Tax 11.20 NoteCompany A is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company A attempts to make a new and improved widget. Upon approval of a project, Company A documents the scope and goals of the project, the uncertainties that exist in accomplishing these goals, and the processes by which Company A hopes to eliminate the uncertainties. In addition, contemporaneously with conducting the research project, Company A documents: (1) the location or locations at which the research is conducted, (2) the machinery and equipment used in the project and the manner used, (3) the various materials and supplies used in attempting to produce the improved widget, the purpose and manner in which such items were used, (4) the processes applied, (5) the results achieved throughout the research process, and (6) the point at which Company A either abandons the research project or achieves the goal of eliminating the uncertainties involved with the development of the new widget. Company A purchased various machinery and equipment, and supplies and materials used in conjunction with development of the new widget without tax claiming the purchases are exempt under par. (a). In general, contemporaneous records kept in the manner and detail described will be accepted and used by the department in making its determinations regarding whether the taxpayer is entitled to claim the exemptions under par. (a). Tax 11.20(2)(e)3.3. A business claiming an exemption under par. (a) shall provide records described in subd. 2. or any other information as required by the department to verify that activities are qualified research or that machinery, equipment, or other property or items are used exclusively and directly in qualified research. Tax 11.20(3)(3) Exemptions for raising animals used in qualified research or manufacturing. Tax 11.20(3)(a)(a) Sales of the following property and items to a person who is engaged in the business of raising animals are exempt if all of the animals raised by the seller of the animals are sold primarily to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those entities in qualified research or manufacturing: Tax 11.20(3)(a)1.1. Machines and specific processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly in raising such animals. Tax 11.20(3)(a)2.2. Seeds for planting, plants, feed, fertilizer, soil conditioners, animal bedding, sprays, pesticides and fungicides, breeding and other livestock, bees, beehives and bee combs, poultry, farm work stock, baling twine and baling wire, containers for fruits, vegetables, grain, hay, silage and animal wastes, plastic bags, plastic sleeves and plastic sheeting used to store or cover hay or silage, drugs, semen for artificial insemination, fuel, and electricity, that are used exclusively and directly in raising such animals. Tax 11.20 NoteExamples: (1) Company A raises various animals that it sells for use in qualified research. Company A sells more than 50% of the animals it raises to biotechnology businesses for exclusive and direct use in qualified research. All of the feed Company A purchases for exclusive and direct use in raising its animals is exempt.
Tax 11.20 Note(2) Company T raises various animals that it sells for use in qualified research. Company T uses cages to raise some of these animals. Company T’s purchases of cages are exempt only if more than 50% of all the animals raised by Company T are sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those organizations in qualified research or manufacturing.
Tax 11.20(3)(b)(b) For purposes of determining whether an activity is qualified research under par. (a), the regulations under Treas. Reg. section 1.41-4 apply, except that qualified research that is funded by a member of a combined group for another member of a combined group shall remain qualified research for purposes of this subsection. Tax 11.20(3)(c)1.1. Except as provided in subd. 2. and sub. (4) (am), a person claiming an exemption under par. (a) shall obtain a “Purchaser’s Statement to Seller for Animals Used in Qualified Research or Manufacturing,” Form S-209, from each of its customers described in par. (a) (intro.) and keep the completed forms as a part of its records to document the number of animals that were raised by the seller and sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use in qualified research or manufacturing. When completing Form S-209, the purchaser of the animals is attesting to the number of animals purchased and the number of animals used exclusively and directly in qualified research or manufacturing. Tax 11.20(3)(c)2.2. A person is not required to obtain Form S-209 from its customers that are public or private institutions of higher learning and governmental units. For purposes of the exemption in par. (a), animals sold to such customers are deemed to be sold to such customers for exclusive and direct use in qualified research. Tax 11.20 NoteNote: Form S-209 is available on the department’s web site at www.revenue.wi.gov. Tax 11.20(4)(4) Certification of biotechnology businesses by the department. Tax 11.20(4)(a)(a) Except as provided in par. (am), in order to be considered a biotechnology business for purposes of the exemptions under sub. (3), a business shall first obtain certification from the department as prescribed in this subsection. Tax 11.20(4)(am)(am) In lieu of Form S-209, a seller may accept a fully completed exemption certificate, Form S-211 or S-211E from a purchaser that is a biotechnology business indicating the percentage of the animals purchased from the seller that are for exclusive and direct use in qualified research or manufacturing. The seller of the animals may regard such animals claimed as exempt for exclusive and direct use in qualified research or manufacturing, subject to a request by the department that the seller obtain certifications described in par. (a) from the purchasers to verify the exemption. If the department determines that all of the animals raised by the seller are not sold primarily to biotechnology businesses, the department may invalidate the exemption and make an adjustment to reflect the correct tax. Tax 11.20 NoteExample: Company A raises and sells animals exclusively to purchasers that are biotechnology businesses. Based on the Forms S-209 and the fully completed exemption certificates received by Company A, 60% of all the animals it sells are sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Company A is audited by the department. The department requests that certain purchasers of animals be certified by the department as biotechnology businesses for years relating to the audit. Some of these purchasers are not certified as biotechnology businesses by the department. As a result, only 45% of Company A’s sales of animals are considered to be sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Since Company A does not sell more than 50% of the animals to biotechnology businesses, Company A does not qualify for the exemption under sub. (3) (a).
Tax 11.20(4)(b)(b) A business seeking certification or renewal of a certification under this subsection shall apply with the department in the manner prescribed by the department. The department may require any business submitting an application under this paragraph to provide additional information, as determined by the department, prior to the department granting or denying the applicant’s request for certification or renewal of a certification. Tax 11.20 NoteNote: Information concerning the certification process is available on the department’s web site at www.revenue.wi.gov. Tax 11.20 NoteExample: Additional information that may be requested by the department in processing an application includes documentation of the nature of the business’ income and expenses.
Tax 11.20(4)(c)(c) A business shall be certified by the department as a biotechnology business for the period described in par. (d) if, during that period, the business’ activities are primarily biotechnology. Tax 11.20(4)(d)(d) The certification period under par. (c) shall correspond to the business’ tax year as determined for federal income tax purposes, including short years, subject to the following conditions: Tax 11.20(4)(d)1.1. If a business is certified by the department with respect to a previous tax year, the certification is valid only for the previous tax year. Tax 11.20(4)(d)2.2. If a business is certified for a current tax year, the certification is valid until the expected end of the tax year unless, during such tax year the business’ tax year terminates earlier than expected. When a tax year terminates earlier than expected, the certification is valid until the actual end of the tax year as determined for federal income tax purposes. Tax 11.20(4)(e)(e) Notwithstanding any other provision in this subsection, the department may: Tax 11.20(4)(e)1.1. Revoke any certification granted under this subsection, but only upon information that either the business’ application for certification contained a misstatement as to the business’ gross income or expenses and deductions or the business no longer qualifies as a biotechnology business. Tax 11.20(4)(e)2.2. Require any business seeking certification to be certified only with respect to its previous tax years. Tax 11.20 NoteNote: The interpretations in s. Tax 11.20 are effective beginning January 1, 2012, pursuant to 2009 Wis. Act 28, except for the following amendments effective July 2, 2013, pursuant to 2013 Wis. Act 20: (a) “Qualified research” was amended to include research funded by one member of a combined group for another member of a combined group; (b) The exemption for property used in qualified research by persons engaged primarily in manufacturing in Wisconsin was amended to apply to property used in qualified research by a person engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats.; (c) The exemption for property used in qualified research was amended to include use by one member of a combined group who is conducting qualified research for another combined group member who is either engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., or is primarily engaged in biotechnology; and (d) The change of the term “medicines” to “drugs.” Tax 11.20 HistoryHistory: CR 12-015: cr. Register July 2012 No. 679, eff. 8-1-12; CR 14-006: cr. (1) (cg), (cr), am. (1) (h), r. and recr. (2) (a), am. (2) (b), (Example 2), (Example 3), (c), (d) (Example 1) to (Example 5), (e) 2. L. (Example), (3) (a) 2., (b) Register August 2014 No. 704, eff. 9-1-14; correction in (2) (d) (Examples) (1) made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 19-113: renum. (3) (c) to (3) (c) 1. and am., cr. (3) (c) 2., am. (4) (a), cr. (4) (am), (Example) Register April 2020 No. 772, eff. 5-1-20; CR 20-027: am. (3) (a) 2. Register July 2021 No. 787, eff. 8-1-21. Tax 11.26Tax 11.26 Other taxes, fees, and charges in taxable sales price and purchase price. Tax 11.26(1)(a)(a) Tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., sold at retail are subjected to many direct and indirect taxes, fees, and charges prior to reaching a retailer. The taxes, fees, and charges are commonly included in the price the retailer pays for the property and are not separately identifiable as taxes, fees, and charges. Occasionally, however, a tax, fee, or charge is either separately passed on to a retailer or is imposed at the retail level of activity, but is different from and in addition to the sales tax. The tax, fee, or charge may be imposed by Wisconsin, the federal government, or a municipality. Tax 11.26(1)(b)(b) In determining the sales price or purchase price used to compute Wisconsin sales or use taxes, the treatment of a tax, fee, or charge for sales tax purposes is identical to the treatment that applies for use tax purposes. The same taxes, fees, and charges that are included or excluded from the sales price are also included or excluded from the purchase price. Tax 11.26(2)(2) Taxes, fees, and charges included as part of sales price and purchase price. The following taxes, fees, and charges are included in the sales price and the purchase price, regardless of whether they are separately stated on the invoice, bill of sale, or other similar document given by the seller to the purchaser, except as provided in sub. (3): Tax 11.26(2)(c)(c) Any federal stamp tax and manufacturer’s or importer’s excise tax not imposed directly on the purchaser. Federal excise taxes include excise taxes on alcohol, tobacco, motor and aviation fuel except motor fuel taxes refunded, tires, firearms and ammunition, sporting goods, and air or ship transportation. Tax 11.26(2)(d)(d) A federal, county, or municipal fuel tax included in the price of alternate fuels and general aviation fuel subject to sales tax. Tax 11.26 NoteExample: Fuel taxes are included in the price of fuel used in aircraft, boats, and for other nonhighway use. The taxes are included in the sales price.
Tax 11.26(2)(f)(f) The Canadian or any other country’s export gallonage tax on fuels. Tax 11.26(2)(h)(h) The federal gas guzzler tax imposed under s. 4064 of the Internal Revenue Code. Tax 11.26(2)(j)(j) The federal medical device excise tax imposed under s. 4191 of the Internal Revenue Code. Tax 11.26(3)(3) Taxes, fees, and charges excluded from sales price or purchase price. Section 77.51 (12m) (b) 3. and (15b) (b) 3., Stats., exclude from the sales price and purchase price any taxes legally imposed directly on the purchaser that are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser. Section 77.51 (12m) (b) 3m. and (15b) (b) 3m., Stats., exclude from the sales price and purchase price taxes imposed on the seller that are separately stated on the invoice, bill of sale, or similar document that the seller gives to the purchaser if the law imposing or authorizing the tax provides that the seller may, but is not required to, pass on to and collect the tax from the user or consumer. Therefore, the following taxes, fees, and charges are excluded from the sales price or the purchase price if they are separately stated on the invoice, bill of sale, or similar document given to the purchaser: Tax 11.26(3)(a)(a) The federal communications tax imposed upon telegraph service and telephone service. Tax 11.26(3)(ac)(ac) The room taxes imposed under s. 66.0615, Stats., which municipalities or local exposition districts impose on persons furnishing lodging to transients. Tax 11.26(3)(aL)(aL) The local exposition district food and beverage and rental car taxes imposed under ss. 77.98 and 77.99, Stats. Tax 11.26(3)(ax)(ax) The federal luxury tax imposed under ss. 4001 to 4007 of the Internal Revenue Code. Tax 11.26(3)(c)(c) Federal and Wisconsin motor vehicle excise taxes refunded. Tax 11.26(3)(j)(j) The federal excise tax imposed on the first retail sale of heavy trucks and trailers under section 4051 of the Internal Revenue Code. Tax 11.26 NoteNote: 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 regional transit authority taxes were authorized by 2009 Wis. Act 28 and repealed by 2011 Wis. Act 32; (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. Tax 11.26 HistoryHistory: Cr. Register, September, 1977, No. 261, eff. 10-1-77; am. (2) (d) and (e) and cr. (2) (f), Register, January, 1983, No. 325, eff. 2-1-83; cr. (2) (g), Register, December, 1983, No. 336, eff. 1-1-84; am. (3) (b), Register, April, 1990, No. 412, eff. 5-1-90; am. (1) (a) and (b), (2) (intro.), (b), (c), (d) and (e) and (3) (a), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (intro.), (c), (3) (intro.) and (b), Register, December, 1992, No. 444, eff. 1-1-93; am. (2) (c) and (d), cr. (2) (h) and (3) (c), Register, August, 1999, No. 524, eff. 9-1-99; EmR0924: emerg. am. (title), (1) (a), (2) (title), (intro.), (c), (3) (title) and (b), r. and recr. (1) (b) and (3) (intro.), eff. 10-1-09; CR 09-090: am. (title), (1) (a), (2) (title), (intro.), (c), (3) (title) and (b), r. and recr. (1) (b) and (3) (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a), (2) (c), (d), (3) (b) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (3) (Example 1), (Example 3) Register August 2012 No. 680, eff. 9-1-12; CR 14-006: am. (title), (1) (a), (b), (2) (title), (intro.), (c), (h), cr. (2) (i) to (s), am. (3) (title), (intro.), cr. (3) (ac) to (ax), r. (3) (b) and (Example 1) to (Example 7), cr. (3) (d) to (h) Register August 2014 No. 704, eff. 9-1-14; CR 19-112: r. (2) (i), am. (2) (q), cr. (3) (i), (j) Register June 2020 No. 774, eff. 7-1-20.; CR 20-018: r. (3) (g) Register July 2021, No. 787, eff. 8-1-21. Tax 11.27Tax 11.27 Maintenance contracts, insurance, and warranties. Tax 11.27(1)(a)(a) “Computer software maintenance contract” means a contract that obligates a vendor of computer software to provide a customer with future updates or upgrades to computer software, computer software support services, or both. Tax 11.27(1)(b)(b) “Insurance” means a contract or agreement which promises indemnity against loss or damage resulting from perils outside of and unrelated to defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats. Tax 11.27(1)(c)(c) “Warranty” means a contract or agreement which promises indemnity against defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., sold. Tax 11.27(2)(2) Receipts from insurance. The sales price from the sale of insurance, except contracts under s. 77.52 (2) (a) 13m., Stats., are not subject to Wisconsin sales or use tax when separately stated on the invoice provided to the purchaser. Tax 11.27 NoteExamples: 1) Company A rents a vehicle to Customer A for $200 which includes insurance. The entire charge of $200 is subject to Wisconsin sales or use tax because the charge for insurance is not separately stated.
Tax 11.27 Note2) Company A rents a vehicle to Customer B for $200. On the invoice, Company A shows a charge for vehicle rental of $175 and a charge for insurance of $25. The charge of $175 is subject to Wisconsin sales or use tax. The $25 charge for the insurance is not subject to tax since it is separately stated on the invoice provided to the purchaser.
Tax 11.27(3)(3) Receipts from maintenance contracts and warranties. Section 77.52 (2) (a) 13m., Stats., imposes Wisconsin sales tax on the sale of contracts, including service contracts, maintenance agreements, computer software maintenance contracts for prewritten computer software, and warranties, that provide, in whole or in part, for the future performance of or payment for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., unless the sale, license, lease, or rental in this state of the property, items, or goods to which the contract relates is or was exempt, to the purchaser of the contract, from taxation under subch. III of ch. 77, Stats. Tax 11.27 NoteExamples: 1) Company A sells a machine to Customer C which will be used exclusively and directly in manufacturing. Customer C purchases an extended warranty with the machine. Customer C provides Company A with a properly completed exemption certificate. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the machine to which it relates is exempt from Wisconsin sales or use tax.
Tax 11.27 Note2) Customer D, a resident of Minnesota, purchases an automobile from a dealership in Wisconsin. Customer D makes no use of the automobile in Wisconsin other than to drive it to his home in Minnesota. Customer D purchases an extended warranty with the automobile. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the sale of the automobile is exempt from Wisconsin sales or use tax.
Tax 11.27 Note3) Assume the same facts as in Example 2, except that Customer D does not purchase the extended warranty at the time of sale of the automobile. Instead, six weeks after the sale, Customer D purchases the extended warranty from the dealer. The sale of the extended warranty is not subject to Wisconsin sales or use tax because the automobile to which the sale relates was exempt from Wisconsin sales or use tax.
Tax 11.27 Note4) Customer E, a resident of Wisconsin, purchases an appliance from a store in Wisconsin. Customer E purchases an extended warranty with the appliance. The sale of the extended warranty is subject to Wisconsin sales tax because the sale of the appliance is subject to Wisconsin sales tax.
Tax 11.27 Note5) Assume the same facts as in Example 4, except that Customer E does not purchase the extended warranty at the time of sale of the appliance. Instead, 2 months after the sale, Customer E purchases the extended warranty from the store. The sale of the extended warranty is subject to Wisconsin sales tax because the appliance to which the sale relates was subject to Wisconsin sales tax.
