The Wisconsin Department of Revenue proposes an order to: repeal Tax 11.84 (2) (a) 3.; renumber and amend Tax 11.16 (1) (am), 11.30 (2) (a), and 11.63 (3); amend Tax 11.01 (1) (g), 11.05 (2) (gm), 11.11 (3) (intro.), 11.13 (6) (b) 2., 11.16 (1) (am) (title) and (b) and (3) (Note 2), 11.33 (4) (a) (intro.) and 3. and (5) (c), 11.34 (3) (bg), 11.50 (4) (a) 1.a. and (5) (title),11.51 (2) (a) and (b), 11.56 (9) (b) (intro.), (Example 1) to (Example 4), and (Note 2), 11.63 (1) (intro.) and (5) (Note 1) and (Note 2), 11.68 (3) (b) (Example), (6) (d) and (h), (7) (a) 2. and 4., and (11) (c) (intro.), 11.83 (1) (b), 11.84 (1) (a) and (c), (2) (a) (title) and 2., (3) (title), (a), and (b), and (4) (Note 1) and (Note 2), and 11.945 (2) (intro.); repeal and recreate Tax 11.56 (9) (a) and (b) 1. to 3.; and create Tax 11.16 (1) (am) (intro.), 1., and 2., 11.42, 11.50 (5) (a) 7m., 11.56 (9) (b) (Example 5) to (Example 8), 11.63 (1) (c) and (d), (2) (d), (e), and (f), and (3) (intro.), (b), (c), and (d), 11.68 (4) (h) and (h) (Note) and (7) (a) 7m., and 11.84 (2) (a) 2. (Example 1) to (Example 3), (3) (c), and (4) (j); relating to sales and use tax provisions.
The scope statement for this rule, SS 071-14, was approved by the Governor on July 24, 2014, published in Register No. 704 on August 14, 2014, and approved by the Secretary of Revenue on August 27, 2014. Analysis by the Department of Revenue
Explanation of agency authority: Section 77.65 (3), Stats., provides “[t]he department may promulgate rules to administer this section…” 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 rule (1) reflects various law changes, (2) clarifies multiple rules, and (3) corrects an error in current rule provisions.
a. Aircraft
· Clarify Rule. Amend s. Tax 11.84 (1), to add that a credit is permitted against the Wisconsin use tax for sales or use tax paid to another state where the aircraft was purchased. · Exemption for Aircraft Parts, Maintenance, and Labor. Reflect 2013 Wisconsin Act 185, which repeals and recreates the exemption in s. 77.54 (5) (a), Stats., and amends s. 77.52 (2) (a) 10., Stats. These provisions exempt the sale of aircraft parts, as well as the services performed to aircraft. This requires updates to s. Tax 11.84. b. Clarify Rule. Amend s. Tax 11.11 (3), to clarify that the list of facilities is not an all-inclusive list but only types of municipal waste facilities currently recognized by the department. c. Common Motor Carriers.
· Reflect 2013 Wisconsin Act 364, which amends the definition of "common motor carrier" in s. 194.01 (1), Stats. For purposes of the sales and use tax exemption in sec. 77.54 (5) (b), Stats., "common carrier" has the same meaning as s. 194.01 (1), Stats. This requires updates to s. Tax 11.16. · Clarify Rule. Amend s. Tax 11.16 (1) (b), to include "cell phones," "tracking devices," "GPS units," and "on board recorders" to the list of items in the rule to make it clear that these items qualify as exempt accessories and attachments if they are assigned to and carried on vehicles used exclusively as common and contract carriers. d. Construction Contractors.
· Clarify Rule. Amend the example following s. Tax 11.68 (3) (b), to remove "hot" from "hot water heater" in the example. · Clarify Rule. Amend s. Tax 11.68 (6) (d), to include "underground wiring" to the list of items in the rule to make it clear that the underground wiring becomes part of the realty. · Clarify Rule. Amend s. Tax 11.68 (7) (a) 2, by removing "satellite dishes" from items listed. Create additional item number to be inserted in between s. Tax 11.68 (7) (a) 6. & 7. that clarifies tax treatment for both satellite dishes mounted to concrete foundation and the compact roof mounted satellite dishes that are installed in a residence or a business. · Clarify Rule. Amend s. Tax 11.68 (11) (c), to clarify that the items listed only retain their character as tangible personal property for repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance. e. Correct Error. Amend s. Tax 11.945 (2) (intro.), to remove "telecommunications message services" from the list, since "telecommunications message services" are sourced under the general sourcing hierarchy. f. Fertilizer Blending, Feed Milling, and Grain Drying Machinery and Equipment. Reflect 2013 Wisconsin Act 324, which creates exemptions in s. 77.54 (6) (am) 4. and 5., Stats., for equipment used in a fertilizer blending, feed milling, or grain drying operation and building materials used in constructing or repairing certain holding structures used in a fertilizer blending, feed milling, or grain drying operation. This requires the creation of s. Tax 11.68 (4) (h). It will also be useful to (1) create a new section to explain the exemption, and (2) add examples to s. Tax 11.68 (6) and (7). g. Grocers' Guidelist.
· Clarify Rule. Amend s. Tax 11.51 (2) (a), to include potato chips that are chocolate covered in the taxable list, unless they contain flour. · Clarify Rule. Amend s. Tax 11.51 (2) (b), to clarify "chips, potato, corn and similar items" and "potato chips" are exempt unless they are chocolate covered and do not contain flour as provided in par. (a). · Clarify Rule. Amend s. Tax 11.51 (2) (b), to clarify "ice cream in cones" is exempt only when prepackaged by someone other than the retailer. i. Radio and Television Broadcasting Equipment. Reflect 2013 Wisconsin Act 346, which creates an exemption in s. 77.54 (23n), Stats., for property used by certain commercial radio and television stations. This requires an update to s. Tax 11.63. 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: 2011 Wisconsin Act 208 and 2013 Wisconsin Acts 145, 185, 324, 346, and 364 have made numerous changes to Wisconsin's sales and use tax laws. The department has created this proposed rule order to reflect these statutory changes, as well as provide needed clarification and correction as described above. 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: This rule order makes changes to reflect current law and current department policy. It makes no policy or other changes having an effect on small business.
Anticipated costs incurred by private sector: This proposed rule does not have a fiscal effect on the private sector.
Effect on small business: This proposed rule does not affect small business.
Agency contact person: Please contact Jen Chadwick at (608) 266-8253 or jennifer.chadwick@wisconsin.gov, if you have any questions regarding this proposed rule. Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below no later than October 28, 2016. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jen Chadwick
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
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SECTION 1. Tax 11.01 (1) (g) is amended to read:
Tax 11.01 (1) (g) Form 9400−376. A department of natural resources form for occasional and dealer sales of all−terrain vehicles and utility terrain vehicles.
SECTION 2. Tax 11.05 (2) (gm) is amended to read:
