Wisconsin Legislature: Tax 11.56(9)(b)3.

1) A shoppers guide publisher, who distributes the publication without charge, purchases paper and furnishes it to a printer who charges for the printing of the shoppers guide.

2) A shoppers guide publisher purchases paper it uses to print a shoppers guide which it distributes without charge to recipients.

(b) Section 77.54 (43), Stats., provides that Wisconsin sales or use tax is not imposed on raw materials if both of the following conditions are met:

1. The raw materials are processed, fabricated, or manufactured into, attached to, or incorporated into printed materials.

2. The resulting printed materials will be transported and used solely outside Wisconsin.

Examples: 1) Company A, a Wisconsin company, publishes catalogs to promote the sale of its products. Company A purchases paper from a company that does not have nexus in Wisconsin. The paper is delivered to a Wisconsin printer that prints the catalogs for Company A. The catalogs are shipped outside Wisconsin for use solely outside Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin use tax.

2) Assume the same facts as 1) above, except that the company selling the paper is located in Wisconsin.

The paper purchased by Company A for the catalogs is not subject to Wisconsin sales tax.

3) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print catalogs for Company B. The catalogs are provided without charge to customers outside Wisconsin. The charge by the advertising agency to Company B is exempt from Wisconsin sales and use tax even though the printer is not selling tangible personal property because the finished artwork is used for processing, fabricating or manufacturing printed material that is transported and used solely outside Wisconsin.

(bm) Section 77.52 (2) (a) 11., Stats., provides that the tax does not apply to the service of printing or imprinting tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that results in printed material, catalogs, or envelopes that are exempt under s. 77.54 (25), (25m), or (59), Stats.

Example: Company Z purchases paper that is used to print catalogs that are designed to advertise and promote the sale of Company Z’s merchandise. The paper is delivered to Company X, a Wisconsin printer, that prints the catalogs for Company Z. The catalogs are shipped both in and outside Wisconsin. The charge by Company X to Company Z for the printing of the catalogs is not taxable. However, Company Z owes tax on its purchase of the paper that it provides to Company X for those catalogs that are not shipped outside Wisconsin for use solely outside Wisconsin. Company Z’s purchase of the paper for those catalogs that are shipped outside Wisconsin is exempt as provided in par. (b).

(c) The tax applies to purchases of artwork, single color or multicolor separations, negatives, flats, and similar items if those purchases are used in the manufacture of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., not to be sold, other than items exempt under par. (a) or (b). A printer who does not supply paper used in printing tangible personal property is not selling tangible personal property but rather, is selling a service.

Example: 1) A retailer purchases color separations which are used in its own printing plant to produce advertising material it distributes to its customers in Wisconsin. The sale of the color separations is subject to Wisconsin sales or use tax because the advertising materials manufactured are not destined for sale.

2) Company B purchases finished artwork from an advertising agency. The artwork and paper are provided to a printer who will print flyers that are not catalogs for Company B. The flyers are provided without charge to customers in Wisconsin. The charge by the advertising agency to Company B is subject to Wisconsin sales and use tax. The exemption under s. 77.54 (2), Stats., does not apply because the printer is not selling tangible personal property or an item, or property under s. 77.52 (1) (b) or (c), Stats., and the exemption under s. 77.54 (43), Stats., does not apply because the flyers are used in Wisconsin.

(8) Purchases of fuel and electricity for use in manufacturing printed matter. Section 77.54 (30) (a) 6., Stats., provides an exemption for fuel and electricity consumed in manufacturing tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., in this state. “Manufacturing” is defined in s. 77.51 (7h), Stats.

(9) Additional exemptions for printing industry.

(a) Definitions. In s. 77.54 (61), Stats., and this subsection:

1g. “Book printing” means activities described under 323117 of the North American Industry Classification System.

1r. “Commercial printing, except screen printing and book printing, without publishing, except grey goods printing” means activities described in 2012 North American Industry Classification 323111.

2. “Copies of the product” means finished artwork in a digital form that is generated, furnished, and used for the purpose of printing; represents the object, such as a book, catalog, pamphlet, or magazine, as it is to appear in a printed form; and includes files containing instructions or other information required by the printer for printing the product, such as instructions for plate-making or setting ink-levels at the printing press, whether these instructions or other information are furnished to the printer or derived by the printer from the finished art files.

3. “Finished artwork” has the meaning given in s. 77.51 (3rm), Stats.

5. “Primarily” means more than 50 percent.

8. “Stored” has the meaning of the term “storage” as defined in s. 77.51 (18), Stats.

8m. “Support activities for printing” means activities described under 323120 of the North American Industry Classification System.

9. “Used” has the meaning of the term “use” as defined in s. 77.51 (22), Stats.

(b) Exemptions. Section 77.54 (61), Stats., provides exemptions for purchases of tangible personal property described under s. 77.54 (61) (a) and (b), Stats., by a person primarily engaged in commercial printing, book printing, or support activities for printing, as determined by the department.

1. Commercial printing, except screen printing and book printing, without publishing, except gray goods printing.

2. Printing or printing and binding books and pamphlets without publishing.

3. Performing prepress and postpress services in support of printing activities.

Examples: (1) Newspaper publishes a daily edition of a newspaper. Newspaper operates its own printing plant. The printing plant prints Newspaper’s publications as well as printing under contract for third parties. More than 50 percent of Newspaper’s sales are from sales of its newspaper and advertising revenues associated with sales of its newspaper. Newspaper’s primary activity is described by NAICS code 511110: Newspaper Publishers. Newspaper does not qualify for the exemptions under s. 77.54 (61), Stats.

(2) Insurance Company operates its own printing plant. Insurance Company’s primary source of revenues is insurance premiums. Insurance Company’s primary NAICS code is described within NAICS subsector code 524: Insurance Carriers and Related Activities. Insurance Company does not qualify for the exemptions under s. 77.54 (61), Stats.

(3) Business is engaged in screen printing of T-shirts, caps, and jackets. This is Business’ only activity and source of revenue. Business’ primary activity is described by NAICS code 323113: Commercial Screen Printing. Business does not qualify for the exemptions under s. 77.54 (61), Stats.

(4) Company is primarily engaged in the business of printing on fabric grey goods. Company’s primary activity is described by NAICS code 313310: Textile and Finishing Mills. Company does not qualify for the exemptions under s. 77.54 (61), Stats.

(5) Printer is primarily engaged in commercial printing as described in NAICS code 323111. Company B contracts with Advertising Agency to produce finished artwork that represents Company B’s holiday catalog and to furnish the finished artwork to Printer in the formats specified by Printer. Company B contracts with Printer to print and mail the catalogs to addresses Company B furnishes to Printer. Printer uses the finished artwork in the printing of the catalog. Printer owns servers that it uses primarily to store the finished artwork it receives from its customers. The servers are exempt under s. 77.54 (61), Stats.

(6) Printer is primarily engaged in commercial printing and binding of books, as described in NAICS code 323117. Publisher enters into a contract with Printer to print and bind one of Publisher’s books. Publisher provides Printer with the finished artwork files in the formats specified by Printer. Printer has computer programs that translate the finished artwork files into files that are sent to and used by a plate-making machine to make the plates for printing the book, and into files that are sent to and used by the printing press to print the pages in the book. The computers and server used by Printer to store Publisher’s finished artwork are primarily used by Printer to store copies of products printed or to be printed by Printer. The computers and servers used to store the finished art furnished to Printer by Publisher are exempt under s. 77.54 (61), Stats.

(7) Printer has printing plants in Wisconsin and Minnesota. Printer places an order for office supplies from an out-of-state seller. The office supplies are delivered to Printer’s location in Wisconsin. The office supplies are to be used in Printer’s offices in Wisconsin and Minnesota. Printer sets aside the office supplies it will deliver to its Minnesota office, and delivers these supplies to that office one week later. During the week the office supplies being sent to Minnesota are in Wisconsin and prior to being delivered to Minnesota, the office supplies were only stored, remained idle, and were not used by Printer. Printer’s purchase of the office supplies delivered to it in Wisconsin and then delivered by Printer to its office in Minnesota are exempt under s. 77.54 (61), Stats.

(8) Printer has printing plants in Wisconsin, Iowa, and Indiana. Printer is primarily engaged in activities described by NAICS code 323111. Printer is moving a printing press from its Indiana plant to its Iowa plant. The printing press was originally purchased by Printer in Indiana. The printing press is used exclusively and directly by Printer in manufacturing. Printer has the printing press shipped to its Wisconsin facility. The press is in Wisconsin for not more than 180 days before it is transported to Iowa. While in Wisconsin, Printer performs repairs to the press. Printer’s purchase of the printing press is not subject to Wisconsin use tax. Repair of the printing press while in Wisconsin is a use of the printing press in Wisconsin by the printer. However, Printer is not liable for Wisconsin use tax on its purchase of the printing press as the printing press is an exempt manufacturing machine under s. 77.54 (6) (am) 1., Stats.

Note: Section Tax 11.56 interprets ss. 77.51 (7h), (8), (11), and (14) (h), 77.52 (1) and (2) (a) 11., and 77.54 (2), (2m), (6) (am) 1. and 2., (25), (25m), (30) (a) 6., (43), (59), and (61), Stats.

Note: The interpretations in s. Tax 11.56 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) Sales of typeset material shall first be considered sales of tangible personal property on April 1, 1983; (b) The exemption in sub. (3) (b) 2. for ingredients of publications became effective July 2, 1983, pursuant to 1983 Wis. Act 27; (c) The definition of storage and use for purposes of imposing use tax does not include storing or using raw materials becoming printed materials to be shipped outside Wisconsin effective October 1, 1993, pursuant to 1993 Wis. Act 16; (d) The sales and use tax exemption for raw materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (e) The exemption for fuel and electricity consumed in manufacturing became effective January 1, 2006, pursuant to 2003 Wis. Act 99; (f) The exemption for catalogs and the envelopes in which they are mailed became effective April 1, 2009 pursuant to 2007 Wis. Act 20; (g) The requirement that property and items which qualify for exemption under s. 77.54 (2) and (2m), Stats., be consumed exclusively and directly by a manufacturer in manufacturing property and items destined for sale became effective August 1, 2009 pursuant to 2009 Wis. Act 28; (h) 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; (i) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; (j) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20; (k) The additional printing exemptions under s. 77.54 (61), Stats., became effective October 1, 2013, pursuant to 2013 Wis. Act 20; and (L) Amendments to the additional printing exemptions under s. 77.54 (61), Stats., became effective retroactively to October 1, 2013, pursuant to 2013 Wis. Act 145.

History: Cr. Register, March, 1983, No. 327, eff. 4-1-83; am. (3) (a), renum. (3) (b) to be (3) (b) 1., cr. (3) (b) 2., r. and recr. (7), Register, September, 1984, No. 345, eff. 10-1-84; am. (3) (a) and (c), (5) and (6) (a) 1., (b) (intro.) 1. and 2. and (7) (b), r. (6) (b) 3., cr. (6) (c), Register, April, 1994, No. 460, eff. 5-1-94; r. (1) (a) and (6) (b) 1. and 2., renum. (1) (b) and (c) to be (1) (c) and (a) and am. (c), (3) (a), (b) 1. and 2. and (c) to be (3) (a) (intro.), 1. and 2. and (b) and am. (a) (intro.) 1. and 2., (6) (b) (intro.) to be (6) (b) and am., (6) (c) and (7) (b) to be (7) (b) and (c) and am., cr. (1) (b), am. (2) (a), (5), (6) (a) 2., Register, January, 1999, No. 517, eff. 2-1-99; EmR0924: emerg. am. (1) (a), (b) 2., (c), (2) (intro.), (b), (3), (5), (6), (7) (a), (b) (intro.), 1., and (c), r. and recr. (4), cr. (7) (bm) and (8), eff. 10-1-09; CR 09-090: am. (1) (a), (b) 2., (c), (2) (intro.), (b), (3), (5), (6), (7) (a), (b) (intro.), 1., and (c), r. and recr. (4), cr. (7) (bm) and (8) Register May 2010 No. 653, eff. 6-1-10; CR 13-011: cr. (4) (b) 3. Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (7) (bm), cr. (9) Register August 2014 No. 704, eff. 9-1-14; corrections in (5), (6) (a) 3. made under s. 13.92 (4) (b) 7., Stats., Register August 2014 No. 704; CR 16-053: cr. (9) (a) 1g., renum. (9) (a) 1. to 1r., r. (9) (a) 4., 6., 7., cr. (9) (a) 8m., r. and recr. (9) (b) (intro.) Register June 2018 No. 750, eff. 7-1-18; correction in (9) (b) (intro.) made under s. 35.17, Stats., Register June 2018 No. 750.

Tax 11.57 Utilities.

(1) Taxable sales. Sales of the following tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and services provided by utilities are taxable:

(a) Utility services billed to household, industrial, or commercial customers, with any adjustments for discounts taken by customers in the utility’s next reporting period.

Example: An early payment discount is adjusted for in the next reporting period.

(b) Excess use charges and minimum or idle service charges.

(d) Parking space rentals.

(e) Rentals of transformers located on a customer’s property.

(f) Labor and materials to install or repair conversion burners.

(g) The rental of water heaters.

(h) Sales of scrap, gravel, or timber sold for removal.

(i) Sales of tools, used equipment, and other tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., to employees or other purchasers.

(j) Pilot relights for furnaces, such as “no heat” calls, or replacing appliance fuses.

(k) Sale of a utility overhead transmission or distribution line in place, if installed under easement or license on land owned by others.

Note: See s. Tax 11.86 for more information.

(L) Charges to builders to put in “temporary services.”

(2) Nontaxable sales. The following sales to customers are not subject to the tax:

(a) Connection or reconnection charges for natural gas, electricity, and water.

(b) Utility services delivered to Indians living on an Indian reservation, or services delivered on the reservation to an Indian tribal governing board.

(d) Services coincidental with house moving.

(e) Pilot relight of yard gas lamp.

(f) Contributions in aid of construction, such as payments by a customer to have a line extended to the customer’s property.

(g) The installation charge for a pole sold to a customer, which is installed on land owned by the customer.

(h) “Wheeling” energy for another utility.

(i) Sales of fuel and electricity for use in farming, including agriculture, dairy farming, horticulture, floriculture, silviculture, beekeeping, and custom farming services.

(im) Sales of fuel and electricity consumed in manufacturing tangible personal property, or items or property under s. 77.52 (1) (b) or (c), Stats., in Wisconsin.

(j) Labor charged a customer for the installation of a complete furnace or built-in appliance.

(k) Water delivered to customers through mains.

(L) Coal, fuel oil, propane, steam, peat, fuel cubes produced from solid waste and wood used for fuel, sold for residential use.

(m) Biomass, as defined in s. 196.378 (1) (ar), Stats., that is used for fuel sold for residential use.

(n) Electricity and natural gas sold during the months of November, December, January, February, March, and April for residential use. For purposes of this exemption, s. 77.54 (30) (b), Stats., provides that electricity or natural gas is considered sold at the time of billing. If the billing is by mail, the time of billing is the day on which the billing is mailed. In any event, a qualifying customer shall receive only 6 months of service exempt from taxation during the November through April period.

(o) Low-income assistance fees that are charged under s. 16.957 (4) (a) or (5) (a), Stats.

(p) If fuel or electricity is sold to a person partly for an exempt use and partly for a use that is not exempt, no tax shall be collected by the seller on the portion of the sales price of the fuel or electricity that is used for an exempt purpose, as specified on an exemption certificate provided by the purchaser to the seller, as described in par. (q).

(q)

1. Where a building, that contains residential quarters and commercial operations, is heated by one central heating plant, it is necessary to determine the portion of the fuel purchased which qualifies for the “residential use” exemption. The percentage of residential use may be computed by dividing the number of square feet used for residential purposes, excluding common areas, by the total area heated, excluding common areas. If this does not produce a reasonable result, any other reasonable method of estimating may be used. The resulting percentage should be rounded to the nearest 10%.

2. In this subsection, “residential use” means use in a structure or portion of a structure that is a person’s permanent principal residence. Use in a residence includes heating or cooling the premises, heating water, operating fans or other motors, providing lighting, and other ordinary uses by the purchaser in a residence. Residential use includes use in single-family homes, duplexes, townhouses, condominiums, mobile homes, rooming houses, apartment houses, nursing homes, and farm houses, if the structure is used as a person’s permanent principal residence. Residential use includes use in apartment houses, nursing homes, and farm houses even though they are on a commercial or rural meter.

3. “Non-residential use” is use other than “residential use” as defined in subd. 2., and includes any use in the conduct of a trade, business or profession, whether the trade, business or profession is carried on by the owner of the premises or some other person. It includes use in secondary residences, motor homes not used as a permanent principal residence, travel trailers, other recreational vehicles, and transient accommodations. “Transient accommodations” include hotels, motels, inns, travel homes, tourist houses, summer cottages, apartment hotels, or resort lodges or cabins, and any accommodation which is rented for a continuous period of less than one month.

Examples: 1) A person owns a home in Wisconsin where he resides for 7 months each year and a cottage, also in Wisconsin, where he resides for 5 months each year. The home is his principal residence and the cottage is his secondary residence.

2) A person is a resident of Florida and has a home in Florida. The person also retains a home in Wisconsin. The person’s Florida home is her principal residence and her Wisconsin home is her secondary residence.

4. A “continuous” certification designation is provided on the exemption certificate, form S-211, and, if claimed, the form remains in effect until replaced or revoked. A new certificate shall be filed if there is a change in the percentage of exempt use.

(r)

1. Service provided by an electric cooperative to another electric cooperative, or by a telecommunications utility to another telecommunications utility, for disaster relief work performed during a disaster period.

2. In this paragraph:

a. “Disaster period” has the meaning given in s. 77.54 (68) (b) 2., Stats.

b. “Disaster relief work” has the meaning given in s. 77.54 (68) (b) 3., Stats.

c. “Electric cooperative” has the meaning given in s. 76.48 (1g) (c), Stats.

d. “State of emergency” has the meaning given in s. 77.54 (68) (b) 4m., Stats.