Other taxation
This bill adopts the substantive provisions of the streamlined sales and use tax agreement (agreement) for purposes of administering and collecting state, county, and stadium district sales and use taxes. The agreement is intended to simplify and modernize sales and use tax administration for the states that enter into the agreement and to encourage out-of-state retailers to collect the state, county, and stadium district sales and use taxes voluntarily. Under current federal law, generally, an out-of-state retailer who sells goods or services to customers in this state is not required to collect the sales tax or use tax imposed on such sales, if the retailer has no physical presence in this state. See Quill v. North Dakota, 504 U.S. 298; 112 S.Ct. 1904 (1992).
States that wish to enter into the agreement must adopt uniform definitions related to the administration of sales and use taxes and uniform policies related to sourcing sales of goods and services, bad debt allowances, refunds, and, to some extent, exemptions. Under the agreement, DOR may act jointly with other states that are signatories to the agreement to establish standards for certifying service providers and automated systems to aid out-of-state retailers with the collection of state sales and use taxes.
Under current law, "gross receipts" refers to the measure of the sales tax, and "sales price" refers to the measure of the use tax. Under the bill, "sales price" refers to the measure of the sales tax, and "purchase price" refers to the measure of the use tax.
The bill creates definitions for "alcohol beverages," "candy," "delivery charges," "dietary supplement," "food and food ingredients," "prepared food," and "soft drink."
The agreement provides that a state that is a signatory to the agreement may choose to tax or not tax all articles that are covered by one definition, but a state may not exempt from sales tax or use tax a particular item that is included in a definition. The members of the project working on the agreement approved a definition for "clothing." Therefore, in order to comply with the agreement, a state may either tax all clothing or exempt all clothing, but a state may not exempt certain items of clothing and tax others. This bill, therefore, eliminates the sales tax and use tax exemptions for cloth diapers and antiembolism hose.
This bill creates definitions for "durable medical equipment," "mobility-enhancing equipment," and "prosthetic device." Under the bill, the sale of such equipment and devices is exempt from the sales tax and the use tax.
Under the bill, generally, for purposes of determining which jurisdiction may impose a sales tax or use tax on a sale, if a purchaser receives a product at the seller's business location, the sale of that product occurs at the seller's business location. If a purchaser does not receive the product at a seller's business location, the sale occurs at the location where the purchaser receives the product. If the location of the sale cannot be so determined, the sale occurs at the purchaser's address, as indicated by the seller's business records. If the address cannot be determined from the business records, the sale occurs at the purchaser's address, as obtained during the consummation of the sale, including the address indicated on the purchaser's check. Finally, if the location of a sale cannot be determined in any other way, the sale of tangible personal property occurs at the location from which the tangible personal property is shipped. Under the bill, if the item sold is a digital good or computer software, and the digital good or computer software is delivered electronically, the sale occurs at the location from which the digital good or computer software was first available for transmission by the seller.
Under the bill, generally, the sale of a telecommunications service occurs at a location that is determined to be consistent with the provisions of the federal Mobile Telecommunications Sourcing Act.
This bill will be referred to the Joint Survey Committee on Tax Exemptions for a detailed analysis, which will be printed as an appendix to this bill.
For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
SECTION 1. 20.435 (3) (bm) of the statutes is repealed.
****NOTE: This SECTION involves a change in an appropriation that must be reflected in the revised schedule in s. 20.005, stats.
SECTION 2. 46.513 of the statutes is repealed.
SECTION 3. 66.0615 (1m) (f) 2. of the statutes is amended to read:
66.0615 (1m) (f) 2. Sections 77.51 (12m), (14) (c), (f) and (j) and, (14g), (15a), and (15b), 77.52 (3), (3m), (4), (6) and (13), (14), (18), and (19), 77.522, 77.58 (1) to (5), (6m), and (7), 77.585, 77.59, 77.60, 77.61 (2), (3m), (5), (8), (9) and, (12) to (14), and (15), and 77.62, as they apply to the taxes under subch. III of ch. 77, apply to the tax described under subd. 1.
SECTION 4. 70.111 (23) of the statutes is amended to read:
70.111 (23) VENDING MACHINES. All machines that automatically dispense soda water beverages, as defined in s. 97.29 (1) (i), and items included as a food or beverage under s. 77.54 (20) (a) and (b) food and food ingredient, as defined in s. 77.51 (3t), upon the deposit in the machines of specified coins or currency, or insertion of a credit card, in payment for the soda water beverages, food or beverages food and food ingredient, as defined in s. 77.51 (3t).
SECTION 5. 73.03 (50) (d) of the statutes is amended to read:
73.03 (50) (d) In the case of a sole proprietor, signs the form or, in the case of other persons, has an individual who is authorized to act on behalf of the person sign the form, or, in the case of a single-owner entity that is disregarded as a separate entity under section 7701 of the Internal Revenue Code, the person is the owner. Any person who may register under this subsection may designate an agent, as defined in s. 77.524 (1) (ag), to register with the department under this subsection in the manner prescribed by the department. In this paragraph, "sign" has the meaning given in s. 77.51 (17r).
SECTION 6. 73.03 (50b) of the statutes is created to read:
73.03 (50b) To waive the fee established under sub. (50) for applying for and renewing the business tax registration certificate, if the person who is applying for or renewing the certificate is not required for purposes of ch. 77 to hold such a certificate.
SECTION 7. 73.03 (61) of the statutes is created to read:
73.03 (61) To do all of the following related to the Uniform Sales and Use Tax Administration Act:
(a) Certify compliance with the agreement, as defined in s. 77.65 (2) (a).
(b) Pursuant to the agreement, as defined in s. 77.65 (2) (a), certify certified service providers, as defined in s. 77.51 (1g), and certified automated systems, as defined in s. 77.524 (1) (am).
(c) Consistent with the agreement, as defined in s. 77.65 (2) (a), establish performance standards and eligibility criteria for a seller that sells tangible personal property or taxable services in at least 5 states that are signatories to the agreement, as defined in s. 77.65 (2) (a); that has total annual sales revenue of at least $500,000,000; that has a proprietary system that calculates the amount of tax owed to each taxing jurisdiction in which the seller sells tangible personal property or taxable services; and that has entered into a performance agreement with the states that are signatories to the agreement, as defined in s. 77.65 (2) (a). For purposes of this paragraph, "seller" includes an affiliated group of sellers using the same proprietary system to calculate the amount of tax owed in each taxing jurisdiction in which the sellers sell tangible personal property or taxable services.
(d) Issue a tax identification number to a person who claims an exemption under subch. III or V of ch. 77 and who is not required to register with the department for the purposes of subch. III or V of ch. 77 and establish procedures for the registration of such a person.
(e) Maintain a database that is accessible to sellers and certified service providers, as defined in s. 77.51 (1g), that indicates whether items defined in accordance with the Uniform Sales and Use Tax Administration Act are taxable or nontaxable.
(f) Maintain a database that is accessible to sellers and certified service providers, as defined in s. 77.51 (1g), that indicates tax rates, taxing jurisdiction boundaries, and zip code or address assignments related to the administration of taxes imposed under subchs. III and V of ch. 77.
(g) Set forth the information that the seller shall provide to the department for tax exemptions claimed by purchasers and establish the manner in which a seller shall provide such information to the department.
(h) Provide monetary allowances, in addition to the retailer's discount provided under s. 77.61 (4) (c), to certified service providers, as defined in s. 77.51 (1g), and sellers that use certified automated systems, as defined in s. 77.524 (1) (am), or proprietary systems, pursuant to the agreement as defined in s. 77.65 (2) (a).
SECTION 8. 76.07 (4g) (b) 8. of the statutes is amended to read:
76.07 (4g) (b) 8. Determine transport-related revenue by adding public service revenue allocated to this state on the basis of routes for which the company is authorized to receive subsidy payments, mutual aid allocated to this state on the basis of the ratio of transport revenues allocated to this state to transport revenues everywhere in the previous year, in-flight sales allocated to this state as they are allocated under s. 77.51 (14r) 77.522 and all other transport-related revenues from sales made in this state.
SECTION 9. 77.51 (1b) of the statutes is created to read:
77.51 (1b) "Alcohol beverage" means a beverage that is suitable for human consumption and that contains 0.5 percent or more of alcohol by volume.
SECTION 10. 77.51 (1e) of the statutes is created to read:
77.51 (1e) "Candy" means 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.
SECTION 11. 77.51 (1n) of the statutes is created to read:
77.51 (1n) "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.
SECTION 12. 77.51 (1p) of the statutes is created to read:
77.51 (1p) "Computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.
SECTION 13. 77.51 (2k) of the statutes is created to read:
77.51 (2k) "Delivered electronically" means delivered to a purchaser by means other than by tangible storage media.
SECTION 14. 77.51 (2m) of the statutes is created to read:
77.51 (2m) "Delivery charges" means charges by a seller to prepare and deliver tangible personal property or services to a location designated by the purchaser of the tangible personal property or services, including charges for transportation, shipping, postage, handling, crating, and packing.
SECTION 15. 77.51 (3p) of the statutes is created to read:
77.51 (3p) "Dietary supplement" means a product, other than tobacco, that is intended to supplement a person's diet, if all of the following apply:
(a) The product contains any of the following ingredients or any combination of any of the following ingredients:
1. A vitamin.
2. A mineral.
3. An herb or other botanical.
4. An amino acid.
5. A dietary substance that is intended for human consumption to supplement the diet by increasing total dietary intake.
6. A concentrate, metabolite, constituent, or extract.
(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.
SECTION 16. 77.51 (3pd) of the statutes is created to read:
77.51 (3pd) "Direct mail" means printed material that is delivered 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 included with the printed material is not billed directly to the recipients of the printed material. "Direct mail" includes any tangible personal property provided directly or indirectly by the purchaser of the printed material to the seller of the printed material for inclusion in any package containing printed material. "Direct mail" does not include multiple items of printed material delivered to a single address.
SECTION 17. 77.51 (3pj) of the statutes is created to read:
77.51 (3pj) "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.
(c) It is intended to affect a function or structure of the body.
SECTION 18. 77.51 (3pm) of the statutes is created to read:
77.51 (3pm) "Durable medical equipment" means 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.
SECTION 19. 77.51 (3pp) of the statutes is created to read:
77.51 (3pp) "Electronic" means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
SECTION 20. 77.51 (3t) of the statutes is created to read:
77.51 (3t) "Food and food ingredient" means 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 alcohol beverages or tobacco.
SECTION 21. 77.51 (4) of the statutes is repealed.
SECTION 22. 77.51 (5) of the statutes is amended to read:
77.51 (5) For purposes of subs. (13) (e) and (f) and (14) (L) (15a) and s. 77.52 (2m), "incidental" means depending upon or appertaining to something else as primary; something necessary, appertaining to, or depending upon another which is termed the principal; something incidental to the main purpose of the service. Tangible personal property transferred by a service provider is incidental to the service if the purchaser's main purpose or objective is to obtain the service rather than the property, even though the property may be necessary or essential to providing the service.
SECTION 23. 77.51 (7) of the statutes is repealed and recreated to read:
77.51 (7) (a) "Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term and for consideration and includes:
1. A transfer that includes future options to purchase or extend.
2. 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" does not include any of the following:
1. A transfer of possession or control of tangible personal property under a security agreement or deferred payment plan, if such agreement or plan requires transferring title to the tangible personal property after making all required payments.
2. A transfer of possession or control of tangible personal property under any agreement that requires transferring title to the tangible personal property after making all required payments and after paying an option price that does not exceed the greater of $100 or 1 percent of the total amount of the required payments.
3. Providing tangible personal property along with an operator, if the operator is necessary for the tangible personal property 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.
(c) 1. Transfers described under par. (a) are considered a lease or rental, regardless of whether such transfer is considered a lease or rental under generally accepted accounting principles, or any provision of federal or local law, or any other provision of state law.
2. Transfers described under par. (b) are not considered a lease or rental, regardless of whether such transfer is considered a lease or rental under generally accepted accounting principles, or any provision of federal or local law, or any other provision of state law.
SECTION 24. 77.51 (7m) of the statutes is created to read:
77.51 (7m) "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.
SECTION 25. 77.51 (10m) of the statutes is created to read:
77.51 (10m) (a) "Prepared food" means:
1. Food and food ingredients sold in a heated state.
2. Food and food ingredients heated by the retailer, except as provided in par. (b).
