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(c) If a vending machine operator retailer sells taxable property at a price such that a sales tax is collectible under the bracket system systems set forth in subs. (5) and (6), part of the gross receipts from these sales shall include sales tax if customers are advised that the vending machine prices include sales tax.

SECTION 4. Tax 11.32(5) is repealed and recreated to read:

Tax 11.32(5) BRACKET SYSTEM. (a) The following bracket system may be used by retailers in computing the amount of the state tax which may be collected from the retailer's customers.

Amount of Taxable Sale	5% Tax Collectible
$.01 to $.09	0¢
.10 to .29	1¢
.30 to .49	2¢
.50 to .69	3¢
.70 to .89	4¢
.90 to 1.09	5¢

On sales exceeding $1.00, the state tax equals 5¢ for each full dollar of sales, plus the tax shown above for the applicable fractional part of a dollar.

(b) In counties having a county tax, but no stadium tax, the following bracket system may be used:

Amount of Taxable Sale	Combined State and County Tax of 5.5%
$ .01 to $ .09	0¢
.10 to .27	1¢
.28 to .45	2¢
.46 to .63	3¢
.64 to .81	4¢
.82 to .99	5¢
1.00 to 1.18	6¢
1.19 to 1.36	7¢
1.37 to 1.54	8¢
1.55 to 1.72	9¢
1.73 to 1.90	10¢
1.91 to 2.09	11¢

The state and county tax equals 11¢ for each $2.00 of sales, plus the tax shown above for the fractional part of $2.00.

Example: For a sale of $11.50, the 5.5% tax is 63¢, consisting of 55¢ for $10.00 of sales plus 8¢ for $1.50 of sales.

(c) In counties having a stadium tax, but no county tax, the following bracket system may be used.

Amount of Taxable Sale	Combined State and Stadium Tax of 5.1%
$ .01 to $ .09	0¢
.10 to .29	1¢
.30 to .49	2¢
.50 to .68	3¢
.69 to .88	4¢
.89 to 1.07	5¢
1.08 to 1.27	6¢
1.28 to 1.47	7¢
1.48 to 1.66	8¢
1.67 to 1.86	9¢
1.87 to 2.05	10¢
2.06 to 2.25	11¢
2.26 to 2.45	12¢
2.46 to 2.64	13¢
2.65 to 2.84	14¢
2.85 to 3.03	15¢
3.04 to 3.23	16¢
3.24 to 3.43	17¢
3.44 to 3.62	18¢
3.63 to 3.82	19¢
3.83 to 4.01	20¢
4.02 to 4.21	21¢
4.22 to 4.41	22¢
4.42 to 4.60	23¢
4.61 to 4.80	24¢
4.81 to 4.99	25¢
5.00 to 5.19	26¢
5.20 to 5.39	27¢
5.40 to 5.58	28¢
5.59 to 5.78	29¢
5.79 to 5.98	30¢
5.99 to 6.17	31¢
6.18 to 6.37	32¢
6.38 to 6.56	33¢
6.57 to 6.76	34¢
6.77 to 6.96	35¢
6.97 to 7.15	36¢
7.16 to 7.35	37¢
7.36 to 7.54	38¢
7.55 to 7.74	39¢
7.75 to 7.94	40¢
7.95 to 8.13	41¢
8.14 to 8.33	42¢
8.34 to 8.52	43¢
8.53 to 8.72	44¢
8.73 to 8.92	45¢
8.93 to 9.11	46¢
9.12 to 9.31	47¢
9.32 to 9.50	48¢
9.51 to 9.70	49¢
9.71 to 9.90	50¢
9.91 to 10.09	51¢

The state and stadium tax equals 51¢ for each $10.00 of sales, plus the tax shown above for the fractional part of $10.00.

(d) In counties having a county tax and a stadium tax, the following bracket system may be used.

Amount of Taxable Sale	Combined State, County and Stadium Tax of 5.6%
$ .01 to $ .08	0¢
.09 to .26	1¢
.27 to .44	2¢
.45 to .62	3¢
.63 to .80	4¢
.81 to .98	5¢
.99 to 1.16	6¢
1.17 to 1.33	7¢
1.34 to 1.51	8¢
1.52 to 1.69	9¢
1.70 to 1.87	10¢
1.88 to 2.05	11¢
2.06 to 2.23	12¢
2.24 to 2.41	13¢
2.42 to 2.58	14¢
2.59 to 2.76	15¢
2.77 to 2.94	16¢
2.95 to 3.12	17¢
3.13 to 3.30	18¢
3.31 to 3.48	19¢
3.49 to 3.66	20¢
3.67 to 3.83	21¢
3.84 to 4.01	22¢
4.02 to 4.19	23¢
4.20 to 4.37	24¢
4.38 to 4.55	25¢
4.56 to 4.73	26¢
4.74 to 4.91	27¢
4.92 to 5.08	28¢
5.09 to 5.26	29¢
5.27 to 5.44	30¢
5.45 to 5.62	31¢
5.63 to 5.80	32¢
5.81 to 5.98	33¢
5.99 to 6.16	34¢
6.17 to 6.33	35¢
6.34 to 6.51	36¢
6.52 to 6.69	37¢
6.70 to 6.87	38¢
6.88 to 7.05	39¢
7.06 to 7.23	40¢
7.24 to 7.41	41¢
7.42 to 7.58	42¢
7.59 to 7.76	43¢
7.77 to 7.94	44¢
7.95 to 8.12	45¢
8.13 to 8.30	46¢
8.31 to 8.48	47¢
8.49 to 8.66	48¢
8.67 to 8.83	49¢
8.84 to 9.01	50¢
9.02 to 9.19	51¢
9.20 to 9.37	52¢
9.38 to 9.55	53¢
9.56 to 9.73	54¢
9.74 to 9.91	55¢
9.92 to 10.08	56¢

The state, county and stadium tax equals 56¢ for each $10.00 of sales, plus the tax shown above for the fractional part of $10.00.

(e) The bracket system method is designed so that the total amount of tax paid by customers approximates the tax payable by the retailer on the retailer's taxable gross receipts, if the retailer's sales fall equally throughout all the brackets. When more than one taxable item is sold in a single transaction, the tax is computed on the aggregate sales price of the taxable items sold.

(f) The gross sales and use tax payable by a retailer on retail sales is the total of the applicable tax rates under ss. 77.52(1) and (2), 77.53(3) and (9m) and 77.71, Stats., times the retailer's taxable gross receipts, regardless of the amount of tax collected from customers.

SECTION 5. Tax 11.32(6) and (7) are renumbered Tax 11.32(7) and (8).

SECTION 6. Tax 11.32(6) is created to read:

Tax 11.32(6) ALTERNATIVE BRACKET SYSTEM - MATHEMATICAL COMPUTATION. A retailer is not required to compute the tax due on a transaction using the bracket system described in sub. (5). A retailer who does not use the bracket system described in sub. (5) shall determine the amount of tax due on a transaction by multiplying the applicable tax rate times the aggregate sales price of all taxable items sold in a single transaction. The tax rate may not be multiplied times the sales price of each item separately and then summed. The tax collectible from the customer shall be rounded to the nearest $.01 by using the following rounding procedures:

(a) For amounts less than $.005, the amount shall be rounded down to the next lowest penny.

Examples: 1) Tax computed at $.0849999 would be rounded down to $.08.

2) Tax computed at $3.2549 would be rounded down to $3.25.

(b) For amounts equal to or greater than $.005, the amount shall be rounded up to the next highest penny.

Examples: 1) Tax computed at $.085000 would be rounded up to $.09.

2) Tax computed at $6.455001 would be rounded up to $6.46.

3) Retailer A sells Customer B three different taxable items in one transaction: Item 1's selling price is $14.70, item 2's selling price is $8.30, and item 3's selling price is $7.10. The aggregate selling price of the taxable items is $30.10. The Wisconsin sales tax due on this transaction, assuming a 5% tax rate, is $1.51; $30.10 x 5% = $1.505, and that amount is rounded up to $1.51.

SECTION 7. Tax 11.68(4)(a)2. and (5)(L) are amended to read:

Tax 11.68(4)(a)2. Application or adaptation to the use or purpose to which the real property is devoted; and.

(5)(L) Traffic signals, and street Street and parking lot lighting.

SECTION 8. Tax 11.68(6)(a)15. is created to read:

Tax 11.68(6)(a)15. Stop and go lights, railroad signs and signals and street identification signs.

SECTION 9. Tax 11.68(10)(c) is amended to read:

Tax 11.68(10)(c) Section 77.52(2)(a)10., Stats., provides in part that “... the following items shall be deemed to have retained their character as tangible personal property, regardless of the extent to which any such item is fastened to, connected with or built into real property: furnaces, boilers, stoves, ovens, including associated hoods and exhaust systems, heaters, air conditioners, humidifiers, dehumidifiers, refrigerators, coolers, freezers, water pumps, water heaters, water conditioners and softeners, clothes washers, clothes dryers, dishwashers, garbage disposal units, radios and radio antennas, incinerators, television receivers and antennas, record players, tape players, jukeboxes, vacuum cleaners, furniture and furnishings, carpeting and rugs, bathroom fixtures, sinks, awnings, blinds, gas and electric logs, heat lamps, electronic dust collectors, grills and rotisseries, bar equipment, intercoms, recreational, sporting, gymnasium and athletic goods and equipment including by way of illustration, but not of limitation bowling alleys, golf practice equipment, pool tables, punching bags, ski tows and swimming pools; office, restaurant and tavern type equipment including by way of illustration, but not of limitation lamps, chandeliers, and fans, venetian blinds, canvas awnings, office and business machines, ice and milk dispensers, beverage-making equipment, vending machines, soda fountains, steam warmers and tables, compressors, condensing units and evaporative condensers, pneumatic conveying systems; laundry, dry cleaning, and pressing machines, power tools, burglar alarm and fire alarm fixtures, electric clocks and electric signs.”

Note to Revisor: Delete the word “and” immediately preceding “(m),” in the second note following Tax 11.68, and add the following to the end of the note: “; and (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.”

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 Administrative Code with respect to the sales and use tax.

Section 1 clarifies the methods which retailers may use to notify a customer of the amount of sales tax collected, and replaces the term“vending machine operator” with “vending machine retailer” to provide consistent terminology. Sections 2, 3 and 4 create two new bracket charts and an alternative bracket calculation to address changes in the bracket system. Section 6 updates the Department's position with respect to traffic signals and other traffic control equipment that remain personal property. Other rule sections clarify existing language, reflect 1987 decision by the Wisconsin Court of Appeals, and change style and format to be consistent with Legislative Council Rules Clearinghouse standards.

The changes do not have a fiscal effect.

Notice of Proposed Rule

Revenue

Notice is hereby given that pursuant to s. 227.11(2)(a), Stats., and interpreting s. 77.52(13) and (14), Stats., and according to the procedure set forth in s. 227.16(2)(e), Stats., the Department of Revenue will adopt the following rules as proposed in this notice without public hearing unless, within 30 days after publication of this notice on July 1, 1997, it is petitioned for a public hearing by 25 natural persons who will be affected by the rule, a municipality which will be affected by the rule, or an association which is representative of a farm, labor, business or professional group which will be affected by the rule:

Contact Person

Please contact Mark Wipperfurth at [phone], if you have any questions regarding this proposed rule order.

Analysis by the Department of Revenue

Statutory authority: s. 227.11(2)(a)

Statutes interpreted: s. 77.52(13) and (14)

SECTIONS 1, 2, 3, and 4. Relating to exemption certificates, Tax 11.14(2)(a)(intro.) is amended, Tax 11.14(2)(a)7. and (12) are created, and Tax 11.14(12), (13), and (14) are renumbered, to reflect the department's creation of a new exemption certificate for governmental units.

SECTION 1. Tax 11.14(2)(a)(intro.) is amended to read:

Tax 11.14(2)(a)(intro.) Exemption certificates are signed by purchasers or lessees and are given to sellers or lessors to verify that a transaction is exempt. Sellers and lessors shall exclude from taxable gross receipts transactions for which they have accepted a valid exemption certificate in good faith from a purchaser. The department has provided retailers with 6 7 types of exemption certificates, each of which is designed for use in specific types of transactions. These certificates, discussed individually in this section, are the following:

SECTION 2. Tax 11.14(2)(a)7. is created to read:

Tax 11.14(2)(a)7. Government sales and use tax exemption certificate, form S-209.

SECTION 3. Tax 11.14(12), (13) and (14) are renumbered Tax 11.14(13), (14) and (15).

SECTION 4. Tax 11.14(12) is created to read:

Tax 11.14(12) GOVERNMENT SALES AND USE TAX EXEMPTION CERTIFICATE, FORM S-209. (a) A retailer of tangible personal property or taxable services may accept from a federal or Wisconsin governmental unit a government sales and use tax exemption certificate, form S-209, as proof that a sale is exempt from sales or use tax.

(b) In lieu of accepting a form S-209 as provided in par. (a) a retailer may accept any one of the following:

1. A form S-207, certificate of exemption, described in sub. (7).

2. A purchase order or similar written document from the governmental unit identifying itself as the purchaser.

3. A verbal indication of the governmental unit's certificate of exempt status, or CES, number, which the retailer shall record on the copy of the invoice it retains.

Initial Regulatory Flexibility Analysis

The proposed rule order does not have a significant economic impact on a substantial number of small businesses.

Fiscal Estimate

The rule order creates a new exemption certificate for governmental units. This change does not have a fiscal effect.

Notice of Proposed Rule

Revenue

Notice is hereby given that pursuant to s. 227.11(2)(a), Stats., and interpreting s. 77.52(13) and (14), Stats., and according to the procedure set forth in s. 227.16(2)(e), Stats., the Department of Revenue will adopt the following rules as proposed in this notice without public hearing unless, within 30 days after publication of this notice on July 1, 1997, it is petitioned for a public hearing by 25 natural persons who will be affected by the rule, a municipality which will be affected by the rule, or an association which is representative of a farm, labor, business or professional group which will be affected by the rule.

Contact Person

Please contact Mark Wipperfurth at [phone], if you have any questions regarding this proposed rule order.

Analysis by the Department of Revenue

Statutory authority: s. 227.11(2)(a)

Statutes interpreted: s. 77.54(2), (6)(a), (6m) and (6r)

SECTIONS 1, 3 and 5. Tax 11.39(2)(a), (3)(m), (ze) and (zf) and (4)(intro.) are amended to update language per Legislative Council Rules Clearinghouse standards.

SECTION 2. Tax 11.39(3)(fr), (jd) and (jr) are created to reflect the following:

a. The Wisconsin Supreme Court decision in the case of Wisconsin Department of Revenue v. Bailey-Borhrman Steel Corporation (February 7, 1980, CCH 201-636) which held that cutting rolls of coiled steel into specific widths so they could be fed into customers' presses was manufacturing. This decision, in effect, reversed the decision by the Wisconsin Tax Appeals Commission in the case of Sargento Cheese Company, Inc. v. Wisconsin Department of Revenue (April 20, 1978, CCH 201-492), that Sargento was not engaged in manufacturing when it cut blocks of cheese to produce a variety of packaged cheeses that could be sold at retail.

b. Based on tours of various dental labs, and changes in their operations that have occurred over the years, it is the department's position that dental labs are manufacturers.

c. Based on information provided by various contractors who make ductwork in their machine shops, it was determined by the department that, based on various Commission and court decisions in the past, such activities are manufacturing even though the contractor engages in real property construction when it installs the ductwork.

SECTION 4. Tax 11.39(3)(oc), (os), (wd) and (wr) are created to reflect the following:

a. In an unpublished decision that cannot be cited, the Court of Appeals held in the case of Wisconsin Department of Revenue v. Artex Corporation (January 26, 1987), that grain drying was a manufacturing process.

b. The Circuit Court, Branch 1, Milwaukee County, held in the case of Wisconsin Department of Revenue v. Hide Service Corporation that curing hides was manufacturing as the term was defined in s. 77.51(27), Stats. (now s. 77.54(6m), Stats.).

c. The department, after discussing with various experts in the area of manufacturing, determined that snowmaking for a ski hill is manufacturing.

d. The department, after touring many photofinishing operations and seeking the opinion of a person considered an expert in the area of manufacturing, determined that photofinishing is manufacturing.

SECTIONS 6 and 7. Tax 11.39(4)(a) is repealed to reflect the following decisions by the Wisconsin Tax Appeals Commission:

a. Astra Plating, Inc. v. Wisconsin Department of Revenue (March 14, 1990, corrected March 26, 1990, CCH 203-134). The Commission held that an automobile bumper recycling company was engaged in manufacturing, as the term is defined in s. 77.54(6m), Stats., when it restored damaged automobile bumpers for resale.

b. Lerman Tire Service v. Wisconsin Department of Revenue (June 6, 1983, Docket # S-8876). The Commission held that the taxpayer's process of tire retreading was popularly regarded as manufacturing as the term is defined in s. 77.54(6m), Stats.

Accordingly, Tax 11.39(4)(b) and (c) are renumbered Tax 11.39(4)(a) and (b). Tax 11.39(4)(a), as renumbered, is amended to clarify that certain activities when performed by contractors are not manufacturing. However, operations performed by contractors such as fabricating ductwork at its machine shop that it will install is a manufacturing operation.

SECTIONS 8 and 9. Tax 11.39(4)(d) is repealed to reflect the department's change in position with respect to dental labs. Based on tours of various dental labs, and changes in their operations that have occurred over the years, it is the department's position that dental labs are manufacturers.

Accordingly, Tax 11.39(4)(e), (f), (g), (h), (i), (j), (k), (L), (m) (n), (o) and (r)(intro.) and 1. are renumbered Tax 11.39(4)(c), (d), (e), (f), (g), (h), (i), (j), (k), (L), (m) and (n)(intro.) and 1. Tax 11.39(4)(k), as renumbered, is amended to provide consistent use of language.

SECTIONS 10 and 11. Tax 11.39(4)(r)2. is repealed to reflect the Wisconsin Tax Appeals Commission decision in the case of House of Bidwell v. Wisconsin Department of Revenue (September 1, 1981, CCH 202-890), which stated that production of customized prosthetic devices was manufacturing as the term is defined in s. 77.54(6m), Stats. Although the products sold to customers were customized for the customers, the operation was still found to be manufacturing.

Accordingly, Tax 11.39(4)(r)3. is renumbered Tax 11.39(4)(n)2.