The proposed rules would apply to any entity that has or expects to have generation in Wisconsin greater than 5 MW, or that provides electric service to ultimate end users in Wisconsin, including self-providers and any entity providing transmission service in Wisconsin. Based on the Commission's investigation, it is unlikely that any such providers would be a small business as defined in s. 227.114, Stats. The proposed rules are therefore not expected to affect small businesses as defined in s. 227.114, Stats.
Notice of Proposed Rule
Revenue
Notice is hereby given that pursuant to s. 227.11 (2) (a), Stats., and interpreting ss. 77.51 (4), (12), (13), (14) (intro.), (h) and (L), (15), (20) and (22) (a) and (b) and 77.52 (1), (2) (a) and (2m) (a) and (b), 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 September 15, 1999, 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 Information
Please contact Mark Wipperfurth at (608) 266-8253, if you have any questions regarding this proposed rule order.
Analysis by the Dept. of Revenue
Statutory authority: s. 227.11 (2) (a)
Statutes interpreted: ss. 77.51 (4), (12), (13), (14) (intro.), (h) and (L), (15), (20) and (22) (a) and (b) and 77.52 (1), (2) (a) and (2m) (a) and (b)
Sections 1 and 2. Tax 11.67 (2) (a) is revised, to update language and to remove examples from the text of the rule and set them forth separately, per Legislative Council Rules Clearinghouse (“Clearinghouse") standards.
Tax 11.67(3) (e) 2. is revised and Tax 11.67 (3) (e) 3. is repealed, to clarify that the taxability of materials used in constructing a prototype depends on the primary objective of the customer, and that determining whether a transaction is a purchase and sale of a prototype, or a research and development service with the prototype being incidental, is done on a case-by-case basis.
Section 3. Tax 11.67 (3) (f), (h) and (j) are revised, to conform language and punctuation to Clearinghouse standards.
Section 4. Tax 11.67 (3) (L) to (n) are renumbered Tax 11.67(3)(k) to (m), to conform numbering to Clearinghouse standards. As renumbered, Tax 11.67 (3) (L) is revised, to conform punctuation to Clearinghouse standards.
Text of Proposed Rule
SECTION 1. Tax 11.67 (2) (a) and (3) (e) 2. are amended to read:
Tax 11.67 (2) (a) Since persons engaged in the business of furnishing services are consumers, not retailers, of the tangible personal property which they use incidentally in rendering their services, tax applies to the sale of such the tangible personal property to them. Examples are physicians, lawyers and accountants.
Note to Revisor: Insert the following example following Tax 11.67 (2) (a):
Example: Persons engaged in the business of furnishing services include physicians, lawyers and accountants.
(3)(e)2. In certain instances under a research and development contract, the information cannot be developed without the production of a prototype. In this situation, the researcher owes tax on the materials used to construct the prototype since it is used to compile the data, designs, drawings and whatever else is provided to the customer. The measure of the tax is the cost of the materials going into the production of the prototype as well as all other materials consumed in performing the contract. The transfer of the prototype is incidental to the transfer of information, and for sales tax purposes, is deemed not a sale of tangible personal property. However, if the prototype is transferred to a customer for use in its business or for the purpose of reselling it, the researcher may purchase the materials used to construct the prototype without tax as property for resale if the primary objective of the customer in the transaction is to obtain tangible personal property, such as a prototype, the researcher may purchase the material used to construct the prototype without tax as property for resale. The subsequent sale of the prototype by the researcher to the customer is subject to tax unless an exemption applies. If the primary objective of the customer is to obtain the information resulting from production of the prototype, the prototype is considered transferred to the customer incidental to the research and development services. The researcher is subject to tax on the material purchased and used to construct the prototype. Determinations shall be made on a case-by-case basis.
Note to Revisor: Remove the examples following Tax 11.67(3)(e)2. and insert the following note:
Note: For a ruling on whether a specific transaction is a sale of a prototype or a research and development service with the prototype transferred incidental to the research and development service, write to Wisconsin Department of Revenue, Administration Technical Services, P.O. Box 8933, Madison, WI 53708-8933. The transaction should be described in detail.
SECTION 2. Tax 11.67 (3) (e) 3. is repealed.
SECTION 3. Tax 11.67 (3) (f), (h) and (j) are amended to read:
Tax 11.67 (3) (f) Recording studios. When a recording studio agrees to furnish or supply records, acetates or other tangible personal property which becomes the property of others, the tax applies to the total gross receipts resulting from the sale of
such the tangible personal property. Gross receipts shall
may not be reduced for labor or service costs, including charges for the use or rental of studio facilities, even though such those costs may be itemized in billing the customer.
(h) Drafting. Charges made by a self-employed person for commercial drafting are subject to the tax when the charge is for detailed drawings based entirely on specifications and data supplied by architects, engineers, or other business firms. These charges are taxable if the concepts, ideas, specifications or designs depicted in the drawings produced are the customer's and the person performing the drafting simply transfers the details supplied by the customer to paper thereby producing a drawing, which is tangible personal property, for use by the customer. When the person performing drafting services uses his or her own concepts and ideas in producing detailed drawings for a customer, the sale of the drawings is not a sale of tangible personal property.
(j) Detonating explosives. Detonating explosives is a non-taxable service. A person who performs such
that service and furnishes the explosives used in conjunction with the service is the consumer of the explosives.
SECTION 4. Tax 11.67 (3) (L) to (n) are renumbered Tax 11.67 (3) (k) to (m) and, as renumbered, Tax 11.67(3) (L) is amended to read:
Tax 11.67(3) (L) Car washes. The gross receipts of persons providing car wash service, including those providing coin-operated self-service car washes consisting of a pressurized spray of soap and water, are taxable. These persons are the consumers of the tangible personal property, such as soap, brushes, and towels, they purchase, except for the wax, air freshener and protectants physically transferred to a customer's vehicle. Thus, suppliers may accept a resale certificate for wax, air freshener and protectants sold to car wash operators, but suppliers are liable for the tax on all other sales of supplies to these operators.
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 Department of Revenue's administrative code relating to taxable sales by service enterprises, and the taxability of components utilized in the production of research and development prototypes. The changes clarify existing language to reflect the Department's current position, and alter style and format to conform to Legislative Council Clearinghouse standards. These rule changes do not have a fiscal effect.
Notice of Hearing
Transportation
Notice is hereby given that that pursuant to ss. 85.16 (1), 110.06, 218.01 (5), 227.11 (2), Stats., and interpreting ss. 218.01 (1) (e) and (n), (2) (d) 1., (2a), (3) (a) 6., 9., 14., 18., 19., 22. and 30., (3) (bf), (7a), 218.30, 218.32 (2) and (4) (c), 227.51 (2), 341.51 (3), 342.16 (1m) and (2), Stats., the Department of Transportation will hold a public hearing at the time and place indicated below to consider the amendment of chs. Trans 138 and 139, Wis. Adm. Code, relating to dealer facilities, records and licenses and motor vehicle trade practices.
Hearing Information
November 12, 1999 Room 421
Friday Hill Farms State Trans. Bldg.
1:00 p.m. 4802 Sheboygan Ave.
Madison, WI
Parking for persons with disabilities and an accessible entrance are available on the north and south sides 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 at least 10 days prior to the hearing.
Written Comments
The public record on this proposed rule-making will be held open until close of business November 26, 1999, to permit the submission of written comments from persons unable to attend the public hearing or who wish to supplement testimony offered at the hearing. Any such comments should be submitted to Cathy Skaar, Policy Analyst, Department of Transportation, Dealer Licensing Section, Room 806, P. O. Box 7909, Madison, WI 53707-7909.
Analysis Prepared by the Wis. Dept. of Transportation
Statutory authority: ss. 85.16 (1), 110.06, 218.01 (5), 227.11 (2)
Statutes interpreted: ss. 218.01 (1) (e) and (n), (2) (d) 1., (2a), (3) (a) 6., 9., 14., 18., 19., 22. and 30., (3) (bf), (7a), 218.30, 218.32 (2) and (4) (c), 227.51 (2), 341.51 (3), 342.16 (1m) and (2)
General Summary of Proposed Rule. Chapters Trans 138 and 139 regulate the conduct of motor vehicle dealers, salespeople, and other licensees in Wisconsin and provide protection for consumers from unfair trade practices. The proposed rule amends these regulations to incorporate some new consumer protections and some changes requested by the motor vehicle dealer industry intended to facilitate commerce.
A detailed description of all proposed changes is given in the Statement of Scope for this rule-making, published in the 11-1-98 Wisconsin Administrative Register. The following are the proposed changes:
1. Amend current s. Trans 138.02 (10) definition of “sell" a motor vehicle, to include delivering a vehicle from a seller in another jurisdiction to a retail consumer in Wisconsin. The change would bring under dealer licensing authority those people who currently deliver vehicles to Wisconsin consumers for out-of-state sellers.
2. Exempt from dealer licensing requirements those retail auctions that sell, at one time, heavy (over 16,000 lbs.) construction motor vehicles owned by several businesses, when those sales are incidental to the vehicle owners' primary business activities.
3. Change the definition of a “new" vehicle to allow any number of miles for manufacturer tests, pre-delivery test, dealer exchange or delivery, plus up to 200 miles for any other purpose (including the purchasing consumer's test drive).
4. To modify used motor vehicle disclosure requirements applicable to motorcycles. The Department proposes to exempt motorcycle dealers from the requirement of displaying the Wisconsin Buyer's Guide label on the motorcycle. Customers would have to be provided with an opportunity to review the Wisconsin Buyer's Guide prior to entering into a contract to purchase a motorcycle.
5. To create new protections for people who sell vehicles on consignment through a dealer and to protect the people who buy those consignment vehicles.
6. To clarify that a dealer may accept a subsequent offer on a vehicle when an accepted offer is already pending, and to specify required disclosures to the consumer whose offer is subject to an earlier pending offer.
7. To clarify that there are two allowed methods for dealerships to document changes to the motor vehicle purchase contract after the dealer has accepted the offer.
8. Amend s. Trans 138.05 (5) to give the auctions 14 rather than 12 days to provide clear title before a dealer can rescind a purchase.
9. To restrict fraudulent consumer loan application practices made possible by artificial adjustments to the price of a vehicle.
10. Amend current s. Trans 139.05 (2) (g) to permit dealers to provide a total cash price for a vehicle on the face of the motor vehicle purchase contract and to incorporate by reference a computer printout or other document that itemizes the components of that price. The consumer would sign the incorporated sheet.
11. Regulate adjustments to the amount due on delivery when a lien pay-off is an estimate.
12. Allow a consumer to rescind a contract without penalty when a rebate conditioned on consumer or vehicle eligibility is unavailable at the time of delivery.
13. Require dealers to pay off loans on a trade-in vehicle within 7 business days of acquiring the vehicle.
14. Make the penalty warning more apparent to the consumer by moving it next to the contract signature block.
15. Require a dealer either (a) to cancel a purchase contract within 5 business days of its execution if the credit terms disclosed in the contract cannot be obtained for the customer or (b) be bound to delivery of the vehicle on those terms.
16. Specify time periods that a dealer must wait for a consumer to accept or reject proposed credit terms, in different circumstances of contract signature and vehicle delivery.
17. To clarify that a dealer may cancel a purchase contract by a date specified in the contract if the contract is subject to the consumer obtaining acceptable financing of the consumer's choice, and the consumer does not notify the dealer in writing that financing has been secured.
18. Exclude audio equipment and molding damage when calculating whether a new vehicle has been damaged to the extent of more than 6% of its value when that equipment is replaced with identical manufacturer's original equipment.
19. Clarify that a dealer may complete a purchase contract for a vehicle without inspecting and disclosing it if the vehicle is exempt by rule from inspection and disclosure.
20. To eliminate use of the term “service agreement" in the proposed rule and to use “service contract" throughout instead.
21. Restore several warranty disclosure requirements to the proposed rule which were removed from the rule in previous amendment. Misinformation regarding warranties has resurfaced as a problem since the provision was removed from the code.
Fiscal Estimate
This proposed rule will have no fiscal impact on the Department or the Transportation Fund. No fiscal impact on local governments is anticipated.
Initial Regulatory Flexibility Analysis
This proposed rule will have little net effect on small businesses. On the one hand, business activities of dealers are improved by some streamlined requirements; on the other hand, disclosures of sales practices are required to provide adequate consumer protection. Specifically:
1. Amend current s. Trans 138.02 (10) definition of “sell" a motor vehicle, to include delivering a vehicle from a seller in another jurisdiction to a retail consumer in Wisconsin. The change would bring under dealer licensing authority those people who currently deliver vehicles to Wisconsin consumers for out-of-state sellers. This provision will require some out-of-state dealers to become licensed in Wisconsin and follow Wisconsin reporting and trade practice law for sales in Wisconsin.
2. Exempt from dealer licensing requirements those retail auctions that sell, at one time, heavy (over 16,000 lbs.) construction motor vehicles owned by several businesses, when those sales are incidental to the vehicle owners' primary business activities. This provision will reduce paperwork burden for these small businesses.
3. Change the definition of a “new" vehicle to allow any number of miles for manufacturer tests, pre-delivery test, dealer exchange or delivery, plus up to 200 miles for any other purpose (including the purchasing consumer's test drive). This change will require dealers to keep track of reasons for miles; on the other hand, this provision will enable dealers to sell as “new" some vehicles which the previous definition had not allowed, an aid to the business.
4. To modify used motor vehicle disclosure requirements applicable to motorcycles. The Department proposes to exempt motorcycle dealers from the requirement of displaying the Wisconsin Buyer's Guide label on the motorcycle. Customers would have to be provided with an opportunity to review the Wisconsin Buyer's Guide prior to entering into a contract to purchase a motorcycle. This provision will reduce small business costs associated with protecting and/or replacing labels as is required under current law; however, requiring that the label be provided to the consumer before a contract becomes binding creates a new function for businesses to perform. Without that step, however, the significant consumer protections provided by the labels would be lost.
5. To create new protections for people who sell vehicles on consignment through a dealer and to protect the people who buy those consignment vehicles. This provision will require dealers selling vehicles on consignment to file UCC financing statements as well as follow Wisconsin dealer regulations.
6. To clarify that a dealer may accept a subsequent offer on a vehicle when an accepted offer is already pending, and to specify required disclosures to the consumer whose offer is subject to an earlier pending offer. This provision will allow dealers' more flexibility in structuring transactions to protect consumers in this circumstance, this provision requires dealers to provide clear disclosure to consumers as to the status of their offers.
7. To clarify that there are two allowed methods for dealerships to document changes to the motor vehicle purchase contract after the dealer has accepted the offer. This provision will reduce paperwork by allowing a new contract in addition to making changes on the current contract; however, to provide necessary consumer protections, dealers will be required to obtain consumer signature of new contract and must attach all superseded contracts.
8. Amend s. Trans 138.05 (5) to give the auctions 14 rather than 12 days to provide clear title before a dealer can rescind a purchase. This provision will ease administrative burden on small businesses.
9. To restrict fraudulent consumer loan application practices made possible by artificial adjustments to the price of a vehicle
. This provision will require dealers to specify true prices and discounts on the purchase contract, to protect consumers from fraudulent consumer loan applications; on the other hand, this requirement will help dealers by assuring that the vehicle loan will more likely be made and the purchase will close.
