Text of Rule
SECTION 1. Tax 11.56 (1) (a) is repealed.
SECTION 2. Tax 11.56 (1) (b) and (c) are renumbered Tax 11.56 (1) (c) and (a), and Tax 11.56 (1) (c) as renumbered is amended to read:
Tax 11.56 (1) (c) “Typesetting” includes converting images into standardized letter forms of a certain style which usually are hyphenated, justified and indented automatically by means of machinery and equipment. Typesetting machinery and equipment includes: fonts, video display terminals, tape and disc making equipment, computers and typesetters which are interconnected to operate essentially as one machine. A system shall be considered to operate essentially as one machine whether or not the tape or disc is automatically fed to the typesetter.
SECTION 3. Tax 11.56 (1) (b) is created to read:
Tax 11.56 (1) (b) “Manufacturing printed matter” includes either of the following processes by a manufacturer:
1. Initial typesetting and composition, producing a paste-up, combining photographs with words, making page makeups and taking pictures of them, making proofs and paper for editing, producing negatives which go to the stripping department for assembly of the flat and taking a picture, either positive or negative, of a flat which after it is finally proofed is known as plate-ready film, and producing an image carrier which is installed on a printing press, or using equivalent prepress technology to produce an image carrier, and the bindery/finishing stage.
2. Using computers, scanners, proofers, typesetters, photographic equipment, film processors and direct-to-plate equipment exclusively in performing any of the processes listed in subd. 1. “Manufacturing printed matter” does not include using the equipment described in this subdivision to design, write or compose an original document to be printed.
SECTION 4. Tax 11.56 (2) (a) is amended to read:
Tax 11.56 (2) (a) Charges for printing, lithography, photolithography, rotogravure, gravure, letter press, silk screen printing, imprinting, multilithing, mimeographing, photostating, steel die engraving, and similar operations for
consumers customers, whether or not the paper and other materials are furnished by the consumers customers. A printer's charge for printing on paper furnished by a customer to produce printed matter not to be sold is subject to the tax.
SECTION 5. Tax 11.56 (3) (a), (b) 1. and 2. and (c) are renumbered Tax 11.56 (3) (a) (intro.), 1. and 2. and (b), and Tax 11.56 (3) (a) (intro.), 1. and 2., as renumbered, are amended to read:
Tax 11.56 (3) (a) Sales of tangible personal property by persons who are not printers, including so-called “trade shops” such as typesetters, image reproduction manufacturers, color separators and binders or finishers are taxable unless the sales qualify for a statutory exemption under s. 77.54 (2) or (2m), Stats., or other statutes., including the following:
1. Section 77.54 (2), Stats., which exempts the gross receipts from sales of “. . .tangible personal property becoming an ingredient or component part of an article of tangible personal property or which is consumed or destroyed or loses its identity in the manufacture of tangible personal property in any form destined for sale. . .”
2. Section 77.54 (2m), Stats., which exempts the gross receipts from sales of “tangible personal property or services 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. . . .The exemption. . .does not apply to advertising supplements that are not newspapers.”
SECTION 6. Tax 11.56 (5) and (6) (a) 2. are amended to read:
Tax 11.56 (5) EXEMPT PRINTING MACHINERY AND EQUIPMENT. Section 77.54 (6) (a), Stats., provides that “Machinery Machines and specific processing equipment and repair parts or replacements thereof, exclusively and directly used by a manufacturer in manufacturing tangible personal property. .
.” are exempt from the sales or use tax. This includes machinery and equipment and repair parts or replacements thereof
of the machinery and equipment used exclusively and directly by a manufacturer in the printing process to manufacture tangible personal property.
(6) (a) 2. Section 77.54 (2), Stats. Property such as chemicals, emulsions, acids, raw film, lubricating oils, greases, nonoffset spray, finished art, color separations, plate-ready film, other positives and negatives, flats and similar items which are consumed, destroyed or lose their identity in the manufacture of tangible personal property to be sold. For example, a printer's purchases of positives and negatives which are used to produce catalogs and shoppers guides it sells to other persons.
Example: A printer's purchases of positives and negatives which are used to produce catalogs and shoppers guides it sells to other persons are exempt from the tax.
SECTION 7. Tax 11.56 (6) (b) (intro.) is renumbered Tax 11.56 (6) (b) and amended to read:
Tax 11.56 (6) (b) The exemption under s. 77.54 (2), Stats., described in par. (a) 1. and 2., applies to property purchased by a person who does not use the property other than to provide it to a manufacturer described in par. (a) for use by the manufacturer in manufacturing tangible personal property to be sold. The exemption under s. 77.54 (2), Stats., does not apply if the manufactured tangible personal property is not to be sold by the manufacturer to its customer or by the customer. Examples of nontaxable purchases include:
Examples: 1) A paper manufacturer's purchases of negatives which it transfers to a printer, who uses the negatives to produce printing which the printer sells to the paper manufacturer are exempt from the tax.
2) An advertising agency's purchases of color separations which are furnished to a commercial printer who uses the color separations to produce advertising material the printer sells to the advertising agency are exempt from the tax.
SECTION 8. Tax 11.56 (6) (b) 1. and 2. are repealed.
SECTION 9. Tax 11.56 (6) (c) and (7) (b) are renumbered Tax 11.56 (7) (b) and (c) and amended to read:
Tax 11.56 (7) (b) Wisconsin sales or use tax is not imposed on raw materials that would otherwise be subject to use tax under s. 77.53 (1), Stats., purchased by a publisher or printer of printed materials if both of the following conditions are met:
1. The raw materials are processed, fabricated or manufactured into, attached to or incorporated into printed materials.
2. The resulting printed materials will be shipped outside Wisconsin for use transported and used solely outside Wisconsin.
(c) The tax applies to purchases of artwork, single color or multicolor separations, negatives, flats and similar items if those purchases are used in the manufacture of tangible personal property not to be sold, other than items exempt under par. (a) or (b). A printer who does not supply paper used in printing tangible personal property is not selling tangible personal property but rather, is selling a service.
Note to Revisor: 1) Move the examples at the end of s. Tax 11.56 (6) (c) before renumbering to the end of Tax 11.56 (7) (b) as renumbered, and in the second sentence in example 2 insert the word “not” between “is” and “subject.” In addition, add example 3 to Tax 11.56 (7) (b) as renumbered, as follows:
3) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print catalogs for Company B. The catalogs are provided without charge to customers outside Wisconsin. The charge by the advertising agency to Company B is exempt from Wisconsin sales and use tax even though the printer is not selling tangible personal property because the finished artwork is used for processing, fabricating or manufacturing printed material that is transported and used solely outside Wisconsin.
2) Change the introductory phrase for the examples at the end of s. Tax 11.56 (7) (a) to read as follows:
Examples. Examples of nontaxable purchases for use in manufacturing printed matter include: 1)
3) Replace example 2 at the end of Tax 11.56 (7) (c), as renumbered, with the following example:
2) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print catalogs for Company B. The catalogs are provided without charge to customers in Wisconsin. The charge by the advertising agency to Company B is subject to Wisconsin sales and use tax. The exemption under s. 77.54 (2), Stats. does not apply because the printer is not selling tangible personal property and the exemption under s. 77.54 (43), Stats. does not apply because the printed material is used in Wisconsin.
4) Replace the first note at the end of s. Tax 11.56 with the following note:
Note: Section Tax 11.56 interprets ss. 77.51 (8), (11) and (14) (h), 77.52 (1) and (2) (a) 11. and 77.54 (2), (2m), (6) (a) and (b) and (43), Stats.
5) In the second note at the end of s. Tax 11.56, remove the word “and” before part (c), and at the end add part (d) as follows:
; and (d) The sales and use tax exemption for raw materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27.
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 updates the Wisconsin Administrative Code with respect to firms engaged in manufacturing printed materials. These changes conform to current law and reflect the Department's position; thus, they do not have a fiscal effect.
Notice of Hearing
Transportation
Notice is hereby given that pursuant to s. 344.42, Stats., as created by 1997 Wis. Act 27, and interpreting s. 344.42, Stats., the Department of Transportation will hold a public hearing at the time and place indicated below to consider the creation of ch. Trans 197, Wis. Adm. Code, relating to fees charged for filing of proof of insurance forms with the Division of Motor Vehicles by non-electronic means.
Hearing Information
September 21, 1998 Room 421
Monday Hill Farms State Trans. Bldg.
10:00 a.m. 4802 Sheboygan Ave.
MADISON, WI
Parking for people with disabilities and an accessible entrance are available on the north side of the Hill Farms State Transportation Building.
An interpreter for the hearing-impaired will be available on request for this hearing. Please make reservations for a hearing interpreter 10 days prior to the hearing.
Written Comments
The public record on this proposed rule-making will be held open until close of business September 21, 1998, to permit the submission of written comments from people unable to attend the public hearing or who wish to supplement testimony offered at the hearing. Any such comments should be submitted to:
Richard Kleist
Compliance and Restoration Section, Room 301
Department of Transportation
P. O. Box 7917
Madison, WI 53707-7917
Analysis Prepared by the Wisconsin Department of Transportation
Statutory authority: s. 344.42, Stats., as created by 1997 Wis. Act 27.
Statute interpreted: s. 344.42, Stats., as created by 1997 Wis. Act 27.
General Summary of Proposed Rule. This proposed rule making is intended to codify procedures for collection and auditing of fees charged to insurers under s. 344.42, Stats.
Section 344.42, Stats., imposes a $1.50 fee for filing SR-22 (certifications of proof of insurance) or SR-26s (insurance cancellation notices) in paper rather than electronic form if the insurer files more than 1000 certifications in a year. To determine whether an insurer meets the 1000 certification in a year requirement, all SR-22 and SR-26 filings are counted.
The $1.50 fee per “paper” filing fee is imposed on insurers who exceed that 1000 certification threshold. No fee will be assessed for “on behalf” filings made by employers or parents on behalf of employes or children under s. 343.38, Stats. The Department's computer systems are unable to accept those types of filings electronically.
The Department proposes to bill insurers twice per year for paper filings. Payment is due 30 days after billing. Interest accrues on unpaid balances, and the Department may refuse to accept additional filings from an insurer that fails to pay the fees imposed under s. 344.42, Stats.
Fiscal Estimate
This proposed rule will clarify the fee collection process used by the Department. This proposed rule will have no adverse fiscal effect on state or local governments.
Initial Regulatory Flexibility Analysis
This proposed rule will not have any adverse effect on small businesses, except to the extent that s. 342.42, as created by 1997 Wis. Act 27, imposes fees on businesses that submit more than 1000 insurance filings to the Department in a year and do not use electronic systems to make the filings.
Copies of Proposed Rule
Copies of this proposed rule are available without cost upon request from:
Compliance and Restoration Section, Room 301
Telephone (608) 266-2261
Wis. Dept. of Transportation
4802 Sheboygan Ave.
P.O. Box 7917
Madison, WI 53707-7917
Contact People
People having questions about this proposed rule may write or call:
Richard Kleist, telephone (608) 264-7029
