Chapter Tax 11

Tax 11.94 Note Note: The interpretations in s. Tax 11.94 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The definitions of “delivery charges” and “direct mail,” and 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; (b) The definitions of “advertising and promotional direct mail” and “other direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; and (c) The sales and use tax exemption for advertising and promotional direct mail, which includes the delivery charges for advertising and promotional direct mail, became effective July 1, 2013, pursuant to 2011 Wis. Act 32.

Tax 11.94 History History: Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (e), r. (2) (b), renum. (2) (c), (d) and (e) to be (2) (b), (c) and (d), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c), Register, July, 1987, No. 379, eff. 8-1-87; am. (1) (e) and (2) (b) and (d), Register, June, 1991, No. 426, eff. 7-1-91; reprinted to restore dropped copy in (1) (b), Register, December, 1995, No. 480; am. (1) (d), (2) (a) and (c), r. (2) (d), Register, October, 1999, No. 526, eff. 11-1-99; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (3) (a) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: am. (3) (a) Register August 2013 No. 692, eff. 9-1-13.

Tax 11.945 Tax 11.945 Sourcing transactions.

Tax 11.945(1) (1) Definitions.

Tax 11.945(1)(a) (a) “Advertising and promotional direct mail,” as provided in s. 77.51 (1ag), Stats., means direct mail that has the primary purpose of attracting public attention to a product, person, business, or organization or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization.

Tax 11.945(1)(b) (b)

Tax 11.945(1)(b)1. 1. “Other direct mail,” as provided in s. 77.51 (9r), Stats., means any direct mail that is not advertising and promotional direct mail, regardless of whether advertising and promotional direct mail is included in the same mailing. “Other direct mail” includes:

Tax 11.945(1)(b)1.a. a. Transactional direct mail that contains personal information specific to the addressee, including invoices, bills, account statements, and payroll advices.

Tax 11.945(1)(b)1.b. b. Any legally required mailings, including privacy notices, tax reports, and stockholder reports.

Tax 11.945(1)(b)1.c. c. Other nonpromotional direct mail, including newsletters and informational pieces, that is delivered to existing or former shareholders, customers, employees, or agents.

Tax 11.945(1)(b)2. 2. “Other direct mail” does not include printed materials that result from developing billing information or providing any data processing service that is more than incidental, as defined in s. 77.51 (5), Stats., to producing other direct mail.

Tax 11.945(1)(c) (c) “Product,” as provided in s. 77.51 (11d), Stats., includes tangible personal property, and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services.

Tax 11.945(1)(d) (d) “Receive,” as defined in s. 77.522 (1) (a) 1., Stats., means taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats.; making first use of services; or taking possession or making first use of digital goods under s. 77.52 (1) (d), Stats., whichever comes first. “Receive” does not include a shipping company taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., on a purchaser’s behalf.

Tax 11.945(1)(e) (e) “Transportation equipment,” as defined in s. 77.522 (1) (a) 2., Stats., means any of the following:

Tax 11.945(1)(e)1. 1. Locomotives and railcars that are used to carry persons or property in interstate commerce.

Tax 11.945(1)(e)2. 2. Trucks and truck tractors that have a gross vehicle weight rating of 10,001 pounds or greater, trailers, semitrailers, and passenger buses, if such vehicles are registered under the international registration plan under s. 341.405, Stats., and operated under the authority of a carrier that is authorized by the federal government to carry persons or property in interstate commerce.

Tax 11.945(1)(e)3. 3. Aircraft that are operated by air carriers that are authorized by the federal government or a foreign authority to carry persons or property in interstate or foreign commerce.

Tax 11.945(1)(e)4. 4. Containers that are designed for use on the vehicles described in subds. 1. to 3. and component parts attached to or secured on such vehicles.

Tax 11.945(2) (2) Sourcing — General. Except as provided in subs. (3), (4), and (5), and except as provided in s. Tax 11.66 (3) relating to the sourcing of telecommunications services, ancillary services, and Internet access services, a sale is sourced to a location based on the following:

Tax 11.945(2)(a) (a) If a purchaser receives the product at a seller’s business location, the sale is sourced to that business location.

Tax 11.945(2)(b) (b) If a purchaser does not receive the product at a seller’s business location, the sale is sourced to the location where the purchaser, or the purchaser’s designated donee, receives the product. This would include the location indicated by instructions known to the seller for delivery to the purchaser or the purchaser’s designated donee. The delivery may be made by the seller or by a shipping company hired by the seller or purchaser.

Tax 11.945(2)(c) (c) If the location of a sale cannot be determined under pars. (a) and (b), the sale is sourced to the purchaser’s address as indicated by the seller’s business records, if the records are maintained in the ordinary course of the seller’s business and if using that address to establish the location of the sale is not in bad faith.

Tax 11.945(2)(d) (d) If the location of a sale cannot be determined under pars. (a), (b), and (c), the sale is sourced to the purchaser’s address as obtained during the consummation of the sale, including the address indicated on the purchaser’s payment instrument, if no other address is available and if using that address to determine the location of the sale is not in bad faith.

Tax 11.945(2)(e) (e) If the location of a sale cannot be determined under pars. (a), (b), (c), and (d), including the circumstance in which the seller has insufficient information to determine the locations under pars. (a), (b), (c), and (d), the location of the sale is sourced as follows:

Tax 11.945(2)(e)1. 1. If the item sold is tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., the sale is sourced to the location from which the tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., is shipped.

Tax 11.945(2)(e)2. 2. If the item sold is a digital good or computer software delivered electronically, the sale is sourced to the location from which the digital good or computer software was first available for transmission by the seller, not including any location that merely provided the digital transfer of the product sold.

Tax 11.945(2)(e)3. 3. If a service is sold, the sale is sourced to the location from which the service was provided.

Tax 11.945(3) (3) Direct mail.

Tax 11.945(3)(a) (a) Advertising and promotional direct mail.

Tax 11.945(3)(a)1. 1. Sales of advertising and promotional direct mail sourced to Wisconsin are exempt from Wisconsin sales and use taxes. However, sales of advertising and promotional direct mail sourced to another state may be subject to that other state’s sales or use tax.

Tax 11.945(3)(a)2. 2. A sale of advertising and promotional direct mail, including a sale of a service that is an integral part of the production and distribution of advertising and promotional direct mail, is sourced to the location from which the advertising and promotional direct mail was shipped if the purchaser does not provide to the seller any of the following:

Tax 11.945(3)(a)2.a. a. The purchaser’s direct pay permit.

Tax 11.945(3)(a)2.b. b. An exemption certificate claiming direct mail.

Tax 11.945(3)(a)2.c. c. Other information that indicates the appropriate taxing jurisdiction to which the advertising and promotional direct mail is delivered to the ultimate recipients.

Tax 11.945(3)(a)3. 3. If the purchaser provides one of the items indicated in subd. 2. a. or b., to the seller, the purchaser shall source the sales to the jurisdictions to which the advertising and promotional direct mail is delivered to the recipients.

Tax 11.945(3)(a)4. 4. If the purchaser provides delivery information as provided in subd. 2. c., the seller shall source the sales according to that information.

Tax 11.945(3)(a)5. 5. An exemption certificate provided by the purchaser under subd. 2. b. remains in effect for all sales by the seller who received the exemption certificate to the purchaser who provided the exemption certificate.

Tax 11.945(3)(a)6. 6.

Tax 11.945(3)(a)6.a. a. Except as provided in subd. 6. b., if a transaction is a bundled transaction that includes “advertising and promotional direct mail,” subds. 2. to 5. only apply if the primary purpose of the transaction is the sale of products or services that meet the definition of advertising and promotional direct mail.

Tax 11.945(3)(a)6.b. b. If advertising and promotional direct mail and other direct mail are included in a single mailing, the sale of that mailing is sourced the same as “other direct mail” as explained in par. (b).

Tax 11.945(3)(b) (b) Other direct mail.

Tax 11.945(3)(b)1. 1. The sale of “other direct mail,” including a sale characterized under Wisconsin law as the sale of a service when the service is an integral part of the production and distribution of printed material that meets the definition of “other direct mail,” is sourced to the purchaser’s address as indicated by the seller’s business records, if the records are maintained in the ordinary course of the seller’s business and if using that address to establish the location of the sale is not in bad faith, unless the purchaser provides the seller with either of the following:

Tax 11.945(3)(b)1.a. a. The purchaser’s direct pay permit.

Tax 11.945(3)(b)1.b. b. An exemption certificate claiming direct mail.

Tax 11.945(3)(b)2. 2. If the purchaser provides one of the items indicated in subd. 1. a. or b., to the seller, the purchaser shall source the sale to the jurisdictions to which the other direct mail is to be delivered to the recipients and the purchaser shall pay or remit to the department the tax imposed under s. 77.53, Stats., on its purchases of other direct mail for which the tax is due, and in the absence of bad faith, the seller is relieved from liability for collecting the tax.

Tax 11.945(3)(b)3. 3. If “advertising and promotional direct mail” and “other direct mail” are included in a single mailing, the sale of that mailing is sourced as a sale of “other direct mail.”

Tax 11.945(3)(c) (c) Development of billing information and providing data processing services.

Tax 11.945(3)(c)1. 1. A transaction that includes the development of billing information or the provision of a data processing service that is more than incidental, as defined in s. 77.51 (5), Stats., to producing direct mail is not sourced as a sale of direct mail, but instead is sourced using the general sourcing rules provided in sub. (2).

Tax 11.945(3)(c)2. 2. A transaction that includes data processing services that are incidental, as defined in s. 77.51 (5), Stats., to producing direct mail are sourced using the direct mail sourcing rules provided in this subsection.

Tax 11.945(4) (4) Sourcing leases, licenses, and rentals.

Tax 11.945(4)(a) (a) First or only payment. Except as provided in pars. (c) and (e), for lease, license, and rental agreements that only require one payment and for the first payment on lease, license, and rental agreements that require more than one payment, the lease, license, or rental is sourced to the location where the purchaser receives the product, as follows:

Tax 11.945(4)(a)1. 1. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the lessor’s or licensor’s business location.

Tax 11.945(4)(a)2. 2. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is not received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the location where the lessee or licensee or the lessee’s or licensee’s designated donee receives the product. This would include the location indicated by instructions known to the lessor or licensor for delivery to the lessee or licensee or the lessee’s or licensee’s designated donee. The delivery may be made by the lessor or licensor or by a shipping company hired by the lessee or licensee.

Tax 11.945(4)(a)3. 3. If the location cannot be determined under subds. 1. and 2., the first or only payment is sourced to the lessee’s or licensee’s address as indicated by the lessor’s or licensor’s business records, if the records are maintained in the ordinary course of the lessor’s or licensor’s business and if using that address to establish the location of the lease, license, or rental is not in bad faith.

Tax 11.945(4)(a)4. 4. If the location cannot be determined under subds. 1., 2., and 3., the first or only payment is sourced to the lessee’s or licensee’s address as obtained during the consummation of the lease, license, or rental, including the address indicated on the lessee’s or licensee’s payment instrument, if no other address is available and if using that address to determine the location of the lease, license, or rental is not in bad faith.

Tax 11.945(4)(a)5. 5. If the location cannot be determined under subds. 1., 2., 3., and 4., the first or only payment is sourced as follows:

Tax 11.945(4)(a)5.a. a. For tangible personal property and items and property under s. 77.52 (1) (b) or (c), Stats., except for computer software delivered electronically, the first or only payment is sourced to the location from which the property or item was shipped.

Tax 11.945(4)(a)5.b. b. For prewritten computer software delivered electronically and digital goods under s. 77.52 (1) (d), Stats., the first or only payment is sourced to the location from which the computer software or digital good was first available for transmission by the seller, but not including any location that merely provided the digital transfer of the product sold.

Tax 11.945 Note Example: Company A sells digital goods that it develops at its location in Wisconsin. Company A also has a server located outside Wisconsin from which Company A merely provides the digital transfer of the digital goods. The digital goods are first available for transmission from its Wisconsin location. Company A does not know the location to source the sale of digital goods under subds. 1. to 4. and therefore will source the sale under subd. 5. to the Wisconsin location. The sale cannot be sourced to the location of the server outside Wisconsin, because at that location, Company A merely provides the digital transfer of the digital good.

Tax 11.945(4)(b) (b) Subsequent periodic payments. Except as provided in pars. (d) and (e), subsequent periodic payments on the lease, license, or rental of tangible personal property and items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are sourced to the property’s, item’s, or good’s primary location. The primary location is the address of the property, item, or good provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith.

Tax 11.945(4)(c) (c) Motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment. Leases, licenses, and rentals of motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment are sourced to the primary location of such property as indicated by an address for the property that is provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith, and except that a lease, license, or rental that only requires one payment shall be sourced as provided in par. (a).

Tax 11.945(4)(d) (d) Intermittent use. The sourcing of the lease, license, and rental payments as described in pars. (a) and (b), shall not be altered by any intermittent use of the property, item, or good at a different location.

Tax 11.945 Note Example: Company A leases laptop computers that are normally kept in State A and the lease payments are sourced to State A. However, when an employee is travelling and consulting with clients in other states, the employee brings the laptop computer to these other states. The intermittent use of the laptop computer in the other states does not affect the sourcing of these lease payments.

Tax 11.945(4)(e) (e) Transportation equipment. Leases, licenses, and rentals of transportation equipment are sourced to the location determined in par. (a).

Tax 11.945(5) (5) Florists.

Tax 11.945(5)(a) (a)

Tax 11.945(5)(a)1. 1. “Retail florist” is defined in s. 77.522 (5), Stats., to mean a person engaged in the business of selling cut flowers, floral arrangements, and potted plants and who prepares such flowers, floral arrangements, and potted plants. “Retail florist” does not include a person who sells cut flowers, floral arrangements, and potted plants primarily by mail or via the Internet.

Tax 11.945(5)(a)2. 2. A retailer who does not prepare and sell cut flowers, floral arrangements, and potted plants, such as a person who only takes orders for cut flowers, floral arrangements, and potted plants and then transmits those orders to a retail florist, is not a “retail florist.”

Tax 11.945(5)(b) (b) Except as provided in par. (c), sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services by florists are sourced the same as provided in sub. (2).

Tax 11.945(5)(c) (c) Sales by a retail florist in which the retail florist receives an order from a customer and then transmits that order to a second retail florist who will prepare and deliver the order at the customer’s direction are sourced to the location where the first retail florist received the order from the customer. The first retail florist that received the order from the customer must collect and remit the applicable Wisconsin sales or use taxes based on the location where that retail florist received the order from the customer. The sale from the second retail florist to the first retail florist is not subject to Wisconsin sales or use tax if the first retail florist provides the second retail florist an exemption certificate claiming resale.

Tax 11.945 Note Example: Retail Florist A located in Wisconsin receives an order from a customer, who wants the flowers delivered to a location in Kentucky. Retail Florist A contacts Retail Florist B, located in Kentucky, and has Retail Florist B prepare the order and deliver it to the location in Kentucky. This sale is sourced to Retail Florist A’s location in Wisconsin.

Tax 11.945(5)(d) (d) Sales by persons who are not retail florists but who take orders for cut flowers, floral arrangements, and potted plants from customers and transmit those orders to a person who is a retail florist are sourced as provided in sub. (2).

Tax 11.945 Note Note: Section Tax 11.945 interprets ss. 77.51 (11d) and 77.522, Stats.

Tax 11.945 Note Note: (a) The interpretations under s. Tax 11.945 are effective beginning October 1, 2009, pursuant to 2009 Wis. Acts 2 and 28; (b) The definitions of “advertising and promotional direct mail” and “other direct mail” and the provisions relating to the sourcing of transactions that include these types of items are effective May 27, 2010, pursuant to 2009 Wis. Act 330; and (c) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32.

Tax 11.945 History History: EmR0924: emerg. cr. eff. 10-1-09; CR 09-090: cr. Register May 2010 No. 653, eff. 6-1-10; CR 10-094: renum. (1) (a) to (c) to be (1) (c) to (e), cr. (1) (a) and (b), am. (2) (b), r. and recr. (3) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: renum. (3) (a) 1. to 5. to (3) (a) 2. to 6. and am. 3. to 5., 6. a., cr. (3) (a) 1. Register August 2013 No. 692, eff. 9-1-13; CR 16-053: am. (2) (intro.) Register June 2018 No. 750, eff. 7-1-18.

Tax 11.95 Tax 11.95 Retailer’s discount.

Tax 11.95(1) (1) Computation.

Tax 11.95(1)(a) (a) Effective for Wisconsin sales and use tax returns filed for periods ending on or after January 1, 1997, for timely reporting state, county and stadium sales or use tax collected on their retail sales, retailers may deduct 0.5% of the sales and use tax payable on retail sales, except as provided in pars. (am), (b), and (c).

Tax 11.95(1)(am) (am) Effective for taxes payable on October 1, 2009 and thereafter, the retailer’s discount that may be deducted on a sales and use tax return is limited to $1,000 per reporting period.

Tax 11.95(1)(b) (b) If, for each reporting period required under s. 77.58 (1), Stats., multiplying the sales and use tax payable on retail sales by 0.5% results in $10 or less, the retailer’s discount is the lesser of $10 or the amount of the sales and use tax payable on retail sales.

Tax 11.95(1)(c) (c) Certified service providers that receive compensation under s. 73.03 (61) (h), Stats., for the taxes reported on a return are not entitled to the retailer’s discount on that return.

Tax 11.95(2) (2) Retailer’s discount allowed. The retailer’s discount is allowed if the taxes are paid on or before the due date of the return, or on or before the expiration of any extension period if one has been granted.

Tax 11.95(3) (3) Retailer’s discount not allowed. The retailer’s discount is not allowed if any one of the following applies:

Tax 11.95(3)(a) (a) The payment of sales and use tax is delinquent.

Tax 11.95(3)(b) (b) The sales and use tax payable is as a result of a deficiency determination or filing an amended return after the due date of the return, or after the expiration of any extension period if one has been granted.

Tax 11.95(3)(c) (c) The use tax payable is imposed pursuant to s. 77.53 (2), Stats.

Tax 11.95(3)(d) (d) The certified service provider that is filing the sales and use tax return is receiving compensation under s. 73.03 (61) (h), Stats., with respect to the taxes reported on that return.

Tax 11.95 Note Note: Section Tax 11.95 interprets ss. 77.61 (4) (c), 77.76 (3), (3m), and (3p), and 77.79, Stats.

Tax 11.95 Note Note: (a) The amount of retailer’s discount on or after January 1, 1983 until December 31, 1992 was 2% of the first $10,000 of sales and use tax payable during the retailer’s tax year, 1% of the second $10,000 of sales and use tax payable and 0.5% of the sales and use tax payable in excess of $20,000 each year; (b) The requirement that county tax be remitted by dealers to the registering state agency was repealed effective May 1, 1988, pursuant to 1987 Wis. Act 141; (c) The amount of retailer’s discount for returns filed for periods ending on or after January 1, 1993 and before January 1, 1997, was 0.5% of sales and use tax payable on retail sales, pursuant to 1991 Wis. Act 269; (d) The amount of retailer’s discount in sub. (1) became effective for returns filed for periods ending on or after January 1, 1997, pursuant to 1995 Wis. Act 280; (e) The limitation of the retailer’s discount to $1,000 per reporting period became effective for taxes payable on and after October 1, 2009, pursuant to 2009 Wis. Act 28; and (f) The provision prohibiting the retailer’s discount on those returns filed by a certified service provider who receives other compensation became effective October 1, 2009, pursuant to 2009 Wis. Act 2.