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:
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 on 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; and (c) Sales of meals by community-based residential facilities on their premises became exempt on June 1, 1994, pursuant to 1993 Wis. Act. 332.
Initial Regulatory Flexibility Analysis
The proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
It is anticipated that these changes will have no significant fiscal effect.
Notice of Submission of Proposed Rules to the Presiding Officer of each House of the Legislature, Under S. 227.19, Stats.
Please check the Bulletin of Proceedings for further information on a particular rule.
Agriculture, Trade & Consumer Protection
(CR 95-97):
Chs. ATCP 88 and 89 - Relating to egg grading, handling and labeling.
Department of Financial Institutions--Banking
(CR 96-67):
SS. Bkg 76.01, 76.03, 76.04 and 76.14 - Relating to sales finance companies.
Department of Financial Institutions--Banking
(CR 96-68):
S. Bkg 80.25 - Relating to open end credit, maximum periodic rates and licensed lenders under s. 138.09, Stats.
Ch. NR 140 and ss. NR 700.03, 722.07, 724.13, 726.05 and 726.17 - Relating to the closure of hazardous substance spill cases where the Department has determined that naturally occurring physical, chemical or biological processes will restore groundwater quality within a reasonable period of time.
SS. NR 149.22 and 219.05 - Relating to whole effluent toxicity testing methods.
SS. NR 7.04, 7.05 and 7.06 - Relating to the recreational boating facilities program.
S. NR 46.30 (2) (a) to (c) - Relating to the administration of the Forest Crop Law and the Managed Forest Law.
SS. NR 25.03 (1) (a) and 25.06 (1) (a) 2 - Relating to commercial fishing licenses and lake trout quotas on Lake Superior.
S. PD 3.039 - Relating to the redetermination of indigency during the course of representation.
