Tax 11.68(1)(1) Definition. In this section, “real property construction activities” means activities that occur at a site where tangible personal property or items or goods under s. 77.52 (1) (b) or (d), Stats., that are applied or adapted to the use or purpose to which real property is devoted are affixed to that real property, if the intent of the person who affixes that property, item, or good is to make a permanent accession to the real property. “Real property construction activities” do not include affixing property subject to tax under s. 77.52 (1) (c), Stats., to real property or affixing to real property tangible personal property that remains tangible personal property after it is affixed. Tax 11.68 NoteNote: The definition of real property construction activities was revised effective for sales of property pursuant to contracts entered into on or after December 1, 1997, to:
Tax 11.68 Note(a) Reverse the effect of the Wisconsin Supreme Court decision in the case of Wisconsin Department of Revenue vs. Sterling Custom Homes (283 N.W. 2d 573 (1979)) prospectively from the effective date of this revision, and Tax 11.68 Note(b) Provide by statute those criteria that were used by the Supreme Court in the case of Dept. of Revenue vs. A.O. Smith Harvestore Products, Inc. (72 Wis. 2d 60, (1976)), for purposes of determining whether tangible personal property becomes real property. The meaning of each of the criteria is explained in the Supreme Court’s decision. Tax 11.68(2)(a)(a) Construction contractors may be retailers with respect to some activities and consumers with respect to others. When a construction contractor acts as a retailer, the contractor shall obtain a seller’s permit and pay the tax on its receipts from retail sales of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services. When the contractor acts as a consumer, the contractor shall pay the tax on its purchases of property, items, and goods consumed. Tax 11.68 NoteNote: 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 11.68(2)(b)1.1. Property, items, and goods it installs which retain their character as personal property after sale and installation. Tax 11.68 NoteNote: Refer to subs. (5) and (7) for the classification of property.
Tax 11.68(2)(b)2.2. Labor or services furnished in installing tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which retain their character as personal property after installation. Tax 11.68 NoteNote: Refer to subs. (5) and (7) for the classification of property.
Tax 11.68(2)(b)3.3. Labor and material furnished in the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance of items of real property which retain their character as tangible personal property for repair purposes. Tax 11.68 NoteNote: Refer to sub. (11) for a description of real property which retains its character as tangible personal property for repair purposes.
Tax 11.68(2)(c)(c) Contractors are consumers of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., they use when engaged in real property construction activities, such as altering, repairing, or improving real property. Tax 11.68(3)(a)(a) Generally, real property construction contractors are persons who perform real property construction activities and include persons engaged in activities such as building, electrical work, plumbing, heating, painting, steel work, ventilating, paper hanging, sheet metal work, bridge or road construction, well drilling, excavating, wrecking, house moving, landscaping, roofing, carpentry, masonry and cement work, plastering, and tile and terrazzo work. Tax 11.68(3)(b)(b) A retailer may also be a real property contractor, such as a department store which sells and installs tangible personal property and items or goods under s. 77.52 (1) (b) or (d), Stats., which becomes a part of real property after installation. Tax 11.68 NoteExample: A water heater or water softener sold and installed in a purchaser’s residence by a retailer becomes real property after installation. The retailer is considered to be a real property contractor.
Tax 11.68(4)(a)(a) Materials used in real property. Under s. 77.51 (2), Stats., contractors who perform real property construction activities are the consumers of building materials which they use in altering, repairing, or improving real property. Therefore, suppliers’ sales of building materials to contractors who incorporate the materials into real property in performing construction activities are subject to the tax. This includes raw materials purchased outside Wisconsin that are used by a contractor in manufacturing tangible personal property or items under s. 77.52 (1) (b), Stats., outside Wisconsin, or that are fabricated or altered outside Wisconsin by a contractor so as to become different or distinct items of tangible personal property or items under s. 77.52 (1) (b), Stats., from the constituent raw materials, and are subsequently stored, used, or consumed in Wisconsin by that contractor. Tax 11.68 NoteNote: Prior to August 12, 1993, raw materials purchased outside Wisconsin that were used by a contractor in manufacturing tangible personal property outside Wisconsin or that were fabricated or altered outside Wisconsin by a contractor so as to become different or distinct items of tangible personal property from the constituent raw materials, and were subsequently stored, used, or consumed in Wisconsin by that contractor were not subject to tax pursuant to the Circuit Court of Dane County decision in Morton Buildings, Inc. vs. Wisconsin Department of Revenue (2/10/92).
Tax 11.68(4)(b)1.1. Tangible personal property and property, items, and goods under s. 77.52 (1) (b), (c), and (d), Stats., which a construction contractor will resell as personal property may be purchased without tax for resale. This includes personal property furnished as part of a real property construction activity when the personal property retains its character as personal property after installation. This also includes personal property furnished as part of a real property construction activity when provided as part of a taxable landscaping service. Tax 11.68 NoteNote: Refer to subs. (5) and (7) for the classification of property.
Tax 11.68(4)(b)2.2. Taxable services which a construction contractor will resell may be purchased without tax for resale. Tax 11.68(4)(c)(c) Machinery and tools purchased by contractors. Machinery and equipment, including road building equipment, tunnel shields, construction machines, and cement mixers, tools, including power saws and hand tools, and supplies, including machine lubricating and fuel oils, form lumber, and industrial gases, purchased by a construction contractor for the contractor’s use are generally either consumed in the process of construction or are removed when the project is completed. The contractor is the consumer of the personal property and shall pay the tax on its purchases of the property. However, an exemption is provided in s. 77.54 (5) (d), Stats., for mobile cement mixers used for mixing and processing and the motor vehicle or trailer on which a mobile mixing unit is mounted, including accessories, attachments, parts, supplies, and materials for the vehicles, trailers, and units. Tax 11.68(4)(d)(d) Waste treatment facilities. Under s. 77.54 (26), Stats., contractors may purchase without sales or use tax tangible personal property and items and property under s. 77.52 (1) (b) and (c), Stats., which become a component part of an industrial waste treatment facility that would be exempt under s. 70.11 (21), Stats., if the property were taxable under ch. 70, Stats., or a municipal waste treatment facility, even though they are the consumers of the property and items. Tax 11.68 NoteNote: Refer to s. Tax 11.11 regarding industrial and municipal waste treatment facilities. Tax 11.68(4)(e)(e) Waste reduction and recycling. Under s. 77.54 (26m), Stats., contractors may purchase without sales or use tax waste reduction and recycling machinery and equipment, including parts, which are exclusively and directly used for waste reduction and recycling activities which reduce the amount of solid waste generated, reuse, recycle, or compost solid waste, or recover energy from solid waste, even though they are the consumers of the property. Tax 11.68 NoteExamples: 1) Equipment used in a foundry to clean sand so that the sand can be reused qualifies for exemption.
Tax 11.68 Note2) Equipment used to remove impurities from lubricating oil used in manufacturing machines so that the oil can continue to be used by the manufacturer qualifies for exemption.
Tax 11.68 Note3) Equipment used to produce fuel cubes qualifies for exemption. This equipment shreds waste paper and cardboard, removes foreign objects, blends the materials with a binding agent, adds moisture if necessary and then compresses the materials into fuel cubes which are burned by homeowners or others to replace wood.
Tax 11.68 Note4) A roto-mill machine that mines old pavement and grinds up the mined materials to be reused in construction activities qualifies for exemption.
Tax 11.68 Note5) Large steel waste collection containers, including dumpsters, which may be picked up and dumped into waste collection trucks or hauled away on flatbed trucks, or which may mechanically compact the waste in the container do not qualify for exemption.
Tax 11.68(4)(f)(f) Sports and entertainment home stadiums. Under s. 77.54 (41), Stats., contractors, subcontractors, or builders may purchase without sales or use tax building materials, supplies, and equipment acquired solely for or used solely in the construction, renovation, or development of property that would be exempt under s. 70.11 (36), Stats. Section 70.11 (36), Stats., exempts property consisting of or contained in a sports and entertainment home stadium, including but not limited to parking lots, garages, restaurants, parks, concession facilities, transportation facilities, and functionally related or auxiliary facilities and structures; including those facilities and structures while they are being built; constructed by, leased to, or primarily used by a professional athletic team that is a member of a league that includes teams that have home stadiums in other states, and the land on which that stadium and those structures and facilities are located. Tax 11.68(4)(g)(g) Modular and manufactured homes used outside Wisconsin. Under s. 77.54 (5) (am), Stats., contractors and subcontractors may purchase without sales and use tax modular homes, as defined in s. 101.71 (6), Stats., and manufactured homes as defined in s. 101.91 (2), Stats., that are used in real property construction activities outside Wisconsin. Tax 11.68(4)(h)(h) Fertilizer blending, feed milling, and grain drying operations. Under s. 77.54 (6) (bn), Stats., contractors and subcontractors may purchase without sales and use tax the items described in s. 77.54 (6) (am) 4. and 5., Stats., and used by the contractor or subcontractor in real property construction activities which satisfy the conditions described in s. 77.54 (6) (am) 4. and 5. and (bn), Stats., regarding a fertilizer blending, feed milling, or grain drying operation. Tax 11.68(4)(i)(i) Building materials for facilities owned by local governmental units and certain nonprofit organizations. Tax 11.68(4)(i)1.1. Under s. 77.54 (9m), Stats., contractors may purchase without sales or use tax building materials that the contractor, in fulfillment of a real property construction activity, transfers to a qualifying exempt entity if the materials become part of a facility in Wisconsin that is owned by the entity. Tax 11.68(4)(i)2.a.a. “Qualifying exempt entity” means an entity described in s. 77.54 (9a) (b), (c), (d), (em), and (f), and (fc), and (9g), Stats., a technical college district, the Board of Regents of the University of Wisconsin System, an institution, as defined in s. 36.05 (9), Stats., a college campus, as defined in s. 36.05 (6m), Stats., or the University of Wisconsin-Extension. Tax 11.68(4)(i)2.b.b. “Facility” means any building, shelter, parking lot, parking garage, athletic field, athletic park, storm sewer, water supply system, or sewerage and waste water treatment facility. “Facility” does not include highways, streets, roads, sidewalks or paths, regardless of whether located within a facility. Tax 11.68 NoteExamples: 1) Materials that become a component part of the road, curb, gutters, or sidewalk are not part of a facility, such as black top, cement, and road base materials.
Tax 11.68 Note2) Materials that become a component part of a storm sewer facility and the materials necessary to stabilize those items are part of the storm sewer facility, such as piping, fittings, gravel and other fill necessary to bury the storm sewer piping to protect it from the road. Any road base material used to bring the road to elevation, and the road surface itself, is not part of a facility.
Tax 11.68 Note3) Pipes, pipe liner material, manhole structures, manhole covers, manhole liners, and manhole coatings become a component part of the storm sewer facility.
Tax 11.68(4)(i)2.c.c. A Wisconsin organization described under s. 77.54 (9a) (f), Stats., shall hold a Wisconsin Certificate of Exempt Status number. A non-Wisconsin organization described under s. 77.54 (9a) (f), Stats., and a state veterans organization described in s. 77.54 (9g), Stats., are not required to hold a Wisconsin Certificate of Exempt Status number. Tax 11.68(4)(i)2.d.d. A contractor’s purchase of building materials transferred to a county, city, village or town, a state governmental unit, or a federal governmental unit outside Wisconsin are not exempt. Tax 11.68(4)(i)2.e.e. A contractor’s purchase of building materials transferred to a person other than a qualifying entity is exempt if the person does not use the facility for any purpose other than to transfer it to the qualifying entity. Tax 11.68 NoteExample: Building materials for the construction of a parking ramp that will be owned and operated by a developer prior to transfer to a municipality, does not qualify for the exemption.
Tax 11.68(4)(i)2.f.f. A subcontractor’s purchase of building materials is exempt if the materials are transferred to a qualifying entity and, upon completion of the facility, the materials become a part of the facility in Wisconsin that is owned by the qualifying entity, pursuant to a contract between a general contractor and the qualifying entity, and the general contractor does not use the facility for any purpose other than to transfer it to the entity. Tax 11.68(4)(i)2.g.g. The exemption applies to contracts entered into on or after January 1, 2016. The exemption does not apply to purchases of building materials after January 1, 2016, for a contract that was entered into prior to January 1, 2016, even if the change order relating to those materials was executed after January 1, 2016. Tax 11.68 NoteNote: The effective date is different for contracts with certain exempt qualifying entities. Contracts with certain title holding companies became effective September 1, 2017. Contracts with technical colleges, the UW System, and state veterans organization became effective July 1, 2018.
Tax 11.68(4)(j)(j) Electronics and information technology manufacturing zone facilities. Under s. 77.54 (65), Stats., owners, lessees, contractors, subcontractors, or builders may purchase without sales or use tax building materials, supplies, equipment, and landscaping services if both of the following apply: Tax 11.68(4)(j)1.1. The property or landscaping service is acquired solely for or used solely in, the construction or development of a facility located in an electronics and information technology manufacturing zone designated under s. 238.396 (1m), Stats. Tax 11.68(5)(5) Classification of property after installation. Tax 11.68(5)(a)(a) Contractors shall determine whether a particular contract or transaction results in an improvement to real property or in the sale and installation of personal property. In determining whether personal property becomes a part of real property, the following criteria shall be considered: Tax 11.68(5)(a)2.2. Application or adaptation to the use or purpose to which the real property is devoted. Tax 11.68(5)(a)3.3. An intention on the part of the person making the annexation to make a permanent accession to the real property. Tax 11.68 NoteNote: See Dept. of Revenue vs. A. O. Smith Harvestore Products, Inc.(1976), 72 Wis. 2d 60, regarding determining whether personal property becomes a part of real property. Tax 11.68(5)(b)(b) Certain types of property that have a variety of functions may be personal property in some instances and additions to real property in others, including boilers, furnaces, stand-by generators, pumps, substations, and transformers. When this property is installed primarily to provide service to a building or structure and is essential to the use of the building or structure, it is a real property improvement. However, when similar property is installed in a manufacturing plant to perform a processing function, it may, as machinery, retain its status as personal property. Tax 11.68(6)(6) Personal property which becomes a part of realty. A construction contractor is the consumer of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., such as building materials, which is incorporated into or becomes a part of real property, and sales of this personal property to a contractor are subject to the tax. Personal property which becomes a part of real property includes the following: Tax 11.68(6)(b)(b) Built-in household items such as kitchen cabinets, dishwashers, fans, garbage disposals, central vacuum systems, and incinerators. Tax 11.68(6)(bm)(bm) Casework, tables, counters, cabinets, lockers, sinks, athletic and gymnasium equipment attached to the structure in apartment buildings, convalescent homes, or other residential buildings. Tax 11.68(6)(d)(d) Personal property that is used to construct buildings, and structural and other improvements to buildings, including awnings, canopies, carpeting, foundations for machinery, floors, including computer room floors, partitions and movable walls attached in any way to realty, holding structures used in fertilizer blending, feed milling, or grain drying operations, underground wiring, general wiring and lighting facilities, roofs, stairways, stair lifts, sprinkler systems, storm doors and windows, door controls, air curtains, loading platforms, central air conditioning units, building elevators, sanitation and plumbing systems, and heating, cooling, and ventilation systems. Tax 11.68(6)(f)(f) Personal property that is used to construct improvements to land. “Improvements to land,” as used in this section, include retaining walls, roads, walks, bridges, fencing, railway switch tracks, ponds, dams, ditches, wells, underground irrigation systems except systems sold to and for use by farmers, drainage, storm, and sanitary sewers, and water supply lines for drinking water, sanitary purposes, and fire protection. Tax 11.68(6)(g)(g) Residential water heaters, water softeners, intercoms, incinerators, and garage door opening equipment, except portable equipment. Tax 11.68(6)(h)(h) Personal property that is used to construct silos and the building portion of grain elevators. Tax 11.68(6)(m)(m) Walk-in cold storage units becoming a component part of a building. Tax 11.68(7)(7) Property which remains personal property and construction contract exemption. Tax 11.68(7)(a)(a) Property which remains personal property. Contractors shall obtain a seller’s permit and report for taxation the sales price received from the sale and installation of tangible personal property and items and goods under s. 77.52 (1) (b) and (d), Stats., which retains its character as personal property after installation, such as: Tax 11.68(7)(a)1.1. Furniture, radio and television sets and antennas, washers and dryers, portable lamps, home freezers, portable appliances, and window air conditioning units. Tax 11.68(7)(a)2.2. Communication equipment, including intercoms, pneumatic tube systems, roof mounted antennas, CATV wiring, and music and sound equipment in business, industrial, or commercial buildings, schools, and hospitals, but not in apartment buildings, convalescent homes, or other residential buildings. Tax 11.68(7)(a)3.3. Casework, tables, counters, cabinets, lockers, sinks, athletic and gymnasium equipment, and related easily movable property attached to the structure in schools, laboratories, and hospitals, except if attached to the structure in the bathrooms of such facilities. Tax 11.68(7)(a)4.4. Machinery, including safety attachments, equipment, tools, appliances, process piping and wiring, and grain handling equipment and grain elevator legs used exclusively by manufacturers, industrial processors, and others performing a processing function with the items. Tax 11.68(7)(a)5.5. Office, bank, and savings and loan association furniture and equipment, including office machines, safe deposit boxes, drive-up and walk-up windows, night depository equipment, remote TV auto teller systems, camera security equipment except when used to monitor for unauthorized entry to a building or room in a building, and vault doors. Tax 11.68(7)(a)6.6. Personal property used to carry on a trade or business, including fixtures and equipment installed in stores, taverns, night clubs, restaurants, ice arenas, bowling centers, hotels and motels, barber and beauty shops, figure salons, theaters, and gasoline service stations. Underground storage tanks at gasoline service stations are real property. Tax 11.68(7)(a)7.7. Shades, curtains, drapes, venetian blinds, and associated hardware. Tax 11.68(7)(a)7m.7m. Satellite dish systems installed on residential and commercial buildings, but not satellite dish systems that are installed by permanently affixing the satellite dish to a concrete foundation in apartment buildings, convalescent homes, or other residential buildings.
