Tax 11.66 (2) (a) 1. The service originates or terminates in Wisconsin.
Note to Revisor: Add the following examples at the end of Tax 11.66 (2) (a) 1. as renumbered:
Examples: 1) Mary Jones places a telephone call from her home in Wisconsin to Bill Jones in Illinois. The call originated in Wisconsin since it was placed from a telephone in Wisconsin.
2) Mary Jones receives a collect call at her home in Wisconsin. The call was placed by Bill Jones from a telephone in Illinois. The call terminated in Wisconsin since it was received in Wisconsin.
3) Company A contracts with Telecommunications Provider B for use of a telecommunications channel to send data from Company A's bank, located in Milwaukee, Wisconsin, to Company A's automated teller machines or “ATMs," located in Waukesha, Wisconsin, and to send data from its ATMs in Waukesha 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 telecommunications channel, regardless of the volume of data transmitted or number of transmissions made by Company A. Telecommunications Provider B refers to this service as “private line service." This service originates and terminates in Wisconsin.
4) Assume the same facts as example 3, except the telecommunications channel is used by Company A to send data from its bank in Wisconsin to its ATMs located in Illinois. The telecommunications channel is also used by Company A to send data from its ATMs located in Illinois to its Wisconsin bank. This service originates and terminates in Wisconsin.
SECTION 6. Tax 11.66 (2) (intro.) and (a) (title) are created to read:
Tax 11.66 (2) (intro.) GENERAL. This subsection describes the conditions under which telecommunications services and telecommunications message services are taxable. The conditions are as follows:
(a) (title) Telecommunications services.
SECTION 7. Tax 11.66 (2) (b) (intro.) and 1. to 5. are renumbered Tax 11.66 (2) (a) 2. (intro.) and a. to e.
SECTION 8. Tax 11.66 (2) (b) is created to read:
Tax 11.66 (2) (b) Telecommunications message services. Telecommunications message services that consist of recording telecommunications messages and transmitting them to the purchaser of the service or at that purchaser's direction are taxable, except that those services are not taxable if either of the following apply:
1. They are merely an incidental element of another service that is sold to the purchaser and is not taxable.
2. The situs of the service is outside this state. The situs of a telecommunications message service is the location where the customer, or someone at the direction of the customer, receives the message.
SECTION 9. Tax 11.66 (3) (title) and (intro.) are amended to read:
Tax 11.66 (3) (title) TAXABLE TELECOMMUNICATIONS SERVICES.
(intro.) Telecommunications services which
Gross receipts that are subject to Wisconsin sales or use tax include gross receipts from the sale of the following services:
SECTION 10. Tax 11.66 (3) (a) is renumbered Tax 11.66 (3) (a) 1. and amended to read:
Tax 11.66 (3) (a) 1. Local and toll service and Wide-Area Telecommunications Service , or WATS, including intrastate private line service. or “WATS."
Note to Revisor: Replace the example at the end of sub. (3) (a) 1. as renumbered with the following:
Example: Company JKL, headquartered in Milwaukee, has branch offices in Madison, Green Bay, Chicago and Minneapolis. Company JKL contracts with a telecommunications company for use of telecommunications channels 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 telecommunications 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 telecommunications channels. Increasing capacity requires a higher charge. The telecommunications service is charged to a service address in Wisconsin. The telecommunications company refers to this service as “private line service." The charges by the telecommunications company to Company JKL for this service are subject to Wisconsin sales or use tax. A credit may be allowed, against the Wisconsin sales or use tax, for tax paid to Illinois or Minnesota. See sub. (6).
SECTION 11. Tax 11.66 (3) (a) (intro.) is created to read: Tax 11.66 (3) (a) (intro.) Telecommunications services, including:
SECTION 12. Tax 11.66 (3) (b) and (c) are renumbered Tax 11.66 (3) (a) 2. and 3.
SECTION 13. Tax 11.66 (3) (d) is repealed.
SECTION 14. Tax 11.66 (3) (e) to (L) and (m) are renumbered Tax 11.66 (3) (a) 4. to 11. and 15.
Note to Revisor: Add the following note at the end of Tax 11.66 (3) (a) 15. as renumbered:
Note: Refer to sub. (5) regarding the sale of rights to purchase telecommunications services.
SECTION 15. Tax 11.66 (3) (a) 12., 13. and 14. and (b) are created to read:
Tax 11.66 (3) (a) 12. Call forwarding services.
13. Caller ID services.
14. Internet access services.
(b) Telecommunications message services, including:
1. 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 an incidental element of 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.
2. Security monitoring services that consist of recording a telecommunications message and notifying the customer or local authorities of the message.
3. Electronic mail services.
4. Mechanical or electronic voice messaging and telephone answering 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 either through a toll-free telephone number or a local telephone number. The service provided by Company A is not an incidental element of another service sold by the company that is not a taxable service. Company A's charges for this service are subject to Wisconsin sales or use tax.
SECTION 16. Tax 11.66 (4) (intro.), (a) and (c) are amended to read:
Tax 11.66 (4) (intro.) NONTAXABLE SERVICES. Gross receipts from the sale of or charge for the following services are not taxable:
(a) Interstate or international telecommunications service if the service originates from another state or country or if the service originates in Wisconsin but is charged to a service address in another state or country.
(c) Access Transfers of access services, Measured Toll Service , or MTS, and or “MTS," and Wide-Area Telecommunications Service , or WATS, services resellers
or “WATS," 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.
SECTION 17. Tax 11.66 (4) (d) is repealed and recreated to read:
Tax 11.66 (4) (d) Services that are obtained by means of a toll-free number, that originate outside Wisconsin and terminate in Wisconsin.
Note to Revisor: Remove the example that follows Tax 11.66 (4) (d) before its repeal.
SECTION 18. Tax 11.66 (4) (e) is repealed.
SECTION 19. Tax 11.66 (4) (f) and (5) are renumbered Tax 11.66 (4) (e) and (7) and as renumbered Tax 11.66 (4) (e) is amended to read:
Tax 11.66 (4) (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 this state 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.
SECTION 20. Tax 11.66 (5) and (6) are created to read:
Tax 11.66 (5) PREPAID TELEPHONE CALLING CARDS AND AUTHORIZATION NUMBERS.
(a) The sale of rights to purchase telecommunications services, including purchasing reauthorization numbers, by paying in advance and by using an access number and authorization code, is subject to Wisconsin sales or use tax.
(b) The situs of the sale of the rights to purchase telecommunications services is as follows:
1. If the sale takes place at a retailer's place of business, the situs of the sale is that place of business.
2. If the sale does not take place at a retailer's place of business and an item that will implement the right to purchase telecommunications services, such as a calling card, is shipped, the situs of the sale is the customer's shipping address.
3. If the sale does not take place at a retailer's place of business and no item that will implement the right to purchase telecommunications services is shipped, the situs of the sale is the customer's billing address.
(6) 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.
Note to Revisor: 1) Replace the first note at the end of Tax 11.66 with the following:
2) In the third note at the end of Tax 11.66: remove part (b); renumber parts (c) to (h) to be parts (b) to (g); remove the word “and" before part (g) as renumbered; and add the following to the end of the note:
;(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; and (L) The repeal of the exemption for interstate "private line" service, as defined in Tax 11.66 (1) (a), September 1997 Register, and described in Tax 11.66 (4) (d), September 1997 Register, became effective
[Revisor insert effective date of rule order].
Initial Regulatory Flexibility Analysis
This proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
The proposed order updates the Department of Revenue's administrative code relating to telecommunications services and telecommunications message services. The changes incorporate recent law changes, clarify existing language to reflect the Department's current position, and alter style and format to conform to Legislative Council Clearinghouse standards. These rule changes do not have a fiscal effect.
Comments on the Rule
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person shown below no later than August 26, 2002, and will be given the same consideration as testimony presented at the hearing.
Contact Person
Mark Wipperfurth
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
PO Box 8933
Madison WI 53708-8933
Telephone (608) 266-8253
