods are less than 75% of Convenience Store C’s total sales of food and food ingredients, based on its prior tax year; and (b) Convenience Store C makes the napkins and straws available to the purchaser, rather than physically giving or handing the napkins or straws to the purchaser.

5) Same as Example 4, except that Convenience Store C’s customary practice is to physically give or hand the napkins and straws to the purchaser. Convenience Store C’s sales of heated food, heated beverages, soft drinks, candy, cookies, and cartons of milk are subject to tax since Convenience Store C’s customary practice is to physically give or hand the napkins and straws to the purchaser. The tax applies to these sales even though Convenience Store C’s sales of prepared foods are less than 75% of its total sales of food and food ingredients.

6) Grocery Store A has a self-service salad bar. Grocery Store A’s sales of prepared foods, based on its prior tax year, are less than 75% of its total sales of food and food ingredients. The plates necessary to receive the food items at the salad bar, along with the forks, knives, and napkins are made available to the purchaser. Grocery Store A’s sales of the self-service salad bar items are subject to tax since the plates necessary to receive the food items at the salad bar are made available to the purchaser.

(d) Caterers. Food and food ingredients, sold by caterers are generally taxable as prepared foods. For purposes of this paragraph:

“Caterer” means a person engaged in the business of preparing meals, food, and drinks, and serving these items on premises designated by a purchaser. When an agreement with a caterer provides that the caterer shall prepare and serve “prepared foods” either for a stated price per meal, for a lump sum, or for a price per plate, the consideration paid shall constitute taxable receipts.
Charges made by a caterer for preparing and serving prepared foods to social clubs, service clubs, fraternal organizations, or other nonexempt purchasers shall constitute exempt sales for resale only if the purchasers are regularly engaged as retailers of prepared foods, hold a seller’s permit and give a properly completed exemption certificate to the caterer.
The tax shall apply to items purchased by caterers, including dishes, silverware, linen napkins, tablecloths, punch fountains, coffee silver service, and glassware, which are used by caterers to serve food or beverages to their customers, or used in conjunction with providing catering service, unless customers are charged a separate and optional amount for their use. In addition, items such as tents, public address systems, portable dance floors, portable bars, chairs, and tables may be purchased without tax for resale, if used exclusively for rental purposes by a caterer and if customers are charged a separate and optional amount for their use. Disposable items transferred to customers for a valuable consideration, including paper and plastic cups and plates, plastic eating utensils, napkins, straws, placemats, and toothpicks also may be purchased without tax for resale.

(e) Vending machine sales. A vending machine operator’s receipts from candy, dietary supplements, prepared foods, and soft drinks are taxable.

(f) Cover and minimum charges. Cover charges or minimum charges, whether listed separately on a bill or collected as an admission fee or fixed charge, which entitle the patron to receive entertainment or to dance as well as to receive prepared food, candy, dietary supplements, soft drinks, or other taxable property, items, or goods, shall be taxable. If prepared food, candy, dietary supplements, soft drinks, or other taxable property, items, or goods are furnished, prepared, or served at locations other than the place of business of the seller or in a room other than a regular dining room and an extra charge is made for the service, the entire amount shall be taxable.

(g) Tips.

A tip which is given directly to an employee in cash or which is added by a customer to a bill which amount is then turned over in full to the employee shall be exempt from the sales tax, if the amount of the tip is wholly in the discretion or judgment of the customer and the customer does not make the payment pursuant to an arrangement made with the seller.
A flat amount or flat percentage, whether designated as a tip or as a service charge, that is added to the price of prepared food or other taxable food or food ingredient under a requirement of the seller or an arrangement made with the seller is a part of the sales price of the prepared food or other taxable food or food ingredient and shall be subject to the tax, regardless of whether the amount or flat percentage may be subsequently paid over in whole or in part by the seller to employees.

(h) Huber law meals. Prepared foods, candy, dietary supplements, and soft drinks sold to “Huber Law” prisoners by a sheriff or a governmental unit shall be subject to the tax.

(i) Food and food ingredients to employees. Sales of prepared foods, candy, dietary supplements, and soft drinks to employees by an employer for a consideration shall be taxable. For purposes of this paragraph:

A consideration shall be deemed made for prepared foods, candy, dietary supplements, and soft drinks if any one of the following conditions is met:

a. The employee pays cash for the prepared foods, candy, dietary supplements, and soft drinks consumed.

b. An actual, specific charge for the prepared foods, candy, dietary supplements, and soft drinks is deducted from an employee’s wages.

c. An employee receives the prepared foods, candy, dietary supplements, and soft drinks in lieu of cash to bring the employee’s compensation up to the legal minimum wage.

d. An employee has the option to receive cash for the prepared foods, candy, dietary supplements, and soft drinks not consumed.

In the absence of any of the conditions in subd. 1., a consideration is not deemed made when:

a. A value is assigned to prepared foods, candy, dietary supplements, and soft drinks only as a means of reporting the fair market value of an employee’s prepared foods, candy, dietary supplements, and soft drinks for FICA, social security, or union contract purposes.

b. An employee who does not consume available prepared foods, candy, dietary supplements, and soft drinks has no recourse against the employer for additional cash wages.

(j) Transportation companies. The sale of prepared foods, candy, dietary supplements, soft drinks, and alcoholic beverages by transportation companies, such as airlines or railways, to a customer while operating in Wisconsin for a specific charge shall be taxable. These prepared foods, candy, dietary supplements, soft drinks, and alcoholic beverages may be purchased by the transportation companies without tax for resale. However, if the sales price of the prepared foods, candy, dietary supplements, soft drinks, or alcoholic beverages is not separately stated to the customer, the tax shall apply to purchases of these prepared foods, candy, dietary supplements, soft drinks, and alcoholic beverages by transportation companies.

(k) Organizations and their members.

When members of an exempt or nonexempt organization meet at a hotel, restaurant, or other place of business where food or drinks are sold and the members pay for the items, the place of business shall be considered selling directly to the members and not to the organization except as provided in subds. 2. and 3. The sales shall, therefore, be subject to the tax, even if the organization collects from the members, pays the seller, and retains a portion of the collections for its own purposes. In these situations, the organization shall be deemed acting for its members’ convenience and not purchasing and reselling prepared foods.
When an exempt organization as described in s. 77.54 (9a) (f), Stats., pays for food and beverages out of its own funds and provides the items to members or others without charge, the sale of the items by a retailer to the organization is not subject to the tax. If the exempt organization holds a certificate of exempt status issued by the department, it shall give the retailer the certificate number to claim the exemption.
Sales of food and beverages are not subject to tax even though the employee of an exempt organization as described in s. 77.54 (9a) (f), Stats., pays for the sale of the food or beverages provided all of the following are met:

a. The retailer issues the billing or invoice for the food and beverages in the name of the exempt organization.

b. The certificate of exempt status number of the exempt organization is entered on the retailer’s copy of the invoice or billing document.

c. The retailer keeps a copy of the documents described in subd. 3. a. and b.

(3) Exempt sales. The following food and food ingredients shall be exempt:

(a) Health care facilities. Food and food ingredients, except soft drinks, fermented malt beverages, and intoxicating liquor, sold by hospitals, sanatoriums, nursing homes, retirement homes, community-based residential facilities as defined in s. 50.01 (1g), Stats., or any facility certified or licensed under ch. 48, Stats. However, if an affiliated organization sells the items, the exemption does not apply.

Example: If a ladies’ auxiliary of a hospital, separate from the hospital, operates a coffee shop on the hospital premises, although the ladies’ auxiliary is a nonprofit organization, the prepared food and drinks sold at the coffee shop are taxable.

(b) “Meals on wheels.” Prepared food sold to the elderly or disabled by persons providing “mobile meals on wheels.”

(c) Institutions of higher education. Food and food ingredients furnished in accordance with any contract or agreement or paid for to such institution through the use of an account of such institution, by a public or private institution of higher education to any of the following:

An undergraduate student, a graduate student, or a student enrolled in a professional school if the student is enrolled for credit at the public or private institution of higher education and if the food and food ingredients are consumed by the student.
A national football league team.

(d) Groceries. Sales of food and food ingredients, except candy, dietary supplements, prepared foods, and soft drinks are exempt from tax under s. 77.54 (20n), Stats. This includes sales of prepackaged ice cream, ice milk, or sherbet in any size container and also of ice cream, ice milk, sherbet, or yogurt as cones, sundaes, sodas and shakes.

Note: See s. Tax 11.51 for more information.

(e) Supervised boarding facilities. The portion of the monthly fee charged by a supervised boarding facility for low income adults who are receiving or are eligible for social security, supplemental security income, veterans administration, or other disability and retirement benefits reflecting the value of prepared foods provided.

(f) Food and food ingredients to employees. Purchases by restaurants of candy, soft drinks, dietary supplements, prepared foods, and disposable products that are transferred with such items, are exempt from sales and use tax if the restaurant transfers such items to its employees during the employee’s work hours for no consideration.

(g) Vegetable oil and animal fat. Sales of vegetable oil and animal fat to an individual that will be converted to motor vehicle fuel for use in that individual’s personal motor vehicle if the individual does not sell any of that fuel during the year. This exemption only applies if the motor vehicle fuel is exempt from the motor vehicle fuel tax under s. 78.01 (1), Stats.

(h) Prepared food manufactured by the retailer. Sales of prepared food that is manufactured at one location and sold by the same retailer at a different location, are exempt if all of the following apply:

The prepared food is not candy, a soft drink, or a dietary supplement.
The prepared food is manufactured by the retailer at a building assessed as manufacturing property under s. 70.995, Stats., or that would be assessed as manufacturing property under s. 70.995, Stats., if the building was located in Wisconsin.
The retailer does not make any retail sales of prepared food at the building described in subd. 2.
Either of the following apply:

a. The prepared food is sold by the retailer in a frozen state without eating utensils (i.e., plates, bowls, knives, forks, spoons, glasses, cups, napkins, straws).

b. The prepared food consists of more than 50% yogurt.

(4) Specialty situations.

(a) Specialty items. A seller engaged principally in the sale of taxable food may also be engaged in the sale of exempt food.

Example: A restaurant which specializes in serving pancakes may also sell containers of its specially prepared syrup to take home. Sales of this syrup are not taxable.

(b) Fund-raising events. When a charge to a customer bears little or no relationship to the actual value of taxable food and food ingredients and beverages received, the tax shall be based on the reasonable value of the taxable food and food ingredients and other tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services received by the customer. The retailer is responsible for determining the reasonable value and showing that the charge to the patron bears little or no relationship to the actual value received.

Note: Section Tax 11.87 interprets ss. 77.51 (10m), (12m), (14) (b) and (f), and (15b), and 77.54 (20n) and (20r), Stats.

Note: The interpretations in s. Tax 11.87 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales of meals by retirement homes became exempt April 25, 1978, pursuant to Chapter 250, Laws of 1977; (b) Sales of meals by certain health care facilities off their premises became taxable October 1, 1991, pursuant to 1991 Wis. Act 39; (c) Sales of meals by community-based residential facilities on their premises became exempt June 1, 1994, pursuant to 1993 Wis. Act. 332; (d) The exemption for certain meals, food, food products and beverages furnished by institutions of higher education was revised to apply only if the items are furnished to an undergraduate student, a graduate student or a student enrolled in a professional school if the student is enrolled for credit at that institution and if the items are consumed by that student, or the items are furnished to a national football league team, effective for contracts or agreements entered into on or after October 14, 1997, pursuant to 1997 Wis. Act 27, and further revised to include certain meals, food, food products or beverages paid for to an institution of higher education through the use of an account of the institution, if the items are furnished by the institution, effective December 31, 1997, pursuant to 1997 Wis. Act 41; (e) Sales of certain food combinations became exempt effective August 1, 1997, pursuant to 1997 Wis. Act 237; (f) The exemption for food and food ingredients was revised to exempt all food and food ingredients except candy, dietary supplements, prepared food and soft drinks effective October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (h) The exemption for prepared food manufactured and sold by the same retailer under s. 77.54 (20n) (d), Stats., became effective September 23, 2017, pursuant to 2017 Wis. Act 59.

History

Cr. Register, March, 1978, No. 267, eff. 4-1-78; renum. (1) (b) to be (1) (g), cr. (1) (b) to (f), am. (3) (a), (b) and (c), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (d) 3., (g) and (i), Register, June, 1983, No. 330, eff. 7-1-83; am. (3) (d), Register, September, 1984, No. 345, eff. 10-1-84; correction in (1) (b) made under s. 13.93 (2m) (b) 7., Stats.; am. (1) (intro.) and (f), (2) (a), (b), (c), (d) 1., (g), (j) and (k), (3) (a) and (4) (a), cr. (2) (k) 3., Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (d) (intro.), 3., (f), (i) (intro.), 1. intro. and 2. intro., (k) 2., (3) (a), (b) and (d), cr. (3) (e), Register, December, 1992, No. 444, eff. 1-1-93; renum. (1) (a) to (g) to be (b) to (h) and am. (1) (b), cr. (1) (a), am. (3) (a), (d) and (e), Register, December, 1996, No. 492, eff. 1-1-97; am. (1) (b), (2) (c) and (3) (a), renum. (1) (e) and (f) to be (1) (f) and (e), r. and recr. (3) (c), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. am. (title), (1) (b), (e), (h), (2) (a), (b), (d), (f), (g) 2., (h) to (k) 1., (3) (intro.), (a), (b), (c) 1., 2., (d), (e) and (4) (b), cr. (1) (em) and (3) (f), r. and recr. (2) (c), (e) and (3) (c) (intro.), eff. 10-1-09; CR 09-090: am. (title), (1) (b), (e), (h), (2) (a), (b), (d), (f), (g) 2., (h) to (k) 1., (3) (intro.), (a), (b), (c) 1., 2., (d), (e) and (4) (b), cr. (1) (em) and (3) (f), r. and recr. (2) (c), (e) and (3) (c) (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (a), (j), (3) (a) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: cr. (3) (g), am. (4) (b), cr. (4) (b) (Examples) Register August 2012 No. 680, eff. 9-1-12; CR 19-122: am. (3) (b) Register July 2020 No. 775, eff. 8-1-20; CR 20-018: cr. (3) (h) Register July 2021 No. 787, eff. 8-1-21.

Wis. Admin. Code § Tax 11.88 Manufactured homes, mobile homes, modular homes, and recreational vehicles {#sec-tax-11.88 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.88}

(1) Definitions. For purposes of this section:

(a)

“Manufactured home,” as defined in s. 101.91 (2), Stats., means either of the following:

a. A structure that is designed to be used as a dwelling with or without a permanent foundation and that is certified by the federal department of housing and urban development as complying with the standards established under 42 USC 5401 to 5425.

b. A mobile home, unless a mobile home is specifically excluded under the applicable statute.

As provided in 42 USC 5402 (6), “manufactured home” means a structure, transportable in one or more sections, which, in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein; except that such term shall include any structure which meets all the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification required by the Secretary of Housing and Urban Development and complies with the standards established under this chapter; and except that such term shall not include any self-propelled recreational vehicle.

(b) “Mobile home,” as defined in s. 101.91 (10), Stats., means a vehicle manufactured or assembled before June 15, 1976, designed to be towed as a single unit or in sections upon a highway by a motor vehicle and equipped and used, or intended to be used, primarily for human habitation, with walls of rigid uncollapsible construction, which has an overall length in excess of 45 feet. “Mobile home” includes the mobile home structure, its plumbing, heating, air conditioning and electrical systems, and all appliances and all other equipment carrying a manufacturer’s warranty.

(bm)

“Modular home,” as defined in s. 101.71 (6), Stats., means any structure or component thereof which is intended for use as a dwelling and satisfies either of the following conditions:

a. The structure or component is of closed construction and fabricated or assembled on-site or off-site in manufacturing facilities for installation, connection, or assembly and installation, at the building site. In this subd. 1. a., “closed construction” has the meaning given in s. 101.71 (1), Stats.

b. The structure or component is a building of open construction which is made or assembled in manufacturing facilities away from the building site for installation, connection, or assembly and installation, on the building site and for which certification is sought by the manufacturer. In this subd. 1. b. and subd. 2., “open construction” has the meaning given in s. 101.71 (7), Stats.

“Modular home” does not mean any manufactured home under s. 101.91, Stats., or any building of open construction which is not subject to subd. 1. b.

(c) “New manufactured home,” as defined in s. 101.91 (11), Stats., means a manufactured home that has never been occupied, used or sold for personal or business use.

(d) “New recreational vehicle,” as defined in s. 218.10 (7), Stats., means a recreational vehicle which has never been occupied, used or sold for personal or business use.

(e) “Recreational vehicle,” as defined in s. 340.01 (48r), Stats., means a vehicle that is designed to be towed upon a highway by a motor vehicle, that is equipped and used, or intended to be used, primarily for temporary or recreational human habitation, that has walls of rigid construction, and that does not exceed 45 feet in length.

(f) “Recreational vehicle dealer” has the meaning given in s. 218.10 (1g), Stats.

(g) “Retailer” is a person who has or is required to have a certificate under s. 77.52 (7), Stats., or s. 77.53 (9), Stats., and who holds or is required to hold a permit issued under s. 77.52 (9), Stats., or s. 77.53 (9m), Stats.

(h) “Used manufactured home,” as defined in s. 101.91 (12), Stats., means a manufactured home that has previously been occupied, used or sold for personal or business use.

(i) “Used recreational vehicle” has the meaning given in s. 218.10 (9), Stats.

(2) Manufactured and Mobile homes as personal property vs. realty improvement. A manufactured or mobile home is personal property if it is located in a manufactured home community, a mobile home park, or other place where the land on which the manufactured or mobile home is located is not owned by the manufactured or mobile home owner. A manufactured or mobile home is a realty improvement if it is permanently affixed to land owned by the owner of the manufactured or mobile home. It is permanently affixed to the land for sales tax purposes if the manufactured or mobile home sits on a foundation and is connected to utilities. “On a foundation” means it is off the wheels and sitting on some other support.

(3) Sales of manufactured and mobile homes which are realty improvements.

(a) The sale of a manufactured or mobile home and the land to which it is permanently affixed is the sale of a realty improvement not subject to the tax. The sale of a manufactured or mobile home which is a realty improvement on the land of the seller, and which is acquired by the purchaser for removal from the seller’s land for permanent attachment to the purchaser’s land, is the sale of realty.

(b) If the seller of a manufactured or mobile home as part of the sales transaction agrees to permanently affix the home on a foundation on land owned by the purchaser, the seller is a contractor-consumer engaged in improving realty. Except as provided in par. (c), sales of manufactured or mobile homes to the contractor-consumer are subject to the tax, but the sales price from the subsequent sale by the contractor-consumer to the purchaser of the home are not taxable.

(c) Sales of manufactured homes to the contractor-consumer for use in real property construction activities outside Wisconsin are exempt from Wisconsin sales and use tax.

(4) Sales and rentals of manufactured and mobile homes which are personal property.

(a) Under s. 77.54 (31), Stats., the total sales price from the sale of a used mobile home or a used manufactured home is exempt from the sales and use tax.

(b) Under s. 77.51 (15b) (b) 7. and (12m) (b) 7., Stats., 35% of the total sales price from the sale of a new manufactured home is exempt from the tax. No credit is allowed for trade-in allowances on the purchase of these new manufactured homes.

(c) Under s. 77.54 (36), Stats., the rental of a mobile home or a manufactured home used for residence for a continuous period of one month or more is exempt from the sales and use tax, whether the manufactured or mobile home is classified as real or personal property.

(d) Under s. 77.54 (7), Stats., recreational vehicles, as defined in s. 340.01 (48r), Stats., registered or titled or required to be registered or titled in this state that are transferred to the child, spouse, parent, father-in-law, mother-in-law, son-in-law, or daughter-in-law of the transferor are exempt occasional sales if the recreational vehicle, as defined in s. 340.01 (48r), Stats., has been previously registered or titled in Wisconsin in the name of the transferor and the transferor is not engaged in the business of selling recreational vehicles, as defined in s. 340.01 (48r), Stats.

(e) Under s. 77.53 (18), Stats., the use tax does not apply to a manufactured home or mobile home purchased by a nonresident outside Wisconsin 90 days or more before bringing the manufactured or mobile home into Wisconsin in connection with a change of domicile to Wisconsin.

(4m) Modular homes.

(a) The sale of a modular home and the land to which it is permanently affixed is the sale of a realty improvement not subject to the tax.

(b) If the seller of a modular home as part of the sales transaction agrees to permanently affix the home on a foundation, the seller is a contractor-consumer engaged in improving realty. Except as provided in par. (e), the sale of the modular home to the contractor-consumer is subject to the tax, but the sales price from the subsequent sale by the contractor-consumer to the purchaser of the home is not taxable.

(c) The sales or purchase price from the sale of a modular home that is tangible personal property when sold (i.e., the sale to the contractor-consumer), may be reduced by one of the following:

35% of the sales or purchase price.
An amount equal to the sales or purchase price of the home minus the cost of materials that become an ingredient or component part of the home.

(d) Once the retailer chooses one of the options provided in par. (c) 1. or 2., the retailer may not use the other option without the written approval of the department.

(e) Sales of modular homes to the contractor-consumer for use in real property construction activities outside Wisconsin are exempt from Wisconsin sales and use tax.

(5) Payment of tax.

(a) No recreational vehicle may be registered in Wisconsin unless the registrant presents proof that the sales or use tax has been paid or that the registrant’s acquisition of the recreational vehicle was exempt from the tax. If the recreational vehicle registrant does not present proof that the tax has been paid, the registrant shall pay the tax at the time the recreational vehicle is registered with the department of transportation even though the recreational vehicle may also be used out-of-state.

(b) If a recreational vehicle purchased outside Wisconsin is subject to the Wisconsin use tax, a credit is permitted against the Wisconsin use tax for any sales or use tax paid to the state in which the recreational vehicle was purchased.

(6) Consignment sales. When a recreational vehicle dealer displays and sells a recreational vehicle on behalf of another person, the dealer is a marketplace provider and responsible for collecting and remitting tax on the transaction if the dealer directly or indirectly, through agreements or arrangements with third parties, processes the payment from the purchaser for the retail sale, regardless of whether the dealer receives compensation or other consideration in exchange for the services provided by the dealer.

Note: For information regarding marketplace providers and sellers, see s. Tax 11.555.

Note: Section Tax 11.88 interprets ss. 77.51 (2), (7i), (7j), (11d), (12m) (b) 7., (13), (14) (n) 7., and (15b) (b) 7., (17) (g), 77.52 (2) (a) 1., 77.523, 77.53 (17) and (18), 77.54 (7), (31), and (36), 77.61 (1) (a) and (c), 101.91 (2), (10), (11), and (12), 218.10 (1g), (7), and (9), and 340.01 (29) and (48r), Stats.

Note: The interpretations in s. Tax 11.88 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Nonretailer sales of mobile homes became taxable effective August 1, 1977, pursuant to Chapter 29, Laws of 1977; (b) Nonretailer sales of mobile homes exceeding 45 feet in length became exempt effective July 1, 1978, pursuant to Chapter 418, Laws of 1977; (c) Rental of a mobile home that is personal property for lodging for a continuous period of one month or more became exempt effective July 1, 1984, pursuant to 1983 Wis. Act 341, clarified effective April 1, 1986, pursuant to 1985 Wis. Act 149; (d) Gross receipts from a used mobile home became exempt effective January 1, 1987, pursuant to 1985 Wis. Act 29; (e) Thirty−five percent of the gross receipts from the sale of new mobile homes became exempt January 1, 1987, pursuant to 1985 Wis. Act 29; (f) The exemption from use tax of mobile homes purchased 90 or more days before moving to Wisconsin became effective August 1, 1987, pursuant to 1987 Wis. Act 27; (g) The exemption for transfers to in-laws became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (h) The exemption for certain new mobile homes transported in two unattached sections became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (i) The changes in terminology related to “mobile homes,” “manufactured homes,” and “recreational vehicles,” became effective January 1, 2008, pursuant to 2007 Wis. Act 11; (j) The change of the term “gross receipts” to “sales price” became effective October 1, 2009, pursuant to 2009 Wis. Act 2; and (k) 2019 Wis. Act 10 relating to marketplace providers became effective January 1, 2020.

History

Cr. Register, December, 1980, No. 300, eff. 1-1-81; r. and recr. (3) and (6), Register, July, 1987, No. 379, eff. 8-1-87; am. (2) (b), (3) (d), (4) (b) and (5), cr. (3) (e), Register, June, 1991, No. 426, eff. 7-1-91; am. (3) (b) and (d), Register, April, 1993, No. 448, eff. 5-1-93; corrections in (3) (c) and (6) (a) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (title), cr. (1) (bm), am. (3) (b), cr. (3) (c), (4m) Register August 2012 No. 680, eff. 9-1-12; CR 20-027: am. (6) Register July 2021 No. 787, eff. 8-1-21; CR 22-017: r. and recr. (6) Register June 2023 No. 810, eff. 7-1-23.

Subchapter X Administrative Provisions

Wis. Admin. Code § Tax 11.90 Penalty for failure to produce records under s. 77.61 (19), Stats {#sec-tax-11.90 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.90}

(1) General. A person who fails to produce records or documents, as provided under ss. 73.03 (9) and 77.59 (2), Stats., that were requested by the department may be subject to any of the following penalties under s. 77.61 (19), Stats.:

(a) The disallowance of deductions, credits, exemptions or inclusions of additional taxable sales or additional taxable purchases to which the requested records relate.

(2) Definitions. In this section:

(c) “Records requested were not provided” means that all records requested were not provided to the department within the time specified by the department.

(d) “Written request for records” includes requests made by letter, e-mail, fax or any other written form.

(a) A first written request for records where the department allowed the person a minimum of 30 days from the date of request for the records to be provided.

By certified mail, evidenced by a return receipt signed by the taxpayer or an authorized representative.
By personal service pursuant to sec. 801.11, Stats., if unable to obtain a signature as provided in subd. 1.

Examples: 1) The department issues a first written request for records to Corporation A on September 1, 2016, allowing Corporation A until October 6, 2016, to provide the records requested. Corporation A does not provide the requested records to the department by October 6, 2016. The department issues a second written request for records to Corporation A on October 21, 2016, allowing Corporation A until November 30, 2016, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 77.61 (19), Stats. Corporation A does not provide the requested records by November 30, 2016. The department mails a summons request for records to Corporation A which is received on December 20, 2016, allowing Corporation A until January 31, 2017, to provide the records requested. Corporation A does not provide the requested records by January 31, 2017. Therefore, the department may disallow the deductions, credits, or exemptions or include the additional taxable sales or additional taxable purchases to which the requested records relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from Corporation A not providing the records requested.

2) The department issues a first written request for records to Corporation B on December 21, 2016, allowing Corporation B until January 20, 2017, to provide the records requested. Corporation B does not provide the requested records to the department by January 20, 2017. The department issues a second written request for records to Corporation B on February 8, 2017, allowing Corporation B until March 10, 2017, to provide the records requested. Included in this second written request for records is a notification regarding the penalties provided by s. 77.61 (19), Stats. Corporation B does not provide the requested records to the department by March 10, 2017. The department personally serves a summons request for records on Corporation B on March 28, 2017, allowing Corporation B until May 10, 2017, to provide the records requested. Corporation B provides records to the department by May 10, 2017, but the department determines that the taxpayer did not provide some of the records requested by May 10, 2017. Therefore, since the taxpayer did not provide all of the records requested by May 10, 2017, the department may disallow the deductions, credits, or exemptions or include the additional taxable sales or additional taxable purchases to which the requested records that were not provided relate and impose a penalty equal to the greater of $500 or 25% of the additional tax on the adjustments made resulting from the requested records that were not provided.

(4) Waiver of penalties.

Death of the taxpayer, tax preparer, accountant or other responsible party.
Onset of debilitating illness or injury of the taxpayer, tax preparer, accountant or other responsible party.
Natural disaster such as tornado, flood or fire.
Records that were destroyed due to events beyond control of the taxpayer or other responsible party and not due to neglect.
Any other facts and circumstances that the department believes pertinent.

Examples: 1) Since Corporation C does not provide the records requested by the date specified in a summons request for records to support deductions for exempt sales, the department issues a proposed audit report to Corporation C disallowing all the deductions for exempt sales previously claimed, which represents the penalty provided in s. 77.61 (19) (a) 1., Stats. Additional tax of $100,000 and the penalty as provided in s. 77.61 (19) (a) 2., Stats., of $25,000 results in the proposed audit report from disallowing the deductions for exempt sales. Corporation C provides the records requested 26 days after the department issues the proposed audit report but before the notice of assessment is issued and explains, without any further detail, that they were too busy with other aspects of their business to respond to the three written requests for records by the dates specified. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person’s control. In addition, the records provided do not support a reduction of the exempt sales deductions disallowed in the proposed audit report. Therefore, the deductions for exempt sales adjustment is not modified so the proposed additional tax of $100,000 and the original proposed penalty as provided in s. 77.61 (19) (a) 2., Stats., of $25,000 remain.

2) Since Mr. Smith does not provide the records requested regarding his business, which primarily receives payments in cash, to support the reported gross receipts by the date specified in a summons request for records, the department issues a notice of assessment to Mr. Smith including an estimated amount into taxable sales for unreported receipts, which represents the penalty provided in s. 77.61 (19) (a) 1., Stats. Additional tax of $60,000, a negligence penalty of $15,000 and the penalty as provided in s. 77.61 (19) (a) 2., Stats., of $15,000 results in the assessment from including these estimated receipts. Mr. Smith appeals the assessment, provides the records that were requested during the audit, and explains that he forgot to provide the records that were previously requested. In this situation, the failure to provide the records requested is not reasonable or justified by factors beyond the person’s control. However, the records provided show that unreported receipts were only 20% of the amount previously included by the department as estimated unreported receipts. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty as provided in s. 77.61 (19) (a) 2., Stats., is reduced from $15,000 to $3,000.

3) Assume the same facts as example 2, except that Mr. Smith explains that he did not previously provide the requested records because his accountant had possession of them and was in the hospital when the records were requested during the audit. In this situation the failure to provide the records requested is reasonable or justified by factors beyond the person’s control. Therefore, the unreported receipts adjustment is modified to reduce the additional tax from $60,000 to $12,000, the negligence penalty is reduced from $15,000 to $3,000 and the original penalty as provided in s. 77.61 (19) (a) 2., Stats., of $15,000 is waived.

History

EmR0929: emerg. cr. eff. 10-19-09; CR 09-087: cr. Register June 2010 No. 654, eff. 7-1-10; correction in (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register June 2010 No. 654; CR 17-018: am. (3) (intro.), cr. (3) (c), am. (3) (c) (Examples), (4) (b) (Examples) Register September 2019 No. 765, eff. 10-1-19; correction in (4) (b) (Examples) made under s. 13.92 (4) (b) 7., Stats., Register September 2019 No. 765.

Wis. Admin. Code § Tax 11.905 Statistical sample criteria {#sec-tax-11.905 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.905}

(1) Purpose. The purpose of this section is to establish criteria applicable to field audits using statistical sampling conducted by the department. Sales transactions and purchase transactions must independently meet the criteria in sub. (4). This section does not apply to non-statistical sampling conducted by the department in field audits.

(2) Definitions. In this section:

(a) “Annual sales” means net sales reportable for federal income tax purposes for the person’s taxable year.

(b) “Electronic records” means machine readable records that include electronic transactions and electronic source documents.

(c) “Electronic transaction” means a record produced by a computerized data processing accounting system that is used for recording an accounting transaction.

(d) “Maximum sample size” means the maximum number of sample units selected using statistical sampling for each sample population identified.

(e) “Net error” means the total error from the sample population determined by projecting the error from each subgroup or stratum of the sample population and summing those results.

(f) “Person” has the meaning given in s. 77.51 (10), Stats., and includes an entity described in s. 77.61 (19m) (a), Stats.

(g) “Record” means any document described in s. Tax 11.92 (1).

(h) “Relative precision” means the accuracy of the sample projection compared to the real or inherent value of the net error sampled for in the population.

(i) “Sample population” means the electronic transactions from the total population that will be used to draw the sample. More than one sample population may exist in the total population.

Example: A person uses separate accounting systems to record purchase and sales transactions. The department draws samples from two sample populations; one for purchase transactions and one for sales transactions.

(j) “Sample unit” means a single electronic transaction within the sample population. A sample unit may be a single transaction or separate items of a transaction depending on how the person records the transaction in its data processing accounting system.

Example: For each equipment sales transaction, person enters two transactions in its data processing accounting system; equipment and delivery. Equipment and delivery are each sample units.

(k) “Source document” means a record containing the detail of a transaction entered in a data processing accounting system.

(L) “Statistical sampling” means a sampling method in which the department randomly selects a sample of electronic transactions and uses probability theory to evaluate the sample results.

(m) “Total population” means all of a person’s electronic transactions produced by a computerized data processing accounting system.

(3) Procedures.

(a) The department may, by field audit, determine the tax required to be paid to the state or the refund due to any person on the basis of sampling, whether or not any of the following is true:

The person being audited has complete records of transactions.
The method is statistical sampling.
The person being audited consents.

(b) Any person with less than $10,000,000 annual sales during any year at issue in a field audit may require the department to use statistical sampling in that field audit, if all of the criteria in sub. (4) are met.

(c) Upon the department’s determination of the sample population, a sample is generated of sample units and source documents for those sample units are made available to the department’s auditor.

(d) The department may use more than one sample population to draw sample units for purposes of determining an error rate and tax due or refund. The department may use a separate sample population and sampling method to select sample units in any of the following circumstances:

Significant changes in the person’s computerized data processing accounting software.
Changes to laws that affect the tax treatment or recordkeeping of a person’s sales or purchases.

Example: A new exemption for certain supplies used by the person occurs in the third year of a four-year audit period. The sample units randomly selected for review occur in the first and second year of the audit period, when the exemption did not apply. If the department finds that no tax was paid on the supplies, a projection of the error for the audit period may result in an over-assessment of tax on the supplies.

Changes to the person’s internal procedures for reporting sales and use tax.
Changes to the person’s business operations or organizational structure.

Example: The person began selling a new line of products in the audit period.

Other relevant circumstances in which the use of more than one sample population or a separate sampling method to select sample units would be reasonably necessary to maintain statistical quality.

(4) Criteria for statistical sampling. All of the following criteria must be met before statistical sampling may be used on a sample population:

(a) All accounting transactions must be maintained in an electronic format and must be capable of secure electronic transfer to the department, in a form useable by the department.

(b) The data processing accounting system must be capable of producing and transferring to the department an electronic spreadsheet of all accounts for each period under audit, including account number, account description, and year-end and pre-closing balances.

Customer name.
Electronic transaction number that identifies and leads to the source document.
Electronic transaction date.
Electronic transaction amount.
Information necessary to determine where sourced under s. 77.522, Stats.

(d) All electronic purchase transactions must include all of the following:

Vendor name.
Electronic transaction number that identifies and leads to the source document.
Electronic transaction date.
Electronic transaction amount.
Account number from accounting system or other information that identifies where the purchased item was stored, used or consumed.

(e) Documentation used to prepare each sales and use tax return filed with the department to report sales and use tax paid must be available for review by the department, including transaction detail, reports, and work papers.

(f) All sample unit source documents must be available for review by the department.

(g) There must be at least 10,000 sample units in the sample population.

(5) Maximum sample size.

(a) Except as provided in par. (b), the maximum number of sample units selected for review for each sample population from which a statistical sample is drawn may not exceed 10 percent of the sample population or 15,000 transactions, whichever is less.

(b) Paragraph (a) does not apply if the relative precision of the sample is greater than 20 percent. In determining an acceptable sample size, the department must consult with the person.

Example: If the relative precision of a sample is 20 percent and the net error is $100,000, there is 90% confidence that the true error of the sample population is between $80,000 and $120,000.

Note: Section Tax 11.905 interprets s. 77.59 (2) and (2g), Stats.

History

CR 18-080: cr. Register April 2019 No. 760, eff. 5-1-19; correction in (2) (f), (h) made under s. 35.17, Stats., Register April 2019 No. 760.

Wis. Admin. Code § Tax 11.91 Successor’s liability {#sec-tax-11.91 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.91}

(1) Description of successor.

(a) A purchaser or assignee of the business or stock of goods, including furniture, fixtures, equipment, and inventory, of any retailer liable for sales or use tax shall be personally liable for the payment of the sales or use tax if the purchaser or assignee fails to withhold a sufficient amount of the purchase price to cover the taxes due.

(b) If a corporation is created and acquires the assets of a sole proprietor in consideration for the corporation’s capital stock, the corporation is liable for any sales or use tax liability of the sole proprietorship.

(c) A surviving joint tenant shall not have successor’s liability for delinquent sales or use tax where the business or inventory passes by law to the remaining joint tenant.

(d) A financial institution or mortgagee who forecloses on a loan to a retailer owing delinquent sales or use tax shall not incur successor’s liability.

(e) If a retail business or stocks of goods shall pass from A to B to C, and B’s successor’s liability shall be unpaid, such liability shall not pass to C. The new successor, C, shall be liable only for B’s unpaid sales and use tax.

(f) Successor’s liability is not incurred in a sale by a trustee in bankruptcy, in a transfer by gift or inheritance, in a sheriff’s sale, or in a sale by a personal representative or special administrator.

(g) If a creditor, including a financial institution, actually operates a business which has been voluntarily surrendered by a delinquent debtor in full or partial liquidation of a debt, the creditor is a successor. The creditor is not a successor if it acquires possession of a business voluntarily surrendered, if it never operates the business and if its sole purpose is to sell the business in its entirety, as a whole or piecemeal, at whatever price it can obtain to recover its investment.

(2) Extent of liability.

(a) If there is no purchase price, there shall be no successor’s liability.

(b) A successor shall be liable to the extent of the purchase price. The purchase price shall include:

Consideration paid for tangible property and items, property, and goods, under s. 77.52 (1) (b), (c), and (d), Stats., and for intangibles such as leases, licenses, and good will.
Debts assumed by the purchaser, or canceled by a creditor.

(c) A successor shall be liable only for the amount of the tax liability, not for penalties and interest. Although based on the predecessor’s tax, the successor’s liability shall not bear interest.

(d) A successor’s liability shall be limited to amounts owed by the predecessor which were incurred at the location purchased. If the seller operated at more than one location while incurring a total liability for all locations, its liability incurred at the location sold shall be determined and shall represent the amount for which the successor may be held liable.

(e) Successor’s liability is determined by law and shall not be altered by agreements or contracts between a buyer and seller.

(3) Procedures for purchaser.

(a) A purchaser shall withhold a sufficient amount from the purchase price to cover any possible sales or use tax liability.

(b) The purchaser shall submit a written request to the department for a clearance certificate. An oral request for a clearance certificate shall not be accepted. The letter requesting the certificate shall include the real name, business name, and seller’s permit number, if known, of the prior operator. All sales tax returns for all periods during which the predecessor operated shall be filed with the department before it may issue the certificate.

(c) Under s. 77.52 (18) (bm), Stats., the department has 60 days from the date it receives the request for a clearance certificate or from the date the former owner makes its records available, whichever is later, but no later than 90 days after it receives the request, to ascertain the amount of sales tax liability, if any. The department shall within these periods, issue either:

A clearance certificate; or
A notice of sales tax liability to purchaser and successor in business, which shall state the amount of tax due before a clearance certificate can be issued and which shall be served and handled as a deficiency determination under s. 77.59, Stats.

(d) The department’s failure to mail the notice of liability within the 90 day period shall release the purchaser from any further obligation.

(4) Department’s collection procedures.

(a) The department shall first direct collection against the predecessor.

(b) Action against the successor shall not be commenced prior to an action against a predecessor unless it appears that a delay would jeopardize collection of the amount due.

Note: Section Tax 11.91 interprets s. 77.52 (18), Stats.

Note: The interpretations in s. Tax 11.91 are effective under the general sales and use tax law on and after September 1, 1969, except that the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, October, 1976, No. 250, eff. 11-1-76; am. (1) (d) and (2) (b) 2., cr. (1) (f) and (g), Register, December, 1978, No. 276, eff. 1-1-79; am. (1) (a), (b) and (g), (2) (a) and (3) (b) and (c) (intro.), Register, June, 1991, No. 426, eff. 7-1-91; correction in (3) (c) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (1) (a), (2) (b) 1. and (3) (b), eff. 10-1-09; CR 09-090: am. (1) (a), (2) (b) 1. and (3) (b) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.92 Records and record keeping {#sec-tax-11.92 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.92}

(1) General. All persons selling, licensing, leasing, or renting tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services and every person storing, using, or otherwise consuming in Wisconsin tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services shall keep adequate and complete records so that they may prepare complete and accurate tax returns. These records shall include the normal books of account ordinarily maintained by a prudent business person, together with all supporting information such as beginning and ending inventories, records of purchases and sales, cancelled checks, bills, receipts, invoices which shall contain a posting reference, cash register tapes, credit memoranda which shall carry a reference to the document evidencing the original transaction or other documents of original entry which are the basis for the entries in the books of account, and schedules used in connection with the preparation of tax returns. These records shall show:

(a) The sales price from sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services, or licenses, rentals, or leases of tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., including any services that are a part of the sale, license, lease, or rental sourced to Wisconsin under s. 77.522, Stats., even if the seller, licensor, or lessor regards the receipts as taxable or nontaxable. Taxable receipts shall be reported on the accrual basis, except when the department is satisfied that an undue hardship would exist and authorizes reporting on some other basis.

(b) The basis for all deductions claimed in filing returns, including exemption certificates obtained from customers. Exempt sales to governmental units and public schools need not be supported by exemption certificates, if the supplier retains a copy of the exempt entity’s purchase order and the supplier’s invoice or billing document. Sales to organizations holding a certificate of exempt status, CES, including religious or charitable organizations and certain title holding companies described under section 501 (c) (2), can be documented as exempt by recording the CES number on the seller’s copy of the bill of sale. Except as provided in this paragraph and ss. 77.52 (13) and 77.53 (10), Stats., exempt sales shall be supported by an exemption certificate retained by the seller and paper certificates shall also be signed by the purchaser. Documents necessary to support claimed exemptions from tax liability, such as bills of lading and purchase orders, shall be maintained in a manner in which they readily can be related to the transaction for which exemption is sought.

(bg) Sales to state veterans organizations, as defined in s. 45.41 (1) (b), Stats., are exempt, except for property and services used primarily in preparing, storing, serving, selling, or delivering food and beverages, including products and services for cleaning machinery and equipment used for the food and beverages that are sold by the veterans organization. The state veterans organization shall provide a Wisconsin sales and use tax exemption certificate, Form S-211 or S-211E, to claim an exemption on their purchases.

(c) Total purchase price of all tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services purchased for sale, license, lease, rental, storage, use, or other consumption in Wisconsin.

(d) Every person subject to the county or stadium sales and use tax shall keep a record of sales that the person makes that are sourced under s. 77.522, Stats., to each:

County that has in effect an ordinance imposing a county tax under s. 77.70, Stats.
Stadium district that has in effect a resolution imposing the tax under s. 77.706, Stats.

(e) Every person shall keep a record of the purchase price of property, items, and goods on which the person is subject to county and stadium use or excise tax in each enacting county or stadium district’s jurisdiction.

(2) Microfilm records. Microfilm, including microfiche, reproductions of general books of account, such as cash books, journals, voucher registers and ledgers, and supporting records of detail shall be acceptable if the following conditions are met:

(a) Appropriate facilities are provided for preservation of the films for periods required.

(b) Microfilm rolls are indexed, cross referenced, labeled to show beginning and ending numbers or beginning and ending alphabetical listing of documents included, and are systematically filed.

(c) Transcriptions are provided for any information contained on microfilm which may be required for purposes of verification of tax liability.

(d) Proper facilities are provided for the ready inspection and location of the particular records, including adequate projectors for viewing and copying the records.

(3) Records prepared by automated data processing (adp) systems. An automatic data processing, ADP, tax accounting system shall have the capability of producing visible and legible records which will provide the following necessary information for verification of the taxpayer’s tax liability:

(a) Recorded or reconstructible data. ADP records shall provide an opportunity to trace any transaction back to the original source or forward to a final total. If detailed printouts are not made of transactions at the time they are processed, then the system must have the ability to readily reconstruct these transactions.

(b) General and subsidiary books of account. A general ledger, with source references, shall be written out to coincide with financial reports for tax reporting periods. Where subsidiary ledgers are used to support the general ledger accounts, the subsidiary ledgers shall also be written out periodically.

(c) Audit trail and supporting documents. The audit trail shall be designed so that the details underlying the summary accounting data may be identified and made available to the department upon request. The record keeping system should be so designed that supporting documents, such as sales invoices, purchase invoices, exemption certificates, and credit memoranda, shall be readily available.

(d) Program documentation. A written description of the ADP portion of the accounting system shall be available. Important changes, together with their effective dates, shall be noted in order to preserve an accurate chronological record. The statements and illustrations as to the scope of operations shall be sufficiently detailed to indicate:

The application being performed.
The procedures employed in each application.
The controls used to ensure accurate and reliable processing.

(4) Records retention. The records shall be preserved and retained for the 4-year period open to audit under s. 77.59 (3), Stats. If any agreement is entered into to extend the 4-year audit period, the records shall be preserved for that extended period. If a notice of tax determination has been issued to the taxpayer by the department and if the taxpayer files a petition for redetermination, the records for the period covered by the notice of the tax determination shall be preserved and retained until the tax redetermination has been finally resolved.

(5) Examination of records. All records described in this section shall be made available for examination by the department at its request.

(6) Failure to maintain records. In the absence of suitable and adequate records, the department may determine the amount of tax due by using any information available, whether obtained from the taxpayer’s records or from any other source. Failure to maintain and keep complete and accurate records may result in penalties or other appropriate action provided by law, including the disallowance of deductions, credits, and exemptions and the inclusion of additional taxable sales or additional taxable purchases to which the requested records relate.

(7) Penalties.

(a) If the department has given notice to a person to keep certain sales and use tax records, and thereafter additional sales or use taxes are assessed on the basis of information not contained in the records, the department shall impose a penalty equal to 25% of the amount of sales or use tax assessed. This is in addition to all other penalties provided by law.

(b) If a person fails to produce records or documents that were requested by the department, as provided under ss. 73.03 (9) and 77.59 (2), Stats., the penalties under s. 77.61 (19), Stats., may be imposed. See s. Tax 11.90 for additional information relating to these penalties.

Note: Section Tax 11.92 interprets ss. 77.52 (13), 77.54 (9a) and (9g), 77.58 (6m), 77.60 (8), 77.61 (4) (a) and (9), and 77.75, Stats.

Note: The interpretations in this s. Tax 11.92 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The 25% penalty in sub. (7) became effective July 20, 1985, pursuant to 1985 Wis. Act 29; and (b) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, July, 1977, No. 259, eff. 8-1-77; emerg. cr. (1) (d), eff. 3-24-86; cr. (1) (d), Register, October, 1986, No. 370, eff. 11-1-86; am. (1) (intro.), (a), (b) and (c), (2) (intro.), (3) (intro.) and (c) and (4), cr. (7), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1) (intro.) to (c), (2) (b), (3) (c) and (6), renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. to 3. and (e) eff. 10-1-09;CR 09-090: am. (1) (intro.) to (c), (2) (b), (3) (c) and (6), renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. to 3. and (e) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: renum. (7) to be (7) (a), cr. (7) (b) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (1) (b), (d) (intro.), r. (1) (d) 3., am. (1) (e) Register August 2012 No. 680, eff. 9-1-12; CR 20-018: am. (1) (b), cr. (1) (bg) Register July 2021 No. 787, eff. 8-1-21; correction in (1) (d) 2. made under s. 13.92 (4) (b) 7., Stats., Register February 2025 No. 830.

Wis. Admin. Code § Tax 11.925 Sales and use tax security deposits {#sec-tax-11.925 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.925}

(1) General.

(a) Under s. 77.61 (2) (a), Stats., the department may require a person liable for sales and use taxes to make a security deposit before or after a seller’s permit is issued. The amount of the security deposit determined by the department may not exceed $15,000. If a person fails or refuses to make a security deposit as requested, the department may refuse to issue a permit or revoke the permit.

(b) As provided in s. 77.61 (2) (b), Stats., a certified service provider who has contracted with a seller and filed an application to collect and remit sales and use taxes on behalf of the seller shall submit a surety bond within 60 days after the department notifies the certified service provider that the certified service provider is registered to collect Wisconsin sales and use taxes, to guarantee the payment of such sales and use taxes. However, the secretary of revenue or the secretary’s designee may waive this requirement or release the liability with respect to any certified service provider.

(2) Factors for department’s consideration.

(a) In determining whether or not security will be required and the amount of security to be required, the department may consider all relevant factors including the person’s:

Evidence of adequate financial responsibility. Evidence may include a person’s assets and liabilities, liquidity of assets, estimated expenditures, and potential sales tax liability.
Prior record of filing tax returns and paying taxes of any kind with the department.
Type of business.

Example: A temporary or seasonal business having no fixed location which is frequently moved from city to city may be a greater security risk than one operating continually at a fixed location.

Type of entity.

Example: A sole proprietor or partner having nonbusiness financial resources may be a better risk than a corporation having limited assets.

(b) Although the individual factors listed in par. (a) may be considered in determining security requirements, each case shall be determined on its merits as evaluated by the department. Protection of the sales and use tax revenues shall be the major consideration in determining security requirements. However, due consideration shall be given to reasonable evidence that security is not necessary.

(c) In instances in which the department determines that a security deposit in excess of $50.00 is required, notification of this requirement shall include a written statement clearly describing the reasons for the requirement and a description or calculation showing how the amount of the security requirement was determined.

(3) Types of security. Acceptable types of security include, but are not limited to:

(a) Non interest-bearing.

Cash, certified check, or money order.
Surety bonds issued by authorized underwriters.

(b) Interest-bearing.

Time certificates of deposit issued by financial institutions and made payable to the department. Interest earned on those certificates shall be paid to the depositor.
Fully paid investment certificates issued by savings and loan associations made payable to the depositor. A security assignment, form S-127, shall be completed if this type of security is selected.

Note: Form S-127 may be obtained from the department’s website at www.revenue.wi.gov, any Department of Revenue office, or by writing, emailing, or calling: Wisconsin Department of Revenue, P.O. Box 8901, Madison, WI 53708-8901, DORSpecialProcedures@wisconsin.gov, (608) 266-0833.

Bearer bonds issued by the U.S. government, any unit of Wisconsin municipal government or by Wisconsin schools. The depositor should clip 2 full years’ coupons before depositing this type of security.

(4) Determination of amount.

(a) If a security deposit is required, the amount generally shall be equal to the depositor’s average quarterly Wisconsin sales and use tax liability increased to the next highest even $100 amount. The average quarterly sales and use tax liability shall be based on whichever of the following the department considers most appropriate in the circumstances:

The depositor’s previous sales and use tax liability at the location specified on the permit.
The predecessor’s sales and use tax liability at the location specified on the permit,
The estimated tax liability shown on the application for permit.
Other factors, such as the department’s estimate of estimated tax liability based on its experience with other similar activities.

(b) If at the time of the security review the retailer has an outstanding sales and use tax delinquency, the delinquent amount shall be added to the average quarterly sales and use tax liability.

(5) Return of deposit.

(a) Section 77.61 (2) (a), Stats., provides any security deposited under s. 77.61 (2), Stats., shall be returned to the taxpayer if the taxpayer has, for 24 consecutive months, complied with all the requirements of subch. III of ch. 77, Stats.

(b) The 24 month compliance requirement described in par. (a) shall begin on the day the deposit is received by the department.

(c) Within 30 days after the conclusion of the 24-month period described in par. (a), the department shall review the taxpayer’s compliance record. If the taxpayer has complied with subch. III of ch. 77, Stats., the department shall within 60 days after the expiration of the 24-month period certify the deposit for refund.

(d) Compliance with subch. III of ch. 77, Stats., means that:

Sales and use tax returns were timely filed.
All payments were made when due.
No delinquencies of sales or use tax, interest, or other charges existed.
No penalties due to negligence or fraud were assessed for filing periods within the 24-month compliance period.
No assessment of additional tax, interest, or other charges for filing periods within the 24-month compliance period is unpaid at the end of the 24-month compliance period.

Note: Section Tax 11.925 interprets s. 77.61 (2), Stats.

Note: The interpretations in s. Tax 11.925 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The return of deposit provisions in sub. (5) became effective March 13, 1980, pursuant to Chapter 125, Laws of 1979; (b) The $15,000 limit for security deposits became effective October 1, 1985, pursuant to 1985 Wis. Act 29; and (c) The provision to require certified service providers to submit surety bonds and the provision to allow the secretary of revenue to waive the requirement became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, July, 1981, No. 307, eff. 8-1-81; am. (1), (2) (a) 1., 3., and 4., (3) (b) 2., and (5) (c), Register, March, 1991, No. 423, eff. 4-1-91; am. (1), (2) (b), (3) (b) 1., (5) (c), (d) 4. and 5., r. (3) (a) 3., Register, December, 1992, No. 444, eff. 1-1-93; EmR0924: emerg. renum. (1) to be (1) (a) and am., cr. (1) (b), am. (2) (a) 1., (3) (a) 1., (5) (a), (d) 3. and 5., eff. 10-1-09; CR 09-090: renum. (1) to be (1) (a) and am., cr. (1) (b), am. (2) (a) 1., (3) (a) 1., (5) (a), (d) 3. and 5. Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.93 Annual filing of sales tax returns {#sec-tax-11.93 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.93}

(1) A retailer holding a regular seller’s permit who during the previous calendar or fiscal year had a sales and use tax liability not exceeding $600 will be notified by the department that it must only file one sales and use tax return for the following year. If the retailer wants to continue to file returns on a quarterly basis, it must contact the department.

(2) Returns and payments of retailers reporting on an annual basis shall be due and payable on the last day of the month following the close of their calendar or fiscal year.

Note: Section Tax 11.93 interprets s. 77.58 (5), Stats.

Note: The interpretations in s. Tax 11.93 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) A $300 standard applied to taxable years beginning on and after January 1, 1979. Prior to that date, a $100 standard applied; (b) The “annual information return” was eliminated for 1981 and subsequent years, pursuant to Chapter 221, Laws of 1979; and (c) The $600 standard applies on and after January 1, 2014.

History

Cr. Register, December, 1978, No. 276, eff. 1-1-79; cr. (4), Register, January, 1983, No. 325, eff. 2-1-83; r. (3) and (4), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1), eff. 10-1-09; CR 09-090: am. (1) Register May 2010 No. 653, eff. 6-1-10; EmR1323: emerg. am. (1), eff. 1-1-14; CR 13-095: am. (1) Register May 2014 No. 701, eff. 6-1-14.

Wis. Admin. Code § Tax 11.94 Delivery charges {#sec-tax-11.94 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.94}

(1) Definition. “Delivery charges” is defined in s. 77.51 (2m), Stats., to mean charges by a seller to prepare and deliver tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services to a location designated by the purchaser of the tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services, including charges for transportation, shipping, postage, handling, crating, and packing.

(2) Taxability of delivery charges.

(a) When a seller charges a purchaser for the delivery of taxable tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the seller’s total charge, including any delivery charge, shall be subject to the sales or use tax. It is immaterial whether delivery is made by the seller’s vehicle, a common or contract carrier, or the United States postal service.

Example: Retailer A sells clothing to Customer B for $100. Retailer A also charges Customer B $10 for delivery of the clothing. Retailer A delivers the clothing to Customer B at a Wisconsin address for which the total applicable sales and use tax rate is 5%. The correct computation of the tax due is as follows:

(b) When a seller charges a purchaser for the delivery of nontaxable or exempt tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the seller’s total charge, including any delivery charge, is not subject to the sales or use tax.

(c)

If a shipment includes both taxable and nontaxable property and items the seller shall determine and set forth on the invoice the portion of the delivery charge reasonably allocable to the taxable property and items. The portion allocated to nontaxable property and items is not taxable. If no allocation is made, the total delivery charge shall be taxable.
The allocation in subd. 1. is computed based on either:

a. The total sales price of all of the property and items subject to tax as compared to the total sales price of all of the property and items included in the shipment.

b. The total weight of all of the property and items subject to tax as compared to the total weight of all of the property and items included in the shipment.

(d) A Wisconsin purchaser who purchases taxable property and items without tax for use in Wisconsin is subject to the use tax or sales tax pursuant to s. Tax 11.14 (2) (c) based on the “purchase price” of the property and items to the purchaser. The “purchase price” shall include delivery charges paid by the Wisconsin purchaser to the seller for shipment of the property and items to the purchaser. The “purchase price” does not include delivery charges paid by the Wisconsin purchaser to a carrier independent of the seller when the purchaser arranges for the transportation.

Example: If the “delivered price” of a carload of lumber is $6,000, including delivery charges, and the purchaser pays the delivery charges directly to the common carrier and deducts the payment from the amount due the seller, the delivery charges are borne by the seller and are included in the seller’s measure of the tax.

(3) Direct mail.

(a) Delivery charges for “other direct mail” are not subject to sales or use tax if the delivery charges are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser. Delivery charges for “advertising and promotional direct mail” are exempt from sales and use tax regardless of whether they are separately stated on the invoice, bill of sale, or similar document.

(b) “Direct mail” is defined in s. 77.51 (3pd), Stats., to mean printed material that is delivered or distributed by the U.S. postal service or other delivery service to a mass audience or to addressees on a mailing list provided by or at the direction of the purchaser of the printed material, if the cost of the printed material or any tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., included with the printed material is not billed directly to the recipients of the printed material. “Direct mail” includes any tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., provided directly or indirectly by the purchaser of the printed material to the seller of the printed material for inclusion in any package containing the printed material, including billing invoices, return envelopes, and additional marketing materials. “Direct mail” does not include multiple items of printed material delivered to a single address.

Note: Section Tax 11.94 interprets ss. 77.51 (2m), (3pd), (12m) (a) 4. and (b) 4., (14) (intro.), and (15b) (a) 4. and (b) 4., 77.52 (1), and 77.585 (8), Stats.

Note: The interpretations in s. Tax 11.94 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The definitions of “delivery charges” and “direct mail,” and the change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (b) The definitions of “advertising and promotional direct mail” and “other direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; and (c) The sales and use tax exemption for advertising and promotional direct mail, which includes the delivery charges for advertising and promotional direct mail, became effective July 1, 2013, pursuant to 2011 Wis. Act 32.

History

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (e), r. (2) (b), renum. (2) (c), (d) and (e) to be (2) (b), (c) and (d), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (e) and (2) (b) and (d), Register, June, 1991, No. 426, eff. 7-1-91; reprinted to restore dropped copy in (1) (b), Register, December, 1995, No. 480; am. (1) (d), (2) (a) and (c), r. (2) (d), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (3) (a) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: am. (3) (a) Register August 2013 No. 692, eff. 9-1-13.

Wis. Admin. Code § Tax 11.945 Sourcing transactions {#sec-tax-11.945 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.945}

(1) Definitions.

(a) “Advertising and promotional direct mail,” as provided in s. 77.51 (1ag), Stats., means direct mail that has the primary purpose of attracting public attention to a product, person, business, or organization or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization.

(b)

“Other direct mail,” as provided in s. 77.51 (9r), Stats., means any direct mail that is not advertising and promotional direct mail, regardless of whether advertising and promotional direct mail is included in the same mailing. “Other direct mail” includes:

a. Transactional direct mail that contains personal information specific to the addressee, including invoices, bills, account statements, and payroll advices.

b. Any legally required mailings, including privacy notices, tax reports, and stockholder reports.

c. Other nonpromotional direct mail, including newsletters and informational pieces, that is delivered to existing or former shareholders, customers, employees, or agents.

“Other direct mail” does not include printed materials that result from developing billing information or providing any data processing service that is more than incidental, as defined in s. 77.51 (5), Stats., to producing other direct mail.

(c) “Product,” as provided in s. 77.51 (11d), Stats., includes tangible personal property, and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services.

(d) “Receive,” as defined in s. 77.522 (1) (a) 1., Stats., means taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.; making first use of services; or taking possession or making first use of digital goods under s. 77.52 (1) (d), Stats., whichever comes first. “Receive” does not include a shipping company taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., on a purchaser’s behalf.

(e) “Transportation equipment,” as defined in s. 77.522 (1) (a) 2., Stats., means any of the following:

Locomotives and railcars that are used to carry persons or property in interstate commerce.
Trucks and truck tractors that have a gross vehicle weight rating of 10,001 pounds or greater, trailers, semitrailers, and passenger buses, if such vehicles are registered under the international registration plan under s. 341.405, Stats., and operated under the authority of a carrier that is authorized by the federal government to carry persons or property in interstate commerce.
Aircraft that are operated by air carriers that are authorized by the federal government or a foreign authority to carry persons or property in interstate or foreign commerce.
Containers that are designed for use on the vehicles described in subds. 1. to 3. and component parts attached to or secured on such vehicles.

(2) Sourcing — General. Except as provided in subs. (3), (4), and (5), and except as provided in s. Tax 11.66 (3) relating to the sourcing of telecommunications services, ancillary services, and Internet access services, a sale is sourced to a location based on the following:

(a) If a purchaser receives the product at a seller’s business location, the sale is sourced to that business location.

(b) If a purchaser does not receive the product at a seller’s business location, the sale is sourced to the location where the purchaser, or the purchaser’s designated donee, receives the product. This would include the location indicated by instructions known to the seller for delivery to the purchaser or the purchaser’s designated donee. The delivery may be made by the seller or by a shipping company hired by the seller or purchaser.

(c) If the location of a sale cannot be determined under pars. (a) and (b), the sale is sourced to the purchaser’s address as indicated by the seller’s business records, if the records are maintained in the ordinary course of the seller’s business and if using that address to establish the location of the sale is not in bad faith.

(d) If the location of a sale cannot be determined under pars. (a), (b), and (c), the sale is sourced to the purchaser’s address as obtained during the consummation of the sale, including the address indicated on the purchaser’s payment instrument, if no other address is available and if using that address to determine the location of the sale is not in bad faith.

(e) If the location of a sale cannot be determined under pars. (a), (b), (c), and (d), including the circumstance in which the seller has insufficient information to determine the locations under pars. (a), (b), (c), and (d), the location of the sale is sourced as follows:

If the item sold is tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., the sale is sourced to the location from which the tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., is shipped.
If the item sold is a digital good or computer software delivered electronically, the sale is sourced to the location from which the digital good or computer software was first available for transmission by the seller, not including any location that merely provided the digital transfer of the product sold.
If a service is sold, the sale is sourced to the location from which the service was provided.

(3) Direct mail.

(a) Advertising and promotional direct mail.

Sales of advertising and promotional direct mail sourced to Wisconsin are exempt from Wisconsin sales and use taxes. However, sales of advertising and promotional direct mail sourced to another state may be subject to that other state’s sales or use tax.
A sale of advertising and promotional direct mail, including a sale of a service that is an integral part of the production and distribution of advertising and promotional direct mail, is sourced to the location from which the advertising and promotional direct mail was shipped if the purchaser does not provide to the seller any of the following:

a. The purchaser’s direct pay permit.

b. An exemption certificate claiming direct mail.

c. Other information that indicates the appropriate taxing jurisdiction to which the advertising and promotional direct mail is delivered to the ultimate recipients.

If the purchaser provides one of the items indicated in subd. 2. a. or b., to the seller, the purchaser shall source the sales to the jurisdictions to which the advertising and promotional direct mail is delivered to the recipients.
If the purchaser provides delivery information as provided in subd. 2. c., the seller shall source the sales according to that information.
An exemption certificate provided by the purchaser under subd. 2. b. remains in effect for all sales by the seller who received the exemption certificate to the purchaser who provided the exemption certificate.

a. Except as provided in subd. 6. b., if a transaction is a bundled transaction that includes “advertising and promotional direct mail,” subds. 2. to 5. only apply if the primary purpose of the transaction is the sale of products or services that meet the definition of advertising and promotional direct mail.

b. If advertising and promotional direct mail and other direct mail are included in a single mailing, the sale of that mailing is sourced the same as “other direct mail” as explained in par. (b).

(b) Other direct mail.

The sale of “other direct mail,” including a sale characterized under Wisconsin law as the sale of a service when the service is an integral part of the production and distribution of printed material that meets the definition of “other direct mail,” is sourced to the purchaser’s address as indicated by the seller’s business records, if the records are maintained in the ordinary course of the seller’s business and if using that address to establish the location of the sale is not in bad faith, unless the purchaser provides the seller with either of the following:

a. The purchaser’s direct pay permit.

b. An exemption certificate claiming direct mail.

If the purchaser provides one of the items indicated in subd. 1. a. or b., to the seller, the purchaser shall source the sale to the jurisdictions to which the other direct mail is to be delivered to the recipients and the purchaser shall pay or remit to the department the tax imposed under s. 77.53, Stats., on its purchases of other direct mail for which the tax is due, and in the absence of bad faith, the seller is relieved from liability for collecting the tax.
If “advertising and promotional direct mail” and “other direct mail” are included in a single mailing, the sale of that mailing is sourced as a sale of “other direct mail.”

A transaction that includes the development of billing information or the provision of a data processing service that is more than incidental, as defined in s. 77.51 (5), Stats., to producing direct mail is not sourced as a sale of direct mail, but instead is sourced using the general sourcing rules provided in sub. (2).
A transaction that includes data processing services that are incidental, as defined in s. 77.51 (5), Stats., to producing direct mail are sourced using the direct mail sourcing rules provided in this subsection.

(4) Sourcing leases, licenses, and rentals.

If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the lessor’s or licensor’s business location.
If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is not received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the location where the lessee or licensee or the lessee’s or licensee’s designated donee receives the product. This would include the location indicated by instructions known to the lessor or licensor for delivery to the lessee or licensee or the lessee’s or licensee’s designated donee. The delivery may be made by the lessor or licensor or by a shipping company hired by the lessee or licensee.
If the location cannot be determined under subds. 1. and 2., the first or only payment is sourced to the lessee’s or licensee’s address as indicated by the lessor’s or licensor’s business records, if the records are maintained in the ordinary course of the lessor’s or licensor’s business and if using that address to establish the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subds. 1., 2., and 3., the first or only payment is sourced to the lessee’s or licensee’s address as obtained during the consummation of the lease, license, or rental, including the address indicated on the lessee’s or licensee’s payment instrument, if no other address is available and if using that address to determine the location of the lease, license, or rental is not in bad faith.
If the location cannot be determined under subds. 1., 2., 3., and 4., the first or only payment is sourced as follows:

a. For tangible personal property and items and property under s. 77.52 (1) (b) or (c), Stats., except for computer software delivered electronically, the first or only payment is sourced to the location from which the property or item was shipped.

Example: Company A sells digital goods that it develops at its location in Wisconsin. Company A also has a server located outside Wisconsin from which Company A merely provides the digital transfer of the digital goods. The digital goods are first available for transmission from its Wisconsin location. Company A does not know the location to source the sale of digital goods under subds. 1. to 4. and therefore will source the sale under subd. 5. to the Wisconsin location. The sale cannot be sourced to the location of the server outside Wisconsin, because at that location, Company A merely provides the digital transfer of the digital good.

(d) Intermittent use. The sourcing of the lease, license, and rental payments as described in pars. (a) and (b), shall not be altered by any intermittent use of the property, item, or good at a different location.

(e) Transportation equipment. Leases, licenses, and rentals of transportation equipment are sourced to the location determined in par. (a).

(5) Florists.

(a)

“Retail florist” is defined in s. 77.522 (5), Stats., to mean a person engaged in the business of selling cut flowers, floral arrangements, and potted plants and who prepares such flowers, floral arrangements, and potted plants. “Retail florist” does not include a person who sells cut flowers, floral arrangements, and potted plants primarily by mail or via the Internet.
A retailer who does not prepare and sell cut flowers, floral arrangements, and potted plants, such as a person who only takes orders for cut flowers, floral arrangements, and potted plants and then transmits those orders to a retail florist, is not a “retail florist.”

(b) Except as provided in par. (c), sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services by florists are sourced the same as provided in sub. (2).

(c) Sales by a retail florist in which the retail florist receives an order from a customer and then transmits that order to a second retail florist who will prepare and deliver the order at the customer’s direction are sourced to the location where the first retail florist received the order from the customer. The first retail florist that received the order from the customer must collect and remit the applicable Wisconsin sales or use taxes based on the location where that retail florist received the order from the customer. The sale from the second retail florist to the first retail florist is not subject to Wisconsin sales or use tax if the first retail florist provides the second retail florist an exemption certificate claiming resale.

Example: Retail Florist A located in Wisconsin receives an order from a customer, who wants the flowers delivered to a location in Kentucky. Retail Florist A contacts Retail Florist B, located in Kentucky, and has Retail Florist B prepare the order and deliver it to the location in Kentucky. This sale is sourced to Retail Florist A’s location in Wisconsin.

(d) Sales by persons who are not retail florists but who take orders for cut flowers, floral arrangements, and potted plants from customers and transmit those orders to a person who is a retail florist are sourced as provided in sub. (2).

Note: Section Tax 11.945 interprets ss. 77.51 (11d) and 77.522, Stats.

Note: (a) The interpretations under s. Tax 11.945 are effective beginning October 1, 2009, pursuant to 2009 Wis. Acts 2 and 28; (b) The definitions of “advertising and promotional direct mail” and “other direct mail” and the provisions relating to the sourcing of transactions that include these types of items are effective May 27, 2010, pursuant to 2009 Wis. Act 330; and (c) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32.

History

EmR0924: emerg. cr. eff. 10-1-09; CR 09-090: cr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: renum. (1) (a) to (c) to be (1) (c) to (e), cr. (1) (a) and (b), am. (2) (b), r. and recr. (3) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: renum. (3) (a) 1. to 5. to (3) (a) 2. to 6. and am. 3. to 5., 6. a., cr. (3) (a) 1. Register August 2013 No. 692, eff. 9-1-13; CR 16-053: am. (2) (intro.) Register June 2018 No. 750, eff. 7-1-18.

Wis. Admin. Code § Tax 11.95 Retailer’s discount {#sec-tax-11.95 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.95}

(1) Computation.

(a) Effective for Wisconsin sales and use tax returns filed for periods ending on or after January 1, 1997, for timely reporting state, county and stadium sales or use tax collected on their retail sales, retailers may deduct 0.5% of the sales and use tax payable on retail sales, except as provided in pars. (am), (b), and (c).

(am) Effective for taxes payable on October 1, 2009 and thereafter, the retailer’s discount that may be deducted on a sales and use tax return is limited to $1,000 per reporting period.

(b) If, for each reporting period required under s. 77.58 (1), Stats., multiplying the sales and use tax payable on retail sales by 0.5% results in $10 or less, the retailer’s discount is the lesser of $10 or the amount of the sales and use tax payable on retail sales.

(c) Certified service providers that receive compensation under s. 73.03 (61) (h), Stats., for the taxes reported on a return are not entitled to the retailer’s discount on that return.

(2) Retailer’s discount allowed. The retailer’s discount is allowed if the taxes are paid on or before the due date of the return, or on or before the expiration of any extension period if one has been granted.

(3) Retailer’s discount not allowed. The retailer’s discount is not allowed if any one of the following applies:

(a) The payment of sales and use tax is delinquent.

(b) The sales and use tax payable is as a result of a deficiency determination or filing an amended return after the due date of the return, or after the expiration of any extension period if one has been granted.

(d) The certified service provider that is filing the sales and use tax return is receiving compensation under s. 73.03 (61) (h), Stats., with respect to the taxes reported on that return.

Note: Section Tax 11.95 interprets ss. 77.61 (4) (c), 77.76 (3), (3m), and (3p), and 77.79, Stats.

Note: (a) The amount of retailer’s discount on or after January 1, 1983 until December 31, 1992 was 2% of the first $10,000 of sales and use tax payable during the retailer’s tax year, 1% of the second $10,000 of sales and use tax payable and 0.5% of the sales and use tax payable in excess of $20,000 each year; (b) The requirement that county tax be remitted by dealers to the registering state agency was repealed effective May 1, 1988, pursuant to 1987 Wis. Act 141; (c) The amount of retailer’s discount for returns filed for periods ending on or after January 1, 1993 and before January 1, 1997, was 0.5% of sales and use tax payable on retail sales, pursuant to 1991 Wis. Act 269; (d) The amount of retailer’s discount in sub. (1) became effective for returns filed for periods ending on or after January 1, 1997, pursuant to 1995 Wis. Act 280; (e) The limitation of the retailer’s discount to $1,000 per reporting period became effective for taxes payable on and after October 1, 2009, pursuant to 2009 Wis. Act 28; and (f) The provision prohibiting the retailer’s discount on those returns filed by a certified service provider who receives other compensation became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

Cr. Register, February, 1978, No. 266, eff. 3-1-78; r. and recr. Register, September, 1984, No. 345, eff. 10-1-84; emerg. am. (1), eff. 3-24-86; am. (1) Register, October, 1986, No. 370, eff. 11-1-86; am. (1), Register, March, 1991, No. 423, eff. 4-1-91; am. (1), Register, April, 1993, No. 448, eff. 5-1-93; r. and recr. Register, December, 1996, No. 492, eff. 1-1-97; EmR0924: emerg. am. (1) (a), cr. (1) (am), (c) and (3) (d), eff. 10-1-09; CR 09-090: am. (1) (a), cr. (1) (am), (c) and (3) (d) Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (1) (a) Register August 2012 No. 680, eff. 9-1-12.

Wis. Admin. Code § Tax 11.96 Delivery of ordinance or resolution; county, stadium, and premier resort area tax {#sec-tax-11.96 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.96}

(1) Purpose. This section clarifies requirements for the timely delivery of county and stadium sales and use tax and premier resort area tax ordinances or resolutions to the secretary of revenue.

(2) Time requirement for delivery.

(a) Adoption of county tax ordinance. Any Wisconsin county may impose county sales and use taxes by adopting an ordinance. Under s. 77.70, Stats., a certified copy of that ordinance shall be delivered to the secretary of revenue at least 120 days prior to its effective date. The effective date of the ordinance may only be on the first day of January, the first day of April, the first day of July, or the first day of October.

(b) Repeal of county tax ordinance. Under s. 77.70, Stats., a county described in par. (a) may repeal a county sales and use tax by delivering a certified copy of the repeal ordinance to the secretary of revenue at least 120 days before the effective date of the repeal. The effective date of the repeal may only be December 31.

Note: An ordinance to adopt or repeal a county sales and use tax or a premier resort area tax should be mailed to Wisconsin Department of Revenue, Office of the Secretary, Mail Stop 624A, PO Box 8933, Madison WI 53708-8933 or delivered to 2135 Rimrock Road, Madison, Wisconsin.

(c) Adoption of premier resort area tax ordinance. Any Wisconsin municipality or county wholly within a premier resort area under s. 66.1113, Stats., may impose a premier resort area tax, by adopting an ordinance. Under s. 77.9941 (1), Stats., a certified copy of that ordinance shall be delivered to the secretary of revenue at least 120 days prior to its effective date. The effective date of the ordinance may only be on the first day of January, the first day of April, the first day of July, or the first day of October.

(d) Repeal of premier resort area tax ordinance. Under s. 77.9941 (3), Stats., a county or municipality described in par. (c) may repeal a premier resort area tax by delivering a certified copy of the repeal ordinance to the secretary of revenue at least 60 days before the effective date of the repeal. The effective date of the repeal may only be December 31.

(e) Adoption of stadium tax resolution. A baseball park district created under subch. III of ch. 229, Stats., or a football stadium district created under subch. IV of ch. 229, Stats., may impose a stadium district sales and use tax, by adopting a resolution. Under s. 229.824 (15), Stats., a certified copy of that resolution shall be delivered to the secretary of revenue at least 120 days prior to its effective date. The effective date of the ordinance may only be on the first day of January, the first day of April, the first day of July, or the first day of October.

(f) Repeal of stadium tax resolution. A baseball park district and a football stadium district described in par. (e) may repeal a baseball or football stadium district tax by delivering a certified copy of the repeal resolution to the secretary of revenue at least 120 days before the effective date of the repeal. The effective date of the repeal may only be on the first day of January, the first day of April, the first day of July, or the first day of October.

(3) Delivery of ordinance or resolution. An ordinance or resolution referred to in s. 77.70, 77.9941 (1) or (3), or 229.824 (15), Stats., is timely delivered to the secretary of revenue if, by the prescribed number of days before the effective date, any of the following occur:

(a) The ordinance or resolution is hand delivered to and received by the secretary of revenue.

(b) The ordinance or resolution is mailed in a properly addressed envelope with the postage duly prepaid, if the envelope is postmarked before midnight and the ordinance or resolution is received by the secretary of revenue within 5 days after the prescribed date.

(c) The ordinance or resolution is delivered by a carrier other than the U.S. postal service and the ordinance is received by the secretary of revenue.

Note: Section Tax 11.96 interprets ss. 77.70, 77.706, 77.707, 77.9941 (1) and (3), and 229.824 (15), Stats.

History

Cr. Register, April, 2000, No. 532, eff. 5-1-00; correction in (2) (a) made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. am. (title) and (1) to (3), cr. (2) (c) to (h), eff. 10-1-09; CR 09-090: am. (title) and (1) to (3), cr. (2) (c) to (h) Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (title), (1), r. (2) (g), (h), am. (3) (intro.) Register August 2012 No. 680, eff. 9-1-12; correction in (2) (e), (3) made under s. 13.92 (4) (b) 7., Stats., Register February 2025 No. 830.

Wis. Admin. Code § Tax 11.98 Reduction of delinquent interest rate under s. 77.62, Stats {#sec-tax-11.98 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.98}

(1) Procedures. The secretary may reduce the delinquent interest rate from 18% to 12% per year effective for all determinations, assessments, or other actions for additional tax made by the department on or after August 1, 1981, when the secretary determines the reduction fair and equitable, if the person from whom delinquent taxes are owing:

(a) Requests the reduction in writing, addressed to the Wisconsin Department of Revenue, Delinquent Tax Collection System, P.O. Box 8901, Madison, WI 53708.

(b) Clearly indicates why it is fair and equitable for the rate of interest to be reduced. Information regarding one or more of the factors under sub. (2) may be indicated.

(c) Is current in all return and report filings and tax payments for all matters other than the delinquencies for which interest reduction is being sought.

(d) Pays the sales and use taxes, reduced amount of interest, and any penalties associated with them within 30 days of receiving notice from the department of the reduction.

(2) Factors for secretary’s consideration. In determining whether an interest rate reduction is fair and equitable, the secretary may consider the following factors:

(a) The taxpayer’s prior record of reporting and payment to the department.

(b) The taxpayer’s financial condition.

(c) If the taxpayer is a natural person, any circumstances which may have prevented payment such as death, imprisonment, hospitalization, or other institutionalization.

(d) Any unusual circumstances which may have caused the taxpayer to incur the delinquency or prevent its payment.

(e) Any other factor which the secretary believes pertinent.

(3) Determination not appealable. The secretary’s determination under this section is not appealable.

Note: Section Tax 11.98 interprets ss. 71.82 (2) (b), 77.60 (2) and 77.62, Stats.

Note: The interpretations in s. Tax 11.98 are effective under the general sales and use tax law on and after September 1, 1969, except that the secretary could reduce the delinquent interest rate from 18% to 9% for determinations made prior to August 1, 1981.

History

Cr. Register, February, 1979, No. 278, eff. 3-1-79; am. (1) (intro.), Register, June, 1983, No. 330, eff. 7-1-83; EmR0924: emerg. am. (1) (intro.), (d), (2) (c) and (3), eff. 10-1-09; CR 09-090: am. (1) (intro.), (d), (2) (c) and (3) Register May 2010 No. 653, eff. 6-1-10.

Wis. Admin. Code § Tax 11.985 Bundled transactions {#sec-tax-11.985 omnilex-key=us-wi-regs-official--agency-tax--Tax 11.985}

(1) Definitions. In this section:

(a)

“Bundled transaction” means the retail sale of 2 or more products, not including real property and services to real property, if the products are distinct and identifiable products and sold for one nonitemized price.
“Bundled transaction” does not include any of the following:

a. The sale of any products for which the sales price varies or is negotiable based on the purchaser’s selection of the products included in the transaction.

Example: Retailer A enters into a contract with Customer B to provide various information technology services. Customer B selects the information technology services it wants from Retailer A. Through negotiation, Retailer A and Customer B agree on a price based on the services selected and Retailer A bills Customer B one nonitemized price for all of the services. Since the price was based on the products selected by Customer B, the transaction is not a bundled transaction.

b. The retail sale of tangible personal property and a service, if the tangible personal property is essential to the use of the service, and provided exclusively in connection with the service, and if the true object of the transaction is the service. The Wisconsin sales and use tax treatment of this transaction would follow the tax treatment of the service provided.

c. The retail sale of a service and items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., if such items, property, or goods are essential to the use of the service, and provided exclusively in connection with the service, and if the true object of the transaction is the service. The Wisconsin sales and use tax treatment of this transaction would follow the tax treatment of the service provided.

d. The retail sale of services, if one of the services is essential to the use or receipt of a second service, and provided exclusively in connection with the second service, and if the true object of the transaction is the second service. The Wisconsin sales and use tax treatment of this transaction would follow the tax treatment of the second service.

e. A transaction that includes taxable and nontaxable products, if the seller’s purchase price or the sales price of the taxable products is no greater than 10 percent of the seller’s total purchase price or sales price of all the bundled products, as determined by the seller using either the seller’s purchase price or sales price, but not a combination of both, or, in the case of a service contract, the full term of the service contract.

f. The retail sale of taxable tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., and tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that is exempt from the taxes imposed under this subchapter, if the transaction includes food and food ingredients, drugs, durable medical equipment, mobility-enhancing equipment, prosthetic devices, or medical supplies and if the seller’s purchase price or the sales price of the taxable tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is no greater than 50 percent of the seller’s total purchase price or sales price of all the tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., included in what would otherwise be a bundled transaction, as determined by the seller using either the seller’s purchase price or the sales price, but not a combination of both.

(b) “Distinct and identifiable product” does not include any of the following:

a. Packaging, including containers, boxes, sacks, bags, bottles, and envelopes; and other materials, including wrapping, labels, tags, and instruction guides; that accompany, and are incidental or immaterial to, the retail sale of any product.

b. Packaging that is incidental or immaterial to the retail sale of a product includes grocery sacks, shoeboxes, dry cleaning garment bags, and express delivery envelopes and boxes.

a. A product that is provided free of charge to the consumer in conjunction with the required purchase of another product, if the sales price of the other product does not vary depending on whether the product provided free of charge is included in the transaction.

b. Products that are provided free of charge include a free car wash provided by a gas station with the purchase of 15 or more gallons of gas, a free place setting of dinnerware provided by a grocery store with the purchase $50 or more in groceries, and a free cap provided by an auto parts store with the purchase of a case of motor oil.

a. Any items specified in the definition of “purchase price” in s. 77.51 (12m) (a), Stats., or “sales price” in s. 77.51 (15b) (a), Stats.

b. Items that are specified in the definition of “purchase price” and “sales price” include the cost of the property sold, the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, charges by the seller for any services necessary to complete the sale, delivery charges, and installation charges.

(c)

“One nonitemized price” does not include:

a. A price that is separately identified by product on a binding sales document, or other sales-related document, that is made available to the customer in paper or electronic form, including an invoice, a bill of sale, a receipt, a contract, a service agreement, a lease agreement, a periodic notice of rates and services, a rate card, or a price list.

b. A price for which the sales price varies or is negotiable based on the purchaser’s selection of the products included in the transaction even if the seller only provides one price on its invoice to the purchaser.

Example: Retailer C enters into a contract with Customer D to provide various information technology services. Customer D selects the information technology services it wants from Retailer C. Through negotiation, Retailer C and Customer D agree on a price based on the services selected and Retailer C bills Customer D one price for all of the services, some of which are taxable and some of which are not taxable. Although the invoice from Retailer C to Customer D only contains one price for all of the services, since the price was based on the products selected by Customer D, the price is not “one nonitemized price.”

c. A single price that is equal to the total of the individually priced or itemized products contained in the supporting sales related documentation such as a catalog, price list, or service agreement.

If a transaction includes a bundle of products that are sold for one nonitemized price and also one or more additional products that were individually priced or itemized from the bundled products in a catalog or price list, but the invoice provided to the purchaser only included one price, the additional products that were individually priced in the catalog or price list are not part of the bundled transaction.
If the products in a transaction are not sold for one nonitemized price as provided in subds. 1. and 2., and the total sales price of the transaction is further discounted, without itemizing the discount for each product, this will not cause the transaction to now be characterized as a bundled transaction. Unless sales related documentation or information is provided to show the allocation of the discount, the discount is to be allocated pro rata among the otherwise separately itemized products.

(d) “Product” includes tangible personal property, and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services. For purposes of this rule, “product” does not include real property or services to real property.

(2) Taxable receipts.

(a) Except as provided in par. (b), the entire sales price of a bundled transaction is subject to Wisconsin sales or use tax.

(b)

At the retailer’s option, if the retailer can identify, by reasonable and verifiable standards from the retailer’s books and records that are kept in the ordinary course of its business for other purposes, including purposes unrelated to taxes, the portion of the price that is attributable to products that are not subject to the tax imposed under this subchapter, that portion of the sales price is not taxable.
The option provided to the retailer under subd. 1. does not apply to a bundled transaction that contains food and food ingredients as defined in s. 77.51 (3t), Stats., drugs as defined in s. 77.51 (3pj), Stats., durable medical equipment as defined in s. 77.51 (3pm), Stats., mobility-enhancing equipment as defined in s. 77.51 (7m), Stats., prosthetic devices as defined in s. 77.51 (11m), Stats., or medical supplies.

(3) Nontaxable receipts. The receipts from the following types of transactions are not subject to Wisconsin sales or use tax. Although these transactions would generally be thought of as being bundled transactions, since they meet certain specific conditions, they are excluded from the definition of a bundled transaction.

(a) The sales price received from sales of taxable products sold in what would be a bundled transaction, except that the sales price of the taxable products in the transaction are 10 percent or less of the seller’s total sales price of all of the products in the transaction or the seller’s total purchase price of the taxable products in the transaction are 10 percent or less of the seller’s total purchase price of all of the products in the transaction. However, the first person combining the products shall pay the Wisconsin sales or use tax on their purchase price of the taxable items.

(b) If the transaction includes food and food ingredients as defined in s. 77.51 (3t), Stats., drugs as defined in s. 77.51 (3pj), Stats., durable medical equipment as defined in s. 77.51 (3pm), Stats., mobility-enhancing equipment as defined in s. 77.51 (7m), Stats., prosthetic devices as defined in s. 77.51 (11m), Stats., or medical supplies, the sales price received from sales of taxable products sold in what would be a bundled transaction, except that the sales price of the taxable products in the transaction are 50 percent or less of the seller’s total sales price of all of the products in the transaction or the seller’s total purchase price of the taxable products in the transaction are 50 percent or less of the seller’s total purchase price of all of the products in the transaction. This paragraph does not apply if one or more of the products in the transaction is a service.

Note: Section Tax 11.985 interprets ss. 77.51 (1f), (3pf), and (9p), 77.52 (1), (2), (20), (21), (22), and (23), and 77.54 (51) and (52), Stats.

Note: The interpretations in s. Tax 11.985 became effective October 1, 2009, pursuant to 2009 Wis. Act 2.

History

EmR0924: emerg. cr. eff. 10-1-09; CR 09-090: cr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (c) 3. Register November 2010 No. 659, eff. 12-1-10; CR 20-018: am. (3) (b) Register July 2021 No. 787, eff. 8-1-21.

Chapter Tax 12 PROPERTY TAX

Wis. Admin. Code § Tax 12.05 Temporary assessor certification {#sec-tax-12.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.05}

(1) Approval. Temporary assessor certification shall be approved under the following conditions:

(a) The applicant shall not have been temporarily certified previously.

(b) The applicant shall have a job commitment from an elected or appointed assessor, from a firm contracting to make the assessment under s. 70.05 (2), 70.055, or 70.75, Stats., or a job commitment from the department.

(c) The certified individual signing the assessment roll for a local tax unit of government or county assessor system under s. 70.99, Stats., or the applicant’s immediate supervisor if in the department, shall be responsible to see that the following conditions are met:

The effective start and end dates of temporary assessor certification are adhered to.
No more than 2 persons employed by private firms may function as temporary assessors in the same municipality.

(2) Application. Application for temporary assessor certification shall be on the form prescribed by the department of revenue.

(3) When valid. Temporary assessor certification shall become effective upon distribution of the approval by the department of revenue. The approval shall be distributed within 5 business days of receipt by the department of an application as described in sub. (2). Temporary certification shall expire after whichever of the following first occurs:

(a) Ninety days have expired since the certification became effective; or

(b) The applicant passes an assessor certification examination conducted after the temporary assessor certification became effective.

(4) Authorized duties. A temporary certified individual shall be authorized to perform in accordance with the Wisconsin property assessment manual, and under the direct supervision of the certified individual in sub. (1) (c), the duties defined for the lowest assessment technician level of local assessor certification under sub. (1) (c).

Note: This section interprets s. 73.09 (1) and (6), Stats.

History

Emerg. cr. eff. 12-31-80; cr. Register, May, 1981, No. 305, eff. 6-1-81; am. (3) (intro.), Register, January, 1985, No. 349, eff. 2-1-85; CR 13-036: am. (1) (b), (c) (intro.) Register December 2013 No. 696, eff. 1-1-14; CR 19-030: am. (2), (3) Register October 2019 No. 766, eff. 11-1-19.

Wis. Admin. Code § Tax 12.055 Assessor certification examinations {#sec-tax-12.055 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.055}

(1) Examinations. Assessor certification examinations shall be held at the discretion of the department of revenue.

(2) Results. Individuals who have taken an assessor certification examination shall be notified as to whether the individual has passed or failed that examination within 25 business days after the exam.

Note: This section interprets s. 73.09 (5), Stats.

History

Cr. Register, January, 1985, No. 349, eff. 2-1-85.

Wis. Admin. Code § Tax 12.06 Duties of assessors {#sec-tax-12.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.06}

The following levels of certification for assessors and assessment personnel are established:

(1) Assessment personnel.

(a) Assessment technician.

Assessment technician shall be authorized to perform duties in accordance with the Wisconsin Property Assessment Manual under the direct supervision of a property appraiser or an assessor.
Assessment technician shall not be authorized to serve as a property appraiser, or an assessor 1, assessor 2 or assessor 3.

(b) Property appraiser.

Property appraiser shall be authorized to perform duties in accordance with the Wisconsin Property Assessment Manual under the direct supervision of an assessor.
Property appraiser shall not be authorized to serve as assessor 1, assessor 2 or assessor 3.

(2) Assessors.

(a) Assessor 1.

Assessor 1 shall be authorized to perform, in accordance with the Wisconsin Property Assessment Manual, any of the duties of a property appraiser, an assessment technician and the following duties:

a. Serving as statutory assessor in an assessment district with a degree of complexity requiring the level of assessor 1 as determined by the department of revenue which shall include responsibility for all assessed values of real and personal property in the assessment district for which the individual is statutory assessor;

b. Contacting taxpayers of the assessment district to explain the property assessment laws and procedures under which the property assessments are determined;

c. Supervising subordinate assessment staff.

Assessor 1 shall not be authorized to sign the assessment roll as statutory assessor in an assessment district with a degree of complexity requiring the level of assessor 2 or assessor 3 as determined by the department of revenue.

(b) Assessor 2.

Assessor 2 shall be authorized to perform, in accordance with the Wisconsin Property Assessment Manual, any of the duties of a property appraiser, an assessment technician, an assessor 1 and the following duties:

a. Serving as statutory assessor in an assessment district with a degree of complexity requiring the level of assessor 2 as determined by the department of revenue which shall include responsibility for all assessed values of real and personal property in the assessment district for which the individual is statutory assessor;

b. Supervising subordinate assessment staff.

Assessor 2 shall not be authorized to sign the assessment roll as statutory assessor in an assessment district with a degree of complexity requiring the level of assessor 3 as determined by the department of revenue.

Assessor 3 shall be authorized, in accordance with the Wisconsin Property Assessment Manual, to perform the following duties:

a. Serving as statutory assessor in an assessment district with a degree of complexity as determined by the department of revenue at the level of assessor 3 which shall include responsibility for all assessed values of real and personal property in the assessment district for which the individual is statutory assessor;

b. Policy determination, budgetary formulation and responding to appropriate levels of government involved in the property assessment process;

c. Supervising subordinate assessment staff.

Assessor 3 shall not be authorized to sign the assessment roll as statutory assessor in any assessment district with a degree of complexity requiring the level of assessor 1 or assessor 2 as determined by the department of revenue, nor serve on the staff of any assessment district as assessment technician, property appraiser, assessor 1 or assessor 2.

History

Cr. Register, February, 1976, No. 242, eff. 3-1-76; emerg. cr. (1) (am), eff. 1-31-80; am. (2) (a) 1. a., (2) (b) 1. a. and (2) (c) 1. a., Register, January, 1985, No. 349, eff. 2-1-85; CR 13-036: renum. (1) (a) 1. (intro.) to (1) (a) 1. and am., r. (1) (a) 1. a. to g., renum. (1) (b) 1. (intro.) to (1) (b) 1. and am., r. (1) (b) 1. a. to e. Register December 2013 No. 696, eff. 1-1-14.

Wis. Admin. Code § Tax 12.065 Continuing education requirements for recertification of assessors and assessment personnel {#sec-tax-12.065 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.065}

(1) Definitions.

(a) “Accredited institution of higher education” means schools accredited by one of the regional institutional accrediting commissions or associations which have been recognized by the U.S. department of education or a law school accredited by the American bar association.

(b) “Appraisal instruction” means programs which consist of appraisal knowledge which is broad based and essential to assessors and assessment personnel in performing the appraisal function.

(c) “Committee” means the advisory committee appointed by the department from, but not limited to, the following groups: the department; league of Wisconsin municipalities, the assessor’s section; the Wisconsin association of assessing officers; county assessor systems; the Wisconsin technical college system; the University of Wisconsin Extension; the Wisconsin towns association; private appraisal firms or individuals.

(d) “Continuing education” means those hours and subject areas of instruction established for each level of assessor certification and approved by the department to meet minimum requirements for recertification.

(e) “Credit program” means a course which can be applied toward an associate degree or higher degree at an accredited institution of higher education.

(f) “Evidence of attendance” means an official transcript, student grade report, or department approved certificate showing satisfactory completion of educational programs.

(g) “Hour” means a period of 50 minutes of actual instruction and shall not include time spent in writing tests and examinations.

(h) “Noncredit program” means an educational program or training session which does not satisfy requirements for an associate degree or higher degree at an accredited institution of higher education.

(i) “Property tax law” or “management instruction” means programs which consist of assessment administration knowledge which is broad based and essential to assessors in performing the assessment function.

(j) “Recertification” means the reissuance of a certificate by the department to previously certified assessment personnel.

(k) “Recertification period” means the 5 years preceding the expiration of the applicant’s current certification.

(L) “Satisfactory completion” means receiving a passing score for a credit program or attendance at a noncredit program. Attendance at a credit program on an audit basis does not satisfy the requirement of satisfactory completion.

(2) Requirements. Continuing education requirements shall include:

(a) The program shall be approved by the department prior to attendance.

(b) The program shall be attended and completed not earlier than 5 years preceding the expiration of the applicant’s current certification period.

(c) The program shall be attended and completed not later than 2 months prior to the expiration of the applicant’s current certification period.

(d) The program shall be at least 0.5 hours in length.

(e) An applicant or instructor may apply continuing education hours only once for the same program during any given recertification period.

(f) The minimum hours and subject areas of instruction required by certification level are as follows:

Continuing education is not required to be recertified at the assessment technician level.
Twenty hours of continuing education programs in appraisal instruction shall be required for recertification at the property appraiser level.
Thirty hours of continuing education programs shall be required for recertification at the assessor 1 and 2 levels. A minimum of 15 hours shall be in appraisal instruction and a minimum of 15 hours shall be in property tax law or management instruction.
Thirty hours of continuing education programs shall be required for recertification at the assessor 3 level. A minimum of 3 hours shall be in appraisal instruction and a minimum of 27 hours shall be in property tax law or management instruction.
Programs may jointly meet requirements for applicants holding multiple certifications.

(3) Duties. The department and the committee shall be authorized to perform the following duties in administering the continuing education program:

(a) The department shall:

Appoint the committee to staggered 2-year terms. The maximum committee membership shall be 15, containing a minimum of 3 department members.
Assign the duties of committee chairperson and committee secretary to department members.
Call committee meetings as needed and maintain all committee records.
Review recommendations by the committee and notify interested parties of the decisions.
Reimburse the ordinary and necessary expenses of the committee members or duly authorized representatives in the performance of committee business.
Investigate any sponsor or instructor upon receipt of a complaint from an interested person.
Give written notification with the reason for such action if, after investigation and review, the department denies or deems it proper to withdraw its approval of any educational program or instructor. The sponsor or instructor may request a hearing before the department.

(b) The committee shall:

Meet as needed at the request of the committee chairperson. A minimum of 7 members shall be required to conduct business and decisions shall be made on the basis of a majority vote of the members in attendance.
Review materials submitted to the department and recommend approval or disapproval based on the subject area of the program, the qualification of the instructor and the number of hours in each program.

(4) Investigation and review. The department with the assistance of the committee may review approved educational programs and instructors. The method of review shall be determined by the department in each case and may consist of one or more of the following:

(a) Consideration of information available from federal, state or local agencies, private organizations or agencies, or interested persons.

(b) Conferences with officials or representatives of the sponsor involved or with former students.

(c) Public hearing regarding the educational program or instructor involved, with adequate written notice to the sponsor or instructor or both.

(d) Investigation by visitation to the school program or session.

(5) Approval. Requirements for approval of hours, subject areas, instructors and certification of attendance at programs are as follows:

(a) Credit program approved upon the following conditions:

Courses offered by accredited institutions in appraisal instruction and in property tax law or management instruction are automatically approved.
Individuals attending the course shall provide evidence of satisfactory completion to the department within 30 days of conclusion of this course.

(b) Noncredit program approval may be requested by a school or a program sponsor by following the procedures indicated below:

An application for approval shall be submitted at least 30 days prior to the commencement of the program on a form provided by the department. The department shall require the following information and materials:

a. The program title.

b. Name and qualifications of instructor.

c. The name of the sponsoring organization.

d. Detailed outlines of each course with specific allocation of hours to each topic.

Instructors shall be experienced in the subject which they are teaching; the department may limit its approval to specific content areas set forth in sub. (1) (b) and (i). As a minimum, the instructor shall be a person who, in the judgment of the department is qualified by experience or education, or both to supervise a course of study within the legislative intent of this section.
Where the department deems it appropriate, initial approval of noncredit programs may be given without specific information concerning dates, times, locations and instructors, but this information shall be provided no later than 30 days prior to the beginning of the approved program. These approvals shall expire on the first September 30 occurring three or more months from the date of initial approval. Applications for reapproval shall be submitted to the department prior to July 30 each year.
Additional criteria for approval and reapproval of noncredit programs are as follows:

a. Applicants for approval shall not discriminate against anyone on the basis of sex, race, religion, age, physical disability or national origin in their education programs.

b. The department shall approve only those programs whose primary emphasis is in the area of appraisal, property tax law, or management instruction. The amount of continuing education approved for a course will be only the actual amount of instruction time which deals directly with appraisal, property tax law, or management areas.

c. The department may refuse approval if, in its judgment, the attendance at the program cannot be adequately monitored.

The sponsor or school shall provide evidence of attendance as follows:

a. Certificates of attendance on forms prescribed by the department, signed by authorized persons whose signatures are on file with the department and dated on the last class attended by the student, shall be given to all currently certified personnel who meet attendance requirements. This shall be completed within 10 days after the last class.

b. The approved instructor or the sponsor shall submit to the department a list of those persons satisfactorily completing noncredit education programs which also certifies that the named students personally attended the minimum required instruction. The list shall be furnished within 10 days following completion of the program. A school or sponsor shall maintain records to establish the attendance record submitted for continuing education programs for five years.

Students shall register for the complete educational program, attend the whole program, and receive a certificate for the time for which the program was approved, except that a student who is forced by an emergency to leave a program may be given a certificate for the time actually attended, but not for less than 0.5 hours. Sponsors may make arrangements for make-up classes to enable students to meet attendance requirements.
It shall be misconduct under s. 73.09 (7), Stats., for certified assessors or assessment personnel who are involved as instructors or sponsors of noncredit courses to advertise or represent to the public that programs and instructors have been approved by the department when such approval has not been granted in writing by the department.
The school or program sponsor submitting a completed application as described in par. (b) 1. shall be notified of the department’s decision to approve or refuse to approve the application not less than 5 days prior to the commencement of the program.

(6) Address. All correspondence to the department shall be sent to:

Note: This section interprets s. 73.09 (1) and (4), Stats.

History

Emerg. cr. eff. 7-31-81; cr. Register, February, 1982, No. 314, eff. 3-1-82; cr. (5) (a) 4. and (b) 8., Register, January, 1985, No. 349, eff. 2-1-85; am. (1) (i), r. and recr. (5), Register, January, 1989, No. 397, eff. 2-1-89; am. (5) (b) 1. intro. and 8., Register, October, 1995, No. 478, eff. 11-1-95; correction in (6) made under s. 13.93 (2m) (b) 6., Stats., Register November 2002 No. 563; CR 13-036: am. (1) (c), (2) (b), (6) Register December 2013 No. 696, eff. 1-1-14; CR 19-030: am. (1) (d), (g), (L),(2) (d), (f) (intro.), (5) (b) 1. d., 4. b., 5.b., 6. Register October 2019 No. 766, eff. 11-1-19; correction in (2) (d), (5) (b) 6. made under s. 35.17, Stats., Register October 2019 No. 766.

Wis. Admin. Code § Tax 12.07 Assessment districts {#sec-tax-12.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.07}

(1) Levels of certification. Based on the complexity of assessment functions and the various classes of property within each taxation district, the department has established the levels of certification required for statutory assessors of counties and municipalities as follows:

(a) Assessor 1.

(b) Assessor 2.

Note: See s. Tax 12.06 (2) for a description of the duties of an assessor 1, 2, and 3.

(2) Counties and municipalities.

(a) The department shall establish the level of certification under sub. (1) required for statutory assessors of each county and municipality and publish this information in the Wisconsin Property Assessment Manual.

(b) The department shall review the levels of certification under par. (a) every 5 years and revise them as needed. The levels of certification as revised under this paragraph shall be published by the department in the Wisconsin Property Assessment Manual.

(c) A revision under par. (b) shall take effect January 1 of the second year after publication in the Wisconsin Property Assessment Manual.

History

Cr. Register, February, 1976, No. 242, eff. 3-1-76; am. (2) (b), Register, January, 1985, No. 349, eff. 2-1-85; am. (2) (b), Register, June, 1996, No. 486, eff. 7-1-96; CR 13-036: r. and recr. Register December 2013 No. 696, eff. 1-1-14; CR 19-030: am. (2) (b) Register October 2019 No. 766, eff. 11-1-19.

Wis. Admin. Code § Tax 12.073 Estimated fair market value on real and personal property tax bills {#sec-tax-12.073 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.073}

(1) Definitions. For purposes of administering s. 74.09, Stats., the following terms are defined:

(a) “Assessment ratio” means the decimal fraction rounded to the nearest ten thousandth obtained when the assessed value of all taxable nonmanufacturing property as taken from the clerk’s statement of assessment filed with the department is divided by the value of all taxable nonmanufacturing property in the taxation district as determined by the department of revenue prior to adjustments under s. 70.57, Stats.

(b) “Estimated fair market value of real property” means the result rounded to the nearest $100 obtained when the total assessed value of a parcel of real property, including forest crop lands assessed per s. 77.04, Stats., and managed forest croplands assessed under s. 77.84, Stats., as shown on the tax bill is divided by the assessment ratio furnished to the clerk by the department of revenue.

(c) “Estimated fair market value of personal property” means the result rounded to the nearest $10 obtained when the total assessed value of the personal property as shown on the tax bill is divided by the assessment ratio furnished to the clerk by the department of revenue.

(d) “Taxation district” means any whole or portion of a municipality lying within a county.

(2) Requirements.

(a) The department of revenue shall furnish the assessment ratio to every taxation district clerk on the department’s final statement of assessment for the taxation district.

(b) The clerk of the taxation district shall use the assessment ratio furnished by the department to calculate the estimated fair market value shown on the tax bills. The prescribed statements provided by the department are not intended to restrict taxpayers from appealing their assessment if the estimated fair market value exceeds the assessment by less than 10%.

Note: Option A

In addition to the assessed value, Wisconsin law requires that your taxation district show the estimated fair market value of taxable property on property tax bills. This estimated fair market value reflects the approximate market value of your property as of January 1 of the year shown at the top of this tax bill.

This estimated fair market value has been calculated by dividing the assessed value shown on this tax bill by the average assessment ratio of furnished by the Wisconsin department of revenue. The department calculated this ratio by dividing the total January 1 local assessed value by the total January 1 state’s equalized value of your taxation district. If you believe that the estimated fair market value exceeds by at least 10% the amount of money for which your property could have been sold on January 1 of the year shown at the top of this tax bill contact your local assessor or, in the case of manufacturing property, contact the manufacturing section of the department of revenue in your area.

Note: Option B

In addition to the assessed value shown, Wisconsin law requires that your taxation district show the estimated fair market value of taxable property on property tax bills. This estimated fair market value reflects the approximate market value of your property as of January 1 of the year shown at the top of this tax bill.

This estimated fair market value has been calculated by dividing the assessed value shown on this tax bill by the average assessment ratio in your taxation district as furnished by the Wisconsin department of revenue.

The department calculated this ratio by dividing the total January 1 local assessed value by the total January 1 state’s equalized value of your taxation district. If you believe that the estimated fair market value exceeds by at least 10% the amount of money for which your property could have been sold on January 1 of the year shown at the top of this tax bill contact your local assessor, or in the case of manufacturing property, contact the manufacturing section of the department of revenue in your area.

Note: This section interprets s. 74.09, Stats.

History

Cr. Register, August, 1982, No. 320, eff. 9-1-82; am. (1) (b) and (2) (b), Register, January, 1989, No. 397, eff. 2-1-89; correction in (1) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register November 2002 No. 563.

Wis. Admin. Code § Tax 12.10 Examination of manufacturing property report forms, confidentiality {#sec-tax-12.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.10}

(1) Manufacturing property report forms that must be completed by all manufacturers and returned to the department according to s. 70.995 (12), Stats., are confidential records. Self reporting forms for personal property required by s. 70.35 (3), Stats., are confidential records of the assessor’s office.

(2) Manufacturing property report forms shall be deemed privileged information, for use by the department and for use in any public hearing regarding the property assessment. Local assessors and their agents view the report forms submitted regarding property in the jurisdiction the assessor represents. Government agencies may view the report forms for use in acquiring real property for public purposes.

(3) Upon presentation of appropriate identification by the person allowed to make the examination, the report forms may be examined only at the district property assessment office.

Note: This section interprets ss. 70.35 (3) and 70.995 (12), Stats.

History

Cr. Register, March, 1979, No. 279, eff. 4-1-79.

Wis. Admin. Code § Tax 12.20 Net proceeds occupational tax on metal mining, taxable year {#sec-tax-12.20 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.20}

The taxable year adopted by the person engaged in mining metalliferous minerals in this state for purposes of the “net proceeds occupational tax report” shall correspond to the year adopted by that person for Wisconsin franchise and income tax purposes.

History

Cr. Register, June, 1979, No. 282, eff. 7-1-79.

Wis. Admin. Code § Tax 12.21 Indexed mining net proceeds tax rate schedule {#sec-tax-12.21 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.21}

(1) Section 70.375 (5), Stats., prescribes the tax rates to be applied to the net proceeds of the mine of persons engaged in mining metalliferous minerals for taxable years 1981 and 1982.

(2) Section 70.375 (6), Stats., provides that “For calendar year 1983 and corresponding fiscal years and thereafter, the dollar amounts in sub. (5) and s. 70.395 (1) to (2) (i) shall be changed to reflect the percentage change between the gross national product deflator for June of the current year and the gross national product deflator for June of the previous year, as determined by the U.S. department of commerce as of December 30 of the year for which the taxes are due, except that no annual increase may be more than 10%. The revised amounts shall be rounded to the nearest whole number divisible by 100 and shall not be reduced below the amounts under sub. (5) on November 28, 1981. Annually, the department shall adopt any changes in dollar amounts required under this subsection and incorporate them into the appropriate tax forms.”

Note: This section interprets s. 70.375 (5) and (6), Stats.

History

Cr. Register, June, 1983, No. 330, eff. 7-1-83.

Wis. Admin. Code § Tax 12.22 Confidentiality of information {#sec-tax-12.22 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.22}

Any information received for the taxable year 1981 and thereafter shall not be divulged except as provided in s. Tax 1.11.

Note: This section interprets s. 70.375 (2) (b), Stats.

History

Cr. Register, June, 1983, No. 330, eff. 7-1-83; correction made under s. 13.93 (2m) (b) 7., Stats., Register November 2002 No. 563.

Wis. Admin. Code § Tax 12.23 Basis and amount of deduction for depreciation and amortization {#sec-tax-12.23 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.23}

(1) The basis for depreciation and amortization of the property eligible for such write-offs prior to January 1, 1981 under s. 70.375 (4) (k), Stats., 1979, for mines operated during the taxable year 1977 shall be their net book value as of the beginning of that year provided that the straight line method for computing the expense was used for book purposes. If the straight line method was not used the basis shall be recomputed as if it was used.

(2) The amount of the deduction for depreciation on property first eligible for depreciation on or after January 1, 1981 is limited to amounts allowable under s. 71.04 (15), Stats.

Note: 1987 Wis. Act 27 repealed s. 71.04 (15), Stats.

Note: This section interprets s. 70.375 (4) (k), (L), Stats., 1979 s. 70.375 (4) (k).

History

Cr. Register, June, 1979, No. 282, eff. 7-1-79; am. Register, June, 1983, No. 330, eff. 7-1-83.

Wis. Admin. Code § Tax 12.25 Review of assessments, claims for refunds {#sec-tax-12.25 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.25}

Additional assessments and claims for refunds for excess net proceed tax payments are subject to the same procedure for review and final determination as additional income tax assessments and claims for refunds under provisions of ch. 71, Stats., as far as the same may be applicable.

History

Cr. Register, June, 1979, No. 282, eff. 7-1-79; renum. from Tax 12.28, Register, June, 1983, No. 330, eff. 7-1-83.

Wis. Admin. Code § Tax 12.60 Tax incremental district annual report {#sec-tax-12.60 omnilex-key=us-wi-regs-official--agency-tax--Tax 12.60}

The tax incremental district annual reports required by ss. 60.85 (8) (c), 66.1105 (6m) (c) and 66.1106 (10) (a), Stats., must be electronically filed with the department of revenue for each tax incremental district. The report must be filed on the department’s website at https://www.revenue.wi.gov/Pages/SLF/tif.aspx. Standard hypertext markup language (HTML) is used requiring data to be entered into given fields.

History

CR 16-065: cr. Register, May, 2017, No. 737, eff. 6-1-17.

Chapter Tax 13 INVESTMENT AND LOCAL IMPACT FUND

Wis. Admin. Code § Tax 13.01 Purpose {#sec-tax-13.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.01}

The purpose of this chapter is to establish standards and procedures for the issuance of funds generated by a net proceeds occupation tax to municipalities for costs associated with social, educational, environmental, and economic impacts of metalliferous mineral mining incurred prior to, during, and after extraction of metalliferous minerals.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82.

Wis. Admin. Code § Tax 13.02 Scope {#sec-tax-13.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.02}

Pursuant to s. 70.395 (2) (c), Stats., the provisions of this chapter shall govern the distribution and use of net proceeds occupation tax monies.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82.

Wis. Admin. Code § Tax 13.03 Definitions {#sec-tax-13.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.03}

(1) “Board” means investment and local impact fund board.

(2) “Certify” or “certification” means filing with the department of administration a written confirmation of specific transfers, payments, or investments to be made by the department of administration.

(3) “Construction” means the activities described in the approved mining plan which can only occur at the mining site with the issuance of a mining permit and written authorization to commence mining under ss. 293.37, 293.49, and 293.51, Stats.

(4) “Construction period payment” means an amount equal to $100,000 for each county, city, village, town, and Native American community containing at least 15% of a minable ore body eligible to receive a payment under s. 70.395 (2) (d) 5., Stats., during the construction period.

(4m) “Eligible recipient” means a county, city, village, town, tribal government, or local impact committee authorized under s. 293.43 (3), Stats., actively involved or eligible to be involved in the good faith negotiation of a local agreement under s. 293.43, Stats., with the person filing the notice of intent under s. 293.31 (1), Stats.

(5) “First dollar payment” means an amount equal to $100,000 for each county, city, village, town, or Native American community eligible to receive a payment under s. 70.395 (2) (d) 1., 2. or 2m., Stats. If the tax collected under ss. 70.38 to 70.39, Stats., in any year is less than the first dollar payment as defined in this subsection, the first dollar payment for that year means the total amount of taxes collected under ss. 70.38 to 70.39, Stats.

(6) “Impact fund” means investment and local impact fund.

(8) “Mine” means an excavation in or at the earth’s surface made to extract metalliferous minerals for which a permit has been issued under s. 293.49, Stats.

(9) “Mining” has the meaning under s. 70.375 (1) (b), Stats.

(10) “Mining permit application” means the mining permit application form filed with the department of natural resources pursuant to s. NR 132.06, Wis. Adm. Code.

Note: The mine permit application is Form 2700-4, Rev. 4-82.

(10m) “Mining related purposes” has the meaning designated in s. 70.375 (1) (bm), Stats.

(11) “Mining site” means the location:

(a) Of a metalliferous ore deposit for which a mining permit application has been filed pursuant to s. 293.37, Stats.

(b) Designated by s. 70.375 (1) (av), Stats., limited to the proposed location of the defined areas, structures, and equipment as shown in a mining plan:

Filed as part of a mining permit application under s. 293.37, Stats., or
Filed with the board as part of the written notice by a person intending to begin construction under s. Tax 13.05.

(12) “Municipality” means any county, city, village, town, or school district. Pursuant to s. 20.002 (13), Stats., this definition also includes any federally recognized tribal governing body.

(13) “Native American community” means a federally recognized tribal governing body.

(14g) “Notice of intent distribution” means an amount equal to $225,000 maximum disbursed by the board to eligible municipalities, Native American communities, and local impact committees, on an as-needed basis pursuant to s. 70.395 (2) (fm), Stats.

(14r) “Notice of intent payment” means an amount equal to $225,000 maximum to be paid in 3 increments of $75,000 each until a refund is made or negotiations for a local agreement lapse, deposited into the impact fund pursuant to s. 70.395 (2) (dc), Stats.

(16) “Person” means a sole proprietorship, partnership, association, or corporation and includes a lessee engaged in mining metalliferous minerals.

(18) “Project reserve fund” means an amount equal to 10% of the net proceeds tax paid by each mine plus all accrued interest.

(19) “Tax” means the net proceeds occupation tax imposed on persons engaged in mining metalliferous minerals in this state.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; emerg. cr. (10m), eff. 1-1-86. am. (4), cr. (10m), r. and recr. (11), Register, September, 1986, No. 369, eff. 10-1-86; emerg. cr. (20) and (21), eff. 12-14-92; emerg. cr. (4m), (14g) and (14r), eff. 5-17-93; am. (3), (10), (11) (a) and (b) 1., r. and recr. (4), cr. (4m), (14g) and (14r), r. (15) and (17), Register, August, 1993, No. 452, eff. 9-1-93; corrections in (3), (4m), (5), (8), (11) (a) and (b) 1. made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-076: r. (7), am. (9), r. (14), am. (14g), (14r) Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.05 Transfer of taxes, funds, and fees {#sec-tax-13.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.05}

(3) Construction fee.

(a) A person who engages in construction shall pay a construction fee to the department of revenue equal to an amount sufficient to make all the construction period payments that year under s. 70.395 (2) (d), Stats. This fee shall be used exclusively by the board to make construction period payments.

(b) Any person intending to begin construction shall notify the board by registered mail 90 days prior to the time construction begins. This written notice of intent shall include:

The name and address of the person intending to begin construction.
A mining plan showing the location of the mining site.
The names of all municipalities containing at least 15% of the minable ore body.

(c) Within 45 days after the receipt of the written notice of intent to begin construction, the board shall notify the department of revenue and give written public notice listing the counties, cities, villages, towns, and Native American communities to receive construction period payments.

(d) In determining the construction fee, construction is considered to begin in all cities, villages, and towns that are part of the mining site when it begins in any part of the mining site.

(e) Within 7 days after the beginning of construction, a person shall pay the construction fee to the department of revenue for deposit in the impact fund.

(4) Notice of intent payment.

(a) Procedure. Each person filing a notice of intent to collect data with the department of natural resources under s. 293.31 (1), Stats., shall make a notice of intent payment to the department of revenue for deposit in the impact fund, equal to an amount sufficient to make all of the notice of intent distributions under s. 70.395 (2) (dc), Stats.

(b) Information provided to the board. Any person filing a notice of intent to collect data with the department of natural resources shall within 7 days after that filing submit to the board the following:

A copy of the notice of intent to collect data.
A map showing the location of the ore body and proposed mining site.
A list of counties, cities, villages, towns, Native American communities, and local impact committees that may be eligible to be actively involved in the negotiation of a local agreement with that person, pursuant to s. 293.43, Stats. Those listed may be eligible to receive a notice of intent distribution.

(c) Information provided to eligible recipients. Within 7 days after the receipt of the notice of intent payment, the board shall give written notice to the counties, cities, villages, towns, Native American communities, and local impact committees that may be eligible to receive notice of intent distributions and shall distribute guidelines for uses of the distributions to each.

(d) Refunds of undistributed monies. Six months after the date of the signing of the local agreement under s. 293.43, Stats., the board shall refund to the person making the notice of intent payment any money paid under this subsection but undistributed by the board to eligible recipients.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; am. (3) (a), (b) and (c), Register, September, 1986, No. 369, eff. 10-1-86; emerg. cr. (4), eff. 12-14-92; emerg. cr. (4), eff. 5-17-93; r. (1) (a), (2) and (3) (e), renum. (3) (intro.) to (d) to be (3) (a) to (e) and am. (3) (a) and (d), cr. (3) (b) 3. and (4), Register, August, 1993, No. 452, eff. 9-1-93; corrections in (4) (a), (b) 3., and (d) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-076: r. (1), am. (3) (a), renum. (4) (a) (intro.) to (4) (a) and am., r. (4) (a) 1. to 3. Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.06 Direct payments {#sec-tax-13.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.06}

(1) First dollar payments. Certain counties, cities, villages, towns, and Native American communities shall receive a first dollar payment under s. 70.395 (2) (d), Stats. Only county expenditures of first dollar payments are restricted under s. 70.396, Stats. Cities, villages, towns, and Native American communities are not restricted to mining-related expenditures of first dollar payments. Each December, the board shall certify to the department of administration the specific payments to be made on the first Monday in January of the next year.

(3) Notice of intent distributions.

(a) Procedure. Eligible recipients may receive a notice of intent distribution from the board for reasonable local agreement negotiation-related expenses according to the following procedure:

An eligible recipient shall notify the board and the person making payment under s. Tax 13.05 (4) in writing that it is intending to begin negotiations or is preparing to negotiate a local agreement.
On an as-needed basis, an eligible recipient shall provide documentation to the board of the costs that have been incurred or expenses to be incurred. To document the expenses, the eligible recipient shall submit a copy of each bill received, contracts negotiated, or proposals and budgets for future expenses to the board and to the person making payment under s. Tax 13.05 (4).
The board shall make payment from monies received under s. Tax 13.05 (4) to the eligible notice of intent distribution recipient within 3 weeks for the amount of the reasonable expenditures that have occurred or to be incurred.

(b) Prior costs. Unless agreed to in writing between an eligible recipient and the person making payment under s. Tax 13.05 (4), the person shall be liable for costs relating to the negotiation of a local agreement incurred prior to the making of the deposit under s. 70.395 (2) (dc), Stats., and for costs incurred prior to the written notice given by the eligible recipient under par. (a) 1. if such notice and deposit are made or required to be made.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; emerg. cr. (2) (c), eff. 1-1-86; r. and rec. (2) (intro.), (a) and (b), am. (5) (a), Register, September, 1986, No. 369, eff. 10-1-86; emerg. r. and recr. (3), eff. 12-14-92; emerg. r. and recr. (3), eff. 5-17-93; am. (1) (intro.), r. (1) (d) 2. and (5) (e), r. and recr. (2) and (3), Register, August, 1993, No. 452, eff. 9-1-93; corrections in (2) (a), (3) (b) and (4) (c) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-076: renum. (1) (intro.) to (1) and am., r. (1) (a) to (d), (2), (4), (5) Register Jnuary 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.07 Discretionary payments {#sec-tax-13.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.07}

In accordance with s. 70.395 (2) (f), (fm), and (g), Stats., any municipality may apply to the board for a discretionary payment from the impact fund.

(2) Discretionary payment program. The annual discretionary payment program includes the following procedures:

(a) Application process. The application process shall include the following steps:

Before June 1, the board may adopt an overall funding ceiling for the discretionary payment program outlined in this subsection. The level of the ceiling shall be based on the financial status of the impact fund, the board’s expectation of what municipalities will need from the impact fund in the next year, and a review of the status of mineral development projects in the state. The overall funding ceiling shall be viewed throughout the application review process as a fiscal control upon the board. The board may modify the ceiling, as it deems necessary, once it has fully determined the merits of each application.
Before June 1, the board shall give written public notice announcing its intent to distribute discretionary grants and the total funds available for distribution. The board shall give written notice of the grant program and grant guidelines to local governments reasonably expected to be affected by metallic mineral development.
All discretionary grant applications submitted to the board shall be postmarked on or before July 31 in order to receive funding consideration.
Each application shall include a supporting resolution from the appropriate local governing body or bodies. The supporting resolutions submitted to the board shall be postmarked on or before August 31.

a. Each local or joint impact committee application shall be accompanied by a supporting resolution from the committee.

b. Each joint impact committee application shall be accompanied by a supporting resolution from each local committee within the area served by the joint committee and from each municipality which appoints the joint committee.

c. Each local impact committee application shall be accompanied by a supporting resolution from its appointing authority.

A municipality may submit more than one application. Two or more municipalities may submit a joint application.
The board may provide partial funding to a municipality for a mining-related project. The board may also require municipalities to provide matching funds toward project costs as a condition for receiving a discretionary grant.

(b) Application contents. An application may take one of 2 forms:

‘Project proposal.’ Municipalities seeking funds for a particular public service or facility, including the design, construction, or maintenance of a public facility, the hiring of consultants to provide specific legal, planning, local development, or technical assistance shall develop a project proposal for consideration by the board. The appropriate form shall be furnished by the board upon request. Information on the following shall be provided for a project proposal:

a. A detailed description of the project and its component parts.

b. The facts which verify the mining impact the proposal will address.

c. A detailed budget for the proposal including the local funding contribution the municipality plans to make or any outside funding that would be used for the project.

d. The project timetable, including the date of commencement and the date the project is expected to be completed.

e. A description of any alternatives to the proposed project which were considered and an explanation of why the proposed project was rated more highly than the alternatives.

f. A description of how the project will alleviate a mining impact.

‘Mining impact brief.’ Municipalities seeking funding for the operations of a local impact committee or a joint impact committee shall submit a mining impact brief. The appropriate form shall be furnished by the board upon request. Mining impact briefs shall include:

a. A description of the proposed committee activities to be performed.

b. A detailed budget including a description of the amount and sources of other funds and resources that will be applied toward committee activities during the proposed project.

c. An explanation of how the proposed committee activities will alleviate a mining related impact or impacts.

d. A description of how the project will be coordinated with other and other local and joint impact committees.

e. A comprehensive description of the committee’s long-term plans and goals, including a description of the committee activities for which it anticipates that funding will be sought from the board and from other sources in the year subsequent to the proposed project and during the long-term planning period.

f. A description of how the proposed activities to be funded relate to the long-term plans of the committee.

(c) Application review process. All applications shall be reviewed by the board. The following criteria shall be used to evaluate each application:

The extent to which the impact is caused by metallic mining and the severity of the actual or potential impact.
The extent to which the applicant is prepared to deal with the mining impact and is using all possible resources to address the situation. Consideration shall be given to the following factors:

a. Whether the applicant will complement the project with other community assistance programs, resources, funds, or expertise.

b. Whether the applicant has demonstrated an ability and willingness to plan for its future.

c. Whether the applicant had demonstrated a willingness to cooperate with neighboring jurisdictions.

The extent to which the applicant will make effective use of a mining impact grant. Consideration shall be given to the following factors:

a. Whether the proposal is likely to accomplish its purpose and addresses the impact.

b. Whether the request is well-reasoned and cost-effective.

c. Whether the project duplicates other planned activities.

The extent to which funding for the impact is necessary.
The extent to which the applicant has received any payments under s. Tax 13.06.
The board shall consider the following additional criteria in evaluating a funding application submitted by a local impact committee:

a. The extent to which the funding proposal conforms with the statutory purposes of a local impact committee in s. 293.33 (1), Stats., and meets the requirements of s. 293.33 (4), Stats.

b. The adequacy of the local impact committee’s long-term plan and the appropriateness of the funding proposal in relation to the long-term plan.

c. The degree of support provided to the local impact committee by its appointing authority, including staff support, direct financial support, and approval by the appointing authority of the local impact committee’s activities, as evidenced by supporting resolution.

d. The efforts of the local impact committee to obtain additional funding from other sources.

e. The past success of the local impact committee in accomplishing its statutory purposes.

f. The performance of the local impact committee in financial audits and the steps taken by the local impact committee to correct inadequacies noted in audits.

The board shall consider the following additional criteria in evaluating a funding application submitted by a joint impact committee:

a. The extent to which the funding proposal conforms with the purposes of the joint committee specified in this chapter.

b. The adequacy of the joint impact committee’s long-term plan and the appropriateness of the funding proposal in relation to the long-term plan.

c. The degree of local support for activities of the joint committee, including staff services donated by municipalities within the area served by the joint committee, direct financial support received or anticipated to be received from local impact committees and municipalities within the area served by the joint committee and approval of the activities of the joint committee as evidenced by supporting resolutions from local committees, municipalities, and tribal governing bodies within the area served by the joint committee.

d. The efforts of the joint impact committee to obtain additional funding from other sources.

e. Past successes of the joint committee in implementing the purposes specified for the joint committee in this chapter.

f. Performance of the joint committee on financial audits and steps taken by the joint committee to correct inadequacies noted in any financial audit.

g. The adequacy of communications between the joint impact committee and the local impact committees, municipalities, and tribal governing bodies within the area served by the joint impact committee.

When providing partial funding or requiring local matching funds for a grant project, the board shall consider:

a. The extent to which the project is mining related.

b. The extent to which the project is necessary for alleviating a mining-related impact.

c. The extent to which outside funding is necessary.

d. The extent to which a municipality receives other revenues associated with a proposed or operating mine.

e. The amount of funds available in the investment and local impact fund and the short term and long term needs of mining communities throughout the state.

Priority for distribution of payments shall be determined in accordance with s. 70.395 (2) (h), Stats.
During the board review of the grant proposals, applicants may appear before the board on behalf of their applications.

(d) Decision and notification process. The board shall make its funding decisions on or before October 15. The board shall notify all applicants in writing of the action taken on their respective applications.

(e) Grant agreements. Grant decisions made by the board shall be formalized in a grant agreement between the board and the local government grant recipient. The terms of the grant agreement shall include:

The grant project period.
The purposes for which the grant shall be used.
The grant sum awarded.
Provisions for the maintenance of grant funds in a segregated account.
Provisions for the maintenance of records of grant expenditures and supporting documentation to substantiate the costs claimed.
Provisions for the return of unexpended funds to the board at the end of the project period or grant year.
Provisions for the submittal of an expenditure report to the board at the end of the project period or grant year to document the use of the grant award.
Other reasonable terms the board believes necessary to ensure the prudent use of the grant funds.

(f) Grant disbursements. The board shall disburse grant awards as follows:

Discretionary grant awards of $2,000 or less shall be disbursed to the grant recipient at the beginning of the grant project, after the grant agreement has been signed by both parties.
Grant awards for more than $2,000 shall be distributed on an as-needed basis. A grant recipient shall certify to the board project costs that have been incurred. A grant check shall be sent to the grant recipient within 3 weeks for the amount of the expenditure. To certify the expense, the grant recipient shall file a certification form with the board or submit a copy of the bill to document the expenditure.

(g) Appeals process. The grant appeal process shall include the following steps:

Any municipality which wants to appeal a funding decision by the board shall submit a written appeal to the board within 20 days after notification. The 20-day period begins on the day after the mailing of the board’s decision. The written appeal shall specify in detail:

a. How the board has made a material error of law,

b. How the board has made a material error of fact, or

c. New, pertinent information which was not available to the board at the time of its decision.

A representative of an appealing municipality may appear before the board prior to board action on the appeal. The board shall decide whether to reconsider action on an appeal within 30 days after receipt of the written appeal. Any municipality aggrieved by a funding decision of the board may petition the circuit court for a review of the board’s decision within 30 days of its original decision, or if an appeal has been sought as provided in this subdivision, within 30 days of the board’s decision on that appeal. The 30-day period begins on the day after the mailing of the board’s decision. The petition for review shall be served on the board and filed in the office of the clerk of circuit court as specified in s. 227.16, Stats.

(3) Emergency payments.

(a) Any discretionary funds available to the board, may be withdrawn and distributed by the board, at any time, to any municipality which demonstrates its need for financial assistance in alleviating a mining-related impact which is deemed by the board to be sudden and unforeseeable. The policies and procedures presented in sub. (2) (c), shall apply to the distribution and use of emergency reserve monies, except for the specified deadline dates.

(b) The board shall not consider requests for emergency payments from local or joint impact committees for administrative or operational expenses.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; r. and recr. Register, February, 1986, No. 362, eff. 3-1-86; am. (2) (a) 4., (2) (b), 2. intro. and a. to d. and (3), renum. (2) (c) 6. and 7. to be (2) (c) 9. and 10., cr. (2) (a) 4.a. to c., (2) (a) 6., (2) (b) 2. f. and (2) (c) 6. to 8., r. and recr. (2) (b) 2. c., Register, September, 1986, No. 369, eff. 10-1-86; am. (2) (c) 9. a., Register, August, 1993, No. 452, eff. 9-1-93; corrections in (2) (c) 6. a., 9. a. and c. made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-076: r. (1), rn. (2) (c) 9. (intro.) to (2) (c) 9. and am., r. (2) (c) 9. a. to c. Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.08 Expenditures {#sec-tax-13.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.08}

(6) Mining-related costs. Municipalities may seek approval from the board for mining-related projects. Applications seeking expenditure approval shall contain:

(a) Documentation of a metallic mining impact.

(b) Documentation of need.

(8) Other allowable expenditures. Discretionary grants and other funds disbursed by the board may be applied toward a variety of uses as they relate directly to a mining impact project. In general, costs for the compensation of personal services, costs of materials and supplies, travel, and other administrative costs are allowable. All expenditures shall comply with state and local laws, rules, and policies. Costs which shall not be allowed include:

(a) Costs incurred prior to, and after, the effective date of a discretionary grant period.

(b) Costs of social activities, ceremonies, amusements, and other entertainment.

(d) Costs incurred which are not directly related to the eligible funding activities listed in this chapter.

(9) Mining-related purposes. Except for any first dollar payments to a city, village, town, or Native American community, all funds distributed to a municipality by the board shall be used for mining-related purposes, in accordance with s. 70.375 (1) (bm), Stats.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; r. and recr. Register, February, 1986, No. 362, eff. 3-1-86; am. (1) (intro.), renum. (2) and (3) to be (7) and (8) and am., r. (4) and (5), cr. (2) to (6), Register, September, 1986, No. 369, eff. 10-1-86; emerg. am. (2) (intro.), (f) and (7) (a), eff. 2-14-92; emerg. am. (2) (intro.) (c), (f), (3) (a), (4) (a) and (7) (a), renum. (3) (j) to be (3) (k), cr. (3) (j), eff. 5-17-93; am. (1) (intro.), (2) (intro.) (c), (f), (3) (a), (4) (a), (7) (a) and (b), renum. (1) 11. to be (1) (k), renum. (3) (j) to be (3) (k), cr. (1) (L), (3) (j) and (9), Register, August, 1993, No. 452, eff. 9-1-93; corrections in (1) (h), (L), and (2) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-076: r. (1) to (5), am. (6) (intro.), r. (7) Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.09 Audits {#sec-tax-13.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.09}

(1) All funds received from the board shall be placed in a segregated account. The board may require financial audits of the recipients of payments under s. 70.395 (2) (d) through (g), Stats. The financial audit may be conducted as part of a municipality’s annual audit, if one is conducted. The costs of the audits shall be paid by the board from the appropriation under s. 20.566 (7) (g), Stats. The audits shall consist of 3 parts:

(a) An examination of the municipality’s financial statements to assess the fairness with which they were reported;

(b) An evaluation of the expenditures to ensure that the grant funds were used for mining impact activities and complied with the grant contract and state laws and rules; and

(c) A review of the municipality’s internal accounting system to determine whether the grant was carefully managed, and where needed, provide suggestions to improve in-house procedures.

(2) The board shall attempt to insure that all grant recipients are audited periodically. In determining whether a grant recipient is to be audited in a particular year, the board shall give priority to:

(a) Grant recipients whose expenditure reports indicate that a financial accounting, compliance, or management problem exists.

(b) Grant recipients who have received grants of $25,000 or more for a given project or for a given year.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; r. and recr. Register, February, 1986, No. 362, eff. 3-1-86; r. (3), Register,, September, 1986, No. 369, eff. 10-1-86; correction in (1) (intro.)made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609.

Wis. Admin. Code § Tax 13.10 Fiscal guidelines {#sec-tax-13.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.10}

All funds disbursed under this chapter shall be governed by the following provisions:

(1) Segregated accounts. All funds disbursed by the board shall be placed by the recipient government in a separate account and the use of funds clearly and directly identified by the accounting procedures listed in s. Tax 13.11.

(2) Investments. Funds may be invested by recipient governments where the investment of revenue is permitted under state and local law. Interest earned on investments shall be credited to the recipient’s segregated mining impact account and is subject to the same limitations which govern the accounting and expenditure of funds in this chapter. Funds may be invested separately or, for investment purposes, pooled with other cash of the jurisdiction. Where a governmental unit operates a pooled-cash investment program, it shall have an equitable procedure for allocating the interest earned on the total portfolio among all funds from which the cash was pooled.

(3) Loans. The recipient municipality may not loan funds to other activities, programs, or projects.

(4) Indirect or administrative costs. All administrative costs shall be accounted for in sufficient detail to document the expenditures. No flat percentage rates or indirect cost rates shall be used.

(5) Travel expenses. Funds may be used to cover reasonable and necessary travel expenses pertaining to mining-related activities. Fund recipients may not claim or authorize rates which exceed the rates allowed by the state of Wisconsin, department of administration. All travel expense rates used by a fund recipient shall be consistent with travel expense rates paid for other activities of the recipient government. If the recipient chooses to pay travel expenses which are higher than state rates, that municipality shall pay the additional cost. Only reasonable and necessary travel expenses shall be claimed.

Note: Travel rates allowed by the Wisconsin department of administration are available upon request from the board.

(6) Meeting rates. Fund recipients may claim or authorize costs up to $20 per person for attending mining-related meetings. All meeting rates claimed by the fund recipient shall be consistent with the meeting rate paid for other activities of that municipality. If the recipient chooses to pay a meeting rate higher than $20 per person, that municipality shall pay the additional cost.

(7) Legal fees. Fund recipients may claim reimbursement for legal counsel for mining-related purposes, pursuant to s. 70.395 (2) (hw), Stats. Recipients which use funds to pay their own attorney shall use the hourly rate which is consistent with other work the attorney does for that recipient.

(8) Supplies and materials. Supplies and materials purchased with mining impact funds shall be purchased at costs which are consistent with costs paid by that municipality for its own supplies and services.

(9) Procurement of services. Fund recipients shall solicit a minimum of 3 proposals when purchasing services for $2,000 or more. This subsection shall apply to technical, planning, engineering, and other consulting and professional services. Public works projects paid with mining impact funds are subject to provisions outlined in ss. 59.08, 60.47, and 62.15, Stats. Procurement procedures shall:

(a) Ensure equal treatment to all prospective bidders.

(b) Maximize open and free competition for services needed.

(d) Ensure the reasons a particular consultant or contractor was chosen are clearly documented.

(e) Ensure sufficient records are available to document the significant history of the procurement.

(f) Ensure services are obtained efficiently and economically.

(g) Ensure that the services are provided by bidders with technical expertise and professional experience in the areas for which the expertise is sought.

(10) Contracts. All services for $2,000 or more, procured with mining impact funds, shall be clearly described in a written contract. The contract shall delineate the terms, conditions, and specification of the services.

(11) Hiring. Hiring of personnel for mining-related purposes shall be done in an open and fair manner.

(12) Other expenditures. Fund recipients shall also ensure all expenditures are:

(a) Necessary and reasonable.

(b) Solely related to the mining impact activity or project.

(13) Expenditures not allowed. Fund recipients may not claim expenditures for:

(a) Retainer fees for attorneys and other consultants.

(b) Overdrawn account charges of a financial institution.

(d) Independent financial or compliance audits.

(e) Social activities, ceremonies, amusements, and entertainments.

(f) Lobbying members of the legislature or other legislative activity.

(g) Building space, lights, heat and janitorial services, except when these costs are incurred and needed as a result of meetings held exclusively for mining related purposes.

(h) Salaries for elected governing body officials for legislative, administrative, and executive purposes.

(14) Guidelines. All recipients of funds from the board shall receive a copy of the relevant statutes, rules, and guidelines detailing proper usage of those funds.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; r. and recr. Register, September, 1986, No. 369, eff. 10-1-86; emerg. am. (7), eff. 12-14-92; emerg. am. (7), eff. 5-17-93; am. (7) and (9) (intro.), cr. (9) (g) and (14), Register, August, 1993, No. 452, eff. 9-1-93; correction in (9) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653.

Wis. Admin. Code § Tax 13.11 Accounting procedures {#sec-tax-13.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.11}

All recipients of funds under this chapter shall maintain accounting procedures which adequately provide for the following:

(1) Accurate, current, and complete financial statements on the use of funds disbursed to them by the board.

(2) Accurate, current, and complete financial statements on funds contributed from other sources toward mining impact projects or activities.

(3) Records which identify adequately the source and application of all funds disbursed to them by the board, including:

(a) Records of transactions which are inclusive, timely, verifiable, and supported by source documentation.

(b) Records on in-kind services and cost-sharing when required by the board for certain discretionary payments under s. Tax 13.07.

(d) Records which are sufficiently detailed.

(e) Itemized invoices to document legal, technical, and other services related to mining.

(4) Effective internal control over all funds, ensuring that:

(a) The use of funds is for purposes authorized by the board and consistent with applicable laws, regulations and policies.

(b) The use of funds is safeguarded against waste, loss and misuse.

(5)

(a) All municipalities which receive a payment or grant under this chapter shall file an expenditure report by March 1 of the year following the year the funds are received. The expenditure report shall be on forms prepared and furnished by the board. A county’s expenditure report shall include information regarding the use of any funds distributed by the county under s.70.396 (2), Stats.

(b) Any city, village, town, or Native American community which receives a first dollar payment is not required to file an expenditure report for that payment.

(c) The board’s staff may make on-site visits over the course of any year and otherwise monitor the use of payments received by municipalities. Staff shall keep the board informed of its activities and findings in this regard. From the monitoring activities, the completed expenditure reports, and the auditing procedures outlined in s. Tax 13.09, the board shall determine whether municipalities have applied their funds to the purposes authorized.

History

Cr. Register, November, 1982, No. 323, eff. 12-1-82; r. and recr. Register, September, 1986, No. 369, eff. 10-1-86; am. (3) (a) and (5) (c), cr. (3) (e), Register, August, 1993, No. 452, eff. 9-1-93; CR 16-076: am. (5) (a) Register January 2018 No. 745, eff. 2-1-18.

Wis. Admin. Code § Tax 13.12 Recoupment and withholding of payments {#sec-tax-13.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 13.12}

(1) The board may, at any time, recoup direct, discretionary and emergency payments to be made, for noncompliance with ss. 70.395 and 70.396, Stats., or any rule pursuant thereto.

(2) Whenever the board has reason to believe that noncompliance has occurred, it shall hold a hearing on the matter upon written notice to the municipality. If after the hearing the board determines that noncompliance has occurred, it shall recoup such payments to be made and withhold such payments to be made to the municipality as may be appropriate.

History

Cr. Register, September, 1986, No. 369, eff. 10-1-86.

Chapter Tax 14 HOMESTEAD CREDIT

Wis. Admin. Code § Tax 14.01 Administrative provisions {#sec-tax-14.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.01}

(1) Purpose. This section describes the Wisconsin homestead credit, defines terms and sets forth administrative provisions applicable to all sections of this chapter.

(2) Definitions. In this chapter and in ss. 71.51 to 71.55, Stats.:

(a) “County relief” means assistance provided by a county under s. 59.53 (21), Stats., to an eligible dependent person. County relief is a separate program in itself, funded by a block grant program under subch. II of ch. 49, Stats. It does not include other assistance programs, such as social security, supplemental security income, state supplemental payments, federal food stamps, Title XX benefits, community options program payments, aid to families with dependent children, Wisconsin works payments or foster care.

(am) “Disqualified loss” has the meaning given in s. 71.52 (1e), Stats.

(b) “Domicile” has the same meaning for Wisconsin homestead credit purposes as for Wisconsin individual income tax purposes. A claimant’s domicile is the true, fixed and permanent home where the claimant intends to remain permanently and indefinitely and to which, whenever absent, the claimant intends to return. It is often referred to as a “legal residence.” A claimant may be physically present or residing in one locality and maintain a domicile in another but may have only one domicile at any time.

(d) “Dwelling” means the principal dwelling of a qualified household.

(e) “Household” means a claimant and an individual related to the claimant as husband or wife residing in the same homestead as the claimant.

(3) Wisconsin homestead credit.

(a) Sections 71.51 to 71.55, Stats., provide credit in the form of an income tax credit or a refund to qualifying persons who own or rent their Wisconsin homestead. A claimant may claim Wisconsin property taxes accrued or rent constituting property taxes accrued or both on the claimant’s homestead or, in certain cases as described in s. Tax 14.04 (3) (e), Wisconsin property taxes accrued on the claimant’s former homestead, as a basis for calculating a credit against Wisconsin income tax otherwise due. If the credit exceeds the claimant’s Wisconsin income tax otherwise due or if no income tax is due, the amount not offset against Wisconsin income tax and not applied against any liability under s. 71.55 (1), Stats., is paid to the claimant.

(b) Under s. 71.54 (3), Stats., if an approved homestead credit claim by a qualified claimant is more than zero but less than $10, the amount of credit paid or credited shall be $10.

(4) How to file.

(a) A homestead credit claim shall be filed on schedule H or H-EZ, titled “Wisconsin homestead credit.”

Note: Schedules H and H-EZ are available from the department’s website at www.revenue.wi.gov.

(b) If a person or the person’s spouse files a Wisconsin income tax return and claims a homestead credit on the return, the claimant shall attach schedule H or H-EZ to the income tax return. If the claimant has previously filed the income tax return or is filing an income tax return separately from the schedule H or H-EZ, the preferred procedure for filing a homestead credit claim is to file a duplicate copy of the income tax return with schedule H or H-EZ and to write the words “Duplicate” on the top of the first page of the tax return copy and “Income Tax Return Separately Filed” on the top of schedule H or H-EZ.

(c) If neither the claimant nor the claimant’s spouse is required to file a Wisconsin income tax return for the year to which the claim relates, the claimant may file schedule H or H-EZ without attaching it to a return.

(5) Time within which original and amended claims shall be filed.

(a) Under s. 71.53 (2) (a), Stats., an original homestead credit claim shall be filed with the department in conformity with the filing requirements of s. 71.03 (6), (6m) and (7), Stats., or the department shall disallow the claim. The deadline for filing a claim is as follows:

A claim filed for a taxable year for which an income tax return is also filed shall be filed on a calendar year basis as provided in sub. (3) (c), within 4 years, 3 ½ months of the end of the calendar year to which the claim relates.
Under s. 71.03 (6m), Stats., a claim filed by a person who is not required to file an income tax return shall be filed on a calendar year basis. The claim shall be filed within 4 years, 3 ½ months of the end of the calendar year to which the claim relates.

Example: A 2018 homestead credit claim filed for the calendar year ending December 31, 2018, must be filed by April 15, 2023.

(b) A claimant who files a timely original claim may subsequently file an amended claim with the department. Under s. 71.75 (2), Stats., an amended claim shall be filed within 4 years of the deadline for filing the original claim or the department shall disallow the claim.

Example: Claimant A, who filed a 2015 homestead credit claim on May 1, 2017, wishes to file an amended 2015 claim. The amended claim may be filed any time on or before April 15, 2024, since the deadline for filing the original 2015 claim was April 15, 2020.

(6) Proof of claim. Under s. 71.55 (7), Stats., for the purpose of determining the correct amount of homestead credit of a claimant, the claimant shall supply to the department all of the following information that is applicable:

(a) All information requested on the form.

(b) Proper verification of property taxes accrued as provided in s. Tax 14.04 (4), if the claimant claims property taxes accrued.

(c) Proper verification of rent constituting property taxes accrued as provided in s. Tax 14.05 (4), if the claimant claims rent constituting property taxes accrued.

(d) The signature of the claimant. If a claimant is unable to sign a claim, the claimant may make an “X” or other mark with the assistance of another person who signs the claim as a witness to the validity of the signature. A legally authorized representative such as a guardian or attorney-in-fact may sign a homestead credit claim in lieu of a living claimant, but a homestead credit claim filed on behalf of a person who is deceased at the time of filing shall be denied as provided in s. Tax 14.02 (11).

(7) Incorrect claims.

(a) The department may give notice of an incorrect homestead credit amount. The department may correct incorrect claims by adjusting the credit claimed, by assessment as income taxes are assessed or by refund, as appropriate. Under ss. 71.74 (8) (a) and 71.77 (2), Stats., unless the adjustment period is extended by a specific statutory provision, the notice shall be given by the later of 4 years from the unextended due date of the corresponding original income tax return or 4 years from the date a late-filed income tax return is filed. The statutory provisions under which the adjustment period may be extended include the following:

The “intent to defeat or evade” provision under s. 71.77 (3), Stats.
The “extension agreement” provision under s. 71.77 (5), Stats.
The “six-year” provision under s. 71.77 (7) (a), Stats.
The “federal change” provisions under s. 71.77 (7) (b), Stats.

(b) Under s. 71.75 (7), Stats., the department shall act on a claim for homestead credit within one year after it receives the claim, or the credit shall be allowed even if incorrect, unless the claimant has agreed in writing to an extension of the one-year time period. Within the one-year period, prior to allowing the credit, the claimed credit may be reduced. However, under s. 71.74 (8) (a), Stats., if the date of acting on an amended claim is later than the last date for adjusting an original claim as provided in par. (a), the credit may not be reduced to an amount less than the credit allowed on the original claim, and after allowing the credit on the amended claim no further reduction of the credit may be made.

Example: Claimant A timely files a 2013 claim for homestead credit and receives a homestead credit of $500. On November 1, 2019, Claimant A files an amended 2013 claim for homestead credit claiming a revised 2013 credit of $700. Upon review of the file, the department determines that Claimant A’s correct homestead credit for 2013 is $300 rather than the $500 allowed on the original claim or the $700 claimed on the amended claim.

Since the amended 2013 homestead credit claim will be acted on after April 15, 2018, the last date for adjusting an original 2013 claim, the department must act on the amended claim by November 1, 2020. Prior to that date the department may notify Claimant A that no additional credit is allowable for 2013. However, the $200 of excessive credit allowed on the original claim, the difference between the $500 allowed and the correct credit of $300, may not be recovered by the department.

(8) interest on incorrect claims.

(a) Excessive claims. Under s. 71.82 (1) (c), Stats., excessive homestead credit amounts, not the result of negligence or fraudulent intent, that have been paid or credited shall be subject to interest at 12% per year from the deadline for filing the claim. Assessments to collect excessive homestead credit amounts payable before the deadline for filing the claim may not include interest charges.

(b) Understated claims. Under s. 71.55 (4), Stats., the department may not pay interest on any homestead credit, including any additional credit, refund or payment allowed as the result of the review of a homestead credit claim or an amended claim.

Note: Blank forms for filing a homestead credit claim, rent certificates and instructions for claiming the credit may be obtained at any department office throughout the state or by writing to Wisconsin Department of Revenue, P.O. Box 8903, Madison, WI 53708-8903.

Note: Section Tax 14.01 interprets ss. 71.03 (6m), 71.51 to 71.55, 71.74 (8) (a), 71.75 (2) and (7), 71.77 (2) and 71.82 (1) (c), Stats.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; am. (3) (a), Register, January, 1991, No. 421, eff. 2-1-91; am. (1), (2) (intro.), (3) (a), (4), (5) (b), (6) and (8), renum. (2) (a) to (d) to be (2) (b), (c) (d) and (a), and am. (a) and (b), renum. (5) (a) to be (5) (a) (intro.) and am., renum. (7) to be (7) (a) (intro.) and am., cr. (5) (a) 1., 2., (7) (a) 1. to 4. and (b), Register, July, 2000, No. 535, eff. 8-1-00; CR 16-046: am. (4) (a) to (c) Register January 2018 No. 745, eff. 2-1-18; CR 19-141: cr. (2) (am) Register September 2020 No. 777, eff. 10-1-20; CR 21-085: am. (5) (a) 2. (Example), (b) (Example), (7) (b) (Example) Register August 2022 No. 800, 9-1-22.

Wis. Admin. Code § Tax 14.02 Qualification for credit {#sec-tax-14.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.02}

(1) Purpose. This section clarifies the requirements to qualify for the Wisconsin homestead credit.

(2) Two members of a household meeting qualifications.

(a) Under s. 71.53 (1) (c), Stats., only one member of a household existing at the end of a calendar year may claim a homestead credit for that year. Thus, if a husband and wife reside in one homestead at the end of a calendar year and both qualify for the homestead credit, only one of them may claim the credit.

(b) Section 71.52 (1), Stats., provides: “. . .When 2 individuals of a household are able to meet the qualifications for a claimant, they may determine between them as to who the claimant is. If they are unable to agree, the matter shall be referred to the secretary of revenue and the secretary’s decision is final.”

Note: Requests for a determination under par. (b) should be addressed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.

(3) More than one household in a homestead. Under s. 71.53 (1) (c), Stats., one claimant from each household may claim a homestead credit whether the household is the sole occupant of a homestead or whether several households share the homestead.

(4) Household occupying more than one homestead in a year. Section 71.52 (7), Stats., provides “. . .If a household owns and occupies 2 or more homesteads in the same calendar year, property taxes accrued is the sum of the prorated property taxes accrued attributable to the household for each of such homesteads. If the household owns and occupies the homestead for part of the calendar year and rents a homestead for part of the calendar year, it may include both the proration of taxes on the homestead owned and rent constituting property taxes accrued with respect to the months the homestead is rented in computing the amount of the claim . . .” Thus, if a household owns and occupies a homestead in Wisconsin for a portion of the year and then establishes a homestead in a rented dwelling in Wisconsin for the remainder of the calendar year, property taxes accrued shall be the prorated portion of property taxes attributable to the months the household resided in the owned homestead and rent constituting property taxes accrued shall be 25% of the gross rent paid for the remainder of the year, or 20% if heat was included in the cost of the rent.

Example: A household owns and occupies a homestead in Wisconsin from January 1 to April 30, and then establishes a homestead in a rented dwelling in Wisconsin with no heat furnished for the remainder of the calendar year. The annual property taxes accrued on the owned homestead equaled $1,800 and gross rent paid for the last 8 months of the year totaled $2,800.

The property taxes and rent allowable for homestead credit purposes equals $1,300, consisting of four-twelfths of the $1,800 of property taxes accrued, or $600, plus 25% of the gross rent of $2,800, or $700 of rent constituting property taxes accrued.

(5) Household occupying more than one dwelling at the same time. Under s. 71.52 (2), Stats., “gross rent” is rental paid for the right of occupancy of a homestead, and under s. 71.52 (7), Stats., “property taxes accrued” are property taxes levied on the homestead of a household. Since a homestead is the principal dwelling of a household, if a household pays gross rent or property taxes accrued on 2 dwellings occupied concurrently by the household, a claimant may claim only the rent or property taxes pertaining to the principal dwelling.

Examples: Examples of 2 dwellings occupied concurrently include:

1) A claimant maintains a permanent homestead and lives part of the year at a summer cottage which he or she owns.

2) A claimant moves from one apartment to another and pays rent for both apartments for a two-month period.

(6) Temporary absence from homestead. A claimant who is temporarily absent from a homestead and who does not establish a homestead elsewhere is considered to reside in the homestead for the period of the temporary absence.

Examples: 1) A person is in the hospital at the end of the calendar year and it is expected that the absence is temporary. The person is considered to reside in the homestead from which the person is temporarily absent.

2) A person seasonally employed away from the homestead is treated similarly as in example 1.

(7) Domicile of armed forces member. A member of the United States armed forces stationed outside Wisconsin who retains a Wisconsin domicile and maintains a Wisconsin homestead shall be eligible for a homestead credit if otherwise qualified, even though the member does not occupy the homestead during the year to which the claim relates or at the time of filing the claim. The absence from the Wisconsin homestead is considered to be a temporary absence.

(8) Citizens of other countries. Under s. 71.52 (1), Stats., a citizen of a country other than the United States is not eligible for a homestead credit unless the person is a resident alien for federal tax purposes who does not intend to return to his or her homeland.

Example: A citizen of another country is in the United States for educational purposes and is required to leave the United States when the educational program is completed. This person is not eligible for a homestead credit.

(9) Person claiming a farmland preservation credit. Under s. 71.58 (1) (b), Stats., a person is not eligible for a homestead credit if the person qualifies for and claims a farmland preservation credit for the same year to which a homestead credit claim relates. However, if a person who has claimed a farmland preservation credit withdraws the claim, the person is no longer ineligible to receive a homestead credit because of the filing of a farmland preservation credit claim. Withdrawal of the farmland preservation credit claim shall be in writing. A homestead credit claim filed after the withdrawal of a farmland preservation credit claim shall be filed by the normal deadline for filing a homestead credit claim or the department shall disallow the claim.

Example: A 2017 homestead credit claim filed after the withdrawal of a 2017 farmland preservation credit claim must be filed on or before April 15, 2022.

Note: A written withdrawal of a farmland preservation credit claim should be mailed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.

(10) Person claimed as a dependent. Under s. 71.53 (2) (d), Stats., a person does not qualify for a homestead credit if the person is claimed as a dependent for federal income tax purposes during the year to which the claim relates, unless the person claiming a homestead credit is 62 years of age or older as of December 31 of the claim year. However, a person is not disqualified if any of the following apply:

(a) The person is improperly claimed as a dependent on a federal income tax return.

(b) The person qualifies to be claimed as a dependent on a federal income tax return but is not claimed.

(c) The person is properly claimed as a dependent on a federal income tax return but on a later amended federal income tax return is not claimed.

(11) Deceased claimant. Under s. 71.53 (1) (b), Stats., a person must be alive at the time a homestead credit claim is filed. A claim completed and signed but not filed until after a person’s death shall be denied.

Note: The qualification for a homestead credit of a person who becomes married or divorced during a claim year or occupies a separate dwelling from his or her spouse for any part of a claim year is described in s. Tax 14.06.

Note: Section Tax 14.02 interprets ss. 71.52 (1), (2) and (7), 71.53 (1) (b) and (c) and (2) (d) and 71.58 (1) (b), Stats.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; r. (2) (c) and am. (5), (9), (10) and (11), Register, July, 2000, No. 535, eff. 8-1-00; CR 21-085: am. (9) (Example) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 14.03 Household income and income {#sec-tax-14.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.03}

(1) Purpose. This section clarifies the meaning of“household income” and “income” includable in household income as the terms apply to homestead credit claims.

(2) Definitions. In this section:

(a) “Household income” has the meaning specified in s. 71.52 (5), Stats.

(b) “Income” has the meaning specified in s. 71.52 (6), Stats.

(3) Deduction for dependents.

(a) Under s. 71.52 (5), Stats., a deduction of $500 is allowed for each of the claimant’s dependents, as defined in s. 152 of the Internal Revenue Code, who have the same principal abode as the claimant for more than 6 months during the calendar year to which a claim for homestead credit relates. A claimant may multiply the number of dependents with the same principal abode for more than 6 months by $500 and subtract the result from the total of the income items to arrive at household income.

Example: A claimant and the claimant’s spouse claim 3 dependents on their 2014 federal income tax return, and all 3 dependents have the same principal abode as the claimant for the entire year. Household income items include Wisconsin adjusted gross income of $10,500, depreciation of $1,500 and unemployment insurance of $500.

Total household income is $11,000, consisting of the total of the income items listed, $12,500, minus the dependent deduction of $1,500, which is $500 multiplied by 3 dependents.

(b) A dependent is considered to have the same principal abode as the claimant during temporary absences from the claimant’s homestead for reasons such as school attendance, illness, vacations, business commitments or military service.

(c) In the following situations, a dependent who does not have the same principal abode as the claimant for more than 6 months during the calendar year to which a claim for homestead credit relates is nonetheless considered to have the same principal abode for more than 6 months if during that year:

The dependent is born or dies, and the dependent has the same principal abode as the claimant during the entire time the dependent is alive during that year.
The dependent is adopted by the claimant, is placed with the claimant for adoption or becomes the stepchild of the claimant, and the dependent has the same principal abode as the claimant from that time to the end of that calendar year.

(4) Items includable in income. Under s. 71.52 (6), Stats., income includes the sum of:

(a) “Wisconsin adjusted gross income” as defined in s. 71.01 (13), Stats., for the calendar year to which a claim for homestead credit relates.

(b) The following amounts to the extent not included in Wisconsin adjusted gross income:

Maintenance payments, not including foster care maintenance and supplemental payments excludable under s. 131 of the internal revenue code.
Court-ordered support payments, including support for dependents under ch. 49, Stats.
Cash public assistance and county relief, including the following:

a. Aid to families with dependent children, or “AFDC.”

b. Wisconsin works, or “W-2” payments.

c. Non-legally responsible relative, or “NLRR” AFDC payments or kinship care payments under s. 48.57, Stats. These are payments received as a relative other than a parent, for caring for a dependent child in the claimant’s homestead.

d. Cash benefits paid by counties under s. 59.53 (21), Stats.

e. Reimbursement from a governmental agency for amounts originally paid for by the recipient, not including cash reimbursements for home energy assistance or for services under Title XX of the federal social security act and community options program, or “COP” payments under s. 46.27, 2017 Stats.

f. Adoption assistance payments under Title IV-E of the federal social security act or from another state, or payments by the Wisconsin department of children and families under s. 48.975, Stats., to adoptive parents of children having special needs as described in s. DCF 50.03 (1) (b).

g. Veterans administration payments for reimbursement of services purchased by the recipient.

h. Federal housing and urban development, or “H.U.D.” payments for housing.

i. Disaster relief grants under the federal disaster relief act of 1974.

The gross amount of a pension or annuity, including:

a. Railroad retirement benefits.

b. Veterans’ disability pensions.

c. Any amounts withheld by the payor.

d. Nontaxable recoveries of cost.

e. Disability income exclusions from taxable income.

Example: Gross amount of a pension. A claimant was entitled to a pension of $8,000 during the year but received only $5,600 after $2,400 was withheld by the payor for payment of health insurance premiums for the claimant. Of the $8,000 pension, $2,000 was a return of the claimant’s contribution.

The gross pension of $8,000 must be included in income.

Except as provided in subd. 3. e., all payments received for the benefit of a claimant or a member of the claimant’s household under the federal social security act, including:

a. All federal social security retirement, disability or survivorship benefits.

b. Lump sum death benefits.

c. Medicare premiums deducted from social security benefits received by all members of a household.

d. Supplemental security income, or “SSI” benefits received by persons over 65 years of age, or blind or disabled.

e. Supplemental security income - exceptional needs, or “SSI-E” payments under s. 49.77 (3s), Stats.

Compensation and other cash benefits received from the United States for past or present service in the armed forces.
Payments made to surviving widows, widowers or parents of veterans by the United States, but not including insurance proceeds received by beneficiaries of National Service Life Insurance.
Proceeds from a personal endowment insurance policy or annuity contract purchased by the recipient.
The gross amount of “loss of time” insurance proceeds.
Nontaxable interest received from the federal government or any of its instrumentalities, or from state or municipal bonds.
Scholarship and fellowship gifts or income and other educational grants, not including student loans.
Unemployment insurance, including railroad unemployment compensation.
Workers’ compensation.
Capital gains not included in Wisconsin adjusted gross income, but not including a nonrecognized gain from an involuntary conversion under s. 1033 of the internal revenue code.
A gain on the sale of a personal residence excluded under s. 121 of the internal revenue code. A gain on the sale of a personal residence which would be reportable under the installment sale method if taxable may be reported either in full in the year of sale or each year as payments are received.
Dividends not included in Wisconsin adjusted gross income.
Income of a nonresident or part-year resident married to a full-year resident of Wisconsin.
A housing allowance provided to a member of the clergy.
The amount by which a resident manager’s rent is reduced.
Income of a Native American which is nontaxable under ch. 71, Stats.
Income from sources outside of Wisconsin which is nontaxable under ch. 71, Stats.
Nontaxable deferred compensation.

(c) The following items deducted in determining Wisconsin adjusted gross income, including items deducted in arriving at partnership, limited liability company and tax-option “S” corporation income or losses reported as a part of Wisconsin adjusted gross income:

Intangible drilling costs.
Depletion allowances.
Depreciation, including that portion of the standard mileage rate which is determined under the internal revenue code to be depreciation.
Expenses deducted under s. 179 of the internal revenue code, regarding the election to expense certain depreciable business assets.
Amortization.
Contributions to individual retirement accounts under s. 219 of the internal revenue code, including contributions to individual retirement arrangements, or “IRAs,” savings incentive match plans for employees, or “SIMPLEs” and simplified employee pension plans, or “SEPs.”
Contributions to Keogh plans.
Net operating loss carryforwards.
Capital loss carryforwards.
Disqualified losses.

(5) Exclusions from income.

(a) Under s. 71.52 (6), Stats., income does not include the following:

Amounts described in sub. (4) (b) 1., 3. e., 7., 11. and 14. as not being includable.
Gifts from natural persons, including voluntary support payments.
Relief in kind by a governmental agency, including surplus food, food stamps and payments directly to a supplier of goods or services, such as medical care, food, clothing and residential energy.
The nontaxable portions of lump sum insurance proceeds received:

a. For a recipient’s disability or loss of limb.

b. By a beneficiary of a decedent’s life insurance policy.

c. From the surrender of any portion of an insurance policy that does not constitute a personal endowment insurance policy or an annuity contract purchased by the recipient.

Wisconsin homestead credit amounts received.
Social security or SSI payments received on behalf of a claimant’s children or the children of the claimant’s household.
The nontaxable portions of pension, annuity, or other retirement plan payments rolled over from one retirement plan to another.
Tax-free exchanges of insurance contracts under s. 1035 of the internal revenue code.
Crime victim compensation payments under ch. 949, Stats.
Payments under the Wisconsin petroleum cleanup fund act.
“Foster grandparents program” payments under the federal domestic volunteer service act of 1973.
Community spouse income allowance payments under the Wisconsin spousal impoverishment program, except the portion of the payments includable under Wisconsin marital property law.

Note: The determination of household income under Wisconsin marital property law is described in s. Tax 14.06 (3) (c) 2.

(b) Amounts added to Wisconsin adjusted gross income under s. 71.52 (6), Stats., on a previous year’s homestead credit claim and subsequently repaid may be subtracted from income for the year during which they are repaid.

(c) Scholarship and fellowship gifts or income included in Wisconsin adjusted gross income, which were included in income under s. 71.52 (6), Stats., on a previous year’s homestead credit claim may be subtracted from income for the current year.

(6) Marital property agreements. Under s. 71.52 (6), Stats., a marital property agreement or unilateral statement under ch. 766, Stats., has no effect in computing income for a person whose homestead is not the same as the homestead of that person’s spouse.

(7) Income while temporarily absent from homestead. Income received while temporarily absent from a homestead shall be included in income.

Example: The net income from rental of a homestead during a planned temporary absence or earnings from seasonal employment away from the homestead is includable in income.

Note: Household income of a claimant who becomes married or divorced during a claim year or occupies a separate dwelling from his or her spouse for any part of a claim year is described in s. Tax 14.06.

Note: Section Tax 14.03 interprets s. 71.52 (5) and (6), Stats.

Note: Section 71.01 (6), Stats., was revised by 1997 Wis. Act 37, to include provisions of P.L. 105-34, relating to the exclusion of a gain from the sale of a personal residence, effective for sales after May 6, 1997, the same time as for federal purposes. Under the statutes in effect immediately prior to the enactment of 1997 Wis. Act 37, certain gains from the sale of a personal residence could be deferred under s. 1034 of the internal revenue code, and those gains were excludable from income under s. 71.52 (6), Stats. In addition, a gain on the sale of a personal residence excluded under s. 121 of the internal revenue code, which was the once-in-a-lifetime exclusion for a qualifying sale by a person age 55 or older, was includable in income under s. 71.52 (6), Stats.

Note: Section 71.52 (6), Stats., was amended by 1997 Wis. Act 27, effective for 1998 homestead credit claims filed in calendar year 1999 and thereafter. Under the statutes in effect immediately prior to the enactment of 1997 Wis. Act 27, scholarship and fellowship amounts described in sub. (5) (c) could not be excluded from income.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; renum. (3) to (6) to be (4) to (7) and am. (5) (a) 1., cr. (3), Register, August, 1990, No. 416, eff. 9-1-90; am. (3) (a), (4) (b) 10., 15., 23. d. and f. Register, June, 1993, No. 450, eff. 7-1-93; cr. (2) (intro.) and (4) (b) 5. e., r. and recr. (4) (b) 3. and (5), am. (3) (a), (b) and (c) 2. and (4) (b) (intro.), 2., 5. (intro.) and a., 7., 11., 12., 14., 15. and 20., renum. (4) (b) 23. (intro.) and a. to i. to be (4) (c) (intro.) and 1. to 9. and am. (4) (c) (intro.) and 6., Register, July, 2000, No. 535, eff. 8-1-00; corrections in (4) (b) 3. f. made under s. 13.92 (4) (b) 6. and 7., Stats., Register March 2013 No. 687; CR 16-046: am. (3) (a), (a) (Example), (4) (b) 23. h., (5) (a) 7. Register January 2018 No. 745, eff. 2-1-18; CR 19-141: r. (4) (b) 23., cr. (4) (c) 10. Register September 2020 No. 777, eff. 10-1-20; CR 22-044: am. (4) (b) 3. e. Register June 2023 No. 810, eff. 7-1-23.

Wis. Admin. Code § Tax 14.04 Property taxes accrued {#sec-tax-14.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.04}

(1) Purpose. This section clarifies the meaning of “property taxes accrued” as the term applies to homestead credit claims.

(2) Definition. Under s. 71.52 (7), Stats., “property taxes accrued” means real or personal property taxes or monthly parking permit fees under s. 66.0435 (3) (c), Stats., exclusive of special assessments, delinquent interest and charges for service, levied under ch. 70, Stats., on a homestead owned by a claimant or a member of the claimant’s household, less the tax credit, if any, afforded in respect of the property by s. 79.10, Stats. With respect to sub. (3) (e), “property taxes accrued” means the property taxes accrued levied on the former homestead owned by the claimant.

(3) Qualifying property taxes.

(a) Property taxes shall be levied on a homestead or former homestead to qualify as “property taxes accrued.”Property taxes are levied when the tax roll is delivered to the local treasurer for collection, usually on or near December 15 of each year.

(b) The property taxes accrued on a homestead or former homestead for the year to which a claim relates need not be paid prior to filing a homestead credit claim. The fact that the property taxes accrued on the homestead or former homestead are delinquent for years prior to the year to which a claim relates does not disqualify the claimant.

(c) “Property taxes accrued” includes personal property taxes assessed on a homestead or former homestead that is constructed on leased land or assessed on a mobile home owned by the claimant or a member of the claimant’s household. “Property taxes accrued” also includes mobile home parking permit fees assessed under s. 66.0435 (3) (c), Stats., for a mobile home owned by the claimant or a member of the claimant’s household.

(d) Under s. 71.52 (3), Stats., a buyer of a homestead or former homestead in possession under a land contract shall be entitled to claim the property taxes accrued on the homestead or former homestead.

(e) Under s. 71.54 (2) (c) 2., Stats., if a claimant has moved from a homestead owned by the claimant to housing that is exempt from taxation under ch. 70, Stats., other than housing for which payments in lieu of taxes are made under s. 66.1201 (22), Stats., and other than a correctional or detention facility, a claim or claims may be allowed based on the property taxes accrued on that former homestead, provided the claimant has attempted to sell the former homestead. The property taxes accrued on the former homestead may be claimed for the period of time ending on the earliest date any of the events in subds. 1. to 4. occurs. If the earliest date any of those events occurs is in the calendar year following the year in which the claimant moves to the tax-exempt housing, the property taxes accrued shall be prorated from the date of the move to December 31 on a claim for the calendar year in which the move occurs, and from January 1 to the earliest date any of the events in subds. 1. to 4. occurs on a claim for the succeeding calendar year. The events after which the property taxes accrued on the former homestead may no longer be claimed are as follows:

The claimant ceases to own the former homestead.
The claimant begins to rent out or lease out the former homestead.
The claimant ceases to reside in the tax-exempt housing.
Twelve months of time elapses from the date of moving to the tax-exempt housing.

Example: A claimant moves on July 1, 2017, from the homestead she owns to an apartment that is exempt from property taxes. She has listed her former homestead for sale with a realtor. While continuing to reside in the apartment, she sells the former homestead; the date on the closing agreement is May 31, 2018. The property taxes accrued on the former homestead are $2,400 for 2017 and the prorated property taxes on the closing agreement are $1,000.

The claimant may file a 2017 homestead credit claim, based on the 2017 property taxes accrued of $2,400 for the entire year. She may also file a 2018 claim, based on the property taxes accrued of $1,000, prorated from January 1, 2018, to the date of the sale.

(4) Verification of property taxes accrued.

(a) Except as provided in pars. (b) and (c), a claimant who claims property taxes accrued shall submit with the homestead credit claim a copy of the property tax bill, or if not available, a substitute for the property tax bill containing equivalent information to that appearing on the original property tax bill.

(b) If a claimant sells a homestead during the year to which a claim for homestead credit relates, proper verification of property taxes accrued shall be a copy of one of the following documents:

The closing agreement from the sale of the homestead.
The property tax bill for the year prior to the year to which the claim relates.
The property tax bill for the year to which the claim relates.

(c) If a claimant’s homestead is a mobile home owned by the claimant or a member of the claimant’s household, on which parking permit fees are assessed under s. 66.0435 (3) (c), Stats., proper verification of property taxes accrued shall be a copy of the parking permit fee statement issued by an authorized representative of the municipality in which the mobile home was located, or if the claimant paid rent for the land on which the mobile home was located and also paid parking permit fees to a landlord, a statement of the parking permit fees paid to the landlord, signed by the landlord, such as a form I-017, “Rent Certificate.”

(5) Effect of relief and other public assistance.

(a) Under s. 71.54 (2) (a), Stats., property taxes accrued shall be reduced by one-twelfth for each month or portion of a month for which the claimant received either $400 or more of county relief under s. 59.53 (21), Stats., or any amount of aid to families with dependent children, or “AFDC” under s. 49.19, Stats., Wisconsin works payments for community service jobs or transitional placements under s. 49.147 (4) or (5), Stats., or Wisconsin works payments as a caretaker of a newborn child under s. 49.148 (1m), Stats. However, property taxes accrued need not be reduced if the assistance consists solely of foster care payments under s. 49.19 (10) (a), Stats., non-legally responsible relative, or “NLRR” AFDC payments or kinship care payments.

(b) County relief and other cash public assistance payments that are repaid by the claimant in the same calendar year in which they are received are not considered payments for purposes of computing the one-twelfth reduction of property taxes accrued as required by par. (a).

(6) Marital property agreements. Under s. 71.52 (7), Stats., a marital property agreement or unilateral statement under ch. 766, Stats., has no effect in computing property taxes accrued for a person whose homestead is not the same as the homestead of that person’s spouse.

(7) Ownership of homestead by one person or one household. An otherwise qualified person who owns and resides in a Wisconsin homestead may claim a homestead credit based upon property taxes accrued on the homestead, even if another person pays the property taxes.

(8) Ownership of homestead by more than one person.

(a) Except as provided in par. (c), under s. 71.52 (7), Stats., if a homestead is owned by 2 or more persons or entities as joint tenants or tenants in common or is owned as marital property or survivorship marital property and one or more of the co-owners is not a member of the claimant’s household, property taxes accrued is that part of the property taxes accrued levied on the homestead, reduced by the tax credit under s. 79.10, Stats., that reflects the ownership percentage of the claimant and the claimant’s household.

(b) Except as provided in par. (c), if a qualified claimant residing in a co-owned homestead pays the property taxes accrued for a co-owner not residing in the homestead and not claiming property taxes accrued under s. 71.54 (2) (c) 2., Stats., and sub. (3) (e), the claimant may claim a homestead credit based upon both the claimant’s proportionate share of “property taxes accrued” as described in par. (a) and “gross rent” for the property taxes accrued paid on behalf of each absent owner, as provided in s. Tax 14.05 (3) (c). On the other hand, if a qualified claimant residing in a co-owned homestead pays the property taxes accrued for a co-owner who also resides in the homestead but is not a member of the payor’s household, or who is claiming property taxes accrued under s. 71.54 (2) (c) 2., Stats., and sub. (3) (e), each co-owner may file a claim based upon that portion of the property taxes accrued that reflects the ownership percentage of each claimant and his or her household.

Examples: 1) A, B and C each own a one-third interest in a dwelling. A and B are married to each other and live in the dwelling; C lives elsewhere. A and B both qualify for homestead credit and pay all of the property taxes accrued, which are $1,800.

Either A or B may claim a homestead credit based upon “property taxes accrued” of $1,200, their two-thirds share, plus “gross rent” of $600, since they pay C’s one-third share of the property taxes.

If C had also occupied the homestead, A and B could have claimed only $1,200 of “property taxes accrued” and no “gross rent,” even though they paid the entire $1,800. In addition, C could have filed a claim if otherwise qualified, based upon “property taxes accrued” of $600.

2) A mother and son each own a one-half interest in a dwelling occupied solely by the mother, who qualifies for homestead credit. The son pays all of the property taxes accrued on the dwelling.

The mother may claim a homestead credit based upon one-half of the property taxes accrued.

3) A brother and sister both qualify for homestead credit and own 75% and 25% interests, respectively, in a homestead they both occupy. The brother pays all of the property taxes accrued on the homestead.

Each may claim a homestead credit based upon the portion of property taxes accrued reflecting their ownership percentage.

(c) Under s. 71.52 (7), Stats., if a claimant has inherited a partial ownership interest in a homestead, is entitled to possession of the property and is required by the terms of the will that transferred the ownership to pay all of the property taxes on the homestead, the claimant may claim a homestead credit based upon the entire amount of property taxes accrued on the homestead.

(9) Sale or purchase of homestead.

(a) Under s. 71.52 (7), Stats., if a claimant sells or purchases a homestead during the year to which a claim for homestead credit relates, the property taxes accrued shall be prorated for the time the seller or buyer both owned and occupied the homestead during the year. The seller may use the closing agreement, the property tax bill for the year prior to the year to which the claim relates or the property tax bill for the year to which the claim relates as the basis for computing allowable property taxes accrued. The purchaser may use only the property tax bill for the year to which the claim relates as the basis for computing allowable property taxes accrued.

(b) Except as provided under s. 71.54 (2) (c) 2., Stats., and sub. (3) (e), if a seller moved from the homestead or established a homestead elsewhere before the closing date shown on a closing agreement and the property taxes are prorated on the agreement to the closing date, the property taxes shall be further prorated for homestead credit purposes to consider in the year of sale only the property taxes for the period the seller maintained a homestead on the property.

Example: Ownership of a homestead is transferred on June 30. The prorated property taxes for 6 months on the closing agreement are $1,200. The seller moves from that homestead to a new homestead on May 31.

The portion of prorated property taxes allowable to the seller is $1,000, which is the property taxes from January 1 to May 31, rather than the $1,200 shown on the closing agreement.

(10) Property taxes accrued on land.

(a) Not part of a farm. Under s. 71.52 (3) and (7), Stats., if a homestead is not part of a farm, property taxes accrued for land are limited to the property taxes on up to one acre of land which surrounds the homestead dwelling and is reasonably necessary to the use of the dwelling as a home. A parcel of land separated from the homestead parcel by such things as a street, river or utility right-of-way shall be considered to be a part of the homestead parcel.

(b) Part of a farm. Under s. 71.52 (7), Stats., if a homestead is part of a farm, property taxes accrued on up to 120 acres of land which surrounds the homestead dwelling may be claimed. Property taxes accrued for parcels of land which do not surround the homestead parcel shall be allowed if the nonsurrounding parcels are necessary to the use of the homestead parcel as a home.

Example: A farmer owns 3 parcels of land, 60, 40, and 20 acres in size. The homestead is located on the 60 acre parcel. The 60 and 20 acre parcels have a common border. The 40 acre parcel is separated from the others by a neighboring farm. In this situation, qualifying land includes both the 60 acre homestead parcel and the 20 acre parcel adjacent to the homestead parcel. The 40 acre parcel does not qualify since it is not adjacent to the homestead parcel and is not necessary to the use of the homestead as a home. However, if the 3 parcels and the neighboring farm were so situated that a driveway must cross the 40 acre parcel, as well as a portion of the neighboring farm, to reach the homestead or if a substantial portion of farm buildings necessary to the operation of the farm were on the 40 acre parcel, then that parcel would qualify since it would be necessary to the use of the homestead as a farm home. If the 3 parcels were situated so that the 60 acre parcel bordered on the 20 acre parcel which in turn bordered on the 40 acre parcel, the taxes on all 3 parcels would qualify, since they form one contiguous unit.

(11) Multipurpose and multidwelling buildings. Under s. 71.52 (7), Stats., property taxes accrued on a homestead that is part of a multipurpose or multidwelling building are the property taxes accrued on the portion occupied as a principal residence, based upon a percentage of the total property taxes accrued on the multipurpose or multidwelling building and the same percentage of the property taxes accrued on the land surrounding it which otherwise qualifies as described in sub. (10). Property used partly as a homestead and partly for any business purpose, other than farming, for which a deduction is allowed or allowable for income tax purposes is multipurpose property. Property used partly as a homestead and partly as living quarters rented to others is multidwelling property. A building divided into 2 units, one of which is the homestead of a claimant and the other of which is the living quarters of a person who does not pay rent is multidwelling property, even though there is no business or rental use.

Examples: 1) A claimant was a homeowner who as a salesperson used one room of the 8-room house exclusively for business activities. Property taxes accrued for the year were $1,600.

The claimant may claim only seven-eighths of the property taxes accrued, or $1,400, in the computation of allowable homestead credit, since the other one-eighth, or $200, constitutes business taxes.

2) Assume the same facts as in example 1, except that the room was not used exclusively for business. No deductions would be allowable for income tax purposes and the full $1,600 of property taxes accrued could therefore be claimed in the computation of allowable homestead credit.

3) A claimant owned a duplex, lived in one of the 2 equal-sized units and rented out the other unit. Property taxes accrued for the year were $2,400.

Only $1,200, representing the property taxes accrued on the claimant’s principal dwelling, may be claimed in the computation of allowable homestead credit.

4) Assume the same facts as in example 3, except that the claimant lived in one unit and the claimant’s son or daughter lived in the other unit but was not required to pay rent. The claimant nevertheless may claim only $1,200 of the property taxes accrued.

(12) Property subject to a life estate. Property taxes assessed on property subject to a life estate may only be claimed as “property taxes accrued” for purposes of homestead credit by a person in possession of the life estate interest. The life estate must be in writing and incorporated in the warranty deed or other legal documentation.

Example: A widow and her son reside in the same homestead. Prior to the year of the claim, the widow transferred the property to her son by quit-claim deed but retained a life estate in the property. She pays the property taxes, but the property tax bill comes in her son’s name.

If otherwise qualified, the widow may file a claim for homestead credit based upon the entire amount of property taxes accrued. The son may not claim homestead credit based upon any portion of the property taxes accrued on the homestead even though he resides in the property and is otherwise qualified.

Note: The computation of property taxes accrued of a claimant who becomes married or divorced during a claim year or occupies a separate dwelling from his or her spouse for any part of a claim year is described in s. Tax 14.06.

Note: Section Tax 14.04 interprets ss. 71.52 (3) and (7) and 71.54 (2) (a) and (c) 2., Stats.

Note: Section 71.54 (2) (a) (intro.), Stats., was amended by 1995 Wis. Act 27, effective July 28, 1995, to reference “relief from any county under s. 59.07 (154),” Stats. (s. 59.07 (154), Stats., was renumbered s. 59.53 (21), Stats., by 1995 Wis. Act 201, effective September 1, 1996). Section 71.54 (2) (a) (intro.), Stats., was again amended, by 1995 Wis. Act 289, effective July 1, 1996, to provide for a one-twelfth reduction of property taxes accrued for months a claimant received Wisconsin works under s. 49.147 (4) or (5), Stats. Prior to the enactment of 1995 Wis. Acts 27 and 289, the county relief reference was to “general relief from any municipality or county,” and there was no reference to Wisconsin works because that program did not exist.

Note: Section 71.54 (2) (a) (intro.), Stats., was amended by 1999 Wis. Act 9, effective for 2000 homestead credit claims filed in calendar year 2001 and thereafter, to require a one-twelfth reduction of property taxes accrued for months a claimant received Wisconsin works payments as a caretaker of a newborn child under s. 49.148 (1m), Stats. Under the statutes in effect immediately prior to the enactment of 1999 Wis. Act 9, the reduction was not required for receipt of those payments.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; am. (2), (3) (a) to (d), (8) (b) and (9) (b), cr. (3) (e), Register, January, 1991, No. 421, eff. 2-1-91; am. (2), (3) (b), (c), (4) (a), (b) 1., 2. and (c), (8) (a), (b), (9) (a), (b), (10) (a) and (11), r. and recr. (5) and cr. (8) (c), Register, July, 2000, No. 535, eff. 8-1-00; corrections in (2), (3) (c), (e) and (4) (c) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 21-085: am. (3) (e) (Example) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 14.05 Gross rent and rent constituting property taxes accrued {#sec-tax-14.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.05}

(1) Purpose. This section clarifies the terms “gross rent” and “rent constituting property taxes accrued” as the terms apply to homestead credit claims.

(2) Definitions.

(a) “Gross rent” has the meaning specified in s. 71.52 (2), Stats. Gross rent includes payments by a claimant to the landlord for items normally associated with the occupancy of a homestead, such as a garage or parking space, appliances, furniture or utilities. However, payments for food, medical services or other personal services are expressly excluded under s. 71.52 (2), Stats. In situations where charges for food and services are subtracted from amounts paid to a landlord, gross rent is commonly referred to as “rent paid for occupancy.”

(b) “Rent constituting property taxes accrued” has the meaning specified in s. 71.52 (8), Stats.

(3) Rent payments.

(a) Gross rent may be claimed only for the year to which the claim relates, but it may have been paid at any time before the claim is filed.

(b) Property taxes accrued on a claimant’s homestead not owned by the claimant or a member of the claimant’s household, which are paid by the claimant on behalf of an owner who does not reside in the homestead and who does not claim property taxes accrued under s. 71.54 (2) (c) 2., Stats., shall be considered gross rent.

(c) Personal property taxes or mobile home parking permit fees assessed under s. 66.0435 (3) (c), Stats., paid by a claimant for a rented mobile home shall be considered gross rent. In addition, rental paid to a landlord for a mobile home or for land on which a mobile home is located shall be considered gross rent.

(4) Verification of rent constituting property taxes accrued.

(a) Except as provided in pars. (b) and (c), if a claimant claims rent constituting property taxes accrued the claimant and the landlord shall complete form I-017, “Rent Certificate,” and the claimant shall submit it with schedule H or H-EZ. The department is not precluded from requesting additional documentation to verify rent paid in cases it deems appropriate.

(b) If a claimant pays rent for more than one homestead during a year, a separate rent certificate shall be completed for each homestead for which the claimant wishes to claim a homestead credit, and the claimant shall submit all rent certificates together with a single schedule H or H-EZ.

(c) A landlord shall determine the reasonable value of food, medical services and other personal services such as laundry, transportation, counseling, grooming, recreational and therapeutic services provided to a claimant in addition to occupancy rights and subtract those amounts from total rent indicated on the rent certificate, to determine rent paid for occupancy. The landlord shall also indicate whether heat was included or not included in the rent by checking the appropriate box on the rent certificate.

(d) Under s. 71.55 (2), Stats., a landlord is prohibited from charging a fee for completing the rent certificate.

(e) If a claimant is unable to obtain a rent certificate from a landlord, proper rent receipts, money order receipts, cancelled checks or cancelled share drafts substantiating amounts paid shall be acceptable evidence of gross rent paid. The claimant shall also include a rent certificate on which all lines except the signature line have been filled in, or a statement providing the same information as that requested on the rent certificate. The statement or rent certificate shall indicate whether heat was included in the rent, and whether food or services as described in par. (c) were provided and if so the estimated value of the food and services provided. The statement or top portion of the rent certificate should be marked with a comment such as “Landlord Refuses to Sign.”

(f) Proper verification of rent constituting property taxes accrued for a claimant who pays property taxes on the homestead on behalf of an owner other than the claimant shall be a copy of the property tax bill and a statement from the claimant, indicating that he or she paid the property taxes on behalf of an owner who did not reside in the homestead.

(5) Effect of relief and other public assistance.

(a) Under s. 71.54 (2) (a), Stats., rent constituting property taxes accrued shall be reduced by one-twelfth for each month or portion of a month for which the claimant received either $400 or more of county relief under s. 59.53 (21), Stats., or any amount of aid to families with dependent children, or “AFDC” under s. 49.19, Stats., Wisconsin works payments for community service jobs or transitional placements under s. 49.147 (4) or (5), Stats., or Wisconsin works payments as a caretaker of a newborn child under s. 49.148 (1m), Stats. However, rent constituting property taxes accrued need not be reduced if the assistance consists solely of foster care payments under s. 49.19 (10) (a), Stats., non-legally responsible relative, or “NLRR” AFDC payments or kinship care payments.

(6) Marital property agreements. Under s. 71.52 (8), Stats., a marital property agreement or unilateral statement under ch. 766, Stats., has no effect in computing rent constituting property taxes accrued for a person whose homestead is not the same as the homestead of that person’s spouse.

(7) Non-arm’s length rental. Under s. 71.55 (8), Stats., if a homestead is rented under circumstances deemed by the department to be not at arm’s length, it may determine rent constituting property taxes accrued as at arm’s length. The department may make this determination when the amount claimed is in excess of fair rental value. However, since under s. 71.52 (2), Stats., “gross rent” is limited to rental actually paid, the department may not increase the rent constituting property taxes accrued to arm’s length rental if the rent paid was at less than fair rental value.

Example: A claimant files a claim with a rent certificate showing rent paid for occupancy of $7,200, or $600 per month. Investigation by the Department of Revenue discloses the rent is too high for the locality and dwelling involved, and the landlord is financially dependent on others for support and is related to the claimant. The department determines that the fair rental value of the claimant’s homestead for the year of the claim was $300 per month, or $3,600 for the year. No utilities, food or services were furnished by the landlord.

Allowable rent constituting property taxes accrued is $900, which is 25% of $3,600.

(8) Exempt housing.

(a) Under s. 71.53 (2) (e), Stats., no claim for homestead credit may be allowed if a claimant resided for the entire calendar year to which the claim relates in housing which was exempt from taxation under ch. 70, Stats., other than housing for which payments in lieu of taxes are made under s. 66.1201 (22), Stats., except as provided under s. 71.54 (2) (c) 2., Stats. Under s. 71.54 (2) (c) 2., Stats., if a claimant moves to tax-exempt housing, a claim for homestead credit may be allowed based upon property taxes accrued on the claimant’s former homestead under certain conditions. Those conditions are explained in s. Tax 14.04 (3) (e).

(b) Under ss. 71.53 (2) (e) and 71.54 (2) (c) 1., Stats., if a claimant resided for part of the calendar year to which a claim for homestead credit relates, in a homestead which was either subject to taxation under ch. 70, Stats., or exempt from taxation under ch. 70, Stats., but for which payments in lieu of taxes were made under s. 66.1201 (22), Stats., the property taxes accrued or rent constituting property taxes accrued or both for that homestead are allowed for that portion of the year.

(c) Payments in lieu of taxes made under s. 66.1201 (22), Stats., as provided in pars. (a) and (b), are made by most facilities licensed with the state of Wisconsin as “housing authorities.” Rent paid to those housing authorities may be used to determine gross rent and rent constituting property taxes accrued. However, other types of exempted housing which make payments in lieu of taxes do not make the payments under s. 66.1201 (22), Stats., and therefore rent paid to those types of exempted housing may not be used to determine gross rent and rent constituting property taxes accrued.

(d) Types of tax-exempt housing other than housing authorities include:

Federal low-income housing under the housing and urban development, or “H.U.D.” program.
Student dormitories owned by nonprofit educational institutions.
Housing units of religious organizations.
Charitable, nonprofit nursing homes.

(9) Joint occupants of rental units.

(a) Persons sharing living expenses for a rented homestead who are otherwise eligible for the homestead credit and who are not members of the same household, shall each be entitled to claim a portion of the rent paid for occupancy of the homestead. However, the total claims of the joint occupants for rent paid for occupancy may not exceed 100% of the rent paid to the landlord for occupancy, as shown on the rent certificate. The amount of rent paid for occupancy shall be the ratio which the contribution of the claimant or claimant’s household to the cost of shared living expenses, such as rent, food, utilities and supplies, bears to the total cost of the shared living expenses.

Example: X, Y, and Z are 3 unrelated joint occupants of a rental unit who share expenses as follows:

(b) If a claimant described in par. (a) is entitled to more or less rent paid for occupancy than is shown on the rent certificate completed by the landlord for the claimant, the claimant shall in addition to the certificate attach a statement to the homestead credit claim showing the computation of claimed rent paid for occupancy and identifying the other occupants of the homestead with whom rent and living expenses were shared during the year to which the claim relates by giving the name, current address at the time of filing the claim, if known, and social security number, if known.

(10) Rent paid for land. Under s. 71.52 (2), Stats., the portion of s. 71.52 (7), Stats., pertaining to property taxes accrued on land as described in s. Tax 14.04 (10) also applies to gross rent paid for land.

(11) Multipurpose and multidwelling buildings. Under s. 71.52 (2), Stats., the portion of s. 71.52 (7), Stats., pertaining to property taxes accrued on multipurpose and multidwelling buildings as described in s. Tax 14.04 (11) also applies to gross rent paid for a multipurpose or multidwelling building of which the homestead is a part.

(12) Sharecroppers. “Rent constituting property taxes accrued” of a person sharing the costs or proceeds or both from the operations of a farm with the owner of the farm property in consideration for use of the homestead, land, machinery or equipment equals 25% of the owner’s share of the net proceeds applicable to occupancy of the homestead, or 20% if heat is included in the cost of the rent.

Example: A sharecropper resides on and operates a 120 acre dairy farm. The landlord and the sharecropper share equally the gross receipts from crop sales, $10,000, the gross milk receipts, $40,000, and the cost of seed and feed, $20,000. The landlord furnishes the land, buildings and machinery, for which annual allowable depreciation is $6,000. The landlord pays for the heat. In this situation, rent constituting property taxes accrued for the sharecropper equals 20% of the owner’s share of the proceeds less the value of the nonoccupancy items furnished by the landlord, as follows:

(13) Low-income housing.

(a) Indirect payments of rent, such as a subsidy payment from a governmental agency for low-income housing, are not includable in determining gross rent.

(b) A landlord may receive both payments from a claimant and subsidy payments from a governmental agency for rental of the claimant’s homestead. If the allocation of the subsidy payments to food, medical services or other personal services as described in s. 71.52 (2), Stats., furnished by the landlord is not specified under the terms of an agreement with the governmental agency, the portion of the rent paid for occupancy eligible for the homestead credit shall be the total rent paid for occupancy multiplied by a fraction, the numerator of which is the amount paid by the claimant and the denominator of which is the total amount paid including governmental subsidies.

Example: A total of $5,400 is paid to a claimant’s landlord for the year on behalf of the claimant, $1,800 by the claimant and $3,600 by a governmental agency. The value of food provided in $600 and no services are provided.

Qualifying rent paid for occupancy is $1,600, computed as follows: $4,800×[$1,800÷$5,400]. The $4,800 is the total amount paid, $5,400, less the $600 for food. The $1,800 is the amount the claimant paid and the $5,400 is the total amount paid.

(c) If an agreement with the agency paying the subsidy specifies how the subsidy is to be applied, the agreement shall be controlling in the determination of the claimant’s rent paid for occupancy.

(14) Nursing homes and long-term care facilities.

(a) Any one of the following methods may be used by residents of nursing homes or long-term care facilities to determine rent paid for occupancy:

A standard rate of $100 per week but not more than the actual rent paid.
The percentage of building occupancy expenses method. Under this method, the ratio that a nursing home’s or a long-term care facility’s building occupancy expenses for a year bears to gross income received in that year, both directly from residents and indirectly from governmental aid, is determined. This ratio is applied to a resident’s total direct payments for a year for which a homestead credit claim is filed, yielding the portion of the payments constituting rent paid for occupancy. This ratio shall be determined from the most recent income and expense data available at the time a rent certificate is prepared, preferably using data from the same year for which the homestead credit is claimed. The building occupancy expenses claimed shall be limited to the expenses attributable to real estate and furnishings only, such as property taxes, interest, lease or rent expenses, depreciation, upkeep and repairs and utilities.

Example: The following formula may be used to compute a resident’s rent paid for occupancy; the worksheet is filled in as an example of how to compute the percentage:

The percentage rate determined above is to be multiplied by the total rent collected as entered on the rent certificate prepared for a resident filing a homestead credit claim, and the amount so determined is to be entered on the rent certificate as rent paid for occupancy. Assuming a resident’s total direct payments for the year were $36,000, rent paid for occupancy would be $4,500, which is 12.5% of $36,000.

Any other appropriate method, subject to prior approval by the department.

(b)

Under s. 71.53 (2) (f), Stats., a resident living in a nursing home and receiving medical assistance under s. 49.45, Stats., at the time of filing a homestead credit claim is not eligible for the homestead credit.
A person living in a nursing home who received medical assistance under s. 49.45, Stats., during the year to which the claim relates but is not receiving the medical assistance at the time of filing a homestead credit claim may claim the homestead credit if otherwise eligible. In this situation, amounts paid by medical assistance are not includable in determining rent paid for occupancy.

(c) If a fixed charge is made upon admission to a nursing home or long-term care facility entitling a person to occupancy for the balance of the person’s life and additional monthly charges are solely for current maintenance and services, only the initial charge for occupancy shall be “gross rent.” The terms of the agreement between the occupant and the nursing home or long-term care facility shall establish the year or years in which the rent paid for occupancy shall be deemed to be paid. If the rent paid is refundable in part should the occupant leave the home or if the rental payment is held in a trust by the home for the occupant, the initial payment will not be deemed to be paid entirely in one year but shall be prorated.

Note: The computation of rent constituting property taxes accrued of a claimant who becomes married or divorced during a claim year or occupies a separate dwelling from his or her spouse for any part of a claim year is described in s. Tax 14.06.

Note: Section Tax 14.05 interprets ss. 71.52 (2) and (8), 71.53 (2) (e) and (f), 71.54 (2) (a) and (c) and 71.55 (2) and (8), Stats.

Note: Section 71.54 (2) (a) (intro.), Stats., was amended by 1995 Wis. Act 27, effective July 28, 1995, to reference “relief from any county under s. 59.07 (154),” Stats. (s. 59.07 (154), Stats., was renumbered s. 59.53 (21), Stats., by 1995 Wis. Act 201, effective September 1, 1996). Section 71.54 (2) (a) (intro.), Stats., was again amended, by 1995 Wis. Act 289, effective July 1, 1996, to provide for a one-twelfth reduction of rent constituting property taxes accrued for months a claimant received Wisconsin works under s. 49.147 (4) or (5), Stats. Prior to the enactment of 1995 Wis. Acts 27 and 289, the county relief reference was to “general relief from any municipality or county,” and there was no reference to Wisconsin works because that program did not exist.

Note: Section 71.54 (2) (a) (intro.), Stats., was amended by 1999 Wis. Act 9, effective for 2000 homestead credit claims filed in calendar year 2001 and thereafter, to require a one-twelfth reduction of rent constituting property taxes accrued for months a claimant received Wisconsin works payments as a caretaker of a newborn child under s. 49.148 (1m), Stats. Under the statutes in effect immediately prior to the enactment of 1999 Wis. Act 9, the reduction was not required for receipt of those payments.

Note: The standard rate of $100 per week for rent paid for occupancy by residents of nursing homes or long-term care facilities became effective with rent paid for calendar year 2000. For rent paid for calendar years 1999 and prior, the standard rate was $40 per week.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; am. (3) (c) and (8) (a), renum. (8) (b) and (c) to be (8) (c) and (d) and am. (c), cr. (8) (b), Register, January, 1991, No. 421, eff. 2-1-91; r. and recr. (2) and (5), r. (3) (b) and (13) (a) 1. to 3., renum. (3) (c) and (d) to be (3) (b) and (c), (13) (a) (intro.) and (b) to be (13) (b) and (c), (14) (b) to be (14) (b) 1., am. (3) (b), (4) (a) to (c), (e), (7), (8) (a) to (d) (intro.), 1., to 3., (9) (a), (12), (13) (a), (b), (14) (a) 1. and 2., cr. (13) (a) and (14) (b) 2., Register, July, 2000, No. 535, eff. 8-1-00; corrections in (3) (c), (8) (a), (b) and (c) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 16-046: am. (4) (a), (b) Register January 2018 No. 745, eff. 2-1-18; CR 21-085: r. (8) (b) (Example) Register August 2022 No. 800, eff. 9-1-22.

Wis. Admin. Code § Tax 14.06 Marriage, separation or divorce during a claim year {#sec-tax-14.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 14.06}

(1) Purpose. This section describes the qualifications for a homestead credit and the computation of household income, property taxes accrued and rent constituting property taxes accrued of a claimant who becomes married or divorced during the year to which a homestead credit claim relates or whose spouse occupies a separate dwelling for any part of a claim year.

(2) Marriage during a claim year.

(a) A new household is established when a marriage occurs during a claim year and the spouses reside together after the marriage. Under s. 71.53 (1) (c), Stats., either the husband or the wife may claim a homestead credit for the year of the marriage but not both.

(b) Under s. 71.52 (5), Stats., when a marriage occurs during a claim year and the spouses reside together after the marriage, household income shall include the claimant’s income for the portion of the calendar year prior to the marriage and the total income of the household for the remainder of the year after the marriage.

(c) Under s. 71.52 (7) and (8), Stats., the spouse filing a claim may claim property taxes accrued or rent constituting property taxes accrued for the homestead of the claimant for the portion of the year prior to a marriage plus the total of those amounts for the common homestead after the marriage.

Example: X marries Y on September 1, and they decide that X is to be the claimant. Prior to the marriage, X pays gross rent of $250 per month and Y pays gross rent of $350 per month. They pay gross rent of $500 per month for their jointly occupied apartment after the marriage. Heat is not included at any of the dwellings. X’s income is $4,000 prior to the marriage, and X’s services and property generate marital property income of $2,000 after the marriage. Y’s income is $10,000 prior to the marriage, and Y’s services and property generate marital property income of $5,000 after the marriage. There are no dependents.

In this situation, household income reportable by X is $11,000, consisting of X’s $4,000 of income prior to the marriage plus the $7,000 income of both X and Y after the marriage. Rent constituting property taxes accrued which may be claimed by X is $1,000, which is 25% of the sum of X’s rent of $250 per month for 8 months, or $2,000, and 4 months rent at $500 per month after the marriage, or $2,000, totaling $4,000 for the year. Since Y is not the claimant, Y’s rent of $350 per month and income of $10,000 for the 8 months prior to the marriage are not considered in computing the homestead credit.

(3) Separation or divorce during a claim year.

(a) If a husband and wife occupy separate homesteads for all or part of a claim year and continue to occupy separate homesteads on December 31 of that year, or if a husband and wife become divorced during a claim year and do not remarry each other by December 31 of that year, each may claim a homestead credit for that year if otherwise qualified, since 2 households exist at the end of the year. When one spouse has permanently moved into a nursing home and the other spouse remains at home, the husband and wife are considered to occupy separate dwellings at the end of the year.

(b) If a husband and wife occupy separate homesteads for part of a claim year but occupy the same homestead on December 31 of that year, only one of the spouses may claim a homestead credit for that year, since only one household exists at the end of the year.

(c) In the event a husband and wife occupy separate dwellings or become divorced during a claim year, household income is determined under s. 71.52 (5), Stats., under Wisconsin income tax law and under marital property law as provided in ch. 766, Stats., except that marital property law does not apply if one of the spouses is not domiciled in Wisconsin during the period of time they occupy separate dwellings. Household income shall be determined as follows:

For the period of time the claimant and the claimant’s spouse occupy a common homestead as members of the same household, household income shall include all income of both spouses, even if the “innocent spouse” provisions as provided in s. 71.10 (6) (b) and (6m), Stats., are in effect for income tax purposes. If the claimant cannot exactly determine the income of the claimant’s spouse during the portion of the year they occupy a common homestead, the claimant may make a reasonable estimate of the income and shall clearly indicate it as an estimate on the homestead credit claim.
For the period of time the claimant and the claimant’s spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all of the claimant’s income and none of the spouse’s income, if the spouse is not domiciled in Wisconsin during that time. If the claimant’s spouse remains a Wisconsin domiciliary during the period of time the claimant and the claimant’s spouse occupy separate dwellings prior to the issuance of a divorce decree, household income shall include all non-marital property income of the claimant and the claimant’s portion of marital property income as provided by marital property law, ch. 766, Stats., and by the “innocent spouse” provisions in s. 71.10 (6) (b) and (6m), Stats. Under marital property law and the “innocent spouse” provisions, the extent to which marital property income during the period of time the spouses occupy separate dwellings is includable in household income depends on whether the claimant and the claimant’s spouse notify each other of the amount and nature of marital property income generated by each, as follows:

a. If both spouses notify each other, 1/2 of all marital property income of both spouses is includable.

b. If the claimant notifies the spouse but the spouse does not notify the claimant, 1/2 of the marital property income generated by the claimant’s services and property and none of the marital property income generated by the spouse’s services and property is includable.

c. If the claimant does not notify the spouse but the spouse notifies the claimant, all of the marital property income generated by the claimant’s services and property and 1/2 of the marital property income generated by the spouse’s services and property is includable.

d. If neither spouse notifies the other, all of the marital property income generated by the claimant’s services and property and none of the marital property income generated by the spouse’s services and property is includable.

For the portion of the year after a divorce, household income shall include all income of the claimant only.

(d) In order to be valid, the notification referred to in par. (c) must be made by the spouse whose services or property produced the marital property income, prior to the due date of the Wisconsin income tax return, or if the allowable time for filing the Wisconsin income tax return has been extended, the extended due date.

(e) In the event a husband and wife occupy separate dwellings during all or part of a claim year or become divorced during a claim year, each spouse may claim the total amount of property taxes accrued or rent constituting property taxes accrued on the common Wisconsin homestead for the portion of the year they maintain that homestead plus their own amounts for the portion of the calendar year the spouses occupy separate dwellings or are not married to each other. However, as provided in par. (b), only one of the spouses may claim a homestead credit if they are not divorced or do not occupy separate dwellings on December 31 of that year.

Examples: 1) Separation at the end of a claim year. A husband and wife reside in their jointly owned homestead from January 1 to July 31, when the wife moves permanently to a Wisconsin nursing home that is not exempt from property taxes. The husband pays the heat and all the property taxes of $1,200 for the year. Rent paid by the wife for occupancy at the nursing home for the period August 1 through December 31 is $1,000, and the nursing home pays the heat. There are no dependents. Each spouse notifies the other of the marital property income generated by their respective services and properties. Income consists of both non-marital property income and marital property income, as follows:

Both husband and wife are otherwise qualified for the homestead credit. Household income, property taxes accrued, and rent constituting property taxes accrued applicable to each claimant for the year are computed as follows:

2) Separation during a claim year but not on December 31. X and Y are married and live together through April 30. Y moves to another homestead in Wisconsin on May 1 but moves back to X’s homestead on November 1 of the same year. Gross rent for the homestead X resides in is $300 per month all year, and gross rent for Y’s homestead for May through October is $200 per month. Heat is not included at either dwelling. The income X’s services and property generate is $1,000 per month for all 12 months, and the income Y’s services and property generate is $500 per month for all 12 months. All income is marital property income, and X and Y both notify each other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, since X and Y are one household at the end of the year, only one may file a claim for homestead credit; household income and rent constituting property taxes accrued for each spouse are computed as follows:

3) Divorce during a claim year. X and Z are married, live together through May 31, and pay gross rent of $400 per month to that date. On June 1 they both move to separate Wisconsin homesteads, and thereafter X pays gross rent of $300 per month and Z pays gross rent of $400 per month. Heat is not included at any of the dwellings. On November 30, X and Z are divorced. The income X’s services and property generate is $4,000 through May 31 and $5,000 from June 1 to November 30, and X’s income is $1,000 in December. The income Z’s services and property generate is $2,000 through May 31 and $3,000 from June 1 to November 30, and Z’s income is $2,000 in December. All income of both spouses through November 30 is marital property income. Each spouse notifies the other of the marital property income generated by their respective services and properties. There are no dependents. In this situation, household income and rent constituting property taxes accrued for each claimant are computed as follows:

(4) Divorce and remarriage during a claim year.

(a) If during a claim year a person occupies a separate dwelling from his or her spouse, is subsequently divorced, and is remarried to a different spouse and resides with the spouse after the marriage, a new household is established by the person and the new spouse. Under s. 71.53 (1) (c), Stats., either of the new spouses may claim a homestead credit for the year of the marriage but not both.

(b) In the event that during a claim year a claimant occupies a separate dwelling from one spouse, is divorced from that spouse, and is remarried to a new spouse, household income with respect to the claimant and the former spouse for the portion of the claim year prior to the claimant’s remarriage shall be determined as described in sub. (3) (c) and (d). For the portion of the claim year the claimant occupies a common homestead with the new spouse after the remarriage, household income shall include all income of both the claimant and the new spouse.

(c) In the event a claimant occupies a separate dwelling from his or her former spouse, is divorced, and is remarried during a claim year, the claimant may claim the total amount of property taxes accrued or rent constituting property taxes accrued on each common homestead for the portion of the year the claimant occupies a common homestead with a spouse, plus the claimant’s share of property taxes accrued or rent constituting property taxes accrued for the portion of the calendar year the claimant occupies a separate dwelling from his or her spouse or is not married.

Example: X and Z are married and living together, even though a divorce action is pending. X and Z both move to separate Wisconsin homesteads on March 31 and a divorce is granted on April 30. On November 1 of the same year, X marries Y and they share the same homestead for the rest of the year. Z does not remarry during the year. Each individual or couple pays rent for the entire year, and heat is not included at any dwelling. There are no dependents. X and Z notify each other of the marital property income generated by their respective services and properties for January 1 to April 30. Notification between X and Y is immaterial because they do not occupy separate dwellings as husband and wife during the year. Income for each individual and gross rent paid for the year are as follows:

** In this example, all income of each spouse while married to each other is marital property income, and the income listed in each column is the income generated by that person’s services and property.*

Since X and Y are one household at the end of the year, only one of them may file a claim for homestead credit. Z is also entitled to file a homestead credit claim for the year. Household income and rent constituting property taxes accrued are computed as follows:

** The income and rent for the time the claimants are members of the same household are reportable on each claim filed.*

Note: In each of the examples in subs. (2), (3), and (4), the spouses notify each other of the amount and nature of the marital property income generated by their respective services and properties. While it is more common for notification not to occur, each example assumes notification for purposes of illustrating the household income computation, which is far more complex under notification than under non-notification situations. In non-notification situations, the claimant merely includes all of the income generated by his or her services and property and none of the income generated by the spouse’s services and property while they occupy separate dwellings.

Note: Throughout s. Tax 14.06, it has been assumed that a dissolved marriage was dissolved by a decree of divorce. Under s. 766.01 (7), Stats., the dissolution of a marriage may also be by annulment or decree of invalidity, or by entry of a decree of legal separation or separate maintenance. The computation of household income, property taxes accrued and rent constituting property taxes accrued is the same under any of these types of dissolutions.

Note: Section Tax 14.06 interprets ss. 71.52 (5), (7) and (8) and 71.53 (1) (c), Stats.

History

Cr. Register, February, 1990, No. 410, eff. 3-1-90; am. (1) and (3) (c) (intro.), Register, July, 2000, No. 535, eff. 8-1-00.

Chapter Tax 15 REAL ESTATE TRANSFER FEE

Wis. Admin. Code § Tax 15.01 Definition of a conveyance {#sec-tax-15.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.01}

Option contracts or agreements that provide for the right of first refusal of purchasing an interest in real estate are not conveyances within the scope of s. 77.21 (1), Stats.

Note: This section interprets s. 77.21, Stats.

History

Cr. Register, December, 1981, No. 312, eff. 1-1-82.

Wis. Admin. Code § Tax 15.02 Value subject to real estate transfer fee {#sec-tax-15.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.02}

(1) The conveyance of a parcel of real property by a partner to a partnership is subject to both real estate transfer fee and return.

(2) In an exchange of real properties, 2 separate and distinct conveyances are involved and the value should be separately determined for each.

Example: If (i) ‘A’ conveys a parcel X of real property worth $50,000 to ‘B,’ and (ii) ‘B’ in turn conveys a parcel Y of real property worth $45,000 plus cash of $5,000 to ‘A,’ both conveyances are taxable under s. 77.22 (1), Stats., and a return is required to be submitted for each conveyance. The basis of the real estate transfer fee for conveyance (i) is $50,000 and for conveyance (ii) is $45,000. Therefore, the real estate transfer fee for conveyance (i) is $150 and that for conveyance (ii) is $135.

Note: The December, 1992 amendment of sub. (1) is necessitated by a March 25, 1992 court of appeals, district II decision of Wisconsin Department of Revenue v. Mark, which overruled department of revenue policy as stated in the rule which imposes the transfer fee on an amount less than provided for by s. 77.21 (3), Stats. As a result of that decision, this section shall have an effective date of March 25, 1992.

Note: This section interprets s. 77.21, Stats.

History

Cr. Register, December, 1981, No. 312, eff. 1-1-82; am. (1), Register, December, 1992, No. 444, eff. 1-1-93.

Wis. Admin. Code § Tax 15.03 Imposition of real estate transfer fee {#sec-tax-15.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.03}

A real estate transfer fee is imposed on the grantor of real estate on every conveyance not exempted under s. 77.25, Stats. Real estate conveyances which are taxable under s. 77.22, Stats., include:

(1) Corporation conveyances:

(a) From a corporation to a partnership, and from a partnership to a corporation.

(b) From an individual to a corporation, and from a corporation to an individual.

(d) From one corporation to another, both of which have the same parent corporation, that is, conveyances between “sister” corporations.

(e) From a corporation to another caused by a “spin-off.” A spin-off occurs when, after a part of the assets of corporation ‘A’ is transferred to corporation ‘B’ controlled by the transferor ‘A,’ stock or securities in the latter ‘B’ are distributed to the shareholders of the controlling corporation ‘A,’ without a surrender by corporation ‘B’s’ shareholders of any of their stock or securities.

(f) From a corporation to another caused by a “split-up.” In a split-up the distributing corporation ‘A’ transfers its assets to 2 or more newly created corporations in exchange for their stock and effects a complete liquidation, ‘A’s’ shareholders receiving stock in the new corporations in exchange for the distributing corporation’s stock.

(g) From one corporation to another pursuant to any bankruptcy provision.

(h) From a parent corporation to a subsidiary corporation in exchange for stock.

(2) Conveyances by means of a sheriff’s sale where the grantee is a third party with no prior interest in the deed or mortgage.

(3) Conveyances of real property between stepchildren, natural children or stepparent and stepchild.

(4) Conveyances by dissolution of a partnership.

(5) Conveyances between an individual and a tax-exempt organization.

(6) Conveyances of timber or mineral rights.

(7) Court ordered conveyances by a county to satisfy an old age assistance lien.

(8) Conveyances of a remainder interest in real property.

(9) Conveyances of real property from a trustor to a trustee.

(10) Bankruptcy court ordered conveyances.

Note: This section interprets s. 77.22 (1), Stats.

History

Cr. Register, December, 1981, No. 312, eff. 1-1-82; CR 13-037: renum. (2) intro. to (2) and am., r. (2) (a) to (c) Register February 2014 No. 698, eff. 3-1-14.

Wis. Admin. Code § Tax 15.04 Land contracts {#sec-tax-15.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.04}

(1) Original land contract. Any original contract or any instrument evidencing the existence of a land contract, either of which indicates that such original land contract was made on October 1, 1969 or thereafter, requires the submission of a return as a condition to recording by the register of deeds.

(2) Deeds in fulfillment of a land contract.

(a) Any deed or other instrument executed in fulfillment of a land contract, which land contract is dated December 17, 1971, or thereafter, requires the submission of a return and payment of the fee provided by s. 77.22 (2) (b), Stats., as a condition to recording. The return must show that the deed is given in satisfaction of a land contract and the fee is based on the purchase price established by the terms of land contract.

(b) Deeds in fulfillment of recorded land contracts dated prior to December 17, 1971 are not subject to the fee. As a result of the changes made by Chapter 150, Laws of 1971, deeds presented allegedly in fulfillment of an unrecorded land contract dated prior to December 17, 1971 should not be recorded as exempt until the land contract or evidence of the existence of a land contract is recorded. This is necessary to establish that the land contract was in fact dated prior to December 17, 1971.

(3) Sale of a land contract vendee’s interest. A sale or assignment of a vendee’s interest which is dated October 1, 1969, or thereafter is subject to both the fee and return as a condition to recording.

(4) Sale of a land contract vendor’s interest. A deed which transfers the interest of a vendor in a land contract to another person is excluded from the provisions of s. 77.22 (2), Stats. It is therefore not subject to the transfer fee. Under the doctrine of equitable conversion the vendor’s interest in the land contract becomes personal property. Such a transfer is not a conveyance within the definition of s. 77.21 (1), Stats., because it does not provide for the passage of ownership interest in real estate.

Note: See Mueller v. Novelty Dye Works (1956), 273 Wis. 501, 78 N.W. 2d 881.

(5) Recording of a deed issued in partial satisfaction of an original land contract. The basis of the real estate transfer fee shall be prorated in proportion to the area covered by the deed.

Example: If a land parcel of 40 acres was sold under an original land contract for $80,000, and subsequently a deed was issued in partial satisfaction of this land contract for $4,500, and the area covered by the deed issued in partial fulfillment of the land contract was 5 acres, the real estate transfer fee is based upon 5/40 of $80,000 or $10,000.

Note: This section interprets s. 72.22 (2), Stats.

History

Cr. Register, December, 1981, No. 312, eff. 1-1-82; 2015 Wis. Act 38: am. (1) Register July 2015 No. 715, eff. 8-1-15.

Wis. Admin. Code § Tax 15.05 Exemption from fee {#sec-tax-15.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.05}

Conveyance of real property pursuant to any of the exemptions listed in s. 77.25, Stats., are not subject to the payment of real estate transfer fee except that returns are required at the time of recording.

(1) Conveyances from the United States, its agencies or instrumentalities are not subject to the fee imposed under s. 77.22 (1), Stats.

(2) Conveyances from the state, its instrumentalities, agencies and subdivisions are not subject to the fee imposed under s. 77.22 (1), Stats.

(3) A certificate of termination issued by the county court upon petition by interested persons in the realty upon the death of a person holding a life estate in real property or upon the death of a person who is a joint tenant in real property would be a conveyance as defined in s. 77.21 (1), Stats., since it transfers an interest in real estate. This conveyance is exempt from the real estate transfer fee by virtue of s. 77.25 (11), Stats., as a conveyance by descent or survivorship.

(4) Conveyances between husband and wife pursuant to a divorce decree are not subject to the fee but a return must be submitted. The value of property transferred shall be stated on the real estate transfer return.

(6) Conveyances of cemetery lots, as distinct from land conveyed for use as a cemetery, are not subject to s. 77.22 (1), Stats.

Note: This section interprets s. 77.25, Stats.

History

Cr. Register, December, 1981, No. 312, eff. 1-1-82; CR 13-037: r. (5) Register February 2014 No. 698, eff. 3-1-14.

Wis. Admin. Code § Tax 15.06 Inspection of real estate transfer returns {#sec-tax-15.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 15.06}

A taxpayer or agent in a condemnation proceeding or an appeal from an assessment of real property will be allowed to inspect all returns. The taxpayer or agent requesting access to this information shall maintain the confidentiality of the return.

Note: This section interprets s. 77.265 (7), Stats.

History

Cr. Register, July, 1982, No. 319, eff. 8-1-82.

Chapter Tax 16 LOCAL FINANCIAL REPORTING

Wis. Admin. Code § Tax 16.01 Purpose {#sec-tax-16.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.01}

The purpose of this chapter is to establish standards and procedures for the collection of financial information from towns, villages, cities and counties.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85.

Wis. Admin. Code § Tax 16.02 Scope {#sec-tax-16.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.02}

This chapter is applicable to all towns, villages, cities and counties with a population of 25,000 or more according to the latest population estimate made by the state department of administration pursuant to s. 16.96, Stats. Any town, village, city or county whose population declines below 25,000 after December 31, 1986 shall continue to be governed by this chapter.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85.

Wis. Admin. Code § Tax 16.03 Definitions {#sec-tax-16.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.03}

(1) “General purpose financial statements”are those financial statements, including disclosure notes, necessary to fairly present financial position and operating results and changes in financial position of the proprietary fund types in conformity with generally accepted accounting principles. They are listed as follows:

(a) Combined balance sheet - all fund types and account groups.

(b) Combined statement of revenues, expenditures and changes in fund balances - all governmental fund types and similar trust funds.

(c) Combined statement of revenues, expenditures and changes in fund balances - budget and actual - general and special revenue fund types and similar governmental fund types for which annual budgets have been legally adopted.

(d) Combined statement of revenues, expenses and changes in retained earnings or equity - all proprietary fund types and similar trust funds.

(e) Combined statement of changes in financial position - all proprietary fund types and similar trust funds.

(f) Notes to the financial statements.

(2) “Generally accepted accounting principles” means those governmental accounting and financial reporting principles promulgated by the governmental accounting standards board or its successor bodies.

(3) “Generally accepted auditing standards” means those standards approved and adopted by the membership of the American Institute of Certified Public Accountants.

(4) “Local aid programs” means the following:

(a) State shared revenues.

(b) Federal revenue sharing.

(d) State payments for municipal services.

(5) “Local government” means a town, village, city or county.

(6) “Schedules” means a financial presentation used to provide detailed information supporting general purpose financial statements in conformity with the provisions of this chapter.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85; correction in (2) made under s. 13.93 (2m) (b) 6., Stats., Register, March, 1989, No. 399.

Wis. Admin. Code § Tax 16.04 Schedules {#sec-tax-16.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.04}

(1) The governing body of each local government subject to this chapter shall provide for and cause to be prepared the following schedules required by the department for administration of local aid programs and other reporting purposes.

(a) A schedule of revenues and expenditures - all governmental fund types and expendable trust funds.

(b) A schedule of revenues and expenses - all proprietary fund types and similar trust funds.

(d) A schedule of allocations.

(e) A schedule of indebtedness.

(2) The required schedules shall be prepared on the forms provided by the department and in accordance with instructions issued by the department.

(3) The required schedules shall be filed with the department within the time specified under s. 86.303 (5) (c) or (d), Stats. Information in the schedules shall be complete and accurate.

(4) The expense of preparing the required schedules shall be the obligation of the local government for which the schedules were prepared.

(5) Upon failure, refusal or neglect of any local government to file the required schedules in compliance with the provisions of this chapter, the department may prepare or cause to be prepared the required schedules at the expense of the local government. The department shall notify the local government of the daily charge for preparing the required schedules prior to the commencement of any work.

(6) Receipt of an audited financial report and schedules submitted pursuant to s. Tax 16.05 (4) (e) prior to the due date established by sub. (3) will satisfy the requirements of this section.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85; CR 13-035: am. (2) Register December 2013 No. 696, eff. 1-1-14.

Wis. Admin. Code § Tax 16.05 Audited financial report and schedules {#sec-tax-16.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.05}

(1) The governing body of each local government subject to this chapter shall provide for and cause to be prepared an audited financial report of the financial status and activities of all funds of the local government and the schedules enumerated in s. Tax 16.04 (1) accompanied by an auditor’s report.

(2) The audited financial report shall include the following:

(a) Table of contents.

(b) Auditor’s report.

(d) Combining statements by fund type for all fund types for which more than one fund is reported.

(3) Schedules enumerated in s. Tax 16.04 (1) shall be accompanied by an auditor’s report on the supplemental information contained in those schedules. Certain amounts shown on the schedules enumerated in s. Tax 16.04 (1) shall agree with or be reconciled to certain amounts reported in the general purpose financial statements, sub. (2) (c) in accordance with instructions issued by the department.

(4)

(a) The governing body of each local government subject to this chapter shall provide for and cause to be conducted an annual audit of all the funds and account groups of the local government.

(b) The annual audit shall be conducted in accordance with generally accepted auditing standards by either a certified public accountant licensed to practice in the state of Wisconsin; or by a licensed public accountant, licensed on or before December 31, 1970 by the Wisconsin accounting examining board.

(c) The auditor’s report in the financial report required by sub. (2) shall contain an unqualified opinion with respect to the combined financial statements taken as a whole, or if an unqualified opinion cannot be expressed, a qualified opinion, adverse opinion or a disclaimer of opinion together with an explanation of the reasons therefore. The auditor’s report accompanying the schedules required by sub. (3) shall contain an opinion as to whether the supplemental information submitted as schedules is fairly stated in all material respects in relation to the financial report’s combined financial statements taken as a whole. The auditor’s opinion, unqualified, qualified, adverse or a disclaimer, with respect to the supplemental information in the schedule shall be at least the equivalent of the auditor’s opinion with respect to the combined financial statements in the financial report.

(d) The expense of audits required by par. (a) shall be the obligation of the local government for which the audit is made.

(e) The local government shall submit together one copy of its audited financial report and schedules to the department within 30 days after its completion, but not later than July 31 of the year following the year for which the report and schedules were prepared.

(5) Upon failure, refusal or neglect of any local government to file the required financial report and schedules in compliance with the provisions of this chapter, the department may prepare or cause to be prepared the required financial report and schedules at the expense of the local government. The department shall notify the local government of the daily charge for preparing the required financial report and schedules prior to the commencement of any work.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85.

Wis. Admin. Code § Tax 16.06 Compliance {#sec-tax-16.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 16.06}

(1) Compliance with provisions of this chapter will release the unit of local government from any obligation to file the current financial report form authorized under s. 73.10 (2) (a), Stats. Reports prescribed by this chapter should be prepared from accounting records maintained by the local government and should relate directly to those records.

(2) The department shall review schedules and financial reports filed pursuant to this chapter to determine compliance with standards and procedures prescribed by this chapter.

(3) The department may inspect and examine or cause an inspection and examination of the records of local government filing schedules or financial reports under this chapter.

(4) The department may review the auditor’s work- papers prepared during audits conducted pursuant to this chapter to determine compliance.

Note 1) Copies of the draft schedules required by s. Tax 16.04 (1) may be obtained from:

Wisconsin Department of Revenue Division of State/Local Finance P.O. Box 8971 – MS 6-97 Madison, WI 53708-8971

Note 2) Generally accepted accounting principles may be obtained from:

Governmental Accounting Standards Board 801 Main Avenue P.O. Box 5116 Norwalk, CT 06856-5116

Generally accepted auditing standards may be obtained from:

American Institute of Certified Public Accountants 1211 Avenue of the Americas New York, NY 10036

Note 3) The financial report referenced in s. Tax 16.05 represents the audited financial statements of local government units commonly referred to as an audit report or a comprehensive annual financial report and may include other statements, schedules and statistical information presented at the discretion of the local governmental unit.

History

Cr. Register, February, 1985, No. 350, eff. 3-1-85.

Chapter Tax 18 ASSESSMENT OF AGRICULTURAL PROPERTY

Wis. Admin. Code § Tax 18.04 Purpose {#sec-tax-18.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 18.04}

The purpose of this chapter is to provide definitions and procedures for the department and municipal assessors to classify certain real property as agricultural or other, and to value such property for property tax purposes.

History

Cr. Register, September, 1997, No. 501, eff. 10-1-97; CR 13-036: am. Register December 2013 No. 696, eff. 1-1-14.

Wis. Admin. Code § Tax 18.05 Definitions {#sec-tax-18.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 18.05}

In this chapter:

(1) “Agricultural use” means any of the following:

(a) Activities included in subsector 111 Crop Production, set forth in the North American Industry Classification System (NAICS), United States, 1997, published by the executive office of the president, U.S. office of management and budget.

(b) Activities included in subsector 112 Animal Production, set forth in the North American Industry Classification System, United States, 1997, published by the executive office of the president, U.S. office of management and budget.

Note: Subsector 111 Crop Production and subsector 112 Animal Production, set forth in the North American Industry Classification System, United States, 1997, published by the executive office of the president, U.S. office of management and budget, are reproduced in full in the Wisconsin property assessment manual under s. 73.03 (2a), Stats. In addition, copies are on file with the department and the legislative reference bureau.

(d) Land without improvements subject to a federal or state easement or enrolled in a federal or state program if all of the following apply:

The land was in agricultural use under par. (a), (b), or (c) when it was entered into the qualifying easement or program, and
Qualifying easements and programs shall adhere to standards and practices provided under the January 31, 2014 No. 697 version of s. ATCP 50.04, 50.06, 50.71, 50.72, 50.83, 50.88, 50.91, 50.96, or 50.98. The Wisconsin Property Assessment Manual, authorized under s. 73.03 (2a), Stats., shall list the qualifying easements and programs according to the ATCP provisions, and

a. The terms of the temporary easement or program do not restrict the return of the land to agricultural use under par. (a), (b), or (c) after the easement or program is satisfactorily completed, or

b. The terms of an easement, contract, compatible use agreement, or conservation plan for that specific parcel authorized an agricultural use, as defined in par. (a), (b), or (c), for that parcel in the prior year.

(2) “Council” means the farmland advisory council under s. 73.03 (49), Stats.

(3) “Department” means the department of revenue.

(4) “Land devoted primarily to agricultural use” means land in an agricultural use for the production season of the prior year, and not in a use that is incompatible with agricultural use on January 1 of the assessment year.

(5) “Other” means agricultural buildings and improvements and the land necessary for their location and convenience.

(6) “Parcel of agricultural land” means land, contained within a single legal description, that is devoted primarily to agricultural use.

History

Cr. Register, September, 1997, No. 501, eff. 10-1-97; am. (1) (a), (b) and (d), cr. (1) (e), Register, July, 2000, No. 535, eff. 1-1-01; CR 13-036: am. (intro.), (1) (a) Register December 2013 No. 696, eff. 1-1-14; CR 13-102: r. and recr. (1) (d), r. (1) (e) Register June 2015 No. 714, eff. 7-1-15.

Wis. Admin. Code § Tax 18.06 Land classified agricultural; categories of agricultural land {#sec-tax-18.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 18.06}

(1) An assessor shall classify as agricultural land devoted primarily to agricultural use. Land devoted primarily to agricultural use shall typically bear physical evidence of agricultural use, such as furrows, crops, fencing or livestock, appropriate to the production season. If physical evidence of agricultural use is not sufficient to determine agricultural use, the assessor may request of the owner or agent of the owner such information as is necessary to determine if the land is devoted primarily to agricultural use.

(2) For each legal description of property that includes a parcel of agricultural land, the assessor shall indicate on the property record card, by acreage, the category of agricultural land. Categories of agricultural land are the following:

(a) First grade tillable cropland.

(b) Second grade tillable cropland.

(d) Pasture.

(e) Specialty land.

History

Cr. Register, September, 1997, No. 501, eff. 10-1-97.

Wis. Admin. Code § Tax 18.07 Use-value {#sec-tax-18.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 18.07}

(1)

(a) Beginning in 1997 and each year thereafter, the council shall adopt and the department shall publish in the Wisconsin property assessment manual a use value per acre for each category of agricultural land, except specialty land, in each municipality. Use value per acre of specialty land shall be adopted and published for the municipalities in which specialty land is located. Use value per acre for each category of agricultural land in each municipality shall be calculated by dividing the net rental income per acre for that category of agricultural land in that municipality calculated under par. (b) by the capitalization rate for that municipality calculated under par. (c).

(b) Net rental income per acre.

Beginning in 2006 and in each year thereafter, net rental income per acre for each category of agricultural land in each municipality shall be calculated according to the income attributable to a landowner under a crop-share lease. The department shall assume a lease agreement where the income and direct operating costs are distributed equally between the landowner and farm operator. The department shall adhere to professionally accepted appraisal practices in determining gross income, cost of production, and net income that are attributable to a landowner under a crop-share lease. Net income shall be calculated by subtracting average total cost of production per acre under subd. 3. from average gross income per acre under subd. 2.
Beginning in 2006 and in each year thereafter, the landowner’s average gross income per acre for each category of agricultural land in each municipality shall be calculated by multiplying the category’s 5-year average corn yield per acre, adjusted for the typical productivity of that category, by the 5-year average corn market price per unit of output. The product shall be reduced by 50% to reflect a crop-share lease with equal distribution of income. Yield per acre shall be based on the natural resource conservation service’s soil productivity indices and corn market price data shall be obtained from the Wisconsin department of agriculture, trade and consumer protection. If the natural resource conservation service and the Wisconsin department of agriculture, trade and consumer protection are unable to provide, or to provide timely, soil productivity indices and corn market price data, respectively, comparable data shall be obtained from other generally acceptable sources.
Beginning in 2006 and in each year thereafter, the landowner’s average total cost of production per acre for each category of agricultural land shall be calculated by multiplying the category’s 5-year average corn yield per acre, adjusted for the typical productivity of that category, by the 5-year average cost of corn production. In calculating the 5-year average cost of corn production, the department shall include the direct operating costs incurred by the landowner under a crop-share lease, which shall include the cost of seed, fertilizer, lime, manure, chemicals, commercial drying, interest on operating capital, or their equivalent. The total cost of corn production is reduced by 50% to reflect a crop-share lease with equal distribution of direct operating costs. The 5-year average cost of corn production shall not include those costs incurred by a farm operator under a crop-share lease, which includes labor, opportunity cost of unpaid labor, machinery, fuel, repairs, overhead, or their equivalent. An additional landowner cost for operational management, equal to 7.5% of the average gross income determined in subd. 2., shall be subtracted from the average gross income calculation in subd. 2. Property taxes are not a farm expense for purposes of calculating average total cost of production per acre. Yield per acre shall be based on the natural resource conservation service’s soil productivity indices and cost of corn production data shall be obtained from the Wisconsin department of agriculture, trade and consumer protection. If the natural resource conservation service and the Wisconsin department of agriculture, trade and consumer protection are unable to provide, or to provide timely, soil productivity indices and cost of corn production data, respectively, comparable data shall be obtained from other generally acceptable sources.

(c) Capitalization rate. Beginning in 1997 and each year thereafter, the capitalization rate for each municipality shall be determined as follows:

The department shall survey each federal land credit association (FLCA) and each agricultural credit association (ACA) in Wisconsin to obtain the interest rate charged by that association for a medium-sized, 1-year adjustable rate mortgage (ARM), as of January 1 of the year prior to the assessment year. In addition, the survey shall obtain each association’s stock purchase requirement, if any, for such a mortgage. The 1997 survey shall include each association’s 1-year ARM rate and the stock purchase requirement for a medium-sized loan, as of January 1 for the years 1993 to 1997.

Note: If an FLCA and an ACA merge, the combined association’s interest rate and stock purchase requirement shall be obtained.

Note: Each FLCA and each ACA divides loans into 3 to 5 tiers based on loan size and sets a 1-year ARM rate for each tier. Although the dollar amount of a medium-sized loan may vary among FLCAs and ACAs, each FLCA and each ACA offers medium-sized or middle tier loans at a specific 1-year ARM rate as of January 1.

The effective 1-year ARM rate of each FLCA and ACA for each year shall be calculated by dividing that association’s 1-year ARM rate by one minus that association’s stock purchase requirement as of January 1 of the same year, expressed as a percentage of the loan.

Example: If an FLCA or an ACA has a 2% stock purchase requirement, a borrower receives $98,000 of a $100,000 loan. If the 1-year ARM rate is 9%, the effective rate of the loan is 9.18% [9 / (1-.02)].

The statewide average effective rate for each year shall be calculated by averaging the effective 1-year ARM rates under subd. 2.
The statewide average effective rate for the year prior to the assessment year shall be averaged with the statewide average effective rates for the 4 prior years to obtain a statewide 5-year moving average rate.
The capitalization rate for each municipality for each assessment year shall be 11% or the sum of the statewide 5-year moving average rate for the year prior to the assessment year and the net tax rate of that municipality for the property tax levy 2 years prior to the assessment year, whichever is greater.

(d)

Beginning in 2006 and in each year thereafter, increases and decreases in the use values for each category of agricultural land in each municipality shall be limited to the prior year’s percentage change in the statewide equalized value. When determining the percentage change in the statewide equalized value, the department shall exclude the value of agricultural land and new construction. New construction shall include increases in land value due to higher land use, new subdivisions, and increases in improvement value due to new construction, completion of improvements partially assessed, remodeling and additions, and land improvements such as addition of curb, gutter, sewer, water, or their equivalent. The amount of new construction shall be reduced by the loss of land utility and loss of property value due to full or partial destruction, removal, contamination, or their equivalent.
The department shall calculate the percentage change from the previous year’s use-values to the current year’s use-values according to the formula in s. Tax 18.07 (1) (b). Increases and decreases in the use values for each category of agricultural land in each municipality shall be limited to the percentage change determined in subd. 1. If the increase or decrease is less than the percentage change determined in subd. 1., the use value per acre will equal the value calculated by the department according to the formula in s. Tax 18.07 (1) (b).

(2) Not later than January 1 of each year, the department shall provide assessors with the use value per acre for each category of agricultural land in each municipality, calculated under sub. (1). The use value per acre for each category of agricultural land in each municipality shall be published annually in the Wisconsin property assessment manual.

(3)

(a) The assessor shall determine the use value of each parcel of agricultural land based on the use value per acre for that category of agricultural land in that municipality provided by the department.

(b) The assessor shall equate the use value of each parcel of agricultural land to the general level of assessment in the taxation district in which that parcel of agricultural land is located.

History

Cr. Register, September, 1997, No. 501, eff. 10-1-97; emerg. cr. (1) (b) 4., 5., and (c) 6., eff. 10-3-03; CR 03-104: cr. (1) (b) 4., 5., and (c) 6. Register April 2004 No. 580, eff. 5-1-04; emerg. cr. (1) (b) 6., 7. and (c) 7. eff. 12-29-04; CR 05-035: cr. (1) (b) 6., 7., and (c) 7. Register August 2005 No. 596, eff. 9-1-05; CR 05-063: am. (1) (b) 1. to 3., (c) 5., and (3) (a), r. (1) (b) 4. to 7., (c) 6. and 7., cr. (1) (d) 1. and 2. Register October 2005 No. 598, eff. 11-1-05; CR 13-036: am. (2) Register December 2013 No. 696, eff. 1-1-14.

Wis. Admin. Code § Tax 18.09 Assessment of other property {#sec-tax-18.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 18.09}

An assessor shall assess property classified as other according to s. 70.32 (1), Stats.

History

Cr. Register, September, 1997, No. 501, eff. 10-1-97.

Chapter Tax 19 EXPENDITURE RESTRAINT PAYMENTS

Wis. Admin. Code § Tax 19.01 Purpose {#sec-tax-19.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 19.01}

The purpose of this chapter is to establish standards and procedures for determining whether a town, village, or city is eligible for an expenditure restraint payment under s. 79.05, Stats., and the computation of the payment.

History

Cr. Register, July, 1991, No. 427, eff. 8-1-91; am. Register, December, 1998, No. 516, eff. 1-1-99.

Wis. Admin. Code § Tax 19.02 Scope {#sec-tax-19.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 19.02}

This chapter applies to all towns, villages and cities.

History

Cr. Register, July, 1991, No. 427, eff. 8-1-91.

Wis. Admin. Code § Tax 19.03 General {#sec-tax-19.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 19.03}

(1) Definitions. In this section:

(b) “Excess property tax levy rate” means the amount by which the property tax levy rate for a municipality exceeds 5 mills.

(c) “Municipal operating budget increase” means an amount, expressed as a percentage and rounded to 2 places beyond the decimal, which results from dividing:

The difference between the amount of the municipal operating budget for the year of the statement and the amount of the municipal operating budget, including any adjustment under s. 79.05 (6), Stats., for the year before the year of the statement; by
The amount of the municipal operating budget, including any adjustment under s. 79.05 (6), Stats., for the year before the year of the statement.

(f) “Property tax levy rate” means an amount, expressed as a decimal and rounded to 9 places beyond the decimal, which results from dividing:

Municipal taxes only less the tax increment under s. 66.1105, Stats.; by
The municipal full value less the tax incremental value under s. 66.1105, Stats.

(i) “Tax increment” means the sum of tax increments for all taxing jurisdictions as reported on the statement of taxes on the line entitled “tax increment.”

(j) “Taxing jurisdiction” has the same meaning as in s. 74.01 (7), Stats.

(k) “Inflation factor” means an amount expressed as a percentage and rounded to one place beyond the decimal, which results from dividing:

The difference between the sum of the 12 monthly indexes of the U.S. consumer price index for all urban consumers, U.S. city average, for the year before the year of the statement and the sum of the 12 monthly indexes of the U.S. consumer price index for all urban consumers, U.S. city average, for the year prior to that year; by
The sum of the 12 monthly indexes of the U.S. consumer price index for all urban consumers, U.S. city average, for the year before the year of the statement.

(L) “The year of the statement” means the calendar year in which the statement under s. 79.015, Stats., is issued and is the year prior to the calendar year in which the expenditure restraint payment is to be made.

(m) “Total property tax levy” means the amount reported on the statement of taxes as “total town, village or city taxes levied.”

(n) “Valuation factor” has the same meaning as in s. 79.05 (1) (d), Stats.

(2) Eligibility. Any town, village, or city shall receive an expenditure restraint payment if all of the following requirements are met:

(a) Its property tax levy rate established during the year before the year of the statement is greater than 5 mills.

(3) Eligibility under sub. (2) (a). The department of revenue shall determine whether a municipality meets the eligibility requirement under sub. (2) (a). If a municipality meets this eligibility, the department of revenue shall send the expenditure restraint worksheet to the municipality which, when returned to the department of revenue, shall be used to determine if the municipality meets the requirement in sub. (2) (c).

Note: See s. Tax 19.04 for information about the expenditure restraint worksheet.

(4) Payment. If the department of revenue determines that a municipality meets the requirements in sub. (2), it shall receive an expenditure restraint payment calculated by the department of revenue as follows:

(a) Subtract 5 mills from the municipality’s property tax levy rate.

(b) Multiply the amount under par. (a) by the municipality’s full value including the value increment under s. 66.1105, Stats.

(d) Multiply the amount under par. (c) by the amount of the appropriation under s. 79.01 (1), 2021 Stats.

(5) Corrections to payments. The department of revenue will increase or decrease the subsequent year’s distribution under subch. I of ch. 79, Stats., for any overpayments and underpayments.

History

Cr. Register, July, 1991, No. 427, eff. 8-1-91; r. (1) (a), (d), (e), (g), (h) and (2) (b), cr. (1) (am) and (4) (d), am. (1) (b), (c), (k), (L), (2) (intro.), (a), (c), (3) and (4) (intro.) and (a), Register, December, 1998, No. 516, eff. 1-1-99; correction in (1) made under s. 13.93 (2m) (b) 1., Stats., Register, December, 1998, No. 516; corrections in (1) (f) 1., 2. and (4) (b) made under s. 13.93 (2m) (b) 7., Stats., Register September 2006 No. 609; CR 13-035: am. (1) (c) (intro.) Register December 2013 No. 696, eff. 1-1-14; CR 23-062: am. (1) (k) 1., 2. Register July 2024 No. 823, eff. 8-1-24; correction in (4) (d) made under s. 13.92 (4) (b) 7., Stats., Register February 2025 No. 830.

Wis. Admin. Code § Tax 19.04 Expenditure restraint worksheet {#sec-tax-19.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 19.04}

(1) General. Each municipality that meets the requirement in s. Tax 19.03 (2) (a) shall receive from the department of revenue an expenditure restraint worksheet. The completed expenditure restraint worksheet shall be electronically filed to the department along with the budgets described in s. Tax 19.05.

(2) Purpose. The expenditure restraint worksheet shall be used by the department of revenue to determine if the municipality meets the eligibility requirement in s. Tax 19.03 (2) (c).

(3) Due date. For purposes of the 1992 and subsequent years’ expenditure restraint payments, the department’s expenditure restraint worksheet shall be completed and returned to the department of revenue on or before May 1 of the year of the statement.

History

Cr. Register, July, 1991, No. 427, eff. 8-1-91; am. (1), (2), (3) (b) and (c), r. (3) (a) and (4), Register, December, 1998, No. 516; CR 23-062: am. (1), r. (3) (c) Register July 2024 No. 823, eff. 8-1-24; renum. (3) (b) to (3) under s. 13.92 (4) (b) 1., Stats., Register July 2024 No. 823.

Wis. Admin. Code § Tax 19.05 Budgets {#sec-tax-19.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 19.05}

(1) Definitions. In this chapter:

(a) “Long-term debt” means general obligation debt payable over a period that exceeds one year.

(b) “Municipal operating budget” means the total adopted general fund budgeted expenditures, including inter-fund transfers out to other funds and less any principal and interest payments on long-term debt budgeted in the general fund.

(2) General. Municipalities that receive an expenditure restraint worksheet shall submit to the department of revenue the municipal operating budgets for the year of the statement and the preceding year. These budgets are due on or before the same dates as the expenditure restraint worksheet.

(3) Content.

(a) The budgets shall include all of the following except as provided in par. (b):

All revenues, by major revenue source.
All expenditures, by major expenditure category.
Any financing source and use not included under subds. 1. and 2.

(b) For 1994 and subsequent years’ payments, the budgets described in sub. (1) shall be summarized in compliance with s. 65.90, Stats., and in the format prescribed by the department of revenue.

History

Cr. Register, July, 1991, No. 427, eff. 8-1-91; am. (1) (intro.), (b) and (2), Register, December, 1998, No. 516, eff. 1-1-99.

Chapter Tax 20 LOTTERY AND GAMING CREDIT

Wis. Admin. Code § Tax 20.04 Purpose {#sec-tax-20.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.04}

The purpose of this chapter is to provide definitions related to the lottery and gaming credit and establish procedures to assist in the management of the lottery and gaming credit program at the state, county, town, village, and city level.

Note: Department of Revenue forms mentioned through this chapter are located on the department’s web site at www.revenue.wi.gov.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11; CR 16-064: am. Register September 2017 No. 741 eff. 10-1-17.

Wis. Admin. Code § Tax 20.05 Definitions {#sec-tax-20.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.05}

In this chapter:

(1) “Application” means the form used to claim the lottery and gaming credit.

(2) “Approved property” means taxable real estate or an item of personal property that contains the primary residence of an owner whose application for a lottery and gaming credit has been timely filed under s. Tax 20.07 or 20.11, and has not been disqualified by the department.

(3) “Certification date” means January 1 of the year the tax is levied. For manufactured and mobile homes placed in a manufactured or mobile home community after January 1, the certification date is determined under s. 66.0435 (3) (c) 2., Stats.

(4) “Credit” means the lottery and gaming credit under ss. 66.0435 (3) (c) 8. and 79.10, Stats.

(5) “Department” means the department of revenue.

(6) “Dwelling” means a structure or that part of a multidwelling or multipurpose structure occupied as separate living quarters. Separate living quarters are those in which the occupants live and eat separately from any other persons in the building and which have direct access from outside the building or through a common hall. “Dwelling” does not include a structure which is exempt from property taxes under s. 70.111 (19) or 70.112 (5), Stats., in the year of the credit.

(7) “Manufactured home” has the meaning given in s. 66.0435 (1) (cm), Stats.

(8) “Maximum credit value” or “MCV” means the value of property calculated by the department as provided in s. 79.10 (11) (c), Stats., for purposes of computing the lottery and gaming credit.

(9) “Mobile home” has the meaning given in s. 66.0435 (1) (d), Stats.

(10) “Monthly municipal permit fee” means the fee calculated under s. 66.0435 (3) (c), Stats., collected by the local taxing authority or community operator, as defined in s. 66.0435 (1) (c), Stats., from each occupied space or lot in a manufactured or mobile home community located in the licensing authority’s boundaries.

(11) “Municipality” means any town, village, or city.

(12) “Owner” means:

(a) A person named as an owner on the title instrument for that person’s primary residence which is recorded in the records of the register of deeds for the county in which that person’s primary residence is located.

(b) A person related as husband or wife to a person under par. (a), (d), (f), (g), or (h).

(c) A partner of a partnership under s. 178.0102 (11), Stats., or shareholder of a tax-option corporation as defined in s. 71.34 (2), Stats., or a shareholder of a small business corporation as defined in s. 1361 (b) of the Internal Revenue Code, if that partnership or corporation owns property that is the primary residence of the partner or shareholder.

(d) A buyer in possession under a land contract of property which is the primary residence of the buyer, provided that the land contract or the instrument evidencing the existence of a land contract is notarized no later than 6 months after the certification date.

(e) A trustee, as defined in s. 701.0103 (28), Stats., of a trust in property, as defined in s. 701.0103 (20), Stats., where a beneficiary of that trust, as defined in s. 701.0103 (3), Stats., uses the property as his or her primary residence.

(f) A member, as defined in s. 185.01 (5), Stats., of a cooperation as defined in s. 185.01 (2), Stats., that owns property that is the primary residence of the member.

(g) A person holding a property interest for life under s. 700.02 (3), Stats., in property on which that person’s primary residence is located, provided that the life interest is notarized no later than 6 months after the certification date.

(h) An owner of a manufactured or mobile home.

(i) A lawfully authorized agent of an owner described under pars. (a) to (h) acting on behalf of that owner.

(13) “Primary residence” means the dwelling where an individual lives most of the time and to which, when temporarily away, the individual returns, except that no individual may have more than one primary residence at any time. “Primary residence” includes a dwelling located in this state lived in by an individual for more than 6 months during a year in which the individual lived only part of the year in this state.

Note: Eligibility for the lottery credit will not be denied to an owner who is a temporary resident of a facility such as a health care facility if it is the intent of the owner to return to his or her primary residence.

(14) “School tax rate” means the rate computed by the department as the total amount levied by the school district in which the property is located divided by the full value of the school district excluding tax incremental district value increments.

(15) “Taxation district” has the meaning given in s. 74.01 (6), Stats.

(16) “Taxing jurisdiction” has the meaning given in s. 74.01 (7), Stats.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11; correction in (12) (c), (e) made under s. 13.92 (4) (b) 7., Stats., Register April 2017 No. 736; CR 16-064: am. (intro.) Register September 2017 No. 741 eff. 10-1-17.

Wis. Admin. Code § Tax 20.06 Computing the lottery and gaming credit {#sec-tax-20.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.06}

(1) For owners of taxable property, the credit is computed as the estimated fair market value, not to exceed the maximum credit value, of the approved property multiplied by the school tax rate for the school district in which the approved property is located.

(2) For owners of manufactured and mobile homes subject to a monthly municipal permit fee, the credit is computed as the fair market value minus the tax exempt household furnishings of the manufactured or mobile home, as established by the assessor under s. 66.0435 (3) (c), Stats., for January 1, not to exceed the maximum credit value, multiplied by the school tax rate for the school district in which the manufactured or mobile home is located.

(3) The amount of property tax or monthly municipal permit fee due after subtracting the lottery and gaming credit may not be less than zero.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11.

Wis. Admin. Code § Tax 20.07 How to claim the credit {#sec-tax-20.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.07}

(1) Taxable property.

(a) An owner of taxable property who qualifies for the lottery and gaming credit may claim the credit on an application form prescribed by the department. The application form shall require the claimant to attest to, as of the certification date, owning the property described on the application form and using it as a primary residence. The completed application form shall be filed with the county treasurer except that in a city that collects taxes under s. 74.87, Stats., the application form shall be filed with the city treasurer. A claim made under this paragraph is valid until no longer eligible, at which time the claim shall be withdrawn by the claimant as required under sub. (3), except as provided under s. Tax 20.12 (2).

Note: The various application forms used to claim the lottery and gaming credit are available on the department’s web site at www.revenue.wi.gov.

(b) If more than one owner qualifies for and claims a credit on taxable property, each owner shall claim the credit under par. (a) on a separate application form. The number of credits claimed on a property may not exceed the number of dwellings on the property. Total credits for each dwelling are limited by s. Tax 20.06 (3).

Note: Examples of owners whose primary residence is on the same property as another owner include co-owners of agricultural land on which each owner has a primary residence or co-owners of a duplex in which each dwelling is occupied by one of the owners.

(c) An owner who qualifies for the credit against taxes but whose tax bill does not reflect the credit may claim the credit until January 31 following the issuance of the tax bill by filing the application form under par. (a) with the treasurer collecting the taxes. If the application form is approved, the treasurer shall proceed under s. Tax 20.08 (1) (e). Requests made after January 31 shall be filed with the department no later than October 1 following the issuance of the person’s property tax bill, on the appropriate late claim application form, for processing under s. Tax 20.11 (2). The department will notify the applicable treasurer of those late claims approved by the department. The treasurer shall then enter the property on the next tax role as property that qualifies for a lottery and gaming credit. The owner should also file an application under par. (a), with the applicable treasurer, to apply for the credit for subsequent years. A claim made under this paragraph is valid until no longer eligible, at which time the claim shall be withdrawn by the claimant as required under sub. (3), except as provided under s. Tax 20.12 (2).

(d)

If a property transferred qualifies for the credit because a previous owner used the property as his or her primary residence on the certification date, the new owner of the property may apply for the credit on a form prescribed by the department, or by indicating on the real estate transfer return that the property will be used by the owner as their primary residence. Requests made under this paragraph shall be filed with the treasurer of the county in which the property is located or, if the property is located in a city that collects taxes under s. 74.87, Stats., with the treasurer of that city.
A claim made under par. (a) is valid until no longer eligible, at which time the claim shall be withdrawn by the claimant, except as provided under s. Tax 20.12 (2). If the claimant under this paragraph does not own or use the property as his or her primary residence on the certification date of any year subsequent to the year of the claim, the claimant shall withdraw the claim as required under sub. (3).

(e) Requests made after January 31 of the year following the year of the credit shall be filed with the department no later than October 1 following the issuance of the person’s property tax bill for processing under s. Tax 20.11 (2) on the appropriate late claim application form. The submission of a late claim application form with the department does not certify the owner for future credits. The department will notify the applicable treasurer of those late claims approved by the department. The treasurer shall then enter the property on the next tax role as property that qualifies for a lottery and gaming credit. The owner shall also file an application under par. (a) with the applicable treasurer to apply for the credit for subsequent years. A claim made under this paragraph is valid until no longer eligible, at which time the claim shall be withdrawn by the claimant as required under sub. (3), except as provided under s. Tax 20.12 (2).

(2) Manufactured and mobile homes.

(a) The owner of a manufactured or mobile home, subject to a monthly municipal permit fee, who qualifies for the credit as of January 1, may claim the credit on an application form prescribed by the department. The application form shall require the claimant to attest to, as of the certification date, owning the manufactured or mobile home described on the application and using it as a primary residence. The completed application form must be filed with the taxation district treasurer no later than February 10 of the year the owner is eligible for the credit. A claim made under this paragraph is valid until no longer eligible, at which time the claim shall be withdrawn by the claimant as required under sub. (3), except as provided under s. Tax 20.12 (2).

(b) The taxation district treasurer shall compute the amount of the lottery and gaming credit under s. Tax 20.06 (2). One-twelfth of the credit computed under this paragraph shall be subtracted from each monthly municipal permit fee otherwise due for the parking site occupied by the owner under par. (a) on January 1.

(c) The amount of the lottery and gaming credit received for months in which a fee is not due for the parking site of an owner under par. (a) shall be recorded by the taxation district treasurer and returned to the department by January 20 of the following year. The taxation district treasurer may charge back to the school district the corresponding credits previously settled for under s. Tax 20.10.

(3) Withdrawing a claim. Within 30 days of the date on which the claimant no longer owns the taxable real or personal property or the manufactured or mobile home subject to a monthly municipal permit fee on which a claim was based, or no longer uses the property as a primary residence, the claimant shall inform the treasurer administering the credit under this section that the claimant is no longer eligible to claim a credit for the property. Failure to do so may subject the owner to penalties under s. Tax 20.12 (2).

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11.

Wis. Admin. Code § Tax 20.08 Responsibilities of county treasurer and taxation district treasurer {#sec-tax-20.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.08}

(1) Certification of lottery and gaming credit.

(a) The treasurer administering the credit under s. Tax 20.07 (1) (a) shall prepare application forms for properties likely to qualify for the lottery and gaming credit or upon request. Prepared application forms shall include the property identification number and the physical address of the property address or other description of the property. The prepared application for the lottery and gaming credit shall be distributed to the owner of the property for their certification as to whether the property qualifies for the credit.

(b) The treasurer administering the credit under s. Tax 20.07 (1) (a) shall accept application forms for the lottery and gaming credit for taxable property through the October 31 prior to issuance of the tax bill. The treasurer shall accept facsimiles of application forms or other documents evidencing a claim that include all the information contained in the application form prescribed by the department if such facsimiles or other documents are received by the treasurer by October 31. The treasurer may not accept application forms postmarked earlier than the certification date.

(c) If a treasurer receives an application without an owner’s signature, the claim for the credit may not be granted. The treasurer shall attempt to contact the owner and advise of the need to sign the application.

(d) If a treasurer has reason to question a signed application form, the treasurer shall approve the claim but shall mark the property for audit by the department. The treasurer shall advise the department of all properties marked for audit on the March 1 report under sub. (4) (c).

(e) The treasurer administering the credit under s. Tax 20.07 (1) (a) shall remove the credit from a property as of the next January 1 after the filing of a real estate transfer return, unless one of the following applies:

The real estate transfer return indicates that the property will be used as the primary residence of the new owner.
An application form is filed by the new owner.

(f) An owner who qualifies for the lottery and gaming credit but whose tax bill does not reflect the credit, may claim the credit until January 31 following the issuance of the tax bill by filing the application form under s. Tax 20.07 (1) (a) with the treasurer responsible for collecting the January payment of the owner’s property taxes. The treasurer shall compute the credit, subtract the calculated credit from the amount of taxes due to the extent allowed under s. Tax 20.06 (3), for the approved property of the owner, and make an appropriate entry in the tax roll. If the tax has been paid in full, the treasurer shall provide a refund for the amount of the credit, not to exceed the amount of tax paid. The treasurer shall, on or before settlement under s. 74.25 or 74.30, Stats., convey to the county treasurer the property identification number, property address or other description of the property, credit amount, and the name and mailing address for each claim accepted under this paragraph.

(g) The treasurer administering the credit under s. Tax 20.07 (1) (a) shall, by July 1 in each year ending in a four or nine, submit to the department a copy of the procedures used to conduct their verification of the eligibility of credits claimed within their territory under the requirements of s. 79.10 (10) (f), Stats. The procedures shall include methods used by the treasurer to identify properties receiving the credit based on a certification received by a previous owner and notification of property owners that potentially qualify for the credit that are not currently receiving the credit. A summary of the results from the latest verification of eligibility conducted by the treasurer shall be submitted with the procedures.

Example: A treasurer is required to submit the information specified in par. (g) by July 1 of 2014 and July 1 of 2019.

(2) Tax roll entries. The tax roll shall indicate the amount of lottery and gaming credits extended to approved properties.

(3) Property tax bills.

(a) The treasurer under s. Tax 20.07 (1) (a) shall cause the lottery and gaming credit to appear on tax bills for approved properties for which an application has been received under sub. (1) (b). Except as provided in par. (b), the total amount of the lottery and gaming credit shall be deducted from the net property tax included in the first installment. If the lottery and gaming credit exceeds the amount of net property taxes included in the first installment, the excess shall be deducted from subsequent installments, but no installment may be reduced below zero.

Examples: 1) A 2010 property tax bill shows the following amounts:

Total Due: 5,595 – 375 = 5,220

The total due is paid using a two installment method. The special assessments of $250 and special charges of $95 are required to be paid with the first installment.

The first installment is $2,745, determined as follows:

Step 1 [5,250 – (65 + 235)] ÷ 2 = 2,475

Step 2 (2,475 – 75) + (250 + 95) = 2,745

The second installment is $2,475.

2) A 2010 property tax bill shows the following amounts:

Total Due: 650 – 225 = 425

The total due is paid using a five installment method. The special assessments of $100 and special charges of $50 are required to be paid with the first installment.

The first installment is $150, determined as follows:

Step 1 [500 – (40 + 110)] ÷ 5 = 70

Step 2 (70 – 70) + (100 + 50) = 150

After applying the $5 of unused lottery and gaming credit, the second installment is $65. The final three installments are each $70.

(b) On tax bills for approved properties issued by a city that collects general property taxes under s. 74.87, Stats., the lottery and gaming credit shall be prorated over installment payments, but no installment may be reduced below zero.

(4) Information provided to the department.

(a) March credit reimbursement report.

On or before March 1, the county treasurer shall report to the department the total number and amount of credits claimed under s. Tax 20.07 (1), including late claims made under s. Tax 20.07 (1) (c) in each taxation district in the county except that for taxation districts in a city that collects taxes under s. 74.87, Stats., the city treasurer shall report to the department. The report shall be on a form prescribed by the department and shall be submitted by or under the direction of the treasurer.
On or before March 1, each taxation district treasurer shall report to the department the total number and amount of credits claimed through the preceding February 10 for manufactured and mobile homes subject to a monthly municipal permit fee. The report shall be on a form prescribed by the department and shall be submitted by or under the direction of the treasurer.

(b) Returning unused manufactured or mobile home credit. On or before January 20, the taxation district treasurer shall report to the department, on a form prescribed by the department, the amount of unused manufactured and mobile home credits under s. Tax 20.07 (2) (c). Payment for the amount of unused credits under s. Tax 20.07 (2) (c) shall accompany the report.

(c) Claimant report. On or before March 1 of each year, treasurers under sub. (1) (a) shall provide the department a post-certification data file of all claims made in that year, including late claims made under sub. (1) (f). The data file shall be in a computer-readable format, and shall indicate for each individual claim the property identification number, physical property address or other description of the property, credit amount, recommendation for audit, and the name and mailing address for purposes of mailing the tax bill. The total number of credits claimed and the total amount of credit shown on this data file shall equal the number and amount of credits reported on the March Credit Reimbursement Report.

Example: On March 1, 2011 the treasurer provides the department a report of all claims made for the 2010 credit. The report includes all claims from 2009 that remain valid for the 2010 credit, new claims made in 2010, as well as late claims made in 2011 for the 2010 credit.

(d) Corrections report. On or before October 1, the treasurer under sub. (1) shall report to the department all corrections or adjustments made to the lottery and gaming credit claims of the previous year under s. Tax 20.11.

(5) Record retention.

(a) Except for credits extended under s. 79.10 (10) (e), Stats., each claim for a lottery and gaming credit shall be supported by a signed application or a facsimile thereof, which shall be available for inspection by the department in the office of the treasurer administering the credit under s. Tax 20.07 (1) (a) for the period the claim remains valid plus an additional 5 calendar years after the credit has been withdrawn under s. Tax 20.07 (3) or removed under s. Tax 20.12.

(b) All computer programs and records used to extend credits shall be available for inspection by the department in the office of the treasurer administering the credit for the next 5 calendar years from the year the credit was extended.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11.

Wis. Admin. Code § Tax 20.09 Payment of lottery and gaming credits {#sec-tax-20.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.09}

(1) Except as provided in sub. (2), on the 4th Monday in March the department of administration shall pay to the county treasurer the amounts claimed under s. Tax 20.08 (4) (a) 1. and 2. by each taxation district within the county.

(2) Payment under sub. (1) shall be made directly to a municipality, if one of the following applies:

(a) The municipality, annually on or before March 1, submits to the department of administration a letter requesting direct payment of the school levy tax credit, lottery and gaming credit, and first dollar credit. The letter shall contain a statement that the municipality qualifies for direct payment under s. 79.10 (7m) (cm) 1. a., Stats., and has received proper approval from the municipality’s governing body.

(b) The municipality, on or before March 1, submits to the department of administration a letter of notification requesting, until further notice, direct payment of the school levy tax credit, lottery and gaming credit, and first dollar credit. The letter shall contain a statement that the municipality qualifies for direct payment under s. 79.10 (7m) (cm) 2. a., Stats. Notification provided in the manner prescribed in this paragraph remains valid until the municipality notifies the department of administration that the municipality no longer wishes to receive or no longer qualifies to receive direct payment. The department may request written confirmation from a municipality that the municipality qualifies for direct payment under s. 79.10 (7m) (cm) 2., Stats. If a municipality fails to provide written confirmation as requested by the department under this paragraph, payment under sub. (1) shall be made to the county in which the municipality is located.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11; correction in (2) (a), (b) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671.

Wis. Admin. Code § Tax 20.10 Settlement for lottery and gaming credits {#sec-tax-20.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.10}

(1) Except for lottery and gaming credit amounts received for claims under s. Tax 20.07 (2), the municipal treasurer shall settle for amounts received directly by the municipality under s. Tax 20.09 with each taxing jurisdiction within the taxation district not later than April 15. The municipal treasurer shall also distribute the amounts received for claims under s. Tax 20.07 (2) by the municipal treasurer to the appropriate school district by April 15.

(2) The county treasurer shall settle for the amounts received directly under s. Tax 20.09 with each taxation district and each taxing jurisdiction within the taxation district not later than August 20.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11.

Wis. Admin. Code § Tax 20.11 Corrections {#sec-tax-20.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.11}

(1)

(a) If the department determines that the credits in a particular taxation district were not determined or calculated correctly, the department shall order an adjustment under par. (d) for each property for which the credit was incorrect.

(b) The county treasurer shall determine all of the following for each property in a taxation district under par. (a) for which a credit was claimed:

The credit actually claimed.
The correct credit amount.
The difference between subds. 1. and 2.

(c) The treasurer shall sum the differences under par. (b) 3. for each taxation district and shall certify those amounts to the department by October 1.

(d) The differences under par. (b) 3. shall be entered on the following year’s tax roll and shall show on tax bills for each property for which the difference under par. (b) 3. is not zero.

(e) The amount certified under par. (c) for each taxation district shall be added to, or deducted from, the total lottery and gaming credits of the following year paid to the taxation district in March of the following year.

(2) If the department determines in the year of any distribution under s. Tax 20.09 (1) that there was a lottery and gaming credit due, based on an eligible claim made after January 31 and no later than October 1 following the issuance of the person’s property tax bill, the department shall issue a check to the taxpayer in the amount equal to the computed credit. The department shall convey to the county treasurer the property identification number, physical property address or other description of the property, and the name and mailing address for each omitted claim. The owner shall also file an application under s. Tax 20.07 (1) (a) to claim the credit for subsequent years.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11.

Wis. Admin. Code § Tax 20.12 Audit; penalties {#sec-tax-20.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 20.12}

(1) Audit of lottery and gaming credit. The department shall audit claims for the lottery and gaming credits. The department may audit the computer programs and records of county treasurers and treasurers of a taxation district that collects taxes under s. 74.87, Stats., and records of individual property owners that have received the credit within the previous 4 years.

(2) Denial and collection of lottery and gaming credit. If the department determines that a credit was extended to a property or a manufactured or mobile home subject to a monthly municipal permit fee which does not qualify for the credit, the department shall proceed as follows:

(a) Current year audits.

If the determination is prior to the time the tax roll is prepared, the department shall instruct the treasurer under s. Tax 20.08 (1) to deny the credit, and the credit shall not appear on the tax bill for that property. The treasurer shall indicate on the tax roll that a claim for credit was denied.
If the determination is after the tax roll is prepared, the department shall instruct the appropriate taxation district to collect the credit as a lottery special charge on the next property tax bill issued for the property, if the property owner fails to remit the denied credit amount to the department by October 1. The lottery special charge shall include the full amount of the lottery credit plus applicable interest and penalty.

(b) Audit covering previous 4 years. If during the audit the department determines that the credit was extended to a property or a manufactured or mobile home subject to a monthly municipal permit fee that does not qualify for the credit for any of the previous 4 years, the department shall determine the total amount of credit extended in error. If a property owner fails to, by October 1, remit to the department the amount of credit extended in error, the department shall instruct the appropriate taxation district to collect the credit as a lottery special charge on the next property tax bill issued for the property.

If before November 1, the department receives full or partial payment for a lottery and gaming credit previously referred to the treasurer as a special charge, the department will notify the treasurer to remove or reduce the amount of the special charge for that property.
If after October 31 the department receives full or partial payment for a lottery and gaming credit previously referred to the treasurer as a special charge, the department will process the payment and refund any duplicate payment received by the department to the applicable property owner or treasurer.
A person who under this subsection collects lottery and gaming credit special charges payments from a property owner, collects those payments as trust funds and state property. Any person who intentionally fails or refuses to pay over those funds to the state at the time required under ch. 74, Stats., or who fraudulently withholds, appropriates, or uses any of those funds is guilty of theft under s. 943.20, Stats., punishable as specified in s. 943.20 (3), Stats., according to the amount of funds involved. This subdivision applies regardless of the person’s interest in those funds.

(d) Petition for hearing. A person claiming to be adversely affected by a determination made by the department under this subsection may petition the department for a contested case hearing under s. 227.42, Stats.

History

CR 10-129: cr. Register October 2011 No. 670, eff. 11-1-11; (title) created in (1), (2), (d) under s. 13.92 (4) (b) 2., Stats., Register October 2011 No. 670.

Chapter Tax 21 INNOVATION GRANTS AND INNOVATION PLANNING GRANTS

Wis. Admin. Code § Tax 21.01 Purpose {#sec-tax-21.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.01}

The purpose of this chapter is to clarify the administration of innovation grants and innovation planning grants under s. 79.038, Stats.

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25.

Wis. Admin. Code § Tax 21.02 Definitions {#sec-tax-21.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.02}

In this chapter:

(1) “Department” means the Wisconsin department of revenue.

(2) “Municipality” is defined as provided by s. 79.005 (1m), Stats.

(3) “Transfer” means a transition of responsibility for providing a service or duty from one or more municipalities, counties or tribes to another municipality, county, tribe, non-profit organization, or private entity.

(4) “Tribe” means a federally recognized American Indian Tribe or band in the state of Wisconsin.

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25.

Wis. Admin. Code § Tax 21.03 Volunteer fire fighter and emergency medical services practitioner fair market compensation {#sec-tax-21.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.03}

To determine the fair market compensation attributed to the volunteer services provided by a fire fighter and emergency medical services practitioner, counties, municipalities, and tribes shall use the following methodology set forth on the department’s website:

(1) Consider incurred costs or determine the fair market wages to attribute based on the Wisconsin regional and county data from the United States bureau of labor statistics using the median hourly wage rates for the occupational codes applicable to fire fighters and emergency medical services practitioners.

(2) Consider incurred costs or determine the fair market fringe benefits to attribute based on the Wisconsin regional and county data from the United States bureau of labor statistics.

(3) Consider incurred costs to determine the training and equipment costs to attribute.

Note: See https://www.revenue.wi.gov/Pages/SLF/IG.aspx for the method.

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25: consol. (intro.) and (1) (intro.) and renumber to (intro.) and am. under s. 35.17, Stats., and renumber (1) (a) to (c) to be (1) to (3) under s. 13.92 (4) (b) 1., Stats., Register July 2025 No. 835.

Wis. Admin. Code § Tax 21.04 Innovation planning grants {#sec-tax-21.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.04}

The department shall determine eligibility for the innovation planning grant as follows:

(1) Eligibility. Municipalities and tribes with a population not exceeding 5,000 are eligible for the innovation planning grant.

(a) To determine a municipality’s eligibility, the department shall use the population defined in s. 79.005, Stats., as of the date the application is submitted to the department.

(b) To determine a tribe’s eligibility, the department shall use the most recent population data from the United States census bureau as of the date the application is submitted to the department.

(2) Application. The innovation planning grant application shall be completed and submitted by a municipality or tribe electronically via the department’s website.

Note: See https://www.revenue.wi.gov/Pages/SLF/IG.aspx for the electronic application.

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25.

Wis. Admin. Code § Tax 21.05 Innovation grants {#sec-tax-21.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.05}

(1) Eligibility. All counties, municipalities, and tribes within the state of Wisconsin are eligible to apply for the innovation grant.

(2) Application. The innovation grant application shall be completed and submitted electronically via the department’s website.

Note: See https://www.revenue.wi.gov/Pages/SLF/IG.aspx for the electronic application.

(3) Audit and certifications.

(a) Each county, municipality, and tribe participating in an approved innovation project shall maintain detailed records for a minimum period of 4 years after receiving the first grant payment distribution.

(b) The department may require additional documentation to complete an audit required by s. 79.038 (1) (f) 1., Stats.

(c) The department may require each grant participant to submit a report or certification to the department attesting the required cost savings have been realized.

(d) The department may direct the department of administration to delay the final grant distribution while an audit under s. 79.038 (1) (f) 1., Stats., or review of the report or certification in par. (c), is pending.

(e) The department shall direct the department of administration to reduce the final grant distribution of any county, municipality, or tribe that has not realized the projected savings outlined in the approved innovation project as required under s. 79.038 (1) (d) 3., Stats.

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25; correction in (3) (a) made under s. 35.17, Stats., Register July 2025 No. 835.

Wis. Admin. Code § Tax 21.06 Notice date {#sec-tax-21.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 21.06}

The notice date is November 13, 2024, and represents the date identified on the notice of filing innovation grant program rules, as required by 2023 Wisconsin Act 12, section 244 (1).

History

EmR2414: emerg. cr., eff. 11-12-24; CR 24-090: cr. Register July 2025 No. 835, eff. 8-1-25.

Chapter Tax 61 RETAILERS

Wis. Admin. Code § Tax 61.01 Purpose {#sec-tax-61.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.01}

The purpose of this chapter is to provide the administrator with the procedure and criteria for selecting retailers to sell lottery tickets, to establish the retailer’s duties and obligations under the contract, to provide the administrator with the procedure and criteria to terminate or suspend the retailer’s contract and to provide the applicant and retailer an appeal procedure if a contract is denied or a contract is terminated or suspended.

Note: Section Tax 61.01 interprets ss. 565.10 and 565.12, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 61.02 Definitions {#sec-tax-61.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.02}

In this chapter:

(1) “Administrator” means the administrator of the department’s lottery division or any designees.

(1m) “Billing procedure” means the procedures used to collect revenue due the lottery by retailers consistent with s. 565.10 (15), Stats.

(2) “Commencement of a game” means the date, designated by the administrator, on which lottery tickets for a particular game under sub. (3) shall go on sale to the general public.

(3) “Lottery ticket” or “lottery share” means one of the following types:

(a) For instant scratch ticket games under s. 565.01 (6m) (a) 1., Stats., a chance received for consideration that may entitle a player to a prize as a winning ticket under sub. (8), consistent with lottery games under s. 565.27, Stats.

(b) For on-line ticket games under s. 565.01 (6m) (a) 2., Stats., a chance received for consideration that may entitle a player to a prize as a winning ticket under sub. (8), consistent with lottery games under s. 565.27, Stats.

(c) For break-open ticket games under s. 565.01 (6m) (a) 1., Stats., a chance received for consideration that may entitle a player to a prize as a winning ticket under sub. (8), consistent with lottery games under s. 565.27, Stats.

(4) “Low tier prize” means a lottery prize of $49.00 or less, unless otherwise specified in the retailer’s handbook.

(5) “Retailer performance program” or “RPP” means a program that is designed to provide additional compensation, above the compensation provided under s. 565.10 (14) (b) 1. or 2., Stats., to retailers who meet certain performance goals identified by the Wisconsin lottery.

(6) “Selling location” means each cash register or instant ticket vending machine at a Wisconsin lottery retail outlet where a lottery ticket is sold.

(7) “Settlement date” means the date, designated by the administrator, by which the retailer is to return unsold instant scratch tickets for a particular game.

(8) “Validation” means the action of identifying whether a Wisconsin lottery ticket is a winning lottery ticket, by industry means consistent with the type of ticket under sub. (3).

(9) “Winning lottery ticket” or “winning lottery share” any lottery ticket under sub. (3), for which an appropriate validation under sub. (8) has been conducted by a representative of the lottery, which indicates that the lottery ticket is a winning ticket.

(10) “Wisconsin lottery” means the department of revenue Wisconsin lottery division, the executive assistant, the secretary or the deputy secretary of revenue.

Note: Section Tax 61.02 interprets ss. 565.10 and 565.12, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; correction in (7) made under s. 13.93 (2m) (b) 6., Stats., Register, March, 1995, No. 471; renum. (1) to (7) to be (2) to (5), (7), (8) and (10), cr. (1), (6) and (9), Register, October, 2000, No. 538, eff. 11-1-00.; CR 01-088: am. (2), r. (3), renum. subs. (4) to (10) to be (3) to (9), and am. (6), (7) and (9) as renumbered Register February 2002 No. 554, eff. 3-1-02; CR 04-083: am. (2), (3) and (4), cr. (3) (a) to (c) and (8), renum. (8) and (9) to be (9) and (10) and am. Register April 2005 No. 592, eff. 5-1-02; CR 07-087: cr. (1m), am. (6) Register April 2008 No. 628, eff. 5-1-08.

Wis. Admin. Code § Tax 61.03 Procedure for selecting and renewing contracting retailers {#sec-tax-61.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.03}

(1) Any person may apply for a contract to sell lottery tickets by submitting to the Wisconsin lottery a completed application for a lottery retail sales contract. Applications are available upon request by contacting the Wisconsin lottery. A nonrefundable check for $75.00 made payable to the Wisconsin lottery shall accompany each application for a contract. A nonrefundable electronic fund transfer or check for $25.00 made payable to the Wisconsin lottery shall accompany each application for a contract renewal.

Note: Applications and application fees should be mailed or delivered to Wisconsin Lottery, 2135 Rimrock Road, PO Box 8941, Madison WI 53708-8941.

(2) The administrator shall examine the completed application, and based on criteria under s. 565.10 (2) to (5), Stats., and s. Tax 61.04 (1), shall either grant a contract or deny the application. The administrator shall grant the contract or deny the application within 35 business days after the Wisconsin lottery receives the completed application and application fee under sub. (1) or within 35 business days after the administrator completes a credit check under s. Tax 61.04 (1) (a), whichever is later.

Note: Section Tax 61.03 interprets s. 565.10 (1) to (5), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; corrections in (2) made under s. 13.93 (2m) (b) 7., Stats., Register, March, 1995, No. 471; CR 01-088: am. Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 61.04 Criteria for selecting retailers {#sec-tax-61.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.04}

(1) In addition to the criteria under s. 565.10 (1) to (5), Stats., the administrator shall determine if the applicant meets all of the following conditions:

(a) The applicant or the applicant’s business shall satisfactorily pass a credit check by the administrator.

(b) The applicant shall affirm, in the contract application, that the applicant’s business is physically secure and that the premise has a secure place to store lottery tickets.

(d) The applicant is expected to sell a minimum monthly average of $400 worth of instant scratch tickets or instant break-open tickets or the sum of both each fiscal quarter, under s. 565.01 (6m) (a) 1., Stats., which shall be represented in any retailer contract or addenda. The administrator may deny a contract or a renewal to an applicant whose anticipated sales will not meet the stated minimum monthly average of sales per fiscal quarter or whose historical sales have not met the stated minimum monthly average of sales per fiscal quarter.

(e) The applicant may not be an employee of the department of revenue Wisconsin lottery division, or the executive assistant, the secretary or the deputy secretary of revenue, per s. 565.05 (1) (b), Stats.

(2) If the applicant is a state agency or a local unit of government, the criteria under s. 565.10 (2) and (3) (a), Stats., and sub. (1) (e) shall apply to the entity’s officers and directors.

(3) If the administrator finds that there are so many qualified applicants in a given geographic area of the state that, if all those applicants would be granted contracts to sell lottery tickets, there would be an undue concentration of retailers selling lottery tickets in that area, the administrator shall perform market evaluations on the retail establishments seeking a contract. Contracts shall only be granted to those retailers achieving the highest marketing evaluation score until the undue concentration is eliminated. The administrator shall, however, grant a sufficient number of contracts in a given area to serve public convenience.

(4) Any applicant who has a physical or mental disability that constitutes or results in a substantial handicap to the applicant’s employment may be awarded a contract exclusively to sell lottery tickets if the applicant meets all of the following conditions:

(a) Each applicant includes with the retailer application a letter from the Wisconsin division of vocational rehabilitation verifying that the applicant’s disability is a substantial handicap to employment.

(b) Each applicant meets all other criteria under subs. (1) to (3).

Note: Section Tax 61.04 interprets s. 565.10 (1) to (5), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; corrections made under s. 13.93 (2m) (b) 6., Stats., Register, March, 1995, No. 471; am. (1) (d), Register, October, 2000, No. 538, eff. 11-1-00; CR 01-088: am. (1) (intro.), (a), (e), (3), and (4) Register February 2002 No. 554, eff. 3-1-02; CR 04-083: r. and recr. (1) (b), r. (c), am. (d) Register April 2005 No. 592, eff. 5-1-05.

Wis. Admin. Code § Tax 61.05 Fidelity bond {#sec-tax-61.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.05}

(1) The Wisconsin lottery may require from each retailer a fidelity bond or an irrevocable letter of credit, or both, in the amount determined by the administrator and based upon the applicant’s projected lottery ticket sales. The administrator may also require from each retailer the payment of interest for any outstanding unpaid balance that results from a dishonored retailer’s check or electronic funds transfer, under s. Tax 61.08 (14) (d).

(2) The bond shall be payable upon the order of the Wisconsin lottery and may be obtained through an insurance agency or a bond and surety company. No individual bond may be less than $500.00. The letter of credit shall be drawn upon a financial institution with offices within the borders of the state of Wisconsin, and shall be drafted in a manner that allows the lottery to draw upon it without additional action taken by the retailer. No letter of credit may be accepted for which the lottery must pay a sum before it can draw upon the letter of credit.

Note: Section Tax 61.05 interprets s. 565.10 (13), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. (1) Register February 2002 No. 554, eff. 3-1-02; CR 04-083: am. (1) and (2) Register April 2005 No. 592, eff. 5-1-05.

Wis. Admin. Code § Tax 61.06 Certificate of authority {#sec-tax-61.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.06}

(1) When a retailer is awarded a contract or a contract renewal, the retailer shall pay $25.00 to the Wisconsin lottery for a nonassignable and nontransferable certificate of authority. A certificate of authority is required for each location from which the retailer will sell lottery tickets.

(2) The retailer shall be issued a year-round certificate of authority if the retailer intends to sell lottery tickets all 12 months of the year. If the retailer intends to sell lottery tickets less than 12 months a year, the retailer may be issued a seasonal certificate of authority. If the retailer intends to sell lottery tickets throughout the year but only at selected times and places, such as at weekly events or at fairs and festivals, the retailer may be issued a temporary certificate of authority.

(3) If the certificate is lost, mutilated or destroyed, the retailer shall within 15 calendar days request in writing and submit a completed application for a duplicate certificate. The retailer shall pay $25.00 to the Wisconsin lottery for a duplicate certificate of authority.

(4) A mutilated certificate shall be surrendered to the administrator upon issuance of a duplicate. A lost certificate, when found, shall be surrendered to the administrator within 15 calendar days of its recovery.

(5) Payment under subs. (1) and (3) shall be by check or electronic fund transfer.

Note: Section Tax 61.06 interprets s. 565.10 (8) to (12), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. (2) and (4) Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 61.07 Contract denial appeal procedure {#sec-tax-61.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.07}

(1) If the applicant was denied a contract, the administrator shall notify the applicant, in writing, of the denial along with a brief statement why the applicant was denied a contract. The applicant shall also be notified that a request for reconsideration must be made by the applicant within 30 calendar days of the denial and that the request shall contain the information in sub. (2).

(2) Within 30 calendar days of the mailing of the denial, the applicant may request a reconsideration by filing with the administrator a written statement setting forth the applicant’s legal, factual or equitable arguments and submitting any supporting documents. The request for reconsideration shall be deemed filed on the date it is received by the administrator.

(3) Within 20 calendar days of receipt of the request for reconsideration, the administrator may, in writing, request the applicant to submit any additional facts, legal and equitable arguments or documents that the administrator deems necessary to make a determination.

(4) The Wisconsin lottery’s legal counsel shall compile a file containing all the material submitted by the applicant and any relevant material the administrator may have, including but not limited to, the completed application and credit check report. Legal counsel shall then review the file, research, if necessary, the applicable laws and rules and prepare an analysis and recommendation for the administrator’s consideration.

(5) The administrator, after considering all the facts and arguments submitted by the applicant, and legal counsel’s recommendation, shall independently evaluate whether to grant or deny the applicant a contract. Within 45 calendar days of the administrator’s receipt of the request for reconsideration or any supplemental information and documentation requested, the administrator shall notify the applicant, in writing, of the determination. If the applicant is denied a contract, the notice shall include a written statement setting forth the reasons for the denial and notifying the applicant of the right to a hearing on the denial under s. 227.42, Stats. The applicant shall be notified that a request for a hearing must be made by the applicant within 20 calendar days and that the request must contain the information in sub. (6).

(6) Within 20 calendar days of the administrator’s mailing of the final determination, the applicant may request, in writing, a hearing under s. 227.42, Stats. A request for a hearing shall be deemed filed on the date it is received by the administrator. A request shall contain all of the following:

(a) The applicant’s name and address.

(b) The reasons why the applicant requests a hearing.

(d) A description of the mistake the applicant believes was made, if the applicant claims that the denial of contract is based on a mistake in fact or in law.

(e) Any supporting documents not previously submitted to the administrator.

(7) Within 20 calendar days of receipt of a request for hearing, the administrator shall grant or deny the request for a hearing, in writing. A hearing shall be granted if the criteria in s. 227.42 (1), Stats., are met, and the administrator shall reasonably notify the applicant of the time and place of the hearing. A hearing shall be denied if criteria under s. 227.42 (1), Stats., are not met, and the administrator shall inform the applicant, in writing, of the reason for denial.

(8) In the event that neither the applicant nor the applicant’s representative appears at the time and place designated for the hearing, the administrator may take action based upon the record as submitted. By failing to appear, an applicant waives any further right to appeal before the Wisconsin lottery.

Note: Section Tax 61.07 interprets s. 565.10 (1) to (5), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 61.08 Retailer contract terms and conditions {#sec-tax-61.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.08}

The retailer’s contract shall include all of the following terms and conditions:

(1) Contract period and sales authorization. The retailer’s contract shall remain in effect for at least one year and shall expire on the date shown on the certificate of authority. The administrator may renew the contract. However, the retailer does not have a substantial interest in, or a vested legal or equitable right to, a contract renewal.

(2) Contract not assignable or transferable. The retailer’s contract may not be assigned or transferred from one person or location to another.

(3) Retailer is not an employee or agent of the state. The retailer is not an employee or agent of the state of Wisconsin and is not entitled to any right, privilege or benefit that would accrue to an employee or agent of the state of Wisconsin.

(4) Indemnification. The retailer shall indemnify and hold harmless the state of Wisconsin, the Wisconsin lottery, and the Wisconsin lottery’s employees and agents from and against all claims, suits, or actions arising from any willful or negligent act or omission of the retailer or its agents while performing under the terms of the retailer contract.

(5) Compliance with state law and rules. During the term of the retailer contract, the retailer shall comply with ch. 565, Stats., the Wisconsin lottery’s administrative rules and any other applicable state law and administrative rules.

(6) Compliance with retailer’s handbook. During the term of the retailer contract, the retailer shall comply with instructions and procedures for each game as set forth in the retailer handbook.

(7) Certificate of authority. The certificate of authority is not assignable or transferable and shall be conspicuously displayed at the point of sale.

(8) Notification of changes in the retailer’s application.

(a) The retailer shall notify the administrator, in writing, within 15 calendar days of every change of its organizational structure, including but not limited to changes from a sole proprietorship to a partnership or to a corporation.

(b) The retailer shall notify the administrator, in writing, at least 30 calendar days in advance of any change of the retailer’s business address.

(c) The retailer shall notify the administrator, in writing, within 15 calendar days if the retailer, or any of the retailer’s partners, officers, directors or owners, as described under s. 565.10 (3), Stats., have been convicted of or pleaded guilty or no contest to a felony, a gambling related offense, or fraud or misrepresentation in any connection.

(9) Records and recordkeeping.

(a) During the term of the retailer’s contract and until the retailer gives a final accounting at the end of the contract term, the retailer shall maintain current, complete and accurate lottery accounting records and correspondence including but not limited to, the receipt, sale, handling, and returns for credit of all lottery tickets received by the retailer.

(10) Insurance requirement.

(a) During the term of the retailer’s contract the retailer shall do all of the following:

Maintain worker’s compensation insurance, if required to do so under ch. 102, Stats.
Maintain public liability and property damage insurance against any claim that may occur in carrying out the retailer’s contract. Minimum coverages are $300,000 single limit liability or $100,000 bodily injury per person and $300,000 per occurrence and $100,000 property damage.

(b) The insurance requirements under par. (a) 1. and 2. do not apply to a state agency or a local unit of government.

(c) The retailer, by signing and executing the contract, warrants and represents to the Wisconsin lottery that the retailer has in place and will maintain during the contract period the insurance set forth under par. (a) 1. and 2. and at the minimum levels set forth under par. (a) 2.

(d) During the term of the retailer’s contract, the administrator reserves the right to request from the retailer verification that the retailer has complied with the insurance requirements under par. (a) 1. and 2.

(11) Sale of tickets.

(a) The retailer shall accept only cash for lottery tickets.

(b) The retailer may not intentionally sell a lottery ticket to a person under 18 years of age.

(c) The retailer shall sell a minimum monthly average of $400 worth of instant scratch tickets or instant break-open tickets or the sum of both each fiscal quarter, under s. Tax 61.04 (1) (d).

(d) The retailer may not exchange lottery tickets with any other person including other retailers.

(e) The retailer may not sell any lottery tickets at a price different from the price authorized by the Wisconsin lottery, condition the sale of a lottery ticket upon purchase of any other item or service or impose any restriction upon the sale of a lottery ticket unless specifically authorized by the administrator.

(f) The retailer may not play the lottery games by using any method other than random, fair chance, or by any method contrary to the principle that every lottery ticket has an equal and random chance of winning.

(g) The retailer shall make player brochures available to potential lottery ticket customers and explain the game rules when requested.

(h) The retailer may not add any service fee, handling fee, or other expense to the purchase of a ticket or share.

(j) The retailer may not charge any service fee, handling fee or other cost when validating a ticket regardless of whether the ticket or share is a winning or non-winning ticket or share, without the written permission of the administrator.

(k) The retailer may not conduct sales of lottery tickets or shares to off-premises customers by telephone, email, instant messaging or similar electronic means, or by mail, parcel, delivery service, or similar service.

(13) Retailer responsibility for tickets.

(a) The retailer shall be responsible for the condition and security of lottery tickets received. If the retailer’s lottery tickets are lost, stolen, mutilated, damaged, unaccountable, or otherwise unsalable, the retailer shall be solely responsible for those tickets. Except as provided in pars. (c) and (cm), the administrator may not reimburse the retailer for those losses.

(b) The retailer shall report by telephone within 24 hours any stolen tickets to the Wisconsin lottery, consistent with the instructions for reporting stolen tickets as indicated in the retailer contract.

(c) The administrator may credit the retailer’s account for the value that the retailer paid for instant scratch tickets that are unsalable after all the following conditions are met:

The tickets became unsalable due to any malfunction of lottery equipment used in the sale of the tickets or if the tickets are deemed to be misprinted or void, consistent with the features and procedures document of the game to which the ticket or share belongs.
The unsalable tickets are returned to the lottery before the settlement date of the game to which the pack belongs. Tickets returned after the settlement date may not be credited for value by the administrator.
There is no validation of any ticket that is returned for credit, and the latex or other protective measures on each returned ticket show no signs of tampering.
At the discretion of the administrator, the lottery may assess a service charge against the retailer account to recover the cost of returning the tickets.
Credit shall be the retailer’s purchase price, and any credit or service charge shall be made to the retailer’s electronic fund transfer account.

(cm)

The administrator may credit the retailer’s account for the value the retailer paid for instant scratch tickets that are stolen. In determining whether to provide credit, the administrator may consider the following factors:

a. Compliance with the reporting requirement under par. (b).

b. Whether the theft has been reported to law enforcement.

c. Final return date of the game to which the stolen tickets belong.

d. Validation of any ticket that is reported stolen.

e. The retailer’s prior record of reporting stolen tickets to the department.

f. Security of the retailer’s business and the place where tickets are stored.

g. Any other facts and circumstances the administrator believes pertinent.

Credit under this paragraph shall be the retailer’s purchase price, and any credit shall be made to the retailer’s electronic fund transfer account.

(d) In the event that the lottery administrator announces a settlement date for a game, a retailer may return tickets for credit on or before that announced settlement provided that conditions under par. (c) 2. to 5. are met.

(e) The administrator may charge a retailer for shipments delivered on a date different than the retailer’s scheduled order delivery date or shipped on a date other than the retailer’s shipment date. If a retailer is charged, the expense shall be limited to the cost of the delivery.

(14) Retailer’s payment for tickets.

(a) All lottery tickets received by the retailer shall be deemed to have been purchased by the retailer.

(b) The retailer’s accounting records and correspondence under par. (a) shall be available to the administrator for examination and copying during the retailer’s regular business hours. All of those records and correspondence are subject to seizure and audit without prior notice.

(bm) The retailer’s electronic fund transfer account shall be debited no less often than every 60 days for tickets received within the last 60 days.

(c) A retailer shall remit to the lottery, no less frequently than every sixty (60) days, the proceeds from the sale of lottery tickets received since the last remission of proceeds. The terms of billing processes shall be set by the administrator.

(d) If the retailer failed to place sufficient funds in the electronic fund transfer account for the tickets received, the retailer may not receive more tickets until the retailer pays the amount due the lottery consistent with pars. (bm) and (c), or until the retailer has signed an agreement with the administrator which indicates an alternative schedule of payment for outstanding debts consistent with s. Tax 61.02 (1m). The administrator shall determine whether to offer an alternative payment agreement to a retailer on a case by case basis, taking into consideration the retailer’s previous payment history.

(e) The administrator may assess the retailer a surcharge, an interest penalty, or both, for each dishonored retailer’s check or electronic fund transfer. The surcharge shall be equal to the costs incurred, incident to each dishonor. Interest may be charged only in the event that a retailer account is referred for overdue collection, and may be assessed at a rate not to exceed 8.5% of the overdue amount.

(15) Bulk reselling without permission is prohibited.

(a) A retailer may not intentionally resell, or aid in the act of reselling, bulk tickets without the written permission of the administrator.

(b) For purposes of this section, “reselling” means selling or aiding in the selling of multiple tickets to anyone engaged in the business of selling lottery tickets for profit. Persons who participate in ticket buying pools among friends, family or co-workers are not involved in reselling, provided that all tickets are purchased by all participants at the price set by the lottery administrator.

(16) Instant scratch ticket redemption.

(a) The retailer shall redeem low tier prizes for tickets sold at the retailer’s outlet and presented to the retailer by the customer. If the customer elects to redeem the low tier prize at another retail location or at any Wisconsin lottery office, the Wisconsin lottery shall debit the retailer’s account in that amount.

(b) The retailer may not redeem winning lottery tickets for prizes in amounts different from the amounts authorized by the administrator or condition redemption of a lottery prize upon the purchase of any other item or service, or impose any restriction upon the redemption of a lottery prize unless specifically authorized in writing by the administrator.

(17) Break-open tickets.

(a) The administrator may accept returned break-open tickets for credit only under any of the following circumstances:

If the tickets are defective, the retailer shall return as many of the suspected defective tickets as is possible, using the original packaging materials if possible.
If the order was filled incorrectly by the Wisconsin lottery, the retailer shall return any incorrectly shipped break-open tickets, using the original packaging materials if possible.
If the shipment of tickets is unopened by the retailer. To be considered unopened, the package shall contain all the tickets that it contained when delivered to the retailer and have the original packaging and shipping seals intact and unopened.
If the lottery administrator announces a settlement date for a game, a retailer may return tickets for credit on or before the date provided that the retailer returns the tickets using the original packaging materials, or in a manner acceptable to the lottery administrator.

(b) The retailer shall redeem all prizes from tickets purchased at the retailer’s outlet unless the features and procedures document for the game state otherwise.

(18) Point-of-sale material. The retailer shall maintain and display prominently lottery point-of-sale material, including the door decal, current game poster, current game player brochures and the ticket dispenser. The retailer shall maintain and display a sign provided by the lottery that indicates which games no longer have a top prize.

(19) Right to appeal suspension or termination. In the event the administrator suspends or terminates the retailer’s contract, the retailer is entitled to an appeal in accordance with the provisions set forth under s. Tax 61.10.

(20) Suspension or termination procedure. The retailer, upon notice of the suspension or termination, shall immediately stop selling lottery tickets. Within 2 weeks of the suspension or termination, the retailer shall make payment on any money owed to the Wisconsin lottery and surrender all unsold tickets and all state owned lottery property.

(21) Grounds for suspension. The retailer’s contract may be suspended without prior notice by the Wisconsin lottery for any of the following reasons:

(a) The retailer failed to meet one or more of the qualifications for being a retailer under s. 565.10, Stats., or under the Wisconsin lottery’s administrative rules.

(b) The retailer violated a provision under ch. 565, Stats., or of this chapter.

(c) The retailer failed to sell a minimum monthly average of $400 worth of instant scratch tickets or instant break-open tickets or the sum of both in any fiscal quarter, under s. Tax 61.04 (1) (d).

(d) The retailer intentionally sold a lottery ticket to a person under 18 years of age.

(e) The retailer endangered the security of the Wisconsin lottery.

(f) The retailer engaged in fraud, deceit, misrepresentation or other conduct prejudicial to public confidence in the Wisconsin lottery.

(g) The retailer failed to remit money owed to the Wisconsin lottery or failed to make payment on or before the settlement date.

(h) The retailer engaged in advertising of lottery products or services, or both, that in the administrator’s determination was false, deceptive, or misleading.

(i) The retailer failed to follow instructions and procedures for the conduct of any particular lottery game or lottery special event.

(22) Grounds for termination. The retailer’s contract may be terminated by the Wisconsin Lottery, regardless of whether the retailer has been previously suspended. Any issue which is grounds for termination may be considered instead for suspension, at the discretion of the administrator. The administrator may consider whether a retailer acted to promptly cure a cause within a reasonable time after notice, when reviewing the grounds for termination. The retailer’s contract may be terminated for the following reasons:

(a) The retailer failed to meet one or more of the qualifications for being a retailer under s. 565.10, Stats., or under this chapter.

(b) The retailer endangered the security of the lottery, or engaged in fraud, deceit, misrepresentation or other conduct in a manner that would cause perceptions prejudicial to public confidence.

Note: Section Tax 61.08 interprets ss. 565.02 (3) (j), 565.10 (7) to (15), and 565.12, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; corrections made under s. 13.93 (2m) (b) 6. and 7., Stats., Register, March, 1995, No. 471; am. (11) (c) and (21) (c), Register, October, 2000, No. 538, eff. 11-1-00; CR 01-088: r. (15) (c) and am. (1), (3), (5), (7), (8), (10), (11) (b), (e) and (h), (13), (14) (b), (bm), (c) and (d), (15) (a), (b) and (d), (16), (19), (20) and (21) (intro.) and (a) to (h) Register February 2002 No. 554, eff. 3-1-02; CR: 04-083: am. (11) (c), (13) (a), (14) (d), (16) (a) and (21) (c), r. (11) (h), (12), and (15), cr. (13) (c) and (d), r. and recr. (17) (a) Register April 2005 No. 592, eff. 5-1-05; CR 07-087: cr. (11) (h), (j), (k), (13) (e), (14) (c), (15), (17) (a) 4., and (22), am. (13) (c) 1., (14) (bm), (17) (b), (18), (21) (intro.) and (g), renum. (14) (c) and (d) to be (14) (d) and (e) and am. Register April 2008 No. 628, eff. 5-1-08; CR 13-034: am. (11) (h), (k), (13) (a), cr. (13) (cm) Register December 2013 No. 696, eff. 1-1-14.

Wis. Admin. Code § Tax 61.085 Retailer performance program {#sec-tax-61.085 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.085}

(1) Purpose.

(a) The retailer performance program or RPP is intended to provide additional compensation, above the compensation provided under s. 565.10 (14) (b) 1. or 2., Stats., to retailers who meet certain performance goals identified by the department of revenue. This additional compensation is authorized under ss. 565.02 (4) (g) and 565.10 (14) (b) 3m., Stats.

(b) This program is applicable to lottery retailer sales transactions beginning on January 1, 2000.

(2) Definitions. In this section:

(a) “Appropriate sales history” means the historical sales data that is used to calculate performance of a retail location within the RPP. The appropriate quarterly sales history data may be from either the comparable history quarter as defined under par. (c) or the immediately previous quarter as defined under par. (e). The appropriate annual sales history data shall be from the comparable history fiscal year under par. (b).

(b) “Comparable history fiscal year” means the previous fiscal year that has sales history in each sales quarter for a specific retail location.

(c) “Comparable history quarter” means the full sales quarter that is one year prior to the current sales quarter in which the RPP is being administered.

(d) “Gross sales” means the sales data as indicated by Wisconsin lottery accounts receivable documentation of weekly invoicing of the purchase of Wisconsin lottery products by retailers.

(e) “Immediately previous quarter” means the full sales quarter immediately prior to the current sales quarter in which the RPP is being administered.

(f) “Instant ticket” means any of the following:

Any ticket which uses a scratch, pull-tab or break-open method, or a combination of those methods, as the method of player interaction with the ticket.
Any ticket where the features and procedures documentation under s. 565.27, Stats., indicates the ticket is an instant ticket for purposes of the retailer performance program as identified under this section.

(g) “Retail location” means the place of business at which lottery products such as instant tickets or terminal generated tickets are sold, as selected under s. Tax 61.04.

(h) “Sales goals incentive” means the component of the RPP that pays incentives to retailers who increase gross sales in a specified sales quarter or specified fiscal year, or both, when the sales quarter or fiscal year is compared to an appropriate sales history as defined under par. (a).

(hm) “Sales quarter” means a quarter of the Wisconsin lottery fiscal year that is 13 weeks in length. Beginning in fiscal year 2001, the administrator shall determine the start and end dates of all sales quarters of a fiscal year no later than one month prior to the beginning of that fiscal year, and upon request shall provide the calendar dates that define each quarter of a fiscal year. A quarter shall start and end on dates that are consistent with the standard billing cycle that the lottery uses to collect revenue from retailer accounts.

(i) “Short-term incentive” means the component of the RPP that pays incentives to retailers who satisfy a performance expectation as established in short-term incentive features and procedures documentation.

(j) “Winning ticket incentive” means the component of the RPP that pays incentives to retailers who sell winning lottery tickets.

(3) Eligibility. Any retailer may participate in the RPP if it meets all of the following eligibility requirements:

(a) The retailer honors the current retailer contract, including any applicable addenda.

(b) The retailer is not a nonprofit organization as defined in s. 565.10 (14) (a), Stats.

(c) The retailer satisfies any qualifying requirements specific to each component of the RPP. If a retailer fails to satisfy the requirements specific to a component of the RPP, the retailer may not be considered qualified for that component of the RPP. A retailer qualifies for each component separately, and qualifying for one component of the RPP does not affect qualifying for another component.

(4) Design. The retailer performance program shall consist of 3 components, the winning ticket incentive, the sales goals incentive, and the short-term incentive described as follows:

(a) Winning ticket incentive. The expected performance of the winning ticket incentive component of the RPP is the selling of winning lottery tickets. To qualify for the winning ticket incentive, a retailer shall satisfy the eligibility requirements in sub. (3). An incentive shall be paid to a retailer for selling any winning lottery ticket where the stated prize value of the winning lottery ticket is $600 or greater. The incentive shall be paid as follows:

For winning lottery tickets, 2% of the stated prize value shall be paid to a retailer on each prize, up to a maximum of $100,000 per prize level per drawing. In the event that a retailer or retailers earn more than $300,000 from any one prize level in any one drawing, then the lottery shall divide $300,000 equally among all retailers who earned an incentive from that prize level.

(b) Sales goals incentive. The sales goals incentive component of the RPP shall pay a retailer an incentive based on an increase in the amount of sales over the appropriate sales history. The incentive shall be tracked, measured and paid separately for each product type. For each product type, a retailer shall satisfy eligibility requirements in sub. (3), sell a minimum amount of instant tickets as indicated under s. Tax 61.08 (11) (c), and qualify for the product type under sub. (5).

Quarterly payments may be paid for instant ticket product and for non-jackpot terminal generated product, and shall be made in the following manner:

a. For the instant ticket sales product type, the retailer shall receive an incentive calculated by comparing a sales quarter against the appropriate sales history to determine if a sales increase has occurred. If a sales increase has not occurred, no incentive may be paid. If a sales increase has occurred, the retailer shall receive up to 2% of the sales increase unless the administrator adjusts the payment percentage to a lower percentage under sub. (7) to ensure that appropriate funding authority is maintained within the current fiscal year. Any adjustment made shall consider historical sales and incentive information and shall be applied equally to all retailers. Information regarding the details of any adjustment shall be made available upon request to the administrator.

b. For the non-jackpot terminal-generated sales product type, the retailer shall receive an incentive calculated by comparing a sales quarter against the appropriate sales history to determine if a sales increase has occurred. If a sales increase has not occurred, no incentive may be paid. If a sales increase has occurred, the retailer shall receive up to 2% of the sales increase unless the administrator adjusts the payment percentage to a lower percentage under sub. (7) to ensure that appropriate funding authority is maintained within the current fiscal year. Any adjustment made shall consider historical sales and incentive information and shall be applied equally to all retailers. Information regarding the details of any adjustment shall be made available upon request to the administrator.

Annual payments may be paid for instant ticket product, non-jackpot terminal generated product and jackpot terminal-generated product, and shall be made in the following manner:

a. For the instant ticket sales product type the retailer shall receive an incentive calculated by comparing a fiscal year against the appropriate sales history to determine if a sales increase has occurred. If a sales increase has not occurred, no incentive may be paid. If a sales increase has occurred, the retailer shall receive up to 10% of the sales increase unless the administrator adjusts the payment to a lower percentage under sub. (7) to ensure that appropriate funding authority is maintained within the current fiscal year. Any adjustment made shall consider historical sales and incentive information and shall be applied equally to all retailers. Information regarding the details of any adjustment shall be made available upon request to the administrator. Any incentive paid to a retailer shall be adjusted by the percentage of locations contracted to that retailer that do not generate an increase, except that locations which do not have a comparable history fiscal year are not considered when this adjustment is made.

Note: For example: If a retailer has a contract to sell lottery products that includes three retail locations and one of the retail locations fails to generate an increase, then the lottery will adjust the incentive payments to those retail locations which earned an increase. In this example, the adjustment of each payment is calculated by reducing each payment by one third, the number of retail locations included in the contract but for which an increase was not earned.

b. For the non-jackpot terminal-generated sales product type, the retailer shall receive an incentive calculated by comparing a fiscal year against the appropriate sales history to determine if a sales increase has occurred. If a sales increase has not occurred, no incentive may be paid. If a sales increase has occurred, the retailer shall receive up to 10% of the sales increase unless the administrator adjusts the payment to a lower percentage under sub. (7) to ensure that appropriate funding authority is maintained within the current fiscal year. Any adjustment made shall consider historical sales and incentive information and shall be applied equally to all retailers. Information regarding the details of any adjustment shall be made available upon request to the administrator. Any incentive paid to a retailer shall be adjusted by the percentage of locations contracted to that retailer that do not generate an increase, except that locations which do not have a comparable history fiscal year are not considered when this adjustment is made.

c. For the jackpot terminal-generated sales product type, the retailer shall receive an incentive calculated by comparing a fiscal year against the appropriate sales history to determine if a sales increase has occurred. If a sales increase has not occurred, no incentive may be paid. If a sales increase has occurred, the retailer shall receive up to 10% of the sales increase unless the administrator adjusts the payment percentage to a lower percentage under sub. (7) to ensure that appropriate funding authority is maintained within the current fiscal year. Any other adjustment made shall consider historical sales and incentive information and shall be applied equally to all retailers. Information regarding the details of any adjustment shall be made available upon request to the administrator. Any incentive paid to a location shall be adjusted by the percentage of locations contracted to that retailer that do not generate an increase, except that locations which do not have a comparable history fiscal year are not considered when this adjustment is made.

Note: For the fiscal year ending June 30, 2000, “fiscal year 2000,” the Wisconsin lottery shall use the appropriate historical data from the fiscal year which ended on June 30, 1999, “fiscal year 1999,” to determine a one-half fiscal year goal for the jackpot terminal-generated game product type under subd. 3.

(c) Short-term incentive. The short-term incentive shall pay a retailer an incentive based on the achievement of expected performance. Short-term incentives shall be designed to support a certain product or product type or to strengthen sales during certain times of the fiscal year. Performance expectations shall be related to the increasing of sales of lottery products and may be different for each short-term incentive offered to retailers. A short-term incentive may not continue from one fiscal year into another fiscal year. The administrator shall determine whether short-term incentives are offered. The expected performance, and all other information important to the development of a specific short-term incentive, shall be indicated in a document that shall represent the features and procedures of the short-term campaign. Payment may be in the form of merchandise or lottery products. The features and procedures document shall be published to the retailers no later than 14 calendar days prior to the start date of the incentive and shall include the following:

A statement of the requirements for a retailer to qualify for the program. The requirements for qualification for short-term incentives shall be as consistent as possible with other aspects of the RPP.
A statement of the expected performance of a retailer who participates in the short-term incentive.
A statement of the start and end dates of the program and the expected time period that the plan will run.
A statement of how much funding may be made available for payment under the plan, not to exceed $300,000 per short-term incentive.
A detailed explanation of how the incentive is calculated, to be consistent with other aspects of the RPP where appropriate.
A detailed explanation of how incentive payments will be made, and that payments shall be made no later than the last Thursday of the month following the last day of the sales quarter in which the short-term incentive ends. If payment is made in merchandise or lottery product, the explanation will include information about the merchandise or lottery product.
Any other features or procedures determined by the administrator to be appropriate.

(d) Merchandise as payment. If merchandise is used as payment, all of the following conditions must be met:

The lottery may spend up to 10% of the funding available for the RPP, under s. 565.02 (4) (g), Stats., for merchandise or lottery product per fiscal year.
The lottery shall procure appropriate merchandise, merchandise fulfillment or inventory control for the implementation of short-term incentives by conducting procurement activities under s. 565.25, Stats. The lottery shall properly account for lottery product used in a short-term incentive.
The lottery shall provide for the appropriate control of the merchandise or lottery product, including provisions for inventory and physical security where necessary.

(5) Qualification for product types.

(a) To qualify annual sales goals incentives under sub. (4) (b) 2., jackpot terminal-generated sales product type, a retail location shall have a comparable history fiscal year as defined under sub. (2) (b).

(am) If no appropriate sales history can be determined, the retail location may not be considered qualified for annual incentives for that product type. The administrator shall review qualification under each product type no less often than yearly, so that retail locations that become qualified may be included for incentive payments as soon as possible.

(b) To qualify for quarterly sales goals incentives under sub. (4) (b) 1., a retail location shall meet the qualification criteria for that product type. Each product type shall be reviewed separately to determine if an appropriate quarterly sales history as defined under sub. (2) (a) is available to satisfy the criteria. The criteria are as follows:

For a retail location, if there is comparable history quarter sales data as defined under sub. (2) (c), the retailer shall be considered qualified for that product type.
If no comparable history quarter exists for a retail location, the administrator shall substitute sales history from the immediately previous quarter as defined under sub. (2) (e).
If no appropriate quarterly sales history can be determined, either by using data from a comparable history quarter or from an immediately previous quarter, the retail location may not be considered qualified for quarterly incentives for that product type. The administrator shall review qualification under each product type no less often than quarterly so that retail locations that become qualified may be included for incentive payments as soon as possible.

(6) Payment of incentives. The RPP incentives shall be paid in the following sequential order:

(a) Winning Ticket Incentives, under sub. (4) (a).

(b) Short-Term Incentives, under sub. (4) (c).

(c) Quarterly Sales Goals Incentives, under sub. (4) (b) 1., where the sequence of product types paid shall be instant ticket sales products, then non-jackpot terminal-generated products.

(d) Annual Sales Goals Incentives, under sub. (4) (b) 2., where the sequence of product types paid shall be instant ticket sales products, then non-jackpot terminal-generated products, and last jackpot terminal-generated products.

(e) The RPP incentives shall be paid in the following manner:

The winning ticket incentive shall be paid no later than the last Thursday of the month following the last day of the quarter in which the incentive is earned. This incentive may be paid more frequently if the administrator determines that a more frequent schedule is not prohibitive to the effective operation of Wisconsin lottery activities and does not have a negative impact upon the appropriate funding authority of the program.
The short-term incentive shall be paid no later than the last Thursday of the month following the last day of the quarter in which the incentive is earned. This incentive may be paid more frequently if the administrator determines that a more frequent schedule is not prohibitive to the effective operation of Wisconsin lottery activities and does not have a negative impact upon the appropriate funding authority of the program.
The sales goals quarterly incentive shall be paid no later than the last Thursday of the month following the last day of the quarter in which the incentive is earned. The sales goals incentive may be paid more frequently if the administrator determines that a more frequent schedule is not prohibitive to the effective operation of Wisconsin lottery activities and does not have a negative impact upon the appropriate funding authority of the program.
The annual incentive payments shall be paid no later than the last Thursday of the month following the last day of the fiscal year in which the incentive is earned. Jackpot terminal-generated products shall be paid last of all incentive payments in a fiscal year. This incentive may be paid more frequently if the administrator determines that a more frequent schedule is not prohibitive to the effective operation of Wisconsin lottery activities and does not have a negative impact upon the appropriate funding authority of the program.

(7) Funding authority. The administrator shall monitor the expenditures of the RPP at least quarterly, to ensure that the funding authority is not exceeded. Prior to the payment of incentives under sub. (4) (b), the administrator may implement a pre-payment adjustment to ensure that funding authority for the RPP is not exceeded, by reducing the payment of incentives earned. Any pre-payment adjustment in any product type shall be implemented as indicated under sub. (4) (b), to limit the incentive paid so that the payments do not exceed the funding available or negatively impact the payment of earned incentives in the other components of the RPP.

(8) Right to appeal. In the event the administrator terminates the eligibility or qualification of a retailer under the RPP, or in the event the retailer disputes their payments from the RPP, the retailer is entitled to an appeal in accordance with the provisions set forth under s. Tax 61.10.

(9) Report. The administrator shall document the total payments made to retailers under the RPP. The report shall include a breakdown of any incentives paid under the winning ticket incentive, the sales goals incentive and the short-term incentive. The report shall be available within 90 days of the completion of a fiscal year.

Note: Section Tax 61.085 interprets ss. 565.02 (4) (g) and 565.10 (14) (b) 3m., Stats.

History

Cr. Register, October, 2000, No. 538, eff. 11-1-00; CR 04-083: cr. (2) (f) and (4) (d), am. (4) (a) 1. and 2., (c) (intro.), 3., 4., 6., and (7) Register April 2005 No. 592, eff. 5-1-2005; CR 04-083: am. (2) (a), (4) (b) (intro.), (5) (a), (b), and (6), renum. (2) (b) to (i), (4) (b) 1. to 3., (6) (a) and (b) to be (2) (c) to (j), (4) (b) 1. a., b., 2. c., and (6) (e) 1. and 3., and am. (2) (h), (4) (b) 1. a., b., 2. c., and (6) (e) 3., cr. (2) (b) and (f), (4) (b) 1. to 3., (5) (am), (6) (a), (b), (d), (e) (intro.), 2. and 4., r. and recr. (6) (c) Register April 2005 No. 592, eff. 7-2-05; CR 07-087: am. (3) (a) and (4) (b) (intro.), r. (4) (a) 2. Register April 2008 No. 628, eff. 5-1-08.

Wis. Admin. Code § Tax 61.09 Limitation on length of suspension {#sec-tax-61.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.09}

A suspension shall be limited to a maximum of 45 calendar days, during which time the administrator shall consider the appropriate permanent action to be taken, including, but not limited to, termination of the retailer contract.

Note: Section Tax 61.09 interprets s. 565.12, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 61.10 Appeal procedure {#sec-tax-61.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.10}

(1) The administrator shall give the retailer written notice of the retailer’s terminated contract and state the grounds for the termination. The retailer shall also be notified that a request for a reconsideration must be made by the retailer within 30 calendar days and that the request must contain the information in sub. (2).

(2) Within 30 calendar days of the mailing of the notice, the retailer may request a reconsideration by filing with the administrator a written statement setting forth the retailer’s legal, factual or equitable arguments and submitting any supporting documents. The request for reconsideration shall be deemed filed on the date it is received by the administrator.

(3) Within 20 calendar days of receipt of the request for reconsideration, the administrator may, in writing, request the retailer to submit any additional facts, legal and equitable arguments or documents that the administrator deems necessary to make a determination.

(4) The Wisconsin lottery’s legal counsel shall compile all relevant correspondence, lottery accounting records and all materials submitted to the administrator by the retailer for reconsideration. Legal counsel shall then review the file, research, if necessary, the applicable laws and rules and prepare an analysis and recommendation for the administrator’s consideration.

(5) The administrator, after considering all the facts and arguments submitted by the retailer, and legal counsel’s recommendation, shall independently evaluate whether to either reinstate or terminate the contract. Within 45 calendar days of the administrator’s receipt of the request for reconsideration or any supplemental information and documentation requested, the administrator shall notify the retailer, in writing, of the determination. If the contract is terminated, the notification shall include a statement setting forth the reasons for the termination and notifying the retailer of the right to a hearing under s. 227.42, Stats. The retailer shall also be notified that a request for a hearing must be made by the retailer within 20 calendar days and that the request must contain the information in sub. (6).

(6) Within 20 calendar days of the administrator’s mailing of the final determination, the retailer may request, in writing, a hearing under s. 227.42, Stats. A request shall be deemed filed on the date it is received by the administrator. A request for a hearing under s. 227.42, Stats., shall contain all of the following:

(a) The retailer’s name and address.

(b) The reasons why a retailer requests a hearing.

(d) A description of the mistake the retailer believes was made, if the retailer claims that the termination of contract is based on a mistake in fact or in law.

(e) Any supporting documents not previously submitted to the administrator.

(7) Within 20 calendar days of receipt of a request for hearing, the administrator shall grant or deny the request for a hearing, in writing, under s. 227.42, Stats. A hearing shall be granted if the criteria under s. 227.42 (1), Stats., are met. The administrator shall reasonably notify the retailer of the time and place of the hearing. The administrator shall inform the retailer, in writing, of the reason for denying a hearing.

(8) In the event that neither the retailer nor the retailer’s representative appears at the time and place designated for the hearing, the administrator may take action based upon the record as submitted. By failing to appear, the retailer waives any further right to appeal before the Wisconsin lottery.

Note: Section Tax 61.10 interprets s. 565.12, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am. Register February 2002 No. 554, eff. 3-1-02; CR 07-087: am. (title) and (2) Register April 2008 No. 628, eff. 5-1-08.

Wis. Admin. Code § Tax 61.25 Discretion of enforcement {#sec-tax-61.25 omnilex-key=us-wi-regs-official--agency-tax--Tax 61.25}

(1) Consistent with s. 227.04, Stats., the lottery shall exercise the following discretion in the enforcement of rules and guidelines against a small business:

Note: Section 227.04 (2m) (a), Stats., provides that: “Each agency shall promulgate a rule that requires the agency to disclose in advance the discretion that the agency will follow in the enforcement of rules against a small business that has committed a minor violation.” Section 227.04 (1) (a), Stats., defines minor violation as follows: “ “Minor violation” means a rule violation that does not cause serious harm to the public, is committed by a small business, and the violation is not willful, the violation is not likely to be repeated, there is a history of compliance by the violator, or the small business has voluntarily disclosed the violation.”

(a) For purposes of this section the definition of small business, under s. 227.114 (1), Stats., shall include any retailer who holds a contract under s. Tax 61.08, so that all retailers may expect the same treatment with respect to this section.

(2) If a retailer voluntarily discloses an actual or potential violation of lottery rules, guidelines, or terms of a contract with the lottery, the retailer shall be entitled to a reduction or waiver of any penalties associated with the disclosed potential violation. The amount of the reduction or the extent of the waiver shall be determined by the administrator on a case-by-case basis.

(3) Notwithstanding the provisions of sub. (2), no reduction or waiver may be granted for any of the following situations:

(a) The agency discovers the violation before the small business discloses the violation.

(b) The violation is disclosed after an agency audit or inspection of the small business has been scheduled.

(c) The violation was identified as part of the monitoring or sampling requirements that are consistent with the requirements under an existing permit.

(d) The violation results in a substantial economic advantage for the small business.

(e) The small business has repeatedly violated the same rule or guideline.

(f) The violation may result in an imminent endangerment to the environment, or to public health or safety.

(g) The violation is determined to be an act of deceit, fraud, misrepresentation or other conduct prejudicial to public confidence in the lottery.

(h) The violation may give the retailer an unfair economic advantage over another retailer.

(4) A retailer may appeal a determination of inappropriate use of discretion as outlined in section s. Tax 61.10. The administrator shall review each appeal on a case by case basis.

Note: Section Tax 61.25 interprets ss. 227.04, 565.10, and 565.12, Stats.

History

CR 07-087: cr. Register April 2008 No. 628, eff. 5-1-08; correction in (1) made under s. 13.92 (4) (b) 7., Stats., Register June 2014 No. 702.

Chapter Tax 62 MAJOR PROCUREMENTS

Wis. Admin. Code § Tax 62.01 Purpose {#sec-tax-62.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 62.01}

The purpose of this chapter is to provide the administrator with procedures regarding the Wisconsin lottery’s major procurements.

Note: Section Tax 62.01 interprets s. 565.01 (4), Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 62.02 Definitions {#sec-tax-62.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 62.02}

In this chapter:

(1) “Administrator” has the meaning specified in s. Tax 61.02 (1).

(2) “Major procurement” has the meaning specified in s. 565.01 (4), Stats.

(3) “Wisconsin lottery” has the meaning specified in s. Tax 61.02 (9).

Note: Section Tax 62.02 interprets s. 565.01 (4), Stats.

History

CR 01-088: r. and recr., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 62.20 Appeal {#sec-tax-62.20 omnilex-key=us-wi-regs-official--agency-tax--Tax 62.20}

(1) Right to appeal.

(a) Any vendor who submitted a competitive bid in response to a request for proposal or request for bid for a major procurement, and who is aggrieved by the administrator’s notice of intent to contract with another vendor, may appeal the administrator’s decision.

(b) The vendor shall file a written notice of the intent to appeal with the administrator no later than 5 working days after the issuance of the administrator’s notice of intent to contract with another vendor. The notice of appeal shall be deemed to be filed on the day it is received by the administrator.

(c) The vendor shall file the written appeal, fully identifying the contested issues, with the administrator no later than 10 working days after the issuance of the administrator’s intent to contract with another vendor. The appeal shall allege a violation of a state statute or the Wisconsin administrative code. The written appeal shall be deemed to be filed on the day it is received by the administrator.

(2) Authority to resolve an appeal. The administrator may settle and resolve an appeal. A settlement or resolution under this subsection may include the issuance of a new request for proposal or request for bid.

(3) Decision. Unless more time is required to conduct an investigation, the administrator shall issue a written decision on the appeal to the vendor within 10 working days of receipt of the appeal. The administrator’s decision may include the issuance of a new request for proposal or request for bid.

(4) State of procurements during an appeal. During the appeal process, the administrator may not proceed further with the award of the contested contract until a decision is rendered on the appeal, unless the administrator determines that the award of the contract without delay is necessary to protect substantial interests of the state.

Note: Section Tax 62.20 interprets ss. 565.01 (4) and 565.25, Stats.

History

Cr. Register, March, 1989, No. 399, eff. 4-1-89; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Chapter Tax 63 NONPROFIT ORGANIZATION RETAILERS

Wis. Admin. Code § Tax 63.01 Purpose {#sec-tax-63.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.01}

The purpose of this chapter is to provide the administrator with the procedures and criteria for contracting with nonprofit organizations to sell break-open lottery tickets for a higher rate of compensation, to establish the nonprofit organization retailer’s duties and obligations under the contract, to provide the administrator with the procedures and criteria to terminate or suspend the retailer’s contract and to provide the applicant and nonprofit organization retailer an appeal procedure if a contract is denied or a contract is terminated or suspended.

Note: Section Tax 63.01 interprets ss. 565.10 (14) and 565.12, Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.02 Definitions {#sec-tax-63.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.02}

In this chapter:

(1) “Administrator” has the meaning specified in s. Tax 61.02 (1).

(2) “Break-open ticket” means a ticket issued by the Wisconsin lottery that is made of laminated paper, partially perforated to permit strips to be torn from one side to reveal play symbols beneath, from which it can be immediately determined whether the ticket is a winner.

(3) “Location” means the place at which the nonprofit organization has been granted the authority to sell lottery tickets or shares by the administrator.

(4) “Nonprofit organization” has the meaning specified in s. 565.10 (14), Stats.

(5) “Wisconsin lottery” has the meaning specified in s. Tax 61.02 (9).

Note: Section Tax 63.02 interprets ss. 565.10 and s. 565.12, Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: r. and recr., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.03 Application to become a nonprofit organization retailer {#sec-tax-63.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.03}

(1) Any nonprofit organization may apply for a contract to sell break-open tickets by completing the application for a nonprofit organization retailer sales contract prescribed by the administrator and submitting it to the Wisconsin lottery. Applications are available upon request by contacting the Wisconsin lottery. A nonrefundable check for $25.00 made payable to the Wisconsin lottery shall accompany each application for a contract.

Note: Applications and application fees should be mailed or delivered to Wisconsin Lottery, 2135 Rimrock Road, PO Box 8941, Madison WI 53708-8941.

(2) The administrator shall examine the completed application, and based on criteria under s. 565.10 (2) to (5) and (14), Stats., shall either grant a contract or deny the application. The administrator shall grant the contract or deny the application within 35 business days after the Wisconsin lottery receives the completed application and application fee under sub. (1).

Note: Section Tax 63.03 interprets s. 565.10(2) to (5) and (14), Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.04 Temporary nonprofit organization retailer certificate of authority {#sec-tax-63.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.04}

(1) When a nonprofit organization is awarded a contract or a contract renewal under this chapter, the organization shall pay $10.00 to the Wisconsin lottery for a nonassignable and nontransferable certificate of authority. Included as an addendum to the certificate shall be a list from the contract document, specifying the locations at which the nonprofit organization retailer is authorized to sell break-open tickets. Except as otherwise provided in this section, a certificate of authority may authorize sales at more than one location.

(2) The certificate of authority shall be temporary, limiting nonprofit organization retailer sales to specified locations. A certificate of authority and any amendment of it may authorize a nonprofit organization retailer to sell Wisconsin lottery break-open tickets at more than one location, provided the contract document and certificate indicate a single permanent primary location from which the contract and certificate may not be transferred, in accordance with s. 565.10 (10) and (12), Stats. Any other locations that are subsequently amended to the contract and certificate may not be considered as permanent primary locations.

(3) If the certificate is lost, mutilated or destroyed, the nonprofit organization retailer shall within 15 calendar days request in writing and submit a completed application for a duplicate certificate.

(5) If an organization wishes to sell Wisconsin lottery break-open tickets at a location not specified in its retailer contract, it shall apply to the Wisconsin lottery for an amendment to its retailer contract. The application for an amendment must be approved by the Wisconsin lottery at least 15 calendar days before the nonprofit organization begins selling break-open tickets at the new location.

Note: Section Tax 63.04 interprets s. 565.10 (8) to (12), Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: am. (1), (3), (4) and (5), renum. and am. (2) (intro.) to be (2) and r. (2) (a) and (b), Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.05 Contract denial procedure {#sec-tax-63.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.05}

The procedures prescribed under s. Tax 61.07 shall apply to contract denials under this chapter.

Note: Section Tax 63.05 interprets s. 565.10 (1) to (5), Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; correction made under s. 13.93 (2m) (b) 7., Stats., Register, March, 1995, No. 471.

Wis. Admin. Code § Tax 63.06 Nonprofit organization retailer contract terms and conditions {#sec-tax-63.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.06}

The nonprofit organization retailer contract under this chapter shall include all of the following terms and conditions:

(1) Contract period and sales authorization. The contract shall remain in effect for no less than one year and shall expire on the date shown on the certificate of authority. The retailer does not have a substantial interest in, or a vested or equitable right to, a contract renewal.

(2) Contract not assignable or transferable. The contract may not be assigned or transferred from one organization or permanent primary location to another. The list of contract locations may be amended by the administrator using the amendment process under s. Tax 63.04 (5), provided that any amendment is consistent specifically with s. Tax 63.04 (2) and all other applicable administrative rules.

(3) Nonprofit organization retailer is not an employee or agent of the state. The nonprofit organization retailer is not an employee or agent of the state of Wisconsin and is not entitled to any right, privilege or benefit that would accrue to an employee or agent of the state of Wisconsin.

(4) Indemnification. The nonprofit organization retailer shall indemnify and hold harmless the state of Wisconsin, the Wisconsin lottery, and the Wisconsin lottery’s employees and agents from and against all claims, suits, or action arising from any willful or negligent act or omission of the retailer or its agents while performing under the terms of the retailer contract.

(5) Compliance with state law and rules. During the term of the nonprofit organization retailer contract, the retailer shall comply with ch. 565, Stats., the Wisconsin lottery’s administrative rules and any other applicable state law and administrative rules.

(6) Certificate of authority. The certificate of authority is not assignable or transferable and shall be conspicuously displayed at every location where there are sales authorized by the certificate.

(7) Notification of changes in the nonprofit organization retailer’s application.

(a) The nonprofit organization retailer shall notify the administrator, in writing, within 15 calendar days of every change of its organizational structure, including but not limited to changes from unincorporated to incorporated status.

(b) The nonprofit organization retailer shall notify the administrator, in writing, at least 30 calendar days in advance of any change in the nonprofit organization retailer’s official mailing address.

(c) The nonprofit organization retailer shall notify the administrator, in writing, within 15 calendar days if the retailer, or any of the retailer’s officers or directors, as described under s. 565.10 (3), Stats., has been convicted of or pleaded guilty or no contest to a felony, a gambling related offense, or fraud or misrepresentation in any connection.

(8) Sale of lottery break-open tickets. The nonprofit organization retailer:

(a) Shall accept only cash for break-open lottery tickets.

(b) May not intentionally sell a break-open ticket to a person under 18 years of age.

(c) May not exchange break-open tickets with any other person or organization, including other Wisconsin lottery retailers.

(d) May not sell any break-open ticket at a price different than the price authorized by the Wisconsin lottery, condition the sale of a ticket upon the purchase of any other item or service or impose any restriction upon the sale of a ticket unless specifically authorized by the administrator.

(e) May not play the lottery games by using any method other than random, fair chance, or by any method contrary to the principle that every ticket has an equal and random chance of winning.

(f) Shall explain the game rules to potential ticket customers when requested.

(g) May stamp each ticket with the retailer’s identification number assigned by the Wisconsin lottery.

(9) Sales at unauthorized locations. The retailer may not sell tickets purchased from the Wisconsin lottery under this chapter at locations that are not specified in its contract, consistent with s. Tax 63.04 (1).

(10) Responsibility for tickets.

(a) The nonprofit organization retailer shall be responsible for the condition and security of lottery tickets received. If the retailer’s lottery tickets are lost, stolen, mutilated, damaged, unaccountable or otherwise unsalable, the retailer shall be solely responsible for those tickets. The administrator may not reimburse the retailer for those losses.

(b) The nonprofit organization retailer shall report by telephone within 24 hours any stolen tickets to the administrator of security in Madison, Wisconsin.

(11) Payment for break-open tickets.

(a) The nonprofit organization retailer shall elect either of the following 2 payment options in its contract:

Payment by check or money order upon delivery of tickets to the retailer.
Payment through an electronic fund transfer account that shall be debited once a week by the Wisconsin lottery for tickets received the previous week.

(b) All tickets received by the nonprofit organization retailer shall be deemed to have been purchased by the retailer.

If the tickets are defective, the administrator may allow the nonprofit organization retailer to make a return. The retailer shall return as many of the suspected defective tickets as is possible, using packaging that is opaque and can be readily sealed.
If the order was filled incorrectly by the Wisconsin lottery, the administrator may allow the nonprofit organization retailer to make a return. The retailer shall return any incorrectly shipped break-open tickets using packaging that is opaque and can be readily sealed.
If the shipment of tickets is unopened by the nonprofit organization retailer, the administrator may allow the retailer to make a return. To be considered unopened, the package shall contain all the tickets that it contained when delivered to the retailer and have the shipping seals intact and unopened.

(d) The administrator may assess the retailer a surcharge, an interest penalty, or both, for each dishonored check or electronic fund transfer. The surcharge shall be equal to the costs incurred, incident to such dishonor. Interest may be charged only in the event that a retailer account is referred for overdue collection, and may be assessed at a rate not to exceed 8.5% of the overdue amount.

(12) Prize redemption. The nonprofit organization retailer shall redeem all prizes from break-open tickets purchased from that retailer, on the day of sale and at the location of sale.

(13) Right to appeal suspension or termination. In the event the administrator suspends or terminates the nonprofit organization retailer’s contract, the retailer is entitled to an appeal in accordance with the provisions set forth under s. Tax 61.10.

(14) Suspension or termination procedure. The nonprofit organization retailer, upon notice of suspension or termination, shall immediately stop selling lottery tickets. Within 2 weeks of the suspension or termination, the retailer shall make payment on any money owed to the Wisconsin lottery and surrender all unsold tickets and all state owned lottery property.

(15) Grounds for suspension or termination. The nonprofit organization retailer’s contract may be suspended or terminated without prior notice by the Wisconsin lottery for any of the following reasons:

(a) The retailer fails to meet one or more of the qualifications for being a retailer under s. 565.10, Stats., or under the Wisconsin lottery’s administrative rules.

(b) The retailer violates a provision of ch. 565, Stats., or of this chapter.

(d) The retailer intentionally sells a break-open ticket to a person under 18 years of age.

(e) The retailer endangers the security of the Wisconsin lottery.

(f) The retailer engages in fraud, deceit, misrepresentation or other conduct prejudicial to public confidence in the Wisconsin lottery.

(g) The retailer fails to remit money owed to the Wisconsin lottery or fails at least 3 times to have sufficient funds available resulting in the electronic fund transfer, check or money order not clearing the bank.

(h) The retailer engages in telecommunication or printed advertising that in the administrator’s determination is false, deceptive or misleading.

(i) The retailer fails to follow instructions and procedures for the conduct of any particular lottery game.

Note: Section Tax 63.06 interprets ss. 565.10 (7) to (15) and 565.12, Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; r. and recr. (11) (a), am. (11) (d) and (15) (g), Register, October, 1990, No. 418, eff. 11-1-90; correction in (13) made under s. 13.93 (2m) (b) 7., Stats., Register, March, 1995, No. 471; CR 01-088: am. (1) (2), (3), (5), (6), (7), (8) (b), (c), (d), (g), (9), (10), (11) (a),(d), (12), (13), (14), (15) (intro.), (a), (e), (f), (g) and (h) and r. and recr. (11) (c), Register February 2002 No. 554, eff. 3-1-02; CR 07-087: am. (11) (c) 1. to 3. and (d) Register April 2008 No. 628, eff. 5-1-08.

Wis. Admin. Code § Tax 63.07 Limitation on length of suspension {#sec-tax-63.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.07}

Note: Section Tax 63.07 interprets s. 565.12, Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.08 Prize structure of nonprofit organization retailer break-open ticket games {#sec-tax-63.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.08}

The administrator shall offer nonprofit organization retailers under this chapter a selection of at least 2 break-open ticket games with prize structures ranging from not less than 50% of sales to not more than 80% of sales.

Note: Section Tax 63.08 interprets s. 565.30, Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90; CR 01-088: am., Register February 2002 No. 554, eff. 3-1-02.

Wis. Admin. Code § Tax 63.09 Ticket cost to nonprofit organization retailer and nonprofit organization retailer compensation {#sec-tax-63.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 63.09}

The cost to the nonprofit organization retailer of break-open lottery tickets under this chapter shall be 10% of the face price of the tickets. The retailer shall be entitled to retain all proceeds from sales less redeemed prizes.

Note: Section Tax 63.09 interprets s. 565.10 (14) and (15), Stats.

History

Cr. Register, December, 1989, No. 408, eff. 1-1-90.

Wis. Admin. Code Tax — Department of Revenue

Chapter Tax 1 GENERAL ADMINISTRATION

Wis. Admin. Code § Tax 1.001 Definition {#sec-tax-1.001 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.001}

Wis. Admin. Code § Tax 1.01 Assessment districts {#sec-tax-1.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.01}

Wis. Admin. Code § Tax 1.06 Application of federal income tax regulations {#sec-tax-1.06 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.06}

Wis. Admin. Code § Tax 1.10 Depository bank requirements for estimated tax vouchers, sales and use tax returns, and withholding, motor fuel, general aviation fuel and alternate fuels tax deposit reports {#sec-tax-1.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.10}

Wis. Admin. Code § Tax 1.11 Requirements for examination of returns {#sec-tax-1.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.11}

Wis. Admin. Code § Tax 1.12 Electronic funds transfer {#sec-tax-1.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.12}

Wis. Admin. Code § Tax 1.13 Power of attorney {#sec-tax-1.13 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.13}

Wis. Admin. Code § Tax 1.14 Petition for redetermination {#sec-tax-1.14 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.14}

Wis. Admin. Code § Tax 1.15 Enforcement of rules against a small business that has commited a minor violation {#sec-tax-1.15 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.15}

Wis. Admin. Code § Tax 1.16 Financial record matching program {#sec-tax-1.16 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.16}

Wis. Admin. Code § Tax 1.18 Permit predetermination {#sec-tax-1.18 omnilex-key=us-wi-regs-official--agency-tax--Tax 1.18}

Chapter Tax 2 INCOME TAXATION, RETURNS, RECORDS AND GROSS INCOME

Wis. Admin. Code § Tax 2.01 Residence {#sec-tax-2.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.01}

Wis. Admin. Code § Tax 2.02 Reciprocity {#sec-tax-2.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.02}

Wis. Admin. Code § Tax 2.03 Corporation returns {#sec-tax-2.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.03}

Wis. Admin. Code § Tax 2.04 Information returns and wage statements {#sec-tax-2.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.04}

Wis. Admin. Code § Tax 2.07 Earned income tax credit {#sec-tax-2.07 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.07}

Wis. Admin. Code § Tax 2.08 Returns of persons other than corporations {#sec-tax-2.08 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.08}

Wis. Admin. Code § Tax 2.085 Claim for refund on behalf of a deceased taxpayer {#sec-tax-2.085 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.085}

Wis. Admin. Code § Tax 2.09 Reproduction of franchise or income tax forms {#sec-tax-2.09 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.09}

Wis. Admin. Code § Tax 2.10 Copies of federal returns, statements, schedules, documents, etc. to be filed with Wisconsin returns {#sec-tax-2.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.10}

Wis. Admin. Code § Tax 2.105 Notice by taxpayer of federal audit adjustments and amended returns {#sec-tax-2.105 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.105}

Wis. Admin. Code § Tax 2.11 Credit for sales and use tax paid on fuel and electricity {#sec-tax-2.11 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.11}

Wis. Admin. Code § Tax 2.12 Claims for refund and other amended returns {#sec-tax-2.12 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.12}

Wis. Admin. Code § Tax 2.30 Property located outside Wisconsin — depreciation and sale {#sec-tax-2.30 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.30}

Wis. Admin. Code § Tax 2.31 Compensation received by nonresident members of professional athletic teams {#sec-tax-2.31 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.31}

Wis. Admin. Code § Tax 2.32 Economic development surcharge — gross receipts defined {#sec-tax-2.32 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.32}

Wis. Admin. Code § Tax 2.39 Apportionment method {#sec-tax-2.39 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.39}

Wis. Admin. Code § Tax 2.41 Separate accounting method {#sec-tax-2.41 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.41}

Wis. Admin. Code § Tax 2.44 Permission to change basis of allocation {#sec-tax-2.44 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.44}

Wis. Admin. Code § Tax 2.45 Apportionment in special cases {#sec-tax-2.45 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.45}

Wis. Admin. Code § Tax 2.46 Apportionment of apportionable income of interstate air carriers {#sec-tax-2.46 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.46}

Wis. Admin. Code § Tax 2.465 Apportionment of apportionable income of interstate air freight forwarders affiliated with a direct air carrier {#sec-tax-2.465 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.465}

Wis. Admin. Code § Tax 2.47 Apportionment of apportionable income of interstate motor carriers {#sec-tax-2.47 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.47}

Wis. Admin. Code § Tax 2.475 Apportionment of apportionable income of interstate railroads and car line companies {#sec-tax-2.475 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.475}

Wis. Admin. Code § Tax 2.48 Apportionment of apportionable income of interstate pipeline companies {#sec-tax-2.48 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.48}

Wis. Admin. Code § Tax 2.49 Apportionment of apportionable income of interstate financial institutions {#sec-tax-2.49 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.49}

Wis. Admin. Code § Tax 2.495 Apportionment of apportionable income of interstate brokers-dealers, investment advisers, investment companies, and underwriters {#sec-tax-2.495 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.495}

Wis. Admin. Code § Tax 2.50 Apportionment of apportionable income of interstate public utilities {#sec-tax-2.50 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.50}

Wis. Admin. Code § Tax 2.502 Apportionment of apportionable income of interstate telecommunications companies {#sec-tax-2.502 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.502}

Wis. Admin. Code § Tax 2.505 Apportionment of apportionable income of interstate professional sports clubs {#sec-tax-2.505 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.505}

Wis. Admin. Code § Tax 2.60 Definitions relating to combined reporting {#sec-tax-2.60 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.60}

Wis. Admin. Code § Tax 2.61 Combined reporting {#sec-tax-2.61 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.61}

Wis. Admin. Code § Tax 2.62 Unitary business {#sec-tax-2.62 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.62}

Wis. Admin. Code § Tax 2.63 Controlled group election {#sec-tax-2.63 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.63}

Wis. Admin. Code § Tax 2.64 Alternative apportionment for combined groups including specialized industries {#sec-tax-2.64 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.64}

Wis. Admin. Code § Tax 2.65 Designated agent of combined group {#sec-tax-2.65 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.65}

Wis. Admin. Code § Tax 2.66 Combined estimated tax payments {#sec-tax-2.66 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.66}

Wis. Admin. Code § Tax 2.67 Combined returns {#sec-tax-2.67 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.67}

Wis. Admin. Code § Tax 2.82 Nexus {#sec-tax-2.82 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.82}

Wis. Admin. Code § Tax 2.85 Penalty for failure to produce records under s. 71.80 (9m), Stats {#sec-tax-2.85 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.85}

Wis. Admin. Code § Tax 2.87 Reduction of delinquent interest rate under s. 71.82 (2) (b), Stats {#sec-tax-2.87 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.87}

Wis. Admin. Code § Tax 2.88 Interest rates {#sec-tax-2.88 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.88}

Wis. Admin. Code § Tax 2.89 Estimated tax requirements for short taxable years {#sec-tax-2.89 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.89}

Wis. Admin. Code § Tax 2.90 Withholding; wages {#sec-tax-2.90 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.90}

Wis. Admin. Code § Tax 2.91 Withholding; fiscal year taxpayers {#sec-tax-2.91 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.91}

Wis. Admin. Code § Tax 2.92 Withholding tax exemptions {#sec-tax-2.92 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.92}

Wis. Admin. Code § Tax 2.93 Withholding from wages of a deceased employee and from death benefit payments {#sec-tax-2.93 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.93}

Wis. Admin. Code § Tax 2.935 Reduction of delinquent interest rate under s. 71.82 (2) (d), Stats {#sec-tax-2.935 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.935}

Wis. Admin. Code § Tax 2.94 Tax-sheltered annuities {#sec-tax-2.94 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.94}

Wis. Admin. Code § Tax 2.95 Reporting of installment sales by natural persons and fiduciaries {#sec-tax-2.95 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.95}

Wis. Admin. Code § Tax 2.955 Credit for taxes paid to other states {#sec-tax-2.955 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.955}

Wis. Admin. Code § Tax 2.957 Relocated business credit or deduction {#sec-tax-2.957 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.957}

Wis. Admin. Code § Tax 2.96 Extensions of time to file corporation franchise or income tax returns {#sec-tax-2.96 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.96}

Wis. Admin. Code § Tax 2.98 Disaster area losses {#sec-tax-2.98 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.98}

Wis. Admin. Code § Tax 2.986 Registration of a business under s. 73.03 (69), Stats {#sec-tax-2.986 omnilex-key=us-wi-regs-official--agency-tax--Tax 2.986}

Chapter Tax 3 INCOME TAXATION, DEDUCTIONS FROM GROSS INCOME, EXCLUSIONS AND EXEMPTIONS

Wis. Admin. Code § Tax 3.01 Addback and disclosure of related entity expenses {#sec-tax-3.01 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.01}

Wis. Admin. Code § Tax 3.02 Pass-through entity withholding {#sec-tax-3.02 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.02}

Wis. Admin. Code § Tax 3.03 Dividends received deduction — corporations {#sec-tax-3.03 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.03}

Wis. Admin. Code § Tax 3.04 Subtraction for military pay received by members of a reserve component of the armed forces {#sec-tax-3.04 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.04}

Wis. Admin. Code § Tax 3.05 Job creation deduction {#sec-tax-3.05 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.05}

Wis. Admin. Code § Tax 3.085 Retirement plan distributions {#sec-tax-3.085 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.085}

Wis. Admin. Code § Tax 3.095 Income tax status of interest and dividends received from government and other securities by individuals and fiduciaries {#sec-tax-3.095 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.095}

Wis. Admin. Code § Tax 3.096 Interest paid on money borrowed to purchase exempt government securities {#sec-tax-3.096 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.096}

Wis. Admin. Code § Tax 3.098 Railroad retirement supplemental annuities {#sec-tax-3.098 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.098}

Wis. Admin. Code § Tax 3.10 Commercial loan income exemption {#sec-tax-3.10 omnilex-key=us-wi-regs-official--agency-tax--Tax 3.10}

Chapter Tax 4 MOTOR VEHICLE AND GENERAL AVIATION FUEL TAXATION