Tax 11.28 Note
Example: A retailer purchases key chains that it will give to customers who purchase eight gallons of gasoline. The gasoline is exempt from sales tax. The retailer is required to pay Wisconsin sales or use tax on its purchase of the key chains.
Tax 11.28 Note
Note: See s.
Tax 11.985 for additional information concerning bundled transactions.
Tax 11.28(3)(c)1.ag.
ag. When purchasing taxable products, including services, which will be given away to customers who make a required purchase consisting of only taxable property, items, or goods, a retailer may purchase the free products without tax for resale. The retailer is deemed to be selling both the required property, item, or good and the product being provided free, as provided in s.
77.52 (21) (b), Stats.
Tax 11.28 Note
Example: A retailer purchases bicycles that it will give to customers who purchase a sofa. The retailer may purchase the bicycles without tax for resale because the customer must purchase the sofa in order to receive the bicycle.
Tax 11.28(3)(c)1.ar.
ar. When purchasing taxable products, including services, which will be given away to customers who make a required minimum purchase that may consist of both taxable and nontaxable property, items, and goods, the retailer may owe tax on its purchase of the free products. If the sales price of all of the taxable products sold equals or exceeds the required minimum purchase, the retailer may purchase the free products without tax for resale. If the sales price of all of the taxable products sold does not equal or exceed the required minimum purchase, the retailer owes tax on its purchase price of the free products to the extent that nontaxable products are included in the required minimum purchases. The retailer may make a reasonable allocation to compute the tax due on its purchase price of the free products. If the retailer does not want to make this allocation, the retailer shall pay tax on its purchase price of the products provided free of charge.
Tax 11.28 Note
Examples: 1) A retailer provides a free soft drink to each customer that purchases at least $20 worth of property. A customer purchases $15 of taxable property and $5 of nontaxable property and receives the free soft drink. The retailer purchased the soft drink from its supplier for $1. Since 75% of the selling price of the minimum required purchase is from taxable property ($15/$20 minimum purchase requirement = 75%), the retailer is only required to pay tax on the remaining 25% of its $1 purchase price of the soft drink it gave away to this customer.
Tax 11.28 Note
2) Same as Example 1, except that the customer purchases $5 of taxable property and $15 of nontaxable property and receives the free soft drink. Since 25% of the selling price of the minimum required purchases is from taxable property ($5/$20 minimum purchase requirement = 25%), the retailer is only required to pay tax on the remaining 75% of its $1 purchase price of the soft drink it gave away to this customer.
Tax 11.28 Note
3) Same as Example 1, except that the customer purchased $15 of taxable property and $30 of nontaxable property and receives the free soft drink. Since 75% of the minimum required purchases is from taxable property ($15/$20 minimum purchase requirement = 75%), the retailer is only required to pay tax on the remaining 25% of its $1 purchase price of the soft drink it gave away to this customer.
Tax 11.28 Note
4) Same as Example 1, except that the customer purchases $25 of taxable property and $30 of nontaxable property and receives the free soft drink. Since at least 100% of the $20 minimum required purchase is from taxable property, the retailer does not owe any sales or use tax on its purchase of the soft drink that it gave away to this customer.
Tax 11.28 Note
Note: Additional examples can be obtained in
Wisconsin Tax Bulletin 174 (January 2012) available on the Department's web site at
www.revenue.wi.gov.
Tax 11.28(3)(c)1.b.
b. A retailer may not use an exemption certificate when purchasing taxable products which the retailer knows, or should know, are to be given away to customers without a required purchase. If the product that is given away was acquired without tax for resale, the retailer shall report the tax on its purchase price of the product.
Tax 11.28 Note
Example: A retailer purchases key chains that are subsequently given away to customers, regardless of whether the customer makes a purchase. If the retailer purchased the key chains without Wisconsin sales or use tax by giving its supplier an exemption certificate claiming resale, the retailer is liable for tax on its purchase price of the key chains given away.
Tax 11.28(3)(c)2.
2. The taxable sales price of retailers, who issue cents-off coupons which reduce the price of merchandise they sell, and who receive no reimbursement from a manufacturer or other third party, is the reduced amount charged the customer.
Tax 11.28(4)
(4)
Coupon books, including dinner club memberships. Tax 11.28(4)(a)
(a) A sales promotional agency may sell coupon books or voucher books to purchasers who use the coupons or vouchers in obtaining reduced prices from participating retailers. The coupon books may contain coupons redeemable by several retailers or may contain coupons redeemable by only one retailer. The sales promotional agency may have agreed to retain all receipts from the sales of coupon books, or to remit some portion of the receipts to the participating retailers.
Tax 11.28 Note
Example: Coupon books may contain coupons entitling the purchaser to a free meal with the purchase of another meal, free dry cleaning or free bowling games.
Tax 11.28(4)(b)
(b) A sales promotional agency's receipts from sales of coupon or voucher books are not taxable, because the agency is selling intangible rights. These intangible rights entitle the purchaser of the coupon or voucher book to receive tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., or taxable services at a reduced price or for no charge. However, any receipts received by participating retailers from the sales promotional agency are subject to the sales tax, if taxable property, items, goods, or services are furnished to the person using the coupon or voucher. Any additional receipts received by the retailer from the person using the coupons or vouchers also are taxable.
Tax 11.28(4)(c)
(c) Retailers are subject to the sales and use tax on taxable property, items, or goods transferred when coupons are redeemed without consideration from a sales agency, the consumer or any other person unless an exemption applies.
Tax 11.28 Note
Example: Motel A provides a free breakfast with the purchase of lodging. Motel A purchases fruit, milk, cereal, bakery goods including rolls, bagels, muffins, and bread, ground coffee beans, frozen juice, napkins, plastic utensils, and paper plates and cups from a vendor. Motel A prepares the coffee and juice. The food and beverages are placed on a table in the lobby. Motel A's customers may take as much or as little as they want of the food and beverage items.
Tax 11.28 Note
Motel A's purchases of fruit, milk, cereal, bakery goods, ground coffee beans, and frozen juice are not subject to Wisconsin sales or use tax because they are exempt food items under s.
77.54 (20n), Stats. Motel A's purchases of the napkins, plastic utensils, and paper plates and cups are subject to sales or use tax because no exemption applies.
Tax 11.28(5)(a)(a) Furnishing trading stamps and stamp books, with or without charge, to a retailer is an advertising or sales promotional service. The person furnishing the stamps and books is the consumer of the material and shall pay the Wisconsin sales or use tax on purchases of the material.
Tax 11.28(5)(b)
(b) A retailer's taxable sales price may not be reduced by the retailer's payments for trading stamps and stamp books or for payments to customers in redemption of the stamps.
Tax 11.28(6)
(6)
Manufacturer rebates. A manufacturer's rebate to a person who purchases tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., or taxable services from a retailer is not a reduction of the retailer's sales price or purchase price for the item for sales or use tax purposes.
Tax 11.28 Note
Examples: 1) An automobile manufacturer gives an automobile dealer's customer a cash rebate of $1,500 for an automobile purchased by a customer for $15,000. The taxable sales price of the dealer from the sale of the automobile is $15,000.
Tax 11.28 Note
2) An automobile manufacturer gives an automobile dealer's customer the option of receiving a $1,500 cash rebate or allowing the $1,500 rebate to be applied against the price of the automobile ($15,000) by assigning the right to the rebate to the dealer. The customer chooses to assign the rebate to the dealer and apply the rebate against the price paid for the automobile and pays the dealer $13,500 ($15,000 - $1,500) for the automobile. The manufacturer subsequently reimburses the dealer $1,500. The taxable sales price from the sale of the automobile is $15,000.
Tax 11.28(7)
(7)
Certain drugs furnished without charge. No sales or use tax is owed on drugs furnished without charge to a physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist licensed under ch.
447, Stats., podiatrist licensed under ch.
448, Stats., or optometrist licensed under ch.
449, Stats., if the drug may not be dispensed without a prescription.
Tax 11.28 Note
Example: A drug manufacturer furnishes drug samples to doctors without charge. The drug samples may not be dispensed without a prescription. The drug manufacturer does not owe sales or use tax on its cost of the ingredients for the drug samples.
Tax 11.28 Note
Note: The interpretations in s. Tax 11.28 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption from use tax of certain donated property became effective August 9, 1989, pursuant to 1989 Wis. Act 31; (b) The exemption for certain medicines furnished without charge became effective October 14, 1997, pursuant to 1997 Wis. Act 27; (c) Section 77.57, Stats., was amended to remove the portion of the statute that allowed a purchaser to use the lesser of the cost or fair market value of an item that was purchased exempt and whose first taxable use occurred more than 6 months after it was purchased, pursuant to 2009 Wis. Act 2; (d) The requirements for a third party reimbursement to be considered part of the sales price or purchase price of a product are effective October 1, 2009, pursuant to 2009 Wis. Act 2; (e) 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 (f) The tax treatment of products provided for free by retailers became effective September 1, 2011 pursuant to 2011 Wis. Act 32. Tax 11.28 History
History: Cr.
Register, November, 1977, No. 263, eff. 12-1-77; am. (2) (intro.) and (a),
Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. (1) (a) and (b) and (2) (intro.), am. (2) (a) and (d), (3) (a), (b) and (c) 2., and (4) (a), cr. (2) (e) and (6),
Register, March, 1991, No. 423, eff. 4-1-91; am. (1) (a), renum. (2) (intro.) (a) to (e) to be (2) (a) to (f) and am. (2) (b) and (e), (3) (b), (4) (c) and (5), r. and recr. (3) (c),
Register, December, 1996, No. 492, eff. 1-1-97; am. (2) (b), (c) and (f), (3) (c) 1. b. and (4) (b) and (c), cr. (7),
Register, May, 1999, No. 521, eff. 6-1-99;
EmR0924: emerg. am. (1), (2) (a) to (e), (3) (a) (title), (b), (c), (4) (b), (c), (5) (b), (6) and (7), renum. (3) (a) to be (3) (a) (intro.) and am., cr. (3) (a) 1. to 4., eff. 10-1-09;
CR 09-090: am. (1), (2) (a), (b), (d), (e), (3) (a) (title), (b), (c), (4) (b), (c), (5) (b), (6) and (7), renum. (2) (c) and (3) (a) to be (2) (c) 1. and (3) (a) (intro.) and am., cr. (2) (c) 2. and (3) (a) 1. to 4.
Register May 2010 No. 653, eff. 6-1-10;
CR 10-094: am. (2) (f), (3) (c) 1. a., b.
Register November 2010 No. 659, eff. 12-1-10;
CR 12-014: am. (3) (c) 1. (intro.), a., cr. (3) (c) 1. a. (Example), ag., ar., am. (3) (c) 1. b., r. (3) (c) 1. b. (Example 1), renum. (3) (c) 1. b. (Example 2) to (Example)
Register August 2012 No. 680, eff. 9-1-12.
Tax 11.29
Tax 11.29
Leases, licenses and rentals of tangible personal property and items, property and goods under s. 77.52 (1) (b), (c), and (d), Stats. Tax 11.29(1)(a)(a) “Lease or rental," as defined in s.
77.51 (7) (a), Stats., means any transfer of possession or control of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., for a fixed or indeterminate term and for consideration and includes:
Tax 11.29(1)(a)2.
2. Agreements related to the transfer of possession or control of motor vehicles or trailers, if the amount of any consideration may be increased or decreased by reference to the amount realized on the sale or other disposition of such motor vehicles or trailers, consistent with section
7701 (h) (1) of the Internal Revenue Code.
Tax 11.29(1)(b)1.
1. A transfer of possession or control of tangible personal property or items, property or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., under a security agreement or deferred payment plan, if such agreement or plan requires transferring title to the tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., after making all required payments.
Tax 11.29(1)(b)2.
2. A transfer of possession or control of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., under any agreement that requires transferring title to the tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., after making all required payments and after paying an option price that does not exceed the greater of $100 or one percent of the total amount of the required payments.
Tax 11.29(1)(b)3.
3. Providing tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., along with an operator, if the operator is necessary for the tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., to perform in the manner for which it is designed and if the operator does more than maintain, inspect, or set up the tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats.
Tax 11.29(1)(c)
(c) The definition of “lease or rental" provided in pars.
(a) and
(b) first applies to lease and rental contracts entered into on October 1, 2009 and has no effect on lease or rental contracts entered into prior to October 1, 2009 until such lease or rental contract is renewed, extended, or modified on or after October 1, 2009.
Tax 11.29(1)(d)
(d) “Receive" as provided 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., 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 11.29(1)(e)1.
1. Locomotives and railcars that are used to carry persons or property in interstate commerce.
Tax 11.29(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 11.29(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 11.29(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 11.29(2)(a)(a) The sales price from the lease, license, or rental of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., shall be subject to the sales and use taxes to the same extent that the sales price from the sale of the same property, item, or good would be subject to the tax. A lease is a continuing sale in Wisconsin under s.
77.51 (14) (j), Stats., and a lessor or licensor shall pay tax on the lease, license, or rental receipts sourced to Wisconsin under s.
77.522, Stats., even though the property, item, or good may have been acquired, used, or both previously by the lessee or licensee in another state.
Tax 11.29 Note
Note: See s.
Tax 11.32 for information explaining what is included in the “sales price."
Tax 11.29(2)(b)1.1. Transfers described in sub.
(1) (a) are leases, licenses, or rentals regardless of whether such transfer is considered a lease, license, or rental under generally accepted accounting principles, or any other provision of federal, state, or local law.
Tax 11.29(2)(b)2.
2. Transfers described in sub.
(1) (b) are not leases, licenses, or rentals, regardless of whether such transfer is considered a lease, license, or rental under generally accepted accounting principles, or any other provision of federal, state, or local law.
Tax 11.29(2)(c)1.1. If a transaction does not meet the definition of “lease or rental" because title to the property, item, or good transfers to the lessor or licensor under a security or deferred payment plan upon completion of the required payments, the transaction shall be treated as a sale of the property, item, or good and the retailer is liable for the tax on the sales price at the time the property, item, or good is received by the purchaser.
Tax 11.29(2)(c)2.
2. The retailer may exclude from the sales price, as provided in s.
77.51 (15b) (b) 2., Stats., the interest and financing charges if they are separately stated on the invoice, bill of sale, or similar document that the retailer gives to the purchaser.
Tax 11.29 Note
Example: Company A purchases a piece of equipment for $10,000. On October 1, 2009, Company A enters into an agreement with Company B, whereas Company B will make 24 monthly payments of $625 each, for a total of $15,000, relating to the equipment. Company B receives the equipment on November 10, 2009. Once Company B makes the last payment, title to the equipment will transfer from Company A to Company B. Since title to the equipment transfers as soon as Company B makes the last payment, the transaction is not treated as a lease, but instead is treated as a sale. Therefore, Company A's purchase of the equipment may be made without any Wisconsin sales or use tax because it is for resale. Company A's charges to Company B ($15,000) are subject to Wisconsin sales or use tax at the time Company B first receives the piece of equipment (November 10, 2009). Company A may exclude from tax that portion of the $15,000 that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company A to Company B.
Tax 11.29(2)(c)3.
3. If the retailer in a transaction described under subd.
1., has properly reported and paid to Wisconsin the tax due on its sales price from the transaction and the retailer has not excluded from the sales price an amount for interest or financing as described in subd.
2., if the retailer subsequently allows a reduction in the payments that must be made because the purchaser pays off the balance early, the retailer may claim a deduction on its sales and use tax return for this reduction in the sales price. The deduction is limited to the amount of the sales price that the retailer previously remitted tax on to Wisconsin.
Tax 11.29 Note
Example: Company X enters into an agreement with Company Y that is not a lease or rental because it meets the requirements provided in subd. 1. The agreement provides that Company Y will provide 12 monthly payments of $1,000. Based on this agreement, Company X reported and paid the 5% Wisconsin sales tax on the $12,000. Company X did not separately state any amounts for interest or financing to Company Y and did not claim a deduction from the sales price related to that. After seven payments of $1,000 have been made to Company X, Company Y decides that it is going to pay off the remaining amounts due. Company X indicates to Company Y that if it pays off the entire balance by a particular date, Company Y only needs to pay an additional $4,700, instead of the full $5,000 that is still due based on the agreement. Company Y pays the $4,700 by the date required. Since Company X had previously reported the tax due based on the full $12,000 at the time the agreement was entered into, Company X may claim the $300 difference between the amount it previously reported as the taxable sales price on this transaction ($12,000) and the discounted sales price of the transaction ($11,700, made up of the $7,000 in monthly payments and the $4,700 early payoff amount). Company X would claim the deduction as a discount allowed.
Tax 11.29(2)(c)4.
4. If the property, item, or good to which subd.
1. applies is stored, used, or otherwise consumed in Wisconsin and then relocated to a location outside Wisconsin, no refund or partial refund of the Wisconsin tax paid is allowed since the transaction is treated as a “sale" and the property was first stored, used, or otherwise consumed in Wisconsin.
Tax 11.29(2)(d)1.1. If a transaction does not meet the definition of “lease or rental" because title to the property, item, or good transfers to the lessor or licensor under an agreement that requires transferring title to the property, item, or good after all required payments have been made and after paying an option price that does not exceed the greater of $100 or 1% of the total amount of the payments, the transaction shall be treated as a sale of the property, item, or good and the retailer is liable for the tax on the sales price at the time the property, item, or good is received by the purchaser.
Tax 11.29(2)(d)2.
2. The retailer may exclude from the sales price, as provided in s.
77.51 (15b) (b) 2., Stats., the interest and financing charges if they are separately stated on the invoice, bill of sale, or similar document that the retailer gives to the purchaser.
Tax 11.29 Note
Example: Company C purchases a piece of equipment for $20,000. On October 25, 2009, Company C enters into an agreement with Company D, whereas Company D will make 12 monthly payments of $2,000 each, for a total of $24,000, relating to the equipment. In addition, the agreement provides that after all of the $2,000 payments have been made, Company D may pay an option price of $200 and title to the equipment will be transferred to Company D. Company D receives the equipment on November 10, 2009. Since the agreement provides that title to the equipment will transfer to Company D if company D makes all the required payments and then pays an option price of $200 (which is less than 1% of the total amount of the payments), the transaction is not treated as a lease, but instead is treated as a sale. Therefore, Company C's purchase of the equipment may be made without any Wisconsin sales or use tax because it is for resale. Company C's charges to Company D ($24,200) are subject to Wisconsin sales or use tax at the time Company D first receives the piece of equipment (November 10, 2009). Company C may exclude from tax that portion of the $24,200 that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company C to Company D.
Tax 11.29(2)(d)3.
3. If the retailer in a transaction described under subd.
1., has properly reported and paid to Wisconsin the tax due on its sales price from the transaction and the retailer has not excluded from the sales price an amount for interest or financing as described in subd.
2., if the retailer subsequently allows a reduction in the payments that must be made because the purchaser pays off the balance early, the retailer may claim a deduction on its sales and use tax return for this reduction in the sales price. The deduction is limited to the amount of the sales price that the retailer previously remitted tax on to Wisconsin.
Tax 11.29(2)(d)4.
4. If the property, item, or good to which subd.
1. applies is stored, used, or otherwise consumed in Wisconsin and then relocated to a location outside Wisconsin, no refund or partial refund of the Wisconsin tax paid is allowed since the transaction is treated as a “sale" and the property was first stored, used, or otherwise consumed in Wisconsin.
Tax 11.29(2)(e)
(e) If a transaction constitutes a sale-leaseback transaction, the original sale of the property, item, or good to a purchaser may be made without tax for resale if that purchaser makes no taxable storage, use, or other consumption in Wisconsin of the property, item, or good prior to selling it. The sale of the property, item, or good from the first purchaser to a second purchaser (i.e., the person who will lease the equipment back to the first purchaser), may also be made without tax for resale if the second purchaser makes no taxable storage, use, or other consumption in Wisconsin of the property, item, or good prior to selling, leasing, licensing, or renting the property, item, or good back to the first purchaser. If the transfer of that property, item, or good from the second purchaser back to the first purchaser meets the definition of lease or rental in s.
77.51 (7) (a), Stats., the tax will be due on each payment as described in par.
(a). If the transfer of that property, item, or good from the second purchaser back to the first purchaser does not meet the definition of lease or rental in s.
77.51 (7) (a), Stats., the tax will be due on the sales price from the sale of the property, item, or good from the second purchaser back to the first purchaser, as described in pars.
(b) to
(d).
Tax 11.29 Note
Example: Company F purchases a piece of equipment for $20,000 from Company X. Prior to making any other use of the equipment, Company F sells the piece of equipment to Company G for $20,000 and immediately enters into an agreement to “lease" it back from Company G based on 12 monthly payments of $2,000 each. Based on the agreement, the “leasing back" of the equipment does not meet the definition of lease or rental contained in s.
77.51(7)(a), Stats., because title to the piece of equipment will transfer to Company F once Company F has made all of the required payments under the agreement to Company G. In this example, Company F may purchase the piece of equipment from Company X without tax because it is for resale. Company G may also purchase the piece of equipment from Company F without tax because it is for resale. However, since the agreement relating to the leaseback of the piece of equipment to Company F does not meet the definition of lease or rental contained in s.
77.51(7)(a), Stats., Company G is required to charge Wisconsin sales or use tax on the sales price of the piece of equipment (that is, the $24,000 required under the agreement), to Company F. Company G may exclude from tax that portion of the $24,000 required under the agreement that is related to interest or financing charges if the amount of the interest or financing charges are separately stated on the invoice, bill of sale, or similar document provided by Company G to Company F.
Tax 11.29(3)(a)
(a) A lessor's or licensor's purchase of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., to be used solely for lease, license, or rental shall be exempt as a purchase for resale.
Tax 11.29(3)(b)
(b) A lessor's or licensor's purchase of lubricants, repair parts, and repair services for tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), or
(d), Stats., used solely for leasing, licensing, or renting shall also be exempt as a purchase for resale. However, if the same property, items, or goods are purchased by a lessee, licensee, or renter, the purchases shall be taxable.
Tax 11.29(3)(c)
(c) Charges by a lessor or licensor to a lessee, licensee, or renter under a maintenance contract on leased tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., shall be taxable.
Tax 11.29(4)
(4)
Property both rented and used personally. If tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., are purchased by a person who uses them part of the time and leases, licenses, or rents them out part of the time, the sale of the property, item, or good to the person shall be taxable. The lessor's or licensor's rental receipts shall also be taxable, unless the transaction is specifically exempt by statute.
Tax 11.29(5)(a)1.1. If an item of tangible personal property or item, property, or good under s.
77.52 (1) (b),
(c), or
(d), Stats., is provided along with an operator that is necessary for the tangible personal property or item, property, or good to operate in the manner for which it is designed and does more than maintain, inspect, or set up the tangible personal property or item, property, or good, the transaction is considered a service and not a lease, license, or rental of tangible personal property or item, property, or good under s.
77.52 (1) (b),
(c), or
(d), Stats.
Tax 11.29 Note
Example: A backhoe and operator are provided to dig a trench. This transaction is the sale of a service and not a rental of the backhoe.
Tax 11.29(5)(a)2.
2. The purchaser of tangible personal property or items, property, or goods that are used in a transaction described in subd.
1. to provide a service is the consumer of that property, item, or good.
Tax 11.29(5)(a)3.
3. The charge by the person providing the service described in subd.
1. is subject to Wisconsin sales and use tax if the service is specifically identified as a taxable service in s.
77.52, Stats.
Tax 11.29 Note
Example: Company A provides a tractor with a rototiller attachment and an operator to till up the lawn area around Customer B's new home to prepare the seedbed for planting. Company A charges Customer B $50 per hour for the use of the tractor and rototiller attachment and $25 per hour for the operator. Since Company A is providing the tractor and rototiller along with the operator, this is not a lease or rental of the equipment, but instead is deemed to be a service. The charge by Company A to Customer B is subject to Wisconsin sales tax, since Company A is providing a landscaping service. Company A is also required to pay Wisconsin sales or use tax on its purchase of the tractor and rototiller used in providing the service.
Tax 11.29(5)(b)
(b) If an item of tangible personal property or item, property or good under s.
77.52 (1) (b),
(c), or
(d), Stats., is provided along with an operator that only maintains, inspects, or sets up the tangible personal property or item, property, or good, the transaction is considered a lease, license, or rental of the tangible personal property or item, property, or good.
Tax 11.29 Note
Example: Company A rents scaffolding from Company B. Company B provides a person to set up the scaffolding as requested by Company A and to make sure none of the nuts and bolts holding the scaffolding together have loosened up. The entire charge by Company B to Company A is for the lease or rental of the scaffolding.
Tax 11.29(5)(c)
(c) Charges for the rental of motor trucks shall be taxable. However, if drivers are provided by the truck's owner to operate the trucks, this shall be considered a service and not a lease or rental of the trucks.
Tax 11.29(5)(d)
(d) The sales price from the lease, license, or rental of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., incidental to the providing of a nontaxable service shall not be taxable. If the tangible personal property or item, property, or good under s.
77.52 (1) (b),
(c), or
(d), Stats., is incidental to the providing of a nontaxable service, the tangible personal property or item, property, or good under s.
77.52 (1) (b),
(c), or
(d), Stats., is consumed by the service provider and the service provider is required to pay any applicable sales or use tax.
Tax 11.29(6)
(6)
Credit for sales tax paid. If a lessor of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., paid a Wisconsin sales tax on the acquisition of the property, item, or good used solely for leasing purposes, the lessor may either request a refund of the sales tax from the seller or the department or may claim a credit against the tax due on rental receipts from the property, item, or good involved, under s.
77.585 (2), Stats. If a credit is claimed, it shall expire when the cumulative rental receipts equal the sales price upon which the vendor paid sales tax to Wisconsin.
Tax 11.29(7)
(7)
Sourcing lease, license and rental payments. Tax 11.29(7)(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 11.29(7)(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 11.29(7)(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.
