The Wisconsin Department of Revenue proposes an order to: repeal Tax 11.26 (2) (i); amend Tax 11.05 (2) (gm), (4) (f), and (4) (Note 1), 11.08 (6) (Note 2), 11.13 (6) (b) 2., 11.14 (2) (b) and (16), 11.26 (2) (q) and (3) (Note 2), 11.33 (4) (a) (intro) and 3. and (5) (c), 11.34 (3) (bg), 11.35 (2) (b), (5) (a) and (Example), (b) and (Example 1) and (Example 2), (6) (a) (Example 1), (Example 2), (Example 3), and (Example 5), (b) and (Example 2), (7) (b) (Example), (c) (Example 1) and (Example 2), (d) (Example), and (8) (Note 2), 11.41 (4) (a), 11.50 (4) (a) 1. a. and (5) (title), 11.52 (7) (Note 1) and (Note 2), 11.68 (13) (Note 1) and (Note 2), 11.72 (1) (b) 2. and (3) (Note 2), 11.83 (1) (b); and create Tax 11.01 (1) (gm), 11.26 (3) (i) and (j), 11.50 (5) (a) 9., 11.52 (7) (d), 11.68 (4) (a) (title), (b) (title), (c) (title), (d) (title), (e) (title), (f) (title), (fm), (g) (title), (h) (title), and (i); relating to sales and use tax provisions.
The scope statement for this rule, SS 083-16, was approved by the Governor on September 13, 2016, published in Register No. 729B on September 26, 2016, and approved by the Secretary of Revenue on October 14, 2016. Analysis by the Department of Revenue
Statutes interpreted: Sections 77.51 (3pb), (12m), (13b), (13g), and (15b); 77.52 (2) (a) 6. and (13); 77.53 (10); and 77.54 (1), (7m), (9m), (22b), (28), (30) (a) 6., (62m), and (63), Stats. Explanation of agency authority: Section 77.65 (3), Stats., provides “[t]he department may promulgate rules to administer this subsection…” 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, and (2) clarifies multiple rules.
a. Building Materials for Local Government or Nonprofit Facility. Create s. Tax 11.68 (4) (i) to explain the new exemption described in s. 77.54(9m), pursuant to 2015 Wis. Act 126 for building materials that become a part of a facility for a local unit of government or nonprofit organization. c. Diplomatic Exemption. Amend s. Tax 11.05 (4) (f) to state that purchases by diplomats from American Institute in Taiwan are exempt from tax consistent with s. 77.54 (1) and 22 USC 3307. d. Exemption Certificate Requirements. Amend s. Tax 11.14 (2) (b) to remove the phrase "the name and address of the seller" from the required list of data elements needed on an exemption certificate, to be consistent with the provision of the Streamlined Sales and Use Tax Agreement. f. Federal Excise Tax on Heavy Trucks. Amend sec. Tax 11.26 to provide that the taxable sales price and purchase price does not include the federal excise tax imposed on the first retail sale of heavy trucks and trailers under s. 4051 of the Internal Revenue Code, pursuant to the changes made to s. 77.51 (15b) (b) 3s. under 2015 Wis. Act 361. g. Fuel and Electricity Used in Manufacturing. Amend sec. Tax 11.41 (4) to define the phrase "fuel and electricity consumed in manufacturing" consistent with the definition in s. 77.51 (7h) and s. Tax 2.11. The income tax credit was replaced with a sales tax exemption in 2003 Wis. Act 99. h. Insulin Injection Equipment. Amend second note following s. Tax 11.08 to state that apparatus and equipment for the injection of insulin or the treatment of diabetes qualify for exemption under s. 77.54 (22b), Stats., if they meet the definition of "durable medical equipment" in s. 77.51 (3pm), Stats., and are for use in a person's home, pursuant to 2009 Wis. Act 2. j. Occasional Sale Exemption for Nonprofits. Amend s. Tax 11.35 to explain the changes to the occasional sale exemption, provided in s. 77.54 (7m), as amended by 2015 Wis. Act 364. k. Off-Highway Motorcycles. Update Chapter Tax 11 to reflect changes in s. 77.61(1)(b), under 2015 Wis. Act 170, relating to the registration and operation of off-highway motorcycles. l. Sports and Entertainment Arena Facilities. Create sec. Tax 11.68 (4) (fm) to explain the new exemption provided in s. 77.54 (62m), as created by 2015 Wis. Act 60, for building materials, supplies, and equipment used in the construction or development of sports and entertainment arena facilities. m. Video Service Franchise Fees. Amend s. Tax 11.26 to correct a reference to the statutes. The annual, state-issued video service provider fee is imposed under s. 66.0420 (3), Stats., not under s. 66.0420 (7) as the rule provides. Also specify in the rule that the percentage-based, municipal video service provider fee imposed under s. 66.0420 (7), Stats., is not included in sales price and purchase price. 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 has not found a similar rule in an adjacent state.
Summary of factual data and analytical methodologies: 2003 Wisconsin Act 99, 2009 Wisconsin Act 2, 2013 Wisconsin Act 20, and 2015 Wisconsin Acts 55, 60, 126, 170, 251, 361, 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 the date on which the public hearing on this proposed rule is conducted. 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 11.01 (1) (gm) is created to read:
Tax 11.01 (1) (gm) Form 9400-609. A department of natural resources form for occasional and dealer sales of off-highway motorcycles.
SECTION 2. Tax 11.05 (2) (gm) and (4) (f) and (f) (Note 1) are amended to read:
Tax 11.05 (2) (gm) Sales of motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, semitrailers, all−terrain vehicles, utility terrain vehicles, off-highway motorcycles, and aircraft. Governmental units must collect the sales tax on its sales of these items. If the governmental unit does not collect the tax from the purchaser, the purchaser shall file a sales tax return and pay the tax prior to titling or registering the property in this state. (4) (f) Purchases by consular and diplomatic personnel of other countries which have entered into multilateral treaties with the United States government providing for sales and use tax exemptions are exempt provided the personnel present their tax exemption card issued by the United States department of state or the American Institute in Taiwan showing their tax exemption number.
(f) (Note 1) Note: Section Tax 11.05 interprets ss. 77.52 (1), (2), (13), and (14) and 77.54 (1), (9a), (10), (15), (17), (20n), (30), (32), (37), (42), (44), and (55), Stats. SECTION 3. Tax 11.08 (6) (Note 2) is amended to read: Tax 11.08 (6) (Note 2) Note: The interpretations in s. Tax 11.08 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Charges for oxygen equipment became exempt September 1, 1983, pursuant to 1983 Wis. Act 27; (b) Charges for motorized wheelchairs and scooters became exempt September 1, 1985, pursuant to 1985 Wis. Act 29; (c) Charges for apparatus or equipment for the injection of insulin or the treatment of diabetes and supplies used to determine blood sugar levels became exempt March 1, 1989, pursuant to 1987 Wis. Act 399; (d) Charges for antiembolism elastic hose and stockings prescribed by a physician became exempt October 1, 1989, pursuant to 1989 Wis. Act 31; (e) The exemption for adaptive equipment for a handicapped person's vehicle became exempt effective June 1, 1990, pursuant to 1989 Wis. Act 238, renumbered by 1989 Wis. Act 359; (f) The exemption for parts and accessories became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (g) The exemptions provided in s. 77.54 (14s) and (22), Stats., were repealed effective October 1, 2009, and replaced with the exemptions provided under s. 77.54 (22b), Stats., pursuant to 2009 Wis. Act 2; (h) The exemption in s. 77.54 (28), Stats., was amended to remove the exemption for apparatus and equipment for the injection of insulin or the treatment of diabetes. These items will still qualify for exemption under s. 77.54 (22b), Stats., if they are for home use meet the definition of "durable medical equipment" in s. 77.51 (3pm), Stats., and are for use in a person's home, pursuant to 2009 Wis. Act 2; and (i) The clarification that a "prosthetic device" must be a replacement, corrective, or supportive device became effective July 2, 2013, pursuant to 2013 Wis. Act 20. SECTION 4. Tax 11.13 (6) (b) 2. is amended to read:
Tax 11.13 (6) (b) 2. Motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r), Stats., trailers, semitrailers, all−terrain vehicles, utility terrain vehicles, off-highway motorcycles, or aircraft. SECTION 5. Tax 11.14 (2) (b) and (16) are amended to read:
Tax 11.14 (2) (b) Use of an exemption certificate designed by the department is not required by law. A person may use a substitute exemption certificate if it contains all the essential information relating to the transaction and if it is in a form approved by the department. Paper exemption certificates must be signed by and bear the name and address of the purchaser, the name and address of the seller, a general description of the purchaser’s business and the reason for the claimed exemption. An electronic exemption certificate shall contain the same information as a paper exemption certificate, except that a signature is not required.
(16) Exemption certificate not needed for certain sales. No exemption certificate is required for sales of property, items, goods, or services that are exempt from Wisconsin sales and use tax under s. 77.54 (5) (a) 3., (7), (7m), (8), (10), (11), (14), (15), (17), (20n), (21), (22b), (31), (32), (35), (36), (37), (42), (44), (45), (46), (51), and (52), Stats. SECTION 6. Tax 11.26 (2) (i) is repealed.
SECTION 7. Tax 11.26 (2) (q) is amended to read:
Tax 11.26 (2) (q) The state-issued video service franchise fee imposed under s. 66.0420 (7) (3), Stats. SECTION 8. Tax 11.26 (3) (i) and (j) are created to read:
Tax 11.26 (3) (i) The municipal video service provider fee imposed under s. 66.0420 (7), Stats. (j) The federal excise tax imposed on the first retail sale of heavy trucks and trailers under section 4051 of the Internal Revenue Code. SECTION 9. Tax 11.26 (3) (Note 2) is amended to read:
Tax 11.26 (3) (Note 2) Note: The interpretations in s. Tax 11.26 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exclusion for federal and Wisconsin motor vehicle excise taxes refunded became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (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 The regional transit authority taxes were authorized by 2009 Wis. Act 28 and repealed by 2011 Wis. Act 32; and (d) The definitions of "purchase price" and "sales price" were amended to provide when taxes are not included in the "purchase price" or "sales price," pursuant to 2013 Wis. Act 20; and (e) The definitions of "purchase price" and "sales price" were amended retroactively to September 1, 2014 to exclude the federal excise tax on heavy trucks and trailers, pursuant to 2015 Wis. Act 361. SECTION 10. Tax 11.33 (4) (a) (intro.) and (a) 3. and (5) (c) are amended to read:
Tax 11.33 (4) (a) (intro.) The sale of a motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all−terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft that is registered or titled in Wisconsin or required to be registered or titled in Wisconsin is an exempt occasional sale only if one of the following applies: 3. The motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all−terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft is sold by a nonprofit organization meeting the requirements in s. Tax 11.35 (4). (5) (c) Sales of motor vehicles, aircraft, boats, recreational vehicles as defined in s. 340.01 (48r), Stats., snowmobiles, trailers, semitrailers, all−terrain vehicles, and utility terrain vehicles, and off-highway motorcycles. Unless exempt, a use tax or sales tax pursuant to s. Tax 11.14 (2) (c) shall be paid by the purchaser at the time the motor vehicle, aircraft, boat, recreational vehicle as defined in s. 340.01 (48r), Stats., snowmobile, trailer, semitrailer, all−terrain vehicle, or utility terrain vehicle, or off-highway motorcycle is registered or titled within Wisconsin. SECTION 11. Tax 11.34 (3) (bg) is amended to read:
Tax 11.34 (3) (bg) A sale of a motor vehicle, snowmobile, recreational vehicle as defined in s. 340.01 (48r), Stats., trailer, semitrailer, all−terrain vehicle, utility terrain vehicle, off-highway motorcycle, or aircraft that is registered or titled in Wisconsin or required to be registered or titled in Wisconsin, is subject to tax unless s. Tax 11.33 (4) (a) 1. or 2. apply. SECTION 12. Tax 11.35 (2) (b), (5) (a) and (a) (Example), (5) (b) and (b) (Example 1) and (Example 2), (6) (a) and (a) (Example 1), (Example 2), (Example 3), and (Example 5), (6) (b) and (b) (Example 2), (7) (b) (Example), (7) (c) (Example 1) and (Example 2), (7) (d) (Example), and (8) (Note 2) are amended to read:
Tax 11.35 (2) (b) "Entertainment" means entertainment provided at an admission event by all persons or groups who are paid in the aggregate more than $500 $10,000 per event by all persons for performing, for reimbursement of expenses or for prize money.
(5) (a) Its sales of otherwise taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or services or its events occur on 20 75 days or less during the calendar year, regardless of the dollar amount of sales. For events involving the sales of tickets, only the actual days of the events are counted, not the days of ticket sales. (Example) Example: A boy scout troop takes orders for Christmas wreaths from October August 1 through November 1. The wreaths are delivered by the troop on December 15 and 16. For purposes of determining whether its events meet the 20 75-day test, the troop should use the days of delivery rather than days orders are taken.
(b) Its taxable sales price for tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), or (d), Stats., and taxable services for the calendar year are $25,000 $50,000 or less, regardless of the number of days on which its sales or events occur. Sales that are nontaxable are not included for purposes of the $25,000 $50,000 sales price test. (Example 1) Examples: 1) A church sells frozen pizzas. Since sales of frozen pizzas are exempt from sales tax, the sales of the frozen pizzas are not counted as part of the sales price for purposes of the $25,000 $50,000 receipts test.
(Example 2) 2) A nonprofit organization, which sells hundreds of Christmas trees, sells 5 Christmas trees for $100 to a public school. Although Christmas trees are taxable tangible personal property, a public school can purchase tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., exempt from sales tax. As a result, this $100 exempt sale to the school is not counted as part of the sales price for purposes of the $25,000 $50,000 receipts test. (6) (a) (Example 1) Examples: 1) Four different bands are paid $200 $3,000 each to perform at various times during a 3-day event. There is an admission charge for access to the event. Since the total payment for entertainment ($800 $12,000) exceeds the $500 $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.
(Example 2) 2) Two nonprofit organizations co-sponsor an admission event at which a band is hired to perform. Each organization pays the band $300 $5,500. Since the total payment for entertainment ($600 $11,000) exceeds the $500 $10,000 limit in sub. (2) (b), entertainment is deemed to be involved. As a result, receipts from the event are taxable.
(Example 3) 3) A nonprofit organization sponsors a dinner and dance in the high school gymnasium. The dance band is paid in excess of the $500 $10,000 limit in sub. (2) (b). There is no separate admission charge. However, access to the dance is restricted to those who have purchased the meal. The "meal" charge constitutes an admission charge to an event involving entertainment. Therefore, sales by the nonprofit organization at this event are taxable.
(Example 5) 5) Nonprofit Organization A sponsors an admission event at which a band is hired to perform. The band is paid more than $500 $10,000. Nonprofit Organization A allows Nonprofit Organization B, a separate entity, to sell soft drinks and food at the event for consumption on the premises of the event. Although Nonprofit Organization A's sales at the event do not qualify for the occasional sales exemption, Nonprofit Organization B's sales at the event may qualify as exempt occasional sales. The admission charge to the event involving entertainment is made by Nonprofit Organization A, not Nonprofit Organization B.
(b) A nonprofit organization that would otherwise qualify for exempt occasional sales, except for the involvement of entertainment, may obtain a seller's permit from the department for the day or days involving entertainment, pay the sales tax on that event and request inactivation of its seller's permit after the event, and still have exempt occasional sales on days not covered by the seller's permit. Days and receipts from events involving admissions to entertainment for which a seller's permit was obtained are included with all other sales in determining the 20 75-day test and the $25,000 $50,000 taxable receipts test described in sub. (5). A nonprofit organization that obtains a seller's permit for an event and does not request inactivation of its seller's permit after the event does not qualify for the occasional sale exemption while the seller's permit is active, regardless of the number of days and dollar amount of its sales.
(Example 2) 2) A nonprofit organization holds several events during the year. For one of the events, the nonprofit organization obtains a seller's permit because entertainment is involved, collects sales tax on its receipts of $5,000 from that event and requests inactivation of its seller's permit after the event. Taxable receipts from its other events must be combined with the $5,000 of receipts from the event for which it held a seller's permit for purposes of determining whether the $25,000 $50,000 taxable receipts test is met.
(7) (b) (Example) Example: A nonprofit organization has held seven nineteen 3 4-day events for a total of 21 76 days each year for the past 5 years. Receipts were always over $25,000 $50,000, and there were no admissions to entertainment events. One event has lost money for the past 2 years. The organization intends to discontinue that event for the following year; thus, it may anticipate coming under the 20 75-day standard and request inactivation of its seller's permit in good faith.
(c) (Example 1) Examples: 1) A church held 18 73 days of events or sales in the current year. Receipts for the events equaled $30,000 $70,000 and no entertainment was involved. The church expects to hold the same 18 73 days of events in the following year. It requests inactivation of its seller's permit. However, in the middle of the following year, the church garage is destroyed by fire. An additional 4-day event is held to raise funds to help replace the garage. Only the receipts from days 21 76 and 22 77, the days exceeding the standard, are subject to sales tax.
(Example 2) 2) A garden club is organized in the current year. The garden club is not required to hold a seller's permit and does not apply for one. In the following year, the garden club holds 22 77 days of events with taxable receipts from the events of $30,000 $70,000. Only receipts from days 21 76 and 22 77, the days exceeding the standard, are subject to sales tax.
(d) (Example) Example: A nonprofit organization holds 15 70 days of sales in the current year. The organization holds a seller's permit, files sales and use tax returns and pays sales tax on all its receipts in the current year. At the end of the current year, the organization realizes that its sales would have qualified as exempt occasional sales except for its holding of a seller's permit. The organization may not claim a refund of taxes paid while it held a seller's permit.
(8) (Note 2) Note: The interpretations contained in s. Tax 11.35 became effective January 1, 1989, pursuant to 1987 Wis. Act 399, except: (a) the $25,000 receipts standard, and the $500 entertainment standard became effective January 1, 2006, pursuant to 2005 Wis. Act 25; (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; and (c) the 75 day standard, the $50,000 receipts standard, and the $10,000 entertainment standard became effective January 1, 2017, pursuant to 2015 Wis. Act 364. SECTION 13. Tax 11.41 (4) (a) is amended to read:
Tax 11.41 (4) (a) Fuel and electricity are specifically excluded from the exemption provided by s. 77.54 (2), Stats. However, an exemption is provided in s. 77.54 (30) (a) 6., Stats., for fuel and electricity consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., in this state. Consistent with s. 77.51(7h), Stats., "fuel and electricity consumed in manufacturing" means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process and does not include fuel and electricity consumed in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, storing raw materials or finished units of tangible personal property or items or property under s. 77.52(1)(b) or (c), Stats., research and product development, delivery to or from the plant, repairing or maintaining plant facilities, or shipping, advertising, distribution, sales, or administrative department activities.
