Tax 11.51 Note
Example: Company A sells one pound square blocks of chocolate. The blocks of chocolate are “bars."
Tax 11.51(3)(a)4.b.
b. A “drop" is a product that is sold in a round, oval, pear-shaped, or similar form.
Tax 11.51 Note
Example: Company B sells chocolate chips in a bag. Each individual chocolate chip contains all of the ingredients indicated on the label. The chocolate chips are “drops."
Tax 11.51(3)(a)4.c.
c. A “piece" is a portion that has the same make-up as the product as a whole. Individual ingredients and loose mixtures of items that make up the product as a whole are not pieces. Exception: If a loose mixture of different items that make up the product as a whole are all individually considered candy and are sold as one product, that product is also candy.
Tax 11.51 Note
Examples: 1) Company C sells jellybeans in a bag. Each jellybean is made up of the ingredients indicated on the label. Each jellybean is a “piece" or “drop."
Tax 11.51 Note
2) Company D sells trail mix in a bag. The product being sold (e.g., trail mix), is made up of a mixture of carob chips, peanuts, raisins, and sunflower seeds. The individual items that make-up the trail mix are not “pieces," but instead are the ingredients, which when combined, make up the trail mix. Therefore, the trail mix is not sold in the form of bars, drops, or pieces.
Tax 11.51 Note
3) Company E sells a product called “candy lover's mix." “Candy lovers mix" is a product that is made up of a loose mixture of jellybeans, toffee, and caramels. Individually, the jellybeans, toffee, and caramels are all candy. The sale of the mixture is the sale of candy since all of the individual items that make up the product are individually considered to be candy.
Tax 11.51(3)(a)5.
5. In order for a product to be treated as containing “flour," the product label must specifically list the word “flour" as one of the ingredients. There is no requirement that the “flour" be grain-based and it does not matter what the flour is made from.
Tax 11.51 Note
Examples: 1) The ingredient list for a breakfast bar lists “flour" as one of the ingredients. This breakfast bar is not “candy" since it contains flour.
Tax 11.51 Note
2) The ingredient list for a breakfast bar lists “peanut flour" as one of the ingredients. This breakfast bar is not candy because it contains flour.
Tax 11.51 Note
3) The ingredient list for a breakfast bar that otherwise meets the definition of “candy" lists “whole grain" as one of the ingredients, but does not specifically list “flour" as one of the ingredients. This breakfast bar is candy because the word “flour" is not included in the ingredient list.
Tax 11.51 Note
4) Company E sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates identifies flour as one of the ingredients. The box of chocolates is not candy since flour is identified as one of the ingredients on the label.
Tax 11.51 Note
5) Company F sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates, which otherwise meets the definition of “candy," does not identify flour as one of the ingredients. The box of chocolates is candy.
Tax 11.51(3)(a)6.
6. “Other ingredients or flavorings," as used in this definition, means other ingredients or flavorings that are similar to chocolate, fruits, or nuts. This phrase includes candy coatings such as carob, vanilla, and yogurt, flavorings or extracts such as vanilla, maple, mint, and almond, and seeds and other items similar to the classes of ingredients or flavorings. This phrase does not include meats, spices, seasonings such as barbecue or cheddar flavor, or herbs which are not similar to the classes of ingredients or flavorings associated with chocolate, fruits, or nuts, unless the product otherwise meets the definition of “candy."
Tax 11.51 Note
Examples: 1) Retailer A sells barbecue flavored peanuts. The ingredient label for the barbecue flavored peanuts indicates that the product contains peanuts, sugar, and various other ingredients, including barbecue flavoring. Since the barbecue flavored peanuts contain a combination of sweeteners and nuts, and flour is not listed on the label and the nuts do not require refrigeration, they are candy.
Tax 11.51 Note
2) Retailer B sells barbecue potato chips. Potato chips are potatoes, a vegetable, and are not commonly thought of as candy. The barbecue potato chips are food and food ingredients and not candy. The fact that the ingredient label for the barbecue potato chips indicates that the product contains barbecue seasoning which contains a sweetener does not change the fact that the barbecue potato chips are not commonly thought of as candy.
Tax 11.51(3)(a)7.
7. The term “natural or artificial sweeteners" means an ingredient of a food product that adds a sugary sweetness to the taste of the food product and includes, but is not limited to, corn syrup, dextrose, invert sugar, sucrose, fructose, sucralose, saccharin, aspartame, stevia, fruit juice concentrates, molasses, evaporated cane juice, rice syrup, barley malt, honey, maltitol, agave, and artificial sweeteners.
Tax 11.51(3)(a)8.
8. A product that otherwise meets the definition of “candy" is not “candy" if it requires refrigeration. A product “requires refrigeration" if it must be refrigerated at the time of sale or after being opened. In order for a product to be treated as requiring refrigeration, the product label must indicate that refrigeration is required. If the label on a product that contains multiple servings indicates that it “requires refrigeration," smaller size packages of the same product are also considered to “require refrigeration." A product that otherwise meets the definition of “candy" is “candy" if the product is not required to be refrigerated, but is sold refrigerated for the convenience or preference of the customer, retailer, or manufacturer.
Tax 11.51 Note
Examples: 1) A grocery store sells candy bars at room temperature or from a refrigerated display case. Unless the candy bar is required to be refrigerated, it is still candy, even if it was refrigerated when sold.
Tax 11.51 Note
2) Company A sells sweetened fruit snacks in a bag that contains multiple servings. The label on the bag indicates that after opening, the sweetened fruit snacks must be refrigerated. The sweetened fruit snacks “require refrigeration" and therefore are not candy.
Tax 11.51 Note
3) Company A sells sweetened fruit snacks in single serving containers. Other than for packaging, the sweetened fruit snacks are identical to the sweetened fruit snacks in Example 2 above. However, since this container of sweetened fruit snacks only contains one serving, it is presumed that it will be used immediately, and the label does not indicate that after opening, the product must be refrigerated. Even though the label does not contain the statement that after opening the sweetened fruit snacks must be refrigerated, these sweetened fruit snacks are considered to “require refrigeration" and therefore are not candy.
Tax 11.51 Note
4) Company A sells chocolate truffles. The label on the truffles indicates to keep the product cool and dry, but does not indicate that the product must be refrigerated. Since the chocolate truffles are not required to be refrigerated, even though the label indicates to keep them cool, the chocolate truffles do not “require refrigeration."
Tax 11.51(3)(a)9.a.a. Products that are a combination of items that are defined as “candy" and items that are defined as “food and food ingredients" are “bundled transactions" when the items are distinct and identifiable, sold for one non-itemized price, and more than 50 percent of the items are “candy." Such “bundled transactions" are subject to tax. For example, the sale of a bag of multiple types of individually wrapped bars of which more than 50 percent of the bars are “candy" that is sold for one non-itemized price is taxable.
Tax 11.51(3)(a)9.b.
b. If a package contains individually wrapped bars, drops, or pieces and the product label on the package separately lists the ingredients for each type of bar, drop, or piece included in the package, those bars, drops, or pieces that have “flour" listed as an ingredient are “food and food ingredients" and those bars, drops, or pieces which do not have “flour" listed as an ingredient are “candy." The determination of whether the package as a whole meets the definition of a “bundled transaction" is based on the percentage of bars, drops, or pieces that meet the definition of “food and food ingredient" as compared to the percentage of bars, drops, or pieces that meet the definition of “candy." For purposes of this subd.
9. b., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.
Tax 11.51 Note
Examples: 1) Retailer A sells a package that contains 100 total pieces of food and food ingredients. There are 10 different types of foods and food ingredients in the package. Eight of the types of food and food ingredients included in the package meet the definition of “candy," while two of the types included do not meet the definition of “candy." It is a reasonable presumption that 20 (2/10 times 100) of the pieces are not “candy" and 80 (8/10 times 100) of the pieces are “candy." Therefore, since 80 percent of the product is “candy," the sales price of the entire package is taxable as a bundled transaction.
Tax 11.51 Note
2) Retailer B sells bulk food and food ingredients by the pound. Each food and food ingredient is in a separate bin or container. Some of the food and food ingredients are “candy" and some of them are not because they contain flour. However, regardless of the items chosen, the retailer charges the customer $3.49 per pound. Customer C selects some items that are candy and some that are not and puts them in a bag. Since some of the items in the bag are “candy," the retailer shall treat the entire package as a bundled transaction containing primarily “candy," unless the retailer ascertains that 50 percent or less of the items in the bag are “candy."
Tax 11.51(3)(a)9.c.
c. If a package contains individually wrapped bars, drops, or pieces and all of the ingredients for each of the products included in the package are listed together, as opposed to being listed separately by each product included as explained in subd.
9. b., and even if the ingredient lists “flour" as an ingredient, the product will be treated as “candy," unless the retailer is able to ascertain that 50 percent or less of the products in the package are “candy." For purposes of this subd.
9. c., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.
Tax 11.51(3)(a)10.
10. Products whose ingredients are a combination of various unwrapped food ingredients that alone are not candy, along with unwrapped food ingredients that alone are “candy," such as breakfast cereal and trail mix with candy pieces, are considered “food and food ingredients," but not “candy." Sales of these products are not “bundled transactions" because there are not two or more distinct and identifiable products being sold. The combination of the ingredients results in a single product.
Tax 11.51(3)(b)1.1. “Dietary supplement" is defined in s.
77.51 (3n), Stats., to mean a product other than tobacco, that is intended to supplement a person's diet if all of the following apply:
Tax 11.51(3)(b)1.a.
a. The product contains a vitamin, mineral, herb or other botanical, amino acid, dietary substance that is intended for human consumption to supplement the diet by increasing total dietary intake, concentrate, metabolite, constituent, or extract, or any combination thereof.
Tax 11.51(3)(b)1.b.
b. The product is intended for ingestion in tablet, capsule, powder, soft-gel, gel-cap, or liquid form, or, if not intended for ingestion in such forms, is not represented as conventional food and is not represented for use as the sole item of a meal or diet.
Tax 11.51(3)(b)3.
3. Dietary supplements include antioxidants, bee pollen, enzymes, garlic capsules, ginseng, herbal supplements, immune supports, lecithin, metabolic supplements, vitamins and minerals, and zinc lozenges.
Tax 11.51(3)(c)
(c) “Heated state" means sold at any temperature higher than the air temperature of the room or place where the product is sold.
Tax 11.51(3)(d)1.1. “Soft drink" is defined in s.
77.51 (17w), Stats., to mean a beverage that contains less than 0.5 percent of alcohol and that contains natural or artificial sweeteners. “Soft drink" does not include a beverage that contains milk or milk products; soy, rice, or similar milk substitutes; or more than 50 percent vegetable or fruit juice by volume.
Tax 11.51(3)(d)2.
2. Soft drinks are beverages that are in liquid form and do not include items that are not in liquid form such as powdered fruit drinks, powdered teas and frozen drink concentrates.
Tax 11.51(3)(d)3.
3. Natural and artificial sweeteners include corn syrup, dextrose, invert sugar, sucrose, fructose, sucralose, saccharin, aspartame, stevia, maltitol, molasses, evaporated cane juice, rice syrup, barley malt, and honey.
Tax 11.51(3)(d)4.b.
b. Water and tea that are unsweetened are not soft drinks, even if carbonated or flavored.
Tax 11.51(3)(e)1.1. Deli foods sold unheated by weight or volume are exempt, unless utensils are provided, as explained in sub.
(4) (d).
Tax 11.51 Note
Examples: 1) A grocer's deli sells potato salad, fruit salad, cheese, ham, coleslaw, corned beef and fresh rolls at room temperature. These items are sold by weight or volume and utensils are not provided. The sale of these items is not taxable.
Tax 11.51 Note
2) A grocer's deli sells a serving of each of the following for $3.59: potato salad, fruit salad, cheese, ham, coleslaw, corned beef and fresh rolls and provides utensils. The sale is taxable as a sale of prepared food.
Tax 11.51 Note
3) A grocer's deli sells party trays by weight or volume in an unheated condition and for which utensils are not provided. The types of party trays include shrimp and sauce, meats, fresh vegetables, fresh fruits, cheeses or cookies. The sale of these party trays is not subject to tax.
Tax 11.51(4)
(4)
Prepared food. “Prepared food" is defined in s.
77.51 (10m), Stats., to mean any of the following:
Tax 11.51 Note
Example: A retailer sells heated sandwiches to a customer. The heated sandwich is prepared food.
Tax 11.51(4)(b)
(b) Food and food ingredients heated by the retailer, except for the following:
Tax 11.51(4)(b)1.
1. Two or more food ingredients that are mixed or combined by a retailer for sale as a single item, if the retailer's primary classification in the North American Industry Classification System (NAICS), 2002 edition, published by the federal office of management and budget is manufacturing under subsector 311, but not including bakeries and tortilla manufacturing under industry group number 3118.
Tax 11.51 Note
Example: A food manufacturer classified under industry code 31161 of the North American Industry Classification System (NAICS), 2002 edition, makes hot dogs by mixing and combining 2 or more food ingredients, heating the hot dogs so that they are fully cooked and then packaging the hot dogs for sale once they have cooled. Although the hot dogs were heated by the retailer while they were being manufactured, they are not prepared food because they meet the exception in par. (b) 1., assuming the hot dogs do not meet any of the other definitions of prepared food.
Tax 11.51(4)(b)2.
2. Bakery items made by a retailer, including breads, rolls, pastries, buns, biscuits, bagels, croissants, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.
Tax 11.51 Note
Examples: 1) A bakery mixes ingredients together to make a cake. The cake mix is then heated (baked). Once the cake cools, it is decorated and sold to a customer. Although the cake was heated by the retailer, it is not prepared food because it meets the exception in par. (b) 2., assuming the cake does not meet any of the other definitions of prepared food.
Tax 11.51 Note
2) A bakery mixes 2 or more ingredients together to make a bagel. The bagel is then heated and placed in a heated display case for sale to a customer. The bagel is prepared food since it is sold heated. Although the bagel would meet the exception provided in par. (b) 2., since it is sold heated, it is prepared food.
Tax 11.51(4)(b)3.
3. Two or more food ingredients mixed or combined by a retailer for sale as a single item, sold unheated, and sold by volume or weight.
Tax 11.51 Note
Example: Grocery Store A prepares potato salad for sale to its customers. Grocery Store A boils the potatoes, cuts the potatoes up, and combines the potatoes with various other ingredients to make potato salad. Once the potato salad has cooled, Grocery Store A sells the potato salad for $2 per pound. Although the potatoes were previously heated by the retailer when the potato salad was being made, the potato salad is not prepared food since it is sold unheated by weight, assuming the potato salad does not meet any of the other definitions of prepared food.
Tax 11.51(4)(c)
(c) Two or more food ingredients mixed or combined by the retailer for sale as a single item, except if any of the following apply:
Tax 11.51(4)(c)1.
1. The retailer's primary classification in the North American Industry Classification System, 2002 edition, published by the federal office of management and budget is manufacturing under subsector 311, but not including bakeries and tortilla manufacturing under industry group number 3118.
Tax 11.51(4)(c)3.
3. The item is a bakery item made by the retailer, including breads, rolls, pastries, buns, biscuits, bagels, croissants, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.
Tax 11.51 Note
Examples: 1) Restaurant A purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make cakes with an ice cream layer. Restaurant A makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layers are baked and cooled, Restaurant A covers one of the cake layers with a layer of fudge and cookie bits. Restaurant A then places another cake layer over the fudge and cookie bits and covers the second cake layer with a layer of ice cream. Restaurant A decorates the top of the cake according to instructions provided by its customer. Although this cake is two or more ingredients mixed or combined by the retailer for sale as a single item, it is excluded from the definition of prepared food because it is primarily a bakery item and is not subject to Wisconsin sales or use tax, assuming the cake does not meet any of the other definitions of prepared food.
Tax 11.51 Note
2) Restaurant B purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make a layered ice cream cake. Restaurant B makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layer is baked and cooled, Restaurant B places the cake layer between two layers of ice cream. Restaurant B decorates the top of the cake according to instructions provided by its customer. This cake is prepared food and subject to Wisconsin sales or use tax since Restaurant B mixed or combined 2 or more ingredients to make the cake, and the ice cream cake is not primarily a bakery item.
Tax 11.51(4)(c)4.
4. The food and food ingredients are only sliced, repackaged, or pasteurized by the retailer.
Tax 11.51 Note
Example: Grocer C sells cheese trays. The cheese trays are put together by the grocer selecting the various types of cheeses and slicing the amount of each type of cheese it wants to include, placing each type of sliced cheese on the tray, and then wrapping the cheese tray. The cheese tray is not prepared food since the cheese on the tray was only sliced and repackaged, assuming the cheese tray does not meet any of the other definitions of prepared food.
Tax 11.51(4)(c)5.
5. The item contains eggs, fish, meat, or poultry in raw form that requires cooking by the consumer, as recommended by the food and drug administration in chapter 3, part 401.11 of its food code to prevent food-borne illnesses.
Tax 11.51(4)(d)1.1. Food and food ingredients sold with eating utensils that are provided by the retailer of the food and food ingredients, including plates, bowls, knives, forks, spoons, glasses, cups, napkins, or straws. However a “plate" does not include a container or packaging used to transport the food and food ingredients. Eating utensils are provided by the retailer if:
Tax 11.51(4)(d)1.a.
a. The eating utensils are available to the purchasers and the retailer's sales of food and food ingredients as described in pars.
(a),
(b), and
(c) and food for which plates, bowls, glasses, or cups are necessary to receive the food are more than 75 percent of the retailer's total sales of all food and food ingredients at that establishment; or
Tax 11.51(4)(d)1.b.
b. The retailer's customary practice is to physically give or hand the utensils to the purchaser, except that plates, bowls, glasses, or cups that are necessary for the purchaser to receive the food and food ingredients need only be made available to the purchaser.
Tax 11.51 Note
Examples: 1) Deli A has a self-service salad bar. Customers go to the salad bar, pick up a clam shell container at the salad bar, and place the items they would like in the clam shell container. The clam shell container is a plate or bowl necessary for the customer to receive the food and is made available to the customer. Therefore, sales from the self-service salad bar are sales of prepared food.
Tax 11.51 Note
2) Retailer X has a self-service milk machine. Customers go to the milk machine, pick-up a disposable cup, and fill it with whatever kind of milk they want. The cup is necessary for the customer to receive the milk and is made available to the customer. Therefore, sales of milk in this manner are sales of prepared food.
Tax 11.51(4)(d)2.a.a. The numerator of the percentage described in subd.
1. a. includes only sales of prepared food as defined in pars.
(a),
(b), and
(c) and food for which plates, bowls, glasses, or cups are necessary to receive the food, but not including alcoholic beverages.
Tax 11.51(4)(d)2.b.
b. The denominator of the percentage described in subd.
1. a. includes all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks, but not including alcoholic beverages.
Tax 11.51(4)(d)3.a.a. If the percentage determined under subd.
2. is 75 percent or less, utensils are considered to be provided by the retailer if the retailer's customary practice is to physically give or hand the utensils to the purchaser or, in the case of plates, bowls, glasses, or cups that are necessary to receive the food, to make such items available to the purchaser.
Tax 11.51(4)(d)3.b.
b. If the percentage determined under subd.
2. is greater than 75 percent, utensils are considered to be provided by the retailer if the utensils are made available to the purchaser.
Tax 11.51(4)(d)4.a.a. For a retailer whose percentage determined under subd.
2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does not become prepared food simply because the retailer makes utensils available to the purchaser of the item.
Tax 11.51(4)(d)4.b.
b. For a retailer whose percentage determined under subd.
2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does become prepared food if the retailer physically gives or hands utensils to the purchaser of the item, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food, need only be made available to the purchaser.
Tax 11.51(4)(d)4.c.
c. For purposes of subd.
4. a. and
b., serving sizes are based on the information contained on the label of each item sold, except that, if the item sold has no label, the serving size is based on the retailer's reasonable determination.
Tax 11.51(4)(d)5.a.a. Except as provided in subd.
5. b., if a retailer sells food items that have a utensil placed in a package by a person other than the retailer, the utensils are considered to be provided by the retailer.
Tax 11.51(4)(d)5.b.
b. Except as provided in subds.
3. and
4., if a retailer sells food items that have a utensil placed in a package by a person other than the retailer and the person's primary classification in the North American Industrial Classification System (NAICS), 2002 edition, published by the federal office of management and budget, is manufacturing under subsector 311, the utensils are not considered to be provided by the retailer.
