Tax 11.66 Note
Note: Sales of internet access services are not subject to Wisconsin sales or use tax after June 30, 2020.
Tax 11.66(2)(d)
(d) Telecommunications message services that consist of recording telecommunications messages and transmitting them to the purchaser of the service or at that purchaser's direction, but not including services that are taxable under par.
(a),
(b), or
(c), or services that are incidental, as defined in s.
77.51 (5), Stats., to another service that is not taxable under subch.
III of ch. 77, Stats., and sold to the purchaser of the incidental service. Telecommunications message services include the following:
Tax 11.66 Note
Examples: 1) A real estate business, whose employees spend considerable periods of time away from its office, contracts with Company A to answer incoming telephone calls during periods when employees are not available to answer the telephone. Employees of Company A receive the calls to the real estate office by telephone, take messages from incoming callers, and transmit the messages to the real estate company or particular employees in that company. The service provided by Company A is not incidental to another service sold by the company that is not a taxable service. Company A's charge for this service is subject to Wisconsin sales or use tax.
Tax 11.66 Note
2) Company B employs an office management service that provides receptionist, typing, filing, scheduling, bookkeeping, and similar services. Employees of the office management service also answer and route incoming telephone calls. When calls cannot be routed, the office management service takes and transmits messages to the appropriate person. This answering service is only a small part of the total services provided.
Tax 11.66 Note
The telephone answering service provided as a part of the office management service is not subject to Wisconsin sales or use tax because it is incidental to the office management service provided and that office management service is not taxable.
Tax 11.66(2)(d)2.
2. Security monitoring services that consist of recording a telecommunications message and notifying the customer or local authorities of the message.
Tax 11.66(2)(d)4.
4. Mechanical or electronic voice messaging and telephone answering services, except ancillary services.
Tax 11.66 Note
Example: Company A provides its customers access to an office message system computer through which a customer can deposit or retrieve telephone messages using a touch-tone telephone. The service may be used as a message center, a call forwarding service, or an answering service. Messages are stored in the computer, and the customer may send or retrieve messages, reply to a message directly, reroute messages to others, broadcast messages to a wider group, save selected messages, and cancel messages no longer needed. The service is available 24 hours a day, and the customer accesses the computer through either a toll-free telephone number or a local telephone number. The service provided by Company A is not incidental to another service sold by the company that is not a taxable service and is not associated with or incidental to providing telecommunications services. Company A's charges for this service are subject to Wisconsin sales or use tax.
Tax 11.66(3)
(3)
Sourcing. This subsection describes the sourcing of telecommunications services, ancillary services, and telecommunications message services.
Tax 11.66(3)(a)1.1. Except as provided in subds.
3. to
7., the sale of a telecommunications service that is sold on a call-by-call basis is sourced to the taxing jurisdiction:
Tax 11.66(3)(a)1.a.
a. where the call originates and terminates, if the call originates and terminates in the same taxing jurisdiction; or
Tax 11.66(3)(a)1.b.
b. where the call either originates or terminates and where the service address is located, if the call does not originate and terminate in the same taxing jurisdiction.
Tax 11.66(3)(a)2.
2. Except as provided in subds.
3. to
7., the sale of a telecommunications service that is sold on a basis other than a call-by-call basis is sourced to the customer's place of primary use, as defined in sub.
(1) (u).
Tax 11.66(3)(a)3.
3. The sale of a mobile telecommunications service, except an air-to-ground radiotelephone service and a prepaid calling service, is sourced to the customer's place of primary use, as defined in sub.
(1) (u).
Tax 11.66(3)(a)4.
4. The sale of a postpaid calling service is sourced to the location where the signal of the telecommunications service originates, as first identified by the seller's telecommunications system or, if the signal is not transmitted by the seller's telecommunications system, by information that the seller received from the seller's service provider.
Tax 11.66(3)(a)5.
5. The sale of a prepaid calling service or a prepaid wireless calling service is sourced to the location determined under s.
Tax 11.945 (2).
Tax 11.66(3)(a)6.
6. The sale of a prepaid wireless calling service is sourced to the location determined under s.
Tax 11.945 (2), except that if the location cannot be determined under s.
Tax 11.945 (2) (a) to
(d), the prepaid wireless calling service occurs at the location determined under s.
Tax 11.945 (2) (e) 3., or the location associated with the mobile telephone number, as determined by the seller.
Tax 11.66(3)(a)7.a.a. The sale of a private communication service for a separate charge related to a customer channel termination point is sourced to the location of the customer channel termination point.
Tax 11.66(3)(a)7.b.
b. The sale of a private communication service in which all customer channel termination points are located entirely in one taxing jurisdiction for sales and use tax purposes is sourced to the taxing jurisdiction in which the customer channel termination points are located.
Tax 11.66 Note
Example: Company A contracts with Telecommunications Provider B for private communication service to send data from Company A's bank, located in Milwaukee, Wisconsin, to Company A's automated teller machines or “ATMs," located in Milwaukee, Wisconsin, and to send data from its ATMs in Milwaukee to its bank in Milwaukee. The charge by Telecommunications Provider B to Company A is based on a certain amount of dedicated channel capacity available to Company A on the communications channel, regardless of the volume of data transmitted or number of transmissions made by Company A. Since all of the customer channel termination points are located in Milwaukee, Wisconsin, the entire service is sourced to Milwaukee.
Tax 11.66(3)(a)7.c.
c. If the segments are charged separately, the sale of a private communication service that represents segments of a communications channel between 2 customer channel termination points that are located in different taxing jurisdictions for sales and use tax purposes is sourced in an equal percentage to both jurisdictions.
Tax 11.66 Note
Example: Company B contracts with Telecommunications Provider C for private communication service to send data from Company B's bank, located in Milwaukee, Wisconsin, to Company B's automated teller machine (ATM) located in Waukesha, Wisconsin. Telecommunications Provider C charges Company B based on the location of the segments of the channel termination points. Since Company B has 2 customer channel termination points that are located in different taxing jurisdictions, one located in Milwaukee and the other located in Waukesha, the charge by Telecommunications Provider C to Company B is sourced equally between the Milwaukee taxing jurisdiction and the Waukesha taxing jurisdiction.
Tax 11.66(3)(a)7.d.
d. If the segments are not charged separately, the sale of a private communication service for segments of a communications channel that is located in more than one taxing jurisdiction for sales and use tax purposes is sourced to each jurisdiction in a percentage determined by dividing the number of customer channel termination points in that jurisdiction by the number of customer channel termination points in all jurisdictions where segments of the communications channel are located.
Tax 11.66 Note
Example: Company JKL, headquartered in Milwaukee, Wisconsin, has branch offices in Madison, Wisconsin, Green Bay, Wisconsin, Chicago, Illinois and Minneapolis, Minnesota. Company JKL contracts with a telecommunications company for private communication service to send messages between and among its Milwaukee office and the branch offices. Company JKL has exclusive use of the channels while using them. The telecommunications company sells use of the communications channels to other parties while Company JKL is not using them. The charges by the telecommunications company to Company JKL are based on a certain amount of dedicated channel capacity available to Company JKL on the communications channels. The telecommunications company does not bill separately for the segments of the communications channels. Increasing capacity requires a higher charge. The telecommunications company refers to this service as “private line service." Of the charges by the telecommunications company to Company JKL for this service, 60% are subject to Wisconsin sales or use tax because 3 of the 5 customer channel termination points are located in Wisconsin.
Tax 11.66(3)(a)7.e.
e. No credit for tax paid to another state is allowed where the other state apportions the service in a manner similar to that provided in subd.
7. c. and
d. Tax 11.66(3)(b)
(b) Ancillary services. Except for detailed telecommunications billing services, ancillary services are sourced to the customer's place of primary use, as defined in sub.
(1) (u).
Tax 11.66(3)(d)
(d) Exceptions. For purposes of pars.
(a) and
(b), if the location of the customer's service address, channel termination point, or place of primary use is not known, the location where the seller receives or hands off the signal shall be considered, for purposes of this rule, the customer's service address, channel termination point, or place of primary use.
Tax 11.66(3)(e)
(e) Telecommunications message services. Telecommunications message services are sourced to the location determined under s.
Tax 11.945 (2), which will generally result in the sale being sourced to the location where the customer, or someone at the direction of the customer, receives the message.
Tax 11.66(4)
(4)
Nontaxable services. The sales price from the sale of or charge for the following services are not taxable:
Tax 11.66(4)(a)
(a) Interstate or international telecommunications service if the service is sourced to a location outside Wisconsin.
Tax 11.66 Note
Note: Section 256.35 (3m), Stats. was repealed by
2017 Wis. Act 59.
Tax 11.66(4)(c)
(c) Transfers of telecommunications services to resellers who purchase, repackage and resell the services to customers. The reseller is liable for sales tax on its final retail sales of those services.
Tax 11.66(4)(e)
(e) Transfers of services, commonly called “access services," to an interexchange carrier which permit the origination or termination of telephone messages between a customer in Wisconsin and one or more points in another telephone exchange, and which are resold by the interexchange carrier. The interexchange carrier is liable for sales tax on its final retail sales of those services.
Tax 11.66(5)
(5)
Credit for tax paid to another state. Any person who is subject to the tax under s.
77.52 (2) (a) 5., Stats., on telecommunications services that terminate in Wisconsin and who has paid a similar tax on the same services to another state may reduce the amount of the tax remitted to Wisconsin by an amount equal to the similar tax properly paid to another state on those services or by the amount due Wisconsin on those services, whichever is less. That person shall refund proportionally to the persons to whom the tax under s.
77.52 (2) (a) 5., Stats., was passed on an amount equal to the amounts not remitted.
Tax 11.66(6)
(6)
Purchases by persons providing service. Persons engaged in the business of providing telecommunications services are consumers, not retailers, of the tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., used by them or transferred incidentally by them in providing those services. The tax applies to the sale of the property, items, or goods to them.
Tax 11.66 Note
Note: Section
Tax 11.66 interprets ss.
77.51 (1ba),
(1r),
(3c),
(3pe),
(3pn),
(3rn),
(5d),
(5f),
(5n),
(5r),
(7k),
(8m),
(9s),
(10d),
(10f),
(11c),
(13rn),
(17m),
(21n),
(24),
(25), and
(26),
77.52 (2) (a) 5. and
5m.,
77.522 (4),
77.525, and
77.54 (37), Stats.
Tax 11.66 Note
Note: The Dane County Circuit Court's decision of May 22, 1981 in Wisconsin Department of Revenue v. North-West Services Corporation and North-West Telephone Company held that a telephone company may purchase without tax tangible personal property leased or rented to customers in conjunction with an activity open to competition with others who are not public utilities.
Tax 11.66 Note
Note: The interpretations in s. Tax 11.66 are effective under the general sales and use tax law on or after September 1, 1969, except: (a)
Chapter 39, Laws of 1975, effective July 31, 1975, expanded the telephone services subject to the tax to include “telephone services of whatever nature"; (b)
Chapter 317, Laws of 1981, imposed the tax on interstate telegraph and telephone service, effective May 1, 1982; (c) “911" service became exempt on August 1, 1987, pursuant to
1987 Wis. Act 27; (d) Telecommunications services originating in Wisconsin and charged to a subscriber in Wisconsin became taxable October 1, 1989, pursuant to
1989 Wis. Act 31; (e) Telecommunications services originating in Wisconsin and charged to a service address in Wisconsin became taxable October 1, 1991, pursuant to
1991 Wis. Act 31; (f) The repeal of the exemption for equipment in central offices of telephone companies became effective September 1, 1995, pursuant to
1995 Wis. Act 27; (g) Telecommunications services paid for by the insertion of coins in a coin-operated telephone became taxable August, 1, 1996, pursuant to
1995 Wis. Act 351; (h) Certain telecommunications message services became taxable December 1, 1997, pursuant to
1997 Wis. Act 27; (i) Telecommunications services originating outside Wisconsin, terminating in Wisconsin and charged to a service address in Wisconsin, except certain services obtained by means of a toll-free number, became taxable December 1, 1997, pursuant to
1997 Wis. Act 27; (j) Credit for sales tax properly paid to another state on interstate telecommunications services became effective October 14, 1997, pursuant to
1997 Wis. Act 27; (k) Sales of rights to purchase telecommunications services became taxable August 1, 1998, pursuant to
1997 Wis. Act 237; (L) The exemption for interstate private line services no longer applies, effective December 1, 2002; (m) The definitions of air-to-ground radio telephone service, ancillary services, call-by-call basis, communications channel, conference bridging service, customer, customer channel termination point, detailed telecommunications billing services, directory assistance, eight hundred service, end user, fixed wireless service, home service provider, international telecommunications services, internet access services, interstate telecommunications services, intrastate telecommunications services, mobile telecommunications service, nine hundred service, paging service, place of primary use, postpaid calling service, prepaid calling service, prepaid wireless calling service, private communications service, radio service, radiotelegraph service, radiotelephone service, service address, telecommunications service, value-added nonvoice data service, vertical service, and voice mail service became effective October 1, 2009, pursuant to
2009 Wis. Act 2; (n) The specific imposition of tax on ancillary services and interstate, intrastate, and international telecommunications services became effective October 1, 2009, pursuant to
2009 Wis. Act 2; (o) The sourcing provisions related to telecommunications services became effective October 1, 2009, pursuant to
2009 Wis. Act 2; (p) 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; (q) The definition of “primary place of use" was amended to replace the reference to federal law with specific language, and the definition of “prepaid wireless calling service" was amended, pursuant to
2013 Wis. Act 20; and (r) The imposition of tax on internet access services under s. 77.52 (2) (a) 5. a., Stats., is repealed effective July 1, 2020, pursuant to
2017 Wis. Act 59.
Tax 11.66 History
History: Cr.
Register, December, 1977, No. 264, eff. 1-1-78; am. (1) (a), (b), (d) and (e), (2),
Register, January, 1983, No. 325, eff. 2-1-83; cr. (1) (f),
Register, July, 1987, No. 379, eff. 8-1-87; emerg. r. and recr. (1) (a) and (b), eff. 10-1-89; r. and recr.
Register, April, 1990, No. 412, eff. 5-1-90; renum. (3) (d) and (e) to be (4) (f) and (3) (d),
Register, March, 1991, No. 423, eff. 4-1-91; r. and recr.,
Register, September, 1993, No. 453, eff. 10-1-93; am. (2) (intro.) and (5),
Register, September, 1997, No. 501, eff. 10-1-97;
CR 99-101: r. and recr. (1) (a) and (3), renum. (1) (b), (2), (4) (intro.) to (c), (f), and (5) to be (1) (d), (2) (a), (5) (intro.) to (c), (e) and (8) and am. (2) (a) (intro.), 1., 2. (intro.), (5) (intro.), (a), (c) and (e), cr. (1) (b), (c) and (e), (2) (intro.) and (b), (4), (5) (d), (6) and (7), r. (4) (d) and (e),
Register November 2002 No. 563, eff. 12-1-02;
EmR0924: emerg. r. and recr. eff. 10-1-09;
CR 09-090: r. and recr.
Register May 2010 No. 653, eff. 6-1-10; correction in (2) (d) (intro.) made under s.
13.92 (4) (b) 7., Stats.,
Register May 2010 No. 653;
CR 10-094: am. (2) (intro.)
Register November 2010 No. 659, eff. 12-1-10;
CR 12-014: r. (2) (a) 9., cr. (2) (cm), am. (3) (a) 2., 3., (b), (c)
Register August 2012 No. 680, eff. 9-1-12;
CR 14-006: r. and recr. (1) (u), am. (1) (x)
Register August 2014 No. 704, eff. 9-1-14;
CR 20-018: am. (4) (b)
Register July 2021 No. 787, eff. 8-1-21;
CR 22-044: am. (3) (intro.), r. (3) (c), am. (3) (d) Register June 2023 No. 810, eff. 7-1-23. Tax 11.67(1)(1)
General. When a transaction involves the transfer of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., along with the performance of a service, and the transaction is neither a bundled transaction, as defined in s.
Tax 11.985, nor a transaction to which s.
77.52 (2m) (b), Stats., applies, the true objective of the purchaser shall determine whether the transaction is a sale of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., or the performance of a service with the transfer of the property, item, or good being incidental to the performance of the service. If the objective of the purchaser is to obtain the personal property, item, or good, a taxable sale of that property, item, or good is involved. However, if the objective of the purchaser is to obtain the service, a sale of a service is involved even though, as an incidence to the service, some tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., may be transferred.
Tax 11.67 Note
Example: A person performing business advisory, record keeping, payroll, and tax services for small businesses is providing a service even though this person may provide forms and binders without charge as part of the service. The person is the consumer, not the seller, of tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., furnished as an incidence to the service.
Tax 11.67(2)
(2)
Receipts and purchases of persons providing services. Tax 11.67(2)(a)(a) Since persons engaged in the business of furnishing services are consumers, not retailers, of the tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., which they use in rendering their services, tax applies to the sale of the tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., to them.
Tax 11.67 Note
Example: Persons engaged in the business of furnishing services include physicians, lawyers and accountants.
Tax 11.67(2)(b)
(b) A person who performs a nontaxable service in conjunction with the sale of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., is a retailer with respect to the sale, and the tax applies to the total sales price from the sale without any deduction for the work, labor, skill, time spent, or other expense of producing the property, item, or good.
Tax 11.67(2)(c)1.1. If there is a single charge for providing both taxable and nontaxable services that are not a bundled transaction as defined in s.
77.51 (1f), Stats., the entire charge is subject to the tax, unless it is determined by the department that another method, such as allocation or primary purpose of the transaction, more accurately reflects the tax. If the charges for taxable and nontaxable services are separately stated on an invoice, the tax applies only to the charge properly attributable to the taxable services, unless it is determined by the department that the primary purpose of the transaction method for computing the tax more accurately reflects the tax.
Tax 11.67(2)(c)2.
2. If there is a single charge for providing both taxable and nontaxable services in a transaction that is a bundled transaction as defined in s.
77.51 (1f), Stats., the entire charge is subject to the tax, except as provided in s.
77.52 (20) (b), Stats.
Tax 11.67(3)(a)(a) Hospitals and clinics. Hospitals and medical clinics generally provide nontaxable professional services. They are, therefore, the consumers of tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., used in rendering the services. Hospitals and clinics which, in addition to rendering professional services, also sell tangible personal property, items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., or taxable services are retailers and shall obtain a seller's permit and report the tax on these sales.
Tax 11.67 Note
Examples: 1) Sales of drugs by a hospital or clinic pharmacy are taxable if they are not dispensed under a prescription.
Tax 11.67 Note
2) Sales of parking for motor vehicles by a hospital or clinic are taxable.
Tax 11.67 Note
Note: Refer to s.
Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.
Tax 11.67(3)(b)
(b) Original manuscripts or musical arrangements. The transfer to a publisher of an original manuscript or musical arrangement for publication is not a sale of tangible personal property or a digital good under s.
77.52 (1) (d), Stats., and is not subject to the tax. However, the sale of copies of an author's or composer's work is a sale of tangible personal property or a digital good under s.
77.52 (1) (d), Stats., and is taxable. The sale of a manuscript is taxable if the manuscript itself is of particular value as an item of tangible personal property or as a digital good under s.
77.52 (1) (d), Stats., and the purchaser is buying the property or good, and not the service which went into it.
Tax 11.67(3)(c)
(c) Artistic expressions. Sales of works of art, such as paintings and sculptures, are taxable.
Tax 11.67(3)(d)1.1. An interior designer's fee is taxable when the designer's services are part of a sale of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats. If a designer bills a client only for the full list price of the property, item, or good sold and then receives the equivalent of a fee through the designer's supplier in the form of a trade discount, the designer shall pay a tax on the full amount billed the client without any deduction for services performed.
Tax 11.67 Note
Example: A designer's fee is taxable when it is added to the bill for tangible personal property and items, property, and goods under s.
77.52 (1) (b),
(c), and
(d), Stats., on a cost-plus arrangement.
Tax 11.67(3)(d)2.
2. A designer's fee is not taxable if the fee is solely for services rendered and there is no sale of tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., involved with the transaction.
Tax 11.67(3)(d)3.
3. If there is a separate charge for the designer's fee in addition to a separate and optional charge for any tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., the designer sells to the client, the designer's fee is not part of the sales price of the tangible personal property or items, property, or goods under s.
77.52 (1) (b),
(c), or
(d), Stats., if the client had all of the following choices:
