SECTION 5. Tax 11.28(3)(b), relating to cents-off coupons, is amended to conform punctuation to Legislative Council Rules Clearinghouse standards.
SECTION 6. Tax 11.28(3)(c), relating to items redeemed from a retailer, is repealed and recreated to reflect the department's current position that a resale exemption applies to property given away with a required purchase of another item, regardless of whether the item purchased is subject to, or exempt from, Wisconsin sales tax. There is no provision in the sales and use tax law that supports the position that a resale exemption is not allowed based on whether the related property purchased is taxable or exempt.
SECTION 7. Tax 11.28(4)(c), relating to items given away, is amended to clarify the department's position that food products given away are not subject to tax, assuming exemption applies under s. 77.54(20), Stats.
Tax 11.28(5), relating to trading stamps, is amended to conform language to Legislative Council Rules Clearinghouse standards.
SECTION 8. Tax 11.46(3)(c), relating to sales by summer camps, is repealed and recreated to clarify that groceries sold at camps, which are not subject to tax, are only those that are exempt from tax under s. 77.54(20), Stats.
SECTION 9. Tax 11.46(5)(intro.), relating to combined charges, is amended to conform grammar, punctuation and style to Legislative Council Rules Clearinghouse standards.
SECTION 10. Tax 11.51(1), relating to sales by grocers, is amended to reflect the proper reading of s. 77.54(20), Stats., which in no way requires that, for food, food products, and beverages to be exempt from tax, they must be used in the “home preparation of meals.” The statute provides that food, food products, and beverages sold for direct consumption on the premises of the seller are subject to tax.
Tax 11.51(2)(a) and (b), relating to sales by grocers, are amended to reflect the Wisconsin Tax Appeals Commission decision in Artesian Water Company v. Wisconsin Department of Revenue (April 8, 1994), which held that bottled water was exempt from Wisconsin sales or use tax. Section 77.54(20)(b), Stats., specifically excludes from exemption soft drinks and soda water beverages (which would include carbonated or flavored bottled water).
Both subunits are also amended to conform punctuation and style to Legislative Council Rules Clearinghouse standards.
SECTIONS 11, 12 AND 13. Tax 11.87(1)(a) through (g), relating to sales of meals, are renumbered Tax 11.87(1)(b) through (h) and Tax 11.87(1)(a) is created to reflect the amendment to s. 77.54(20)(c)4, Stats., by 1993 Wisconsin Act 332, which exempted from sales or use tax meals sold on premises by community-based residential facilities. Tax 11.87(1)(b) as renumbered is amended to clarify that whether food is exempt from tax is determined under s. 77.54(20), Stats.
SECTION 14. Tax 11.87(3)(a), relating to sales of meals, is amended to reflect the amendment to s. 77.54(20)(c)4, Stats., by 1993 Wisconsin Act 332, which exempted from sales or use tax meals sold on premises by community-based residential facilities.
Tax 11.87(3)(d) is amended to reflect the proper reading of s. 77.54(20), Stats., which in no way requires that, for food, food products, and beverages to be exempt from tax, they must be used in the “home preparation of meals.” The statute only requires that food, food products, and beverages sold for direct consumption on the premises of the seller are subject to tax.
Tax 11.87(3)(e) is amended to correct terminology.
Text of Rule
SECTION 1. Tax 11.28(title), (1)(a) and (2)(title) are amended to read:
Tax 11.28(title) GIFTS AND OTHER ADVERTISING SPECIALTIES. (ss. 77.51(4)(a) and (14)(k) and 77.56(3), Stats.)
(1)(a) Section 77.51(14)(k), Stats., provides that “sale”
,“ ”sale, lease or rental“,” “retail sale”,“ ”sale at retail“ or equivalent terms includes the sale of tangible personal property to a purchaser even though the property may be used or consumed by another person to whom the purchaser transfers the property without valuable consideration, such as gifts and other advertising specialties distributed gratis apart from the sale of other tangible personal property or services.
(2)(title) GIFTS AND SALES INCENTIVE PLANS.
SECTION 2. Tax 11.28(2)(intro.) is renumbered Tax 11.28(2)(a).
SECTION 3. Tax 11.28(2)(a)(title) is created to read:
Tax 11.28(2)(a)(title) General.
SECTION 4. Tax 11.28(2)(a), (b), (c), (d) and (e) are renumbered Tax 11.28(2)(b), (c), (d), (e) and (f) and Tax 11.28(2)(b) and (e) as renumbered are amended to read:
Tax 11.28(2)(b) Grand opening gifts. A person who sells tangible personal property to a retailer who uses the property as gifts at a “grand opening” or similar event, such as an open house, celebrity appearance or “farm days,” cannot accept a resale certificate in good faith if the seller is aware, or should be aware with the exercise of reasonable diligence, of how the property will be used. The seller shall be deemed to be aware of how the property is to be used if the retailer does not normally purchase this type of item or if the retailer does not normally purchase from the seller in this volume. In cases where a seller furnishes free property to a retailer for use as gifts at a “grand opening” or similar event, the person seller furnishing the property to the retailer without charge is subject to the sales or use tax pursuant to s. Tax 11.14(2)(c) on its cost of 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.
(e)(title) Awards. Persons transferring tangible personal property 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.
SECTION 5. Tax 11.28(3)(b) is amended to read:
Tax 11.28(3)(b)(title) Cents-off coupons redeemable by manufacturers. A common arrangement between manufacturers and retailers involves the use of “cents-off”
coupons. The coupons are distributed as part of a retailer's advertisements and are used by consumers toward the purchase of tangible personal property. The retailer then is reimbursed by the manufacturer. In this situaiton, a retailer's taxable gross receipts include the amount which the retailer is reimbursed and the amount paid by the customer presenting the coupon, less any coupon handling fees paid by the manufacturer.
SECTION 6. Tax 11.28(3)(c) is repealed and recreated to read:
Tax 11.28(3)(c) Coupons issued and redeemable by retailers. 1. When a retailer distributes coupons which its customer may use to obtain free tangible personal property, the following shall apply:
a. When purchasing tangible personal property which will be given away to customers who must purchase other property to obtain the free property, a retailer may use a resale certificate to purchase the free property withoutpayment of the sales tax, since the transaction is deemed a sale of both the free property and the other property. The sale of the free property and other property by the retailer is subject to Wisconsin sales or use tax, unless an exemption applies.
b. A retailer may not use a resale certificate when purchasing taxable property which the retailer knows, or should know, is to be given away to customers without the customers being required to purchase other property to receive the free property. If the property that is given away was acquired without tax for resale, the retailer shall report the use tax based on the cost of the property.
Examples: 1) A retailer knows key chains it purchases will be given away to customers when those customers purchase gasoline, food items, or other tangible personal property. The retailer may purchase the key chains without Wisconsin sales tax by giving a resale certificate to its supplier.
2) 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 a resale certificate, the retailer is liable for tax measured by the cost of the key chains given away.
2. The taxable gross receipts of retailers, who issue cents-off coupons which reduce the price of merchandise they sell, and who receive no reimbursement from a manufacturer, are the reduced amounts charged the customer.
SECTION 7. Tax 11.28(4)(c) and (5) are amended to read:
Tax 11.28(4)(c) Except for meals, retailers
Retailers are subject to the sales and use tax on their cost of taxable property transferred when coupons are redeemed without consideration from a sales agency, the consumer or any other person unless an exemption applies. No use tax arises when a meal prepared from exempt food is given away, and the retailer shall not pass on any tax to the consumer of a free meal.
Note to Revisor: Insert the following example after sub. (4)(c):
Example: Motel A provides a free breakfast with the purchase of lodging. Motel A purchases fruit, milk, cereal, bakery goods (rolls, bagels, muffins, 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 (rolls, bagels, muffins, bread), ground coffee beans, and frozen juice are
not subject to Wisconsin sales or use tax because they are exempt food items not for direct consumption on the premises of the vendor under s. 77.54(20), 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 a charge, to a retailer is an advertising or sales promotional service. The person furnishing the stamps and books is the consumer of such the material and shall pay the Wisconsin sales or use tax on purchases of the material.
(b) A retailer's taxable gross receipts shall
may not be reduced by the retailer's payments for trading stamps and stamp books or for payments to customers in redemption of such the stamps.
SECTION 8. Tax 11.46(3)(c) is repealed and recreated to read:
Tax 11.46(3)(c) Food, food products and beverages as defined in s. 77.54(20)(a) and (b), Stats., excluding those food, food products and beverages listed in s. 77.54(20)(c), Stats., sold at a camp for consumption off the premises of the camp. “Off the premises of the camp” means a location outside the boundaries of the camp.
SECTION 9. Tax 11.46(5)(intro.) is amended to read:
Tax 11.46(5)(intro.) An allocation between taxable and exempt receipts shall be made when a single, combined, charge is made for all the privileges extended by a camp. Adequate records shall be kept and maintained to enable the proper allocation; otherwise, the total charge shall be taxable. For purposes of allocating, the following shall apply:
SECTION 10. Tax 11.51(1) and (2)(a) and (b) are amended to read:
Tax 11.51(1) GENERAL. All sales of tangible personal property are taxable except when a specific exemption applies. One of the exemptions is for “food, food products and beverages”
,“ which generally exempts all basic food items for human consumption necessary for the home preparation of meals off the premises of the grocer. This exemption, however, does not include many items normally available in grocery and food stores, such as soda water beverages, including bases or concentrates to produce soft drinks and fruit drinks, beer, intoxicating liquors, candy, paper products and detergents. The following lists in sub. (2)(a) and (b) shall serve as a guide to grocers to determine the kinds of items that are taxable and exempt.
Note to Revisor: Amend only the following portions of the alphabetical lists in sub. (2)(a) and(b):
(2)(a) . . .
Cameras and supplies.
Can openers.
Candied fruits.
Candy.
Candy apples.
Canning and freezer supplies.
Can openers.
. . .
Water, bottled, sparkling, spring and distilled
carbonated or flavored.
Water conditioners.
Wax paper.
Waxing.
Wax paper.
. . .
(b) . . .
Granola bars, see par. (a) except candy or yogurt coated.
. . .
Pasta.
Peanut butter.
Peanuts, in shell or canned, salted or not, see par. (a) except candy or yogurt coated.
Peanut butter.
. . .
Raisins, see par. (a) except candy or yogurt coated.
. . .
Waffle mix.
Water, uncarbonated and unflavored.
Yeast.
. . .
SECTION 11. Tax 11.87(1)(a) is renumbered Tax 11.87(1)(b) and amended to read:
Tax 11.87(1)(b) “Exempt food” means food, food products and beverages not subject to the sales and use tax as provided in s. 77.54(20), Stats.
SECTION 12. Tax 11.87(1)(a) is created to read:
Tax 11.87(1)(a) “Community-based residential facility” has the meaning in s. 50.01(1g), Stats.
SECTION 13. Tax 11.87(1)(b), (c), (d), (e), (f) and (g) are renumbered Tax 11.87(1)(c), (d), (e), (f), (g) and (h).
SECTION 14. Tax 11.87(3)(a), (d) and (e) are amended to read:
Tax 11.87(3)(a) Health care facilities. Meals, food, food products or beverages sold on their premises by hospitals, sanatoriums, nursing homes, retirement homes, community-based residential facilities or day care centers registered under ch. 48, Stats. However, if an affiliated organization sells the items, the exemption does not apply.
(d) Groceries. Sales of the basic food items food, food products and beverages for human consumption purchased for the home preparation of meals exempt from tax under s. 77.54(20), Stats. This includes sales of prepackaged ice cream, ice milk or sherbet in pint or larger sizes, whether prepackaged by the vendor or a supplier. Sales of smaller sized containers of these products are taxable. Sales of ice cream, ice milk, sherbet or yogurt as cones, sundaes, sodas, shakes and frozen chocolate bars made from these products are taxable.
Note to Revisor: Insert the following note after sub. (3)(d):
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
social security income, veterans administration or other disability and retirement benefits reflecting the value of meals provided.
Note to Revisor: Replace the note at the end of Tax 11.87 with the following:
