Register

SECTION 1. Tax 11.09(1), (2)(title) and (4)(e) are amended, to conform language to Legislative Council Rules Clearinghouse standards.

SECTIONS 2, 3 AND 5. Tax 11.09(4)(f) and 11.28(7) are created and Tax 11.09(6) is repealed, to reflect the sales and use tax exemption for certain medicines furnished without charge, as a result of the creation of s. 77.54(14)(f), Stats., by 1997 Wis. Act 27.

SECTION 4. Tax 11.28(2)(b) and (f), (3)(c)1.b. and (4)(c) are amended, to clarify that sales and use tax on property given away need not be measured by the cost of the property (e.g., the tax may be measured by its market value if the requirements of s. 77.57, Stats., are met).

Tax 11.28 (2)(c) is amended, to reflect that a retailer incurs a sales tax liability when a gift certificate is redeemed for taxable services.

Tax 11.28(4)(b) is amended, to reflect the department's position that sales of coupon books and voucher books are not taxable because they are sales of intangible rights.

Text of Rule

SECTION 1. Tax 11.09(1), (2)(title) and (4)(e) are amended to read:

Tax 11.09(1) DEFINITION. For the exemption in s. 77.54(14), Stats., “medicines" means any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease and which is commonly recognized as a substance or preparation intended for such that use.

(2)(title) EXAMPLES OF ITEMS WHICH ARE MEDICINES.

(4)(e) Sold to this state or any political subdivision or municipal corporation thereof of the state, for use in the treatment of a human being; or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof of the state.

SECTION 2. Tax 11.09(4)(f) is created to read:

Tax 11.09(4)(f) Furnished without charge to a physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist licensed under ch. 447, Stats., podiatrist licensed under ch. 448, Stats., or optometrist licensed under ch. 449, Stats., if the medicine may not be dispensed without a prescription.

SECTION 3. Tax 11.09(6) is repealed.

Note to Revisor: Replace the second note at the end of Tax 11.09 with the following:

Note: The interpretations in s. Tax 11.09 are effective under the general sales and use tax law on and after September 1, 1969, except: The exemption for certain medicines furnished without charge became effective October 14, 1997, pursuant to 1997 Wis. Act 27.

SECTION 4. Tax 11.28(2)(b), (c) and (f), (3)(c)1.b. and (4)(b) and (c) 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, of how the property will be used. In cases where a seller furnishes free property to a retailer for use as gifts at a grand opening or similar event, the seller furnishing the property to the retailer without charge is subject to the sales or use tax 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.

(c) Gift certificates. The gross receipts from the sale of a gift certificate are not taxable because the certificate represents an intangible right. When a gift certificate is redeemed for taxable tangible personal property or taxable services, the transaction is completed and the retailer's tax liability accrues at that time.

(f) Gifts originally purchased for resale. When a person purchases property for resale or for other another exempt purpose or under a valid exemption certificate but uses the property for a purpose other than for resale or other another exempt purpose and does not donate the property to an entity described in s. 77.54(9a), Stats., the purchaser shall be liable for use tax based on the purchaser's cost of the new merchandise or ingredients property.

(3)(c)1.b. A retailer may not use a resale certificate when purchasing taxable tangible personal 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.

Note to Revisor: Replace example 2 at the end of sub. (3)(c)1.b. with the following:

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 on the key chains given away.

(4)(b) The A sales promotional agency's receipts from sales of coupon or voucher books are not taxable, because the agency is providing an advertising service selling intangible rights. These intangible rights entitle the purchaser of the coupon or voucher book to receive tangible personal property or taxable services at a reduced price or for no charge. However, any receipts received by participating retailers from the sales promotional agency are subject to the sales tax, if taxable property or services are furnished to the person using the coupon or voucher. Any additional receipts received by the retailer from the person using the coupons or vouchers also are taxable.

(c) 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.

Note to Revisor: Replace the example at the end of sub. (4)(c) with the following:

Example: Motel A provides a free breakfast with the purchase of lodging. Motel A purchases fruit, milk, cereal, bakery goods including rolls, bagels, muffins and 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, 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.

SECTION 5. Tax 11.28(7) is created to read:

Tax 11.28(7) CERTAIN MEDICINES FURNISHED WITHOUT CHARGE. No sales or use tax is owed on medicines furnished without charge to a physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist licensed under ch. 447, Stats., podiatrist licensed under ch. 448, Stats., or optometrist licensed under ch. 449, Stats., if the medicine may not be dispensed without a prescription.

Example: A drug manufacturer furnishes medicine samples to doctors without charge. The medicine samples may not be dispensed without a prescription. The drug manufacturer does not owe sales or use tax on its cost of the ingredients for the medicine samples.

Note to Revisor: 1) Remove example 3 at the end of sub. (2)(a).

2) Replace the two notes at the end of Tax 11.28 with the following:

Note: Section Tax 11.28 interprets ss. 77.51(4)(a) and (14)(k), 77.54(14)(f), 77.56(3) and 77.57, Stats.

Note: The interpretations in s. Tax 11.28 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption from use tax of certain donated property became effective August 9, 1989, pursuant to 1989 Wis. Act 31; and (b) The exemption for certain medicines furnished without charge became effective October 14, 1997, pursuant to 1997 Wis. Act 27.

The rules contained in this order shall take effect on the first day of the month following publication in the Wisconsin administrative register as provided in s. 227.22(2)(intro.), Stats.

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 rule interprets the sales and use tax exemption, created in 1997 Wis. Act 27, for prescription medicines furnished without charge by health practitioners, and clarifies the sales and use tax treatment of promotional gifts, gift certificates, and coupon and voucher books. These changes have no fiscal effect.

Notice of Proposed Rule

Transportation

Notice is hereby given that pursuant to the authority of ss. 85.16 and 347.25 (2), and according to the procedure set forth in s. 227.16 (2) (e), Stats., the Wisconsin Department of Transportation will adopt the following rule amending ch. Trans 300 without public hearing unless, within 30 days after publication of this notice on November 1, 1998, the Department of Transportation 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

Questions about this rule and any petition for public hearing may be addressed to:

Lt. Sandra Huxtable

Dept. of Transportation

Division of State Patrol, Room 551

4802 Sheboygan Ave.

P. O. Box 7912

Madison, WI 53707-7912

Analysis Prepared by the Wis. Dept. of Transportation

Statutory authority: ss. 85.16 and 347.25 (2)

Statute interpreted: s. 347.25 (2)

General Summary of Proposed Rule:

This proposed rulemaking amending ch. Trans 300, relating to school bus equipment standards, will address the installation, operation and light output brilliance of the white strobe light which will be required on all school buses first registered in WI after October 1, 1998. Currently, s. Trans 300.54 (4) advises that the strobe light is an optional piece of equipment for use on school buses. 1997 Wis. Act 117 requires the strobe light as mandatory equipment for all buses first registered on or after October 1, 1998. The current specifications for optional strobe lights will be made applicable to the mandatory strobe lights, and the use of the lights will be required whenever a school bus is in operation on a highway for the purposes specified in s. 340.01 (56) (a) and (am), Stats.

Fiscal Estimate

The Department estimates that there will be no fiscal impact on the liabilities or revenues of any county, city, village, town, vocational, technical and adult education district or sewerage district. The Department estimates that there will be no fiscal impact on state revenues or liabilities. The rule will not impose any fiscal effect on school districts other than that imposed by the amendment of s. 347.26(7), Stats.

Initial Regulatory Flexibility Analysis

This proposed rule will have no adverse impact on small businesses.

Copies of Proposed Rule

Copies of this proposed rule may be obtained upon request, without cost, by writing to Lt. Sandra Huxtable, Department of Transportation, Division of State Patrol, Room 551, P. O. Box 7912, Madison, WI 53707-7912, or by calling [phone]. Alternate formats of the proposed rule will be provided to individuals at their request.

Text of Proposed Rule

Under the authority vested in the state of Wisconsin Department of Transportation by ss. 85.16 and 347.25 (2), Stats., the Department of Transportation hereby proposes to amend a rule interpreting s. 347.25 (2), Stats., relating to school bus equipment standards.

SECTION 1. Trans 300.16 (1) is amended to read:

Trans 300.16 (1) Prior to the start of any trip, the driver shall check the condition of the bus, giving particular attention to brakes, tires, lights, emergency equipment, mirrors, windows, and interior cleanliness of the bus. Defects shall be reported in writing to the person in charge of bus maintenance. The driver shall be responsible for the cleanliness of the interior of the bus and shall ensure that the windshield and mirrors are clean before each school bus operation and that the strobe light is actuated whenever the bus is in operation on a highway for purposes specified in s. 340.01 (56) (a) and (am), Stats.

SECTION 2. Trans 300.54 (1) (am) (intro.) and 6. are created to read:

Trans 300.54 (1) (am) Each bus first registered on or after October 1, 1998, shall be equipped with a strobe light which shall conform with the following requirements:

  6.The strobe light shall be actuated whenever the bus is in operation on a highway unless the bus is being operated in accordance with s. 346.48 (2) (c), Stats.

SECTION 3. Trans 300.54 (4) (intro.) is repealed.

SECTION 4. Trans 300.54 (4) (a) to (d) are renumbered s. Trans 300.54(1) (am) 1. to 4.

SECTION 5. Trans 300.54 (4) (e) is renumbered s. Trans 300.54 (1) (am) 5. and amended to read:

  Trans300.54 (1) (am) 5. The unit shall may be wired with an independent switch with an indicator light in the driver's compartment showing when the light is in operation.

SECTION 6. Trans 300.54 (4) is created to read:

Trans 300.54 (4) School buses painted as provided in s. 347.44 and registered prior to October 1, 1998, may be equipped with a strobe light meeting the requirements of sub. (1) (am).

Notice of Proposed Rule

Transportation

Notice is hereby given that pursuant to the authority of ss. 85.16 (1), 110.075 and 227.10 (1), Stats., and interpreting s. 347.48, Stats., and according to the procedure set forth in s. 227.16 (2) (e), Stats., the Wisconsin Department of Transportation will adopt the following rule amending ch. Trans 305 without public hearing unless, within 30 days after publication of this notice on November 1, 1998, the Department of Transportation 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

Questions about this rule and any petition for public hearing may be addressed to:

Lt. Sandra Huxtable

Dept. of Transportation

Division of State Patrol, Room 551

4802 Sheboygan Ave.

P. O. Box 7912