Tax 11.68 Note
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.
Tax 11.68(13)(a)
(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.
Tax 11.68(13)(b)
(b) Building materials which become a component part of real property are used and consumed at the job site.
Tax 11.68(13)(c)
(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.
Tax 11.68(13)(d)
(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.
Tax 11.68(13)(e)
(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.
Tax 11.68 Note
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.
Tax 11.68 Note
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.
Tax 11.68 History
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. Tax 11.69(1)(1)
Definition. In this section, “financial institution" includes a bank, savings and loan association, savings bank, or credit union.
Tax 11.69(2)
(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.
Tax 11.69(3)
(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:
Tax 11.69(3)(f)
(f) Prepared foods, candy, dietary supplements, and soft drinks in the institution's cafeteria.
Tax 11.69(3)(g)
(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.
Tax 11.69 Note
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.
Tax 11.69(4)(a)(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.
Tax 11.69(4)(b)
(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.
Tax 11.69(4)(c)
(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.
Tax 11.69(4)(d)
(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.
Tax 11.69(5)(a)(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.
Tax 11.69(5)(b)
(b) The use tax may not be imposed directly on a federal credit union due to federal restrictions.
Tax 11.69 Note
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.
Tax 11.69 History
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.
Tax 11.70(1)(a)
(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.
Tax 11.70(1)(b)
(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.
Tax 11.70(1)(c)
(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.
Tax 11.70(1)(d)
(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.
Tax 11.70(1)(e)
(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.
Tax 11.70(2)
(2)
Taxable sales. The following sales are subject to Wisconsin sales or use tax, unless an exemption in sub.
(3) applies:
Tax 11.70(2)(a)
(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.
Tax 11.70(2)(b)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70(2)(c)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
The entire charge by the advertising agency for the production of the master tape and dubs is subject to tax.
Tax 11.70 Note
4) Assume the same facts as Example 3, except that 5 dubs are mailed by the advertising agency to radio stations outside Wisconsin.
Tax 11.70 Note
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.
Tax 11.70(2)(e)
(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.
Tax 11.70(3)
(3)
Nontaxable sales. Charges for the following are not subject to Wisconsin sales or use tax:
Tax 11.70(3)(a)
(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.
Tax 11.70 Note
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.
Tax 11.70(3)(d)
(d) Consultation, market research, and compiling statistical or other information.
Tax 11.70(3)(e)
(e) Recommendations for advertising themes or merchandising plans.
Tax 11.70(3)(g)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70(3)(gm)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70(3)(h)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70(3)(j)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70 Note
2) Assume the same facts as Example 1, except that Company I provides the paper to the printer, in addition to the finished artwork.
Tax 11.70 Note
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.
Tax 11.70(3)(k)
(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.
Tax 11.70 Note
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.
Tax 11.70 Note
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.
Tax 11.70(3)(L)
(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.
Tax 11.70 Note
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.
