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...” Estimate of amount of time that state employees will spend developing the rule and of other resources necessary to develop the rule: The department estimates it will take approximately 100 hours to develop the rule.
Related statute or rule: There are no other applicable statutes or rule.
Plain language analysis: The rule (1) reflects various law changes, and (2) corrects technical issues.
b.
Butcher Shops Listed as Nonmanufacturers. Repeal s. Tax 11.39 (4) (b) which states that butcher shops are nonmanufacturers, since the processes performed by some butcher shops may qualify as manufacturing and improve readability.d.
Custom Farming. Amend s. Tax 11.57 (2) (i) to include a missing reference to custom farming.e.
Electronics and Information Technology Manufacturing Zone Facilities. Create s. Tax 11.68 (4) (j) to explain the new exemption provided in 2017 Wis. Act 59 for building materials, supplies, and equipment used in the construction or development of facilities located in an electronics and information technology manufacturing zone.h.
Exemptions for Beekeeping. Amend ss. Tax 11.12 and 11.57, to reflect the changes in 2017 Wis. Act 59 expanding the definition of farming to include beekeeping.i.
Exemptions Requiring an Exemption Certificate. Amend s. Tax 11.14 (16) to add s. 77.54 (66), Stats., to the list of exemptions that do not require an exemption certificate to be consistent with the list provided in s. 77.52 (13), Stats., pursuant to 2017 Wis. Act 59. j.
Exemption for Services Performed During a Disaster Period. Create ss. Tax 11.57 (2) (r) and 11.86 (5) (d) and amend s. Tax 11.57 to reflect the exemption created in 2017 Wis. Act 290 for services performed during a disaster period by electric cooperatives or telecommunications utilities.k.
Expand List of Qualifying Exempt Entities for Building Materials Exemption. Amend ss. Tax 11.04 (2) and Tax 11.68 (4) (i) to reflect the changes in 2017 Wis. Acts 59, 190, and 231 to expand the list of qualifying exempt entities to include technical colleges and the UW System, state veterans organizations, and certain title holding companies.l.
Hotels, Motels, and Other Lodging Providers Deemed Consumers. Create s. Tax 11.48 (2) (f) to state that hotels, motels, and other lodging providers are deemed the consumers of telecommunications, ancillary, internet access and cable TV services used in providing lodging services, pursuant to 2017 Wis. Act 17. m.
Increase in Occasional Sale Exemption Threshold. Amend ss. Tax 11.16 (1) (h) and (3) (c) (Note 2), 11.17 (4) (b) 6., 11.33 (4) (f) and (Example 1) and (Example 2), 11.53 (3) and (7) (Note 2), and 11.62 (2) (b) and (3) (d) (Note 2) to reflect the threshold provided in 2017 Wis. Act 59.n.
Internet Access Services. Amend s. Tax 11.66 (2) (c) to create a note that reflects internet access services are no longer taxable effective June 30, 2020, as provided in 2017 Wis. Act 59.r.
Prizes Awarded Through Amusement Devices. Create s. Tax 11.52 (5m) to explain the exemption for prizes purchased by an amusement device operation, as created in 2017 Wis. Act 59, and clarify property that does not qualify for the exemption.s.
Exemption for Public Service Surcharge Repealed. Amend ss. Tax 11.05 (3) (u) and 11.66 (4) (b) and repeal s. Tax 11.26 (3) (g) to reflect 2017 Wis. Act 59, which repealed the surcharge established by the Public Service Commission under s. 256.35 (3m) (f), Stats. u.
Tournament and League Entry Fees. Amend s. Tax 11.65 to reflect the exemption for tournament and league entry fees used as prize money, as created in 2017 Wis. Act 59.v.
Undisclosed and Disclosed Principals. Amend s. Tax 11.55 (1) and (2) to clarify that provisions relating to principals apply to services and property.w.
Video and Electronic Games Sold to Amusement Device Operators. Amend s. Tax 11.52 (7) (a) and create s. Tax 11.52 (7) (e) to reflect the exemption for a video or electronic game sold to a person who provides a taxable service through an amusement device, as created by 2017 Wis. Act 59.Summary of, and comparison with, existing or proposed federal regulation: The passage of the permanent Internet Tax Freedom Act, as part of Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114–125) on February 24, 2016, prohibited states like Wisconsin, that were grandfathered in temporary versions, from imposing sales tax on internet access services by July 1, 2020. Wisconsin law was revised to reflect this federal preemption effective July 1, 2020. There is no other 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.
Analysis and supporting documents used to determine effect on small business: This rule makes changes to reflect current law and current department policy. This proposed rule order makes no policy or other changes having an effect on small business except for the removal of butcher shops from the list of non-manufacturers. The department recognizes that some butcher shops could qualify as manufacturers and take advantage of various sales and use tax exemptions.
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 order may have an effect on small business, as described above.
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. 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
SECTION 1. Tax 11.04 (1) is amended to read:
Tax 11.04 (1) Definition. In this rule, "exempt entity" means a person qualifying for an exemption under s. 77.54 (9a) or 77.55 (1), Stats. (a) Section 77.54 (9a), Stats., provides an exemption for sales to this state all the following: 1. The state of Wisconsin or any agency thereof of the state of Wisconsin, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority any;.
2. Any county, city, village, town or school district in this state;a Wisconsin.
3. A county-city hospital established under s. 66.0927, Stats.; a 5. Any other unit of government in this state or any agency or instrumentality of one or more units of government in this state; any Wisconsin.
6. Any federally recognized American Indian tribe or band in this state; any Wisconsin.
7. Any joint local water authority created under s. 66.0823, Stats.; any 8. Any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation;a. 10. A local exposition district under subch. II of ch. 229, Stats.;a 11. A local cultural arts district under subch. V of ch. 229, Stats.;a 12. A cemetery company or corporation described under section 501 (c) 13 of the Internal Revenue Code, if the tangible personal property or taxable services are used exclusively by the cemetery company or corporation for the purposes of the company or corporation. (b) Section 77.55 (1), Stats., provides an exemption for sales to the all the following: 1. The United States, its unincorporated agencies and instrumentalities, and any unincorporated [.
2. Any incorporated] agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States.
SECTION 2. Tax 11.04 (1) (a) 9. is created to read:
Tax 11.04 (1) (a) 9. An entity described under section 501 (c) (2) of the Internal Revenue Code that is exempt from federal income tax under section 501 (a) of the Internal Revenue Code and that is organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to an entity described in s. 77.54 (9a) (f), Stats. SECTION 3. Tax 11.04 (2), (4), and (5) (Note 1) and (Note 2) are amended to read:
Tax 11.04 (2) Taxable sales. Sales Except as provided in s. 77.54 (9m), (26), (41), (62m) and (65), Stats., or if prohibited by federal law, sales of building materials to contractors or subcontractors used in the construction of buildings or structures, or the alteration, repair or improvement of real property for exempt entities, are subject to the tax. (4) Supplier is contractor. A supplier, who is also the contractor who uses the building materials in the construction of buildings or structures, or the alteration, repair or improvement of real property for an exempt entity, is the consumer of such building materials, not the seller of personal property to the exempt entity. The Except as provided in s. 77.54 (9m), (26), (41), (62m), and (65), Stats., or if prohibited by federal law, the sale of building materials to the consumer is subject to the tax. Note: The interpretations in s. Tax 11.04 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The building materials exemption for certain sports stadiums became effective October 1, 1991, pursuant to 1991 Act 37; (b) The change of the term “gross receipts" to “sales price" and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (c) The building materials exemption for a facility in an electronics and information technology manufacturing zone became effective September 20, 2017 pursuant to 2017 Act 58; (d) The building materials exemption for contracts with certain exempt entities became effective January 1, 2016, pursuant to 2015 Wis. Act 126; and (e) A missing reference was added to the list of exempt entities for a local exposition district and certain title holding companies were also added to the list of exempt entities, effective September 1, 2017, pursuant to 2017 Wis. Act 231. SECTION 4. Tax 11.05 (3) (u) and (Note) and (4) (a) are amended to read:
Tax 11.05 (3) (u) Revenues collected under s. 256.35 (3), Stats., and the surcharge established by rule by the public service commission under s. 256.35 (3m) (f), Stats., for customers of wireless providers, as defined in s. 256.35 (3m) (a) 6., Stats. Note: Section 256.35 (3m), Stats., regarding the surcharge for customers of wireless providers was repealed by 2017 Wis. Act 59. (4) Purchases. (a) Section 77.54 (9a), Stats., exempts sales to and the storage, use or other consumption of tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., and services by any of the following: 1. Wisconsin or by any agency of Wisconsin, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority;any.
2. Any county, city, village, town or school district in this state; a Wisconsin.
3. A county-city hospital established under s. 66.0927, Stats.; a 5. Any other unit of government in this state or any agency or instrumentality of one or more units of government in this state; any Wisconsin.
6. Any federally recognized American Indian tribe or band in this state; any Wisconsin.
7. Any joint local water authority created under s. 66.0823, Stats.; any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation; a 9. A local exposition district under subch. II of ch. 229, Stats.;a 10. A local cultural arts district under subch. V of ch. 229, Stats.;and a 11. A cemetery company or corporation described under section 501 (c) (13) of the Internal Revenue Code, if the tangible personal property or taxable services are used exclusively by the cemetery company or corporation for the purposes of the company or corporation. SECTION 5. Tax 11.05 (4) (a) 8. and (bg) are created to read:
Tax 11.05 (4) (a) 8. An entity described under section 501 (c) (2) of the Internal Revenue Code that is exempt from federal income tax under section 501 (a) of the Internal Revenue Code and is organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to an entity described under s. 77.54 (9a) (f), Stats. Tax 11.05 (4) (bg) Purchases by a state veterans organization, as defined in s. 45.41 (1) (b), Stats., are exempt except purchases of property and services used primarily in preparing, storing, serving, selling, or delivering food and beverages, including products and services for cleaning machinery and equipment used for the food and beverages that are sold by the veterans organization. A state veterans organization does not qualify for a certificate of exempt status, CES, number. The organization should provide a fully completed Wisconsin sales and use tax exemption certificate, Form S-211 or S-211E, to claim exemption on their qualifying purchases. SECTION 6. Tax 11.05 (4) (f) (Note 2) is amended to read:
Tax 11.05 (4) (f) Note: The interpretations in s. Tax 11.05 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales by vocational, technical and adult education schools were exempt from July 1, 1972, through October 3, 1973; (b) Mobile meals on wheels became exempt October 4, 1973, pursuant to Chapter 90, Laws of 1973; (c) Admission fees to state parks became exempt on July 1, 1978, pursuant to Chapter 418, Laws of 1977; (d) Sales of coal, fuel oil, propane, steam and wood used for fuel became exempt July 1, 1979, and the electricity and natural gas six-month exemption became effective on November 1, 1979, both pursuant to Chapter 1, Laws of 1979; (e) A governmental unit's charges for parking motor vehicles and aircraft and docking and providing storage space for boats became taxable June 1, 1980, pursuant to Chapter 221, Laws of 1979; (f) Landscaping and lawn maintenance services became taxable on May 1, 1982, pursuant to Chapter 317, Laws of 1981; (g) A governmental unit's charges for copying public records became exempt effective April 27, 1984, pursuant to 1983 Wis. Act 287, later amended effective April 2, 1986, pursuant to 1985 Wis. Act 149 to clarify that the exemption also applies to confidential records, and again amended effective May 1, 1992, pursuant to 1991 Wis. Act 269, to include records under s. 19.35 (1) (a), Stats.; (h) The exemption for peat and fuel cubes produced from solid waste became effective April 2, 1986, pursuant to 1985 Wis. Act 149; (i) The exemption for an agency or instrumentality of a Wisconsin governmental unit became effective June 1, 1986, pursuant to 1985 Wis. Act 149; (j) Wood residue used for fuel by businesses became exempt on September 1, 1987, pursuant to 1987 Wis. Act 27; (k) The exemption for admissions to a museum operated by a nonprofit corporation under lease with the state historical society became exempt July 20, 1985, pursuant to 1985 Wis. Act 29; (L) The exclusion of hospital service insurance corporation from the definition of exempt entity became effective September 1, 1985, pursuant to 1985 Wis. Act 29; (m) Revenues from establishing a “911" emergency telephone system became exempt August 1, 1987, pursuant to 1987 Wis. Act 27; (n) State park camping fees became exempt effective September 1, 1989, pursuant to 1989 Wis. Act 31; (o) The exemption for animal identification tags and standard samples by the Wisconsin department of agriculture, trade and consumer protection became effective October 1, 1993, pursuant to 1993 Wis. Act 16; (p) The exemption for fuel used in farming became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (q) The requirement that meals must be served on the premises of hospitals, nursing homes, etc., for exemption to apply became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (r) The exemption for sales to a local exposition district became effective April 26, 1994, pursuant to 1993 Wis. Act 263; (s) The exemption for sales of meals by community-based residential facilities became effective June 1, 1994, pursuant to 1993 Wis. Act 332; (t) The exemption for sales to the University of Wisconsin Hospitals and Clinics Authority became effective July 29, 1995, pursuant to 1995 Wis. Act 27; (u) The exemption for certain meals, food, food products and beverages furnished by institutions of higher education was revised to apply only if the items are furnished to an undergraduate student, a graduate student or a student enrolled in a professional school if the student is enrolled for credit at that institution and if the items are consumed by that student, or the items are furnished to a national football league team, effective for contracts or agreements entered into on or after October 14, 1997, pursuant to 1997 Wis. Act 27, and further revised to include certain meals, food, food products or beverages paid for to an institution of higher education through the use of an account of the institution, if the items are furnished by the institution, effective December 31, 1997, pursuant to 1997 Wis. Act 41; (v) The exemption for electricity sold for use in farming was expanded to include sales of electricity during the entire year, effective for sales on or after May 1, 2000, pursuant to 1999 Wis. Act 9; (w) The exemption for sales from the collection of public benefit fees became effective October 29, 1999, pursuant to 1999 Wis. Act 9; (x) The exemption for use of recreational facilities in connection with the sale of time-share property became effective December 1, 1999, pursuant to 1999 Wis. Act 9; (y) The exemption for certain items sold from a vending machine became effective July 1, 2001, pursuant to 1999 Wis. Act 9; (z) The exemption for fuel consumed in manufacturing became effective January 1, 2006, pursuant to 2003 Wis. Act 99; (zb) The exemption for regional transit authorities and the Wisconsin Quality Home Health Care Authority became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (ze) The exemption for federally recognized American Indian tribes or bands in Wisconsin became effective August 1, 2009, pursuant to 2009 Act 28; (zh) The requirement that governmental units collect sales tax on their sales of used motor vehicles became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (zL) The exemption for low-income assistance fees became effective July 1, 2005, pursuant to 2005 Wis. Act 141; (zp) The exemption for certain admissions to sports activities by governmental units became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (zr) The exemption for the police and fire protection fee became effective July 1, 2009, pursuant to 2009 Wis. Act 28; (zu) The change of the term “gross receipts" to “sales price" and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (zy) The exemption for sales of food and food ingredients, except soft drinks, by any facility certified or licensed under ch. 48, Stats., became effective May 6, 2010, pursuant to 2009 Wis. Act 204; and (zz) The exemption for regional transit authorities was repealed effective September 28, 2011, pursuant to 2011 Wis. Act 32 and the exemption for the Wisconsin Quality Home Care Authority was repealed effective June 29, 2011, pursuant to 2011 Wis. Act 10; (zza) The exemption for certain title holding entities described under s. 501 (c) (2) of the Internal Revenue Code was effective retroactively to September 1, 2017, pursuant to 2017 Wis. Act 231; and (zzb) The exemption for state veterans organizations was effective July 1, 2018, pursuant to 2017 Wis. Act 190. SECTION 7. Tax 11.12 (1) is amended to read:
