SECTION 5. Tax 7.23 (4) and (5) are created to read:
Tax 7.23 (4) Brewer's permit requirements. (a) A brewer producing or selling fermented malt beverages in this state shall file an application for a brewer's permit with the department in the manner prescribed by the department.
(b) A production brewer is required to obtain federal label approval and a federal brewer's notice from the Alcohol and Tobacco Tax and Trade Bureau.
(c) 1. An application filed under par. (a) shall include a certification by the recipe-brewer as to both of the following:
a. The recipe-brewer is contracting with a production brewer to produce fermented malt beverages.
b. The contract between the recipe-brewer and production brewer specifically provides the production brewer is an agent of the recipe-brewer and the recipe-brewer has retained the right to control the work contracted for.
2. Upon request of the department, a recipe-brewer shall provide the contract under subd. 1. a. and b. for the department's inspection.
3. A contract under subd. 1. a. and b. may be contingent upon the recipe-brewer receiving a permit under s. 125.29
(d) An application filed under par. (a) shall designate the premises where the fermented malt beverages will be manufactured as the exclusive permitted brewery premises and provide the permit number of the production brewer.
1. All applications for issuance or renewal of permits under s. 125.29
, Stats., shall be processed by department personnel generally familiar with activities of fermented malt beverage brewers. The issuance and renewal of permits shall be done in coordination with the enforcement of the requirements of s. 125.29 (1)
2. A permit issued or renewed under this paragraph is specific to the premises of the production brewer. If the recipe-brewer seeks to have fermented malt beverages manufactured at multiple locations, it must submit brewer's permit applications for each new premise.
(f) For purposes of s. 139.05 (2)
, Stats., the recipe-brewer is the brewer whom must file tax returns.
(g) A recipe-brewer shall include fermented malt beverages manufactured in a contract brewing arrangement in the report required under s. 139.11 (2)
, Stats. A production brewer shall exclude fermented malt beverages manufactured in a contract brewing arrangement from the report required under s. 139.11 (2)
(h) For purposes of the eligible producers tax credit under s. 139.02
, Stats., the recipe-brewer is the producer.
(5) Fermented malt beverage wholesaler warehouse facilities.
(a) Minimum requirements for warehouse facilities.
The premises described in a permit issued under s. 125.28
, Stats., shall be a minimum of 1,000 square feet of floor space and shall be located in a free-standing building that is not part of or connected to a premises covered by a retail license or permit issued under s. 125.25
, or 125.27
(b) Exception to minimum requirements.
The secretary of revenue may waive the requirement that a premises described in a permit issued under s. 125.28
, Stats., be a minimum of 1,000 square feet of floor space when the secretary determines the waiver fair and equitable, if the applicant or permittee does both of the following:
1. Submits a written request for a waiver along with the application for issuance or renewal of a permit.
2. Clearly indicates how the requirements described in par. (a) and s. 125.28 (5) (a)
, Stats., other than the requirement that the premises described in the permit be a minimum of 1,000 square feet of floor space, will be or have been met.
(c) Purchases by a wholesaler.
Every permittee under s. 125.28
, Stats., shall retain invoices covering all purchases of fermented malt beverages stored at the premises described in the permit for 4 years from the date of the invoice. The invoices shall be retained on the premises described in the permit for 2 years from the date of the invoice, and shall be open to inspection at all reasonable times by any representative of the department.
(d) Inventory records.
Every permittee under s. 125.28
, Stats., shall complete a written inventory listing the entire stock of fermented malt beverages stored at the premises described in the permit as of the close of business on the last day of every month. A copy of the inventory listing shall be retained by the permittee for 4 years from the date the inventory is completed. The inventory listing shall be retained on the premises described in the permit for 2 years from the date the inventory is completed, and shall be open to inspection at all reasonable times by any representative of the department.
(e) Inspections of warehouse facilities.
Before issuing a permit under s. 125.28
, Stats., the department shall conduct a site inspection of the premises described in the permit application to determine if such premises meets the minimum requirements described in sub. (a). The department shall also conduct periodic site inspections of premises described in permits issued under s. 125.28
, Stats. Site inspections shall be conducted by department personnel generally familiar with activities of fermented malt beverage wholesalers.
(f) Background investigations of applicants.
Before issuing a permit under s. 125.28
, Stats., the department shall conduct a background investigation to determine that the applicant is qualified to hold the permit. The background investigation shall be limited to obtaining information that is necessary to enable the department to verify that the applicant meets the eligibility requirements described in s. 125.28 (1) (a)
and (2) (b)
(g) Processing of permits by the department.
All applications for issuance or renewal of permits under s. 125.28
, Stats., shall be processed by department personnel generally familiar with activities of fermented malt beverage wholesalers. The issuance and renewal of permits shall be done in coordination with the enforcement of the requirements of s. 125.28 (5) (e)
AND ECONOMIC IMPACT ANALYSIS
Type of Estimate and Analysis
X Original Updated Corrected
Administrative Rule Chapter, Title and Number
Section Tax 7.23 – Activities of brewers, bottlers, out-of-state shippers, and wholesalers
The production, distribution, and sale of fermented malt beverages
Fund Sources Affected
Chapter 20 , Stats. Appropriations Affected
GPR FED PRO PRS SEG SEG-S
Fiscal Effect of Implementing the Rule
X No Fiscal Effect
Increase Existing Revenues
Decrease Existing Revenues
Could Absorb Within Agency's Budget
The Rule Will Impact the Following (Check All That Apply)
Local Government Units
Public Utility Rate Payers
Would Implementation and Compliance Costs Be Greater Than $20 million?
Yes X No
Policy Problem Addressed by the Rule
The rule does not create or revise policy, other than to reflect a statutory change.
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
As indicated in the attached fiscal estimate, the fiscal effect of modifying the regulation of fermented malt beverages was included in the fiscal effect of 2011 Wisconsin Act 32. The rule itself does not create any further economic or fiscal impact or implementation and compliance costs beyond the statutes it interprets.
No comments concerning the economic effect of the rule were submitted in response to the department's solicitation.
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
Clarifications and guidance provided by administrative rules may lower the compliance costs for businesses, local governmental units, and individuals.
If the rule is not implemented, section Tax 7.23 will be incomplete in that it will not reflect current law.
Long Range Implications of Implementing the Rule
No long-range implications are anticipated.
Compare With Approaches Being Used by Federal Government
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
Illinois, Iowa, Michigan, and Minnesota have their own unique provisions concerning the regulation of fermented malt beverages, which differ from Wisconsin's provisions substantively enough to prohibit consideration of these approaches.
Assumptions used in arriving at fiscal estimate
2011 Wisconsin Act 32
made several modifications to Wisconsin's three-tier system for the regulation of fermented malt beverages. The act converted the municipal beer wholesaler's license to a statewide permit issued by the Department of Revenue (DOR). It also modified the requirements for obtaining a beer wholesalers permit and restructured the brewers permit. Act 32 further required DOR to promulgate rules to administer and enforce the new wholesaler provisions, including minimum requirements for and periodic inspections of warehouse facilities. The specific directive included in Act 32 to promulgate rules supplemented DOR's existing rule-making authority pertaining to alcohol regulation under s. 125.03 (1)
The proposed rule enacts certain administrative provisions consistent with and required by the Act 32 changes. The proposed rule establishes the requirements for issuance and renewal of fermented malt beverage wholesalers' permits, describes the minimum requirements for fermented malt beverage wholesaler warehouse facilities, and explains the process for applying for wholesalers' permits. The minimum square feet of floor space for a fermented malt beverage wholesaler warehouse facility is set at 1,000 square feet (but a waiver may be granted provided certain statutory requirements are met).
Since the proposed rule merely implements certain provisions and requirements of 2011 Wisconsin Act 32
, the proposed rule itself has no fiscal effect.
Notice of Hearing
NOTICE IS HEREBY GIVEN that, pursuant to sections 77.54 (57) (a) 1m.
and 227.11 (2) (a)
, Stats., the Department of Revenue will hold a public hearing to consider permanent rules creating section Tax 11.07
, relating to sales and use tax exemptions for biotechnology.
The hearing will be held:
Date: Monday, February 27, 2012
Time: 11:00 A.M.
Location: State Revenue Building
2135 Rimrock Road
Madison, WI 53713
Handicap access is available at the hearing location.
Appearances at the Hearing and Submittal of Written Comments
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person listed below no later than February 27, 2012, and will be given the same consideration as testimony presented at the hearing.
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Telephone: (608) 266-8253
Analysis Prepared by the Department of Revenue
Explanation of agency authority
Section 77.54 (57) (a) 1m.
, Stats., provides: “`Biotechnology business' means a business, as certified by the department in the manner prescribed by the department, that is primarily engaged in the application of biotechnologies that use a living organism or parts of an organism to produce or modify products to improve plants or animals, develop microorganisms for specific uses, identify targets for small molecule pharmaceutical development, or transform biological systems into useful processes and products."
Section 227.11 (2) (a)
, Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute..."
Related statute or rule
There are no other applicable statutes or rules.
Plain language analysis
The proposed rule prescribes the manner in which a biotechnology business will be certified. It also prescribes the manner of determining the percent needed to establish if the definition of “primarily," which is defined as “more than 50%" under s. 77.54 (57) (a) 4.
, Stats., is met.
Summary of, and comparison with, existing or proposed federal regulation
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states
The department is not aware of a similar rule in an adjacent state.
Summary of factual data and analytical methodologies
The department has created this proposed rule order to comply with the statutory requirement to prescribe the manner in which a business will be certified for the sales and use tax exemptions for biotechnology under s. 77.54 (57)
, Stats. No other data was used in the preparation of this proposed rule order or this analysis.
Analysis and supporting documents used to determine effect on small business
As explained above, this rule is created to administer Wisconsin's sales and use tax laws. As the rule itself does not impose any significant financial or other compliance burden, the department has determined that it does not have a significant effect on small business.
Anticipated costs incurred by private sector
This rule does not have a significant fiscal effect on the private sector.
Effect on Small Business
This rule does not have a significant effect on small business.
Initial Regulatory Flexibility Analysis
This proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Agency Contact Person
SECTION 1. Tax 11.07 is created to read:
Tax 11.07 Property used in qualified research and property used to raise research animals. (1) General.
Section 77.54 (57) (b)
, Stats., provides exemptions for the following:
(a) Machinery and equipment, including attachments, parts, and accessories, that are sold to persons who are engaged primarily in manufacturing or biotechnology in this state and are used exclusively and directly in qualified research.
(b) Tangible personal property or an item or property under s. 77.52 (1) (b)
, Stats., that is sold to persons who are engaged primarily in manufacturing or biotechnology in this state, if the tangible personal property or item or property under s. 77.52 (1) (b)
, Stats., is consumed or destroyed or loses its identity while being used exclusively and directly in qualified research.
(c) Machines and specific processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly in raising animals that are sold primarily to a biotechnology business, a public or private institution of higher education, or a governmental unit for exclusive and direct use by any such entity in qualified research or manufacturing.
(d) The items listed in s. 77.54 (3m) (a)
, Stats., medicines, semen for artificial insemination, fuel, and electricity that are used exclusively and directly in raising animals that are sold primarily to a biotechnology business, a public or private institution of higher education, or a governmental unit for exclusive and direct use by any such entity in qualified research or manufacturing.
For purposes of the exemptions in s. 77.54 (57) (b)
, Stats., and sub. (1), the following definitions apply:
(d) “In this state" has the meaning given in s. 77.51 (6)
(e) “Institution of higher education" means an accredited educational organization providing education after completion of high school, including undergraduate, graduate, and professional education.