The Wisconsin Department of Revenue proposes an order to: repeal Tax 11.26 (3) (g), 11.39 (4) (b), and 11.68 (9) (a) (Example 2); amend Tax 11.04 (1), (2), (4), and (5) (Note 1) and (Note 2), 11.05 (3) (u) and (Note) and (4) (a) and (f) (Note 2), 11.12 (1), (2) (f), (4) (a) (intro), (b) (intro) and 6. (title) and a., (c), and (d), and (7) (Note 1) and (Note 2), 11.14 (12) (d) and (16) and (Note 1) and (Note 2), 11.16 (1) (h) and (3) (c) (Note 1) and (Note 2), 11.17 (4) (b) 6. and (5) (Note 1) and (Note 4), 11.19 (6), 11.26 (3) (h) (Note 1), 11.33 (4) (f), (Example 1), and (Example 2) and (5) (f) (Note 2), 11.48 (3) (Note 1) and (Note 2), 11.49 (2) (b) and (3) (b) (Note 1) and (Note 2), 11.52 (7) (a) and (Note 1) and (Note 2), 11.53 (3) and (7) (Note 1) and (Note 2), 11.57 (2) (i) and (6) (Note 1) and (Note 2), 11.62 (2) (b) and (3) (d) (Note 1) and (Note 2), 11.65 (1) (c), (3), and (5) (Note 1) and (Note 2), 11.66 (4) (b) and (6) (Note 1) and (Note 3), 11.68 (7) (b) 1., 2., and 3. (intro.) and (Example 1) and (Example 2), (9) (a) and (Example 1), and (13) (Note 1) and (Note 2), 11.83 (4) (c), 11.86 (6) (Note 1) and (Note 2), 11.87 (4) (Note 2), 11.92 (1) (b) and (7) (b) (Note 1), and 11.985 (3) (b) and (Note 1); repeal and recreate Tax 11.68 (4) (i); create Tax 11.04 (1) (a) 9., 11.05 (4) (a) 8. and (bg), 11.12 (1) (am), 11.17 (4) (a) 4., 11.48 (2) (f), 11.49 (2) (bg), 11.52 (5m) and (7) (e), 11.57 (2) (r), 11.66 (2) (c) (Note), 11.68 (4) (j) and (7) (b) 2g., 2h., 2r., and 3. a. and b. and (Example), 11.86 (5) (d), 11.87 (3) (h), and 11.92 (1) (bg), relating to sales and use tax provisions and affecting small business.
The scope statement for this rule, SS 102-18, was approved by the Governor on August 27, 2018, published in Register No. 753A1 on September 4, 2018, and approved by the Secretary of Revenue on September 20, 2018. Analysis by the Department of Revenue
Tax 11.05 – ss. 77.52 (1), (2), (13), and (14) and 77.54 (9a), (9g), (10), (15), (17), (20n), (30), (32), (37), (42), (44), and (55), Stats. Tax 11.17 – ss. 77.51 (3pj), (3pm), (7m), (9), and (11m), 77.52 (1) and (2) (a) 1. and 9., and 77.54 (9a), (14), (14m), (14r), (20n), (22b), (28), and (64), Stats. Tax 11.19 – ss. 77.51 (1fr), (8), and (13h), 77.52 (1) and (2) (a) 11., 77.54 (2m), (9a), (9g), (15), (25), (25m), (43), and (59), and 77.55 (1), Stats. Tax 11.52 – ss. 77.51 (1fm), (3n), (3t), (13), and (17w), 77.52 (1), (1m), (2) (a) 2., 6., 7., 10., and 11., and (2m), and 77.54 (20n), (63), and (65m), Stats. Tax 11.53 - ss. 73.03 (38) and (50), 77.51 (9), 77.52 (1), (7), (9), (11), (12), and (19), 77.54 (7), 77.58, and 77.61 (2), Stats. Tax 11.66 – 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 11.68 – ss. 77.51 (2), (12m) (b) 7., (12t), (14) (intro.), (15a) (b) 1. and 4., (15b) (b) 7., 77.52 (2) (a) 10., 11., and 20. and (2m), 77.53 (1), 77.54 (5) (d), (6) (am) 1., 4., and 5., (9m), (26), (26m), (31), (41), (60), (62m), and (65), 77.71 (3), and 77.77 (3), Stats. Tax 11.83 – ss. 77.51 (7m), (13) (am), (14) (j), and (15b) (b) 6., 77.52 (1), (2) (a) 10. and 13m., and (15), 77.53 (1), (1m), (16), (17), and (18), 77.54 (5) (a), (c), and (d), (7) and (22b), 77.56 (2) and (3), 77.61 (1), 77.71 (2) and (4), and 77.73, Stats. Tax 11.985 – ss. 77.51 (1f), (3pf), and (9p), 77.52 (1), (2), (20), (21), (22), and (23), and 77.54 (51) and (52), Stats. Explanation of agency authority: Section 77.65 (3), Stats., provides "[t]he department may promulgate rules to administer this section…" Section 227.11 (2) (a), Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute...” Estimate of amount of time that state employees will spend developing the rule and of other resources necessary to develop the rule: The department estimates it will take approximately 100 hours to develop the rule.
Related statute or rule: There are no other applicable statutes or rules.
Plain language analysis: The rule (1) reflects various law changes, and (2) corrects technical issues.
b.
Butcher Shops Listed as Nonmanufacturers. Repeal s. Tax 11.39 (4) (b) which states that butcher shops are nonmanufacturers, since the processes performed by some butcher shops may qualify as manufacturing and improve readability.d.
Custom Farming. Amend s. Tax 11.57 (2) (i) to include a missing reference to custom farming.e.
Electronics and Information Technology Manufacturing Zone Facilities. Create s. Tax 11.68 (4) (j) to explain the new exemption provided in 2017 Wis. Act 59 for building materials, supplies, and equipment used in the construction or development of facilities located in an electronics and information technology manufacturing zone.h.
Exemptions for Beekeeping. Amend ss. Tax 11.12 and 11.57, to reflect the changes in 2017 Wis. Act 59 expanding the definition of farming to include beekeeping.i.
Exemptions Requiring an Exemption Certificate. Amend s. Tax 11.14 (16) to add s. 77.54 (66), Stats., to the list of exemptions that do not require an exemption certificate to be consistent with the list provided in s. 77.52 (13), Stats., pursuant to 2017 Wis. Act 59. j.
Exemption for Services Performed During a Disaster Period. Create ss. Tax 11.57 (2) (r) and 11.86 (5) (d) and amend s. Tax 11.57 to reflect the exemption created in 2017 Wis. Act 290 for services performed during a disaster period by electric cooperatives or telecommunications utilities.k.
Expand List of Qualifying Exempt Entities for Building Materials Exemption. Amend ss. Tax 11.04 (2) and Tax 11.68 (4) (i) to reflect the changes in 2017 Wis. Acts 59, 190, and 231 to expand the list of qualifying exempt entities to include technical colleges and the UW System, state veterans organizations, and certain title holding companies.l.
Hotels, Motels, and Other Lodging Providers Deemed Consumers. Create s. Tax 11.48 (2) (f) to state that hotels, motels, and other lodging providers are deemed the consumers of telecommunications, ancillary, internet access and cable TV services used in providing lodging services, pursuant to 2017 Wis. Act 17. m.
Increase in Occasional Sale Exemption Threshold. Amend ss. Tax 11.16 (1) (h) and (3) (c) (Note 2), 11.17 (4) (b) 6., 11.33 (4) (f) and (Example 1) and (Example 2), 11.53 (3) and (7) (Note 2), and 11.62 (2) (b) and (3) (d) (Note 2) to reflect the threshold provided in 2017 Wis. Act 59.n.
Internet Access Services. Amend s. Tax 11.66 (2) (c) to create a note that reflects internet access services are no longer taxable effective June 30, 2020, as provided in 2017 Wis. Act 59.r.
Prizes Awarded Through Amusement Devices. Create s. Tax 11.52 (5m) to explain the exemption for prizes purchased by an amusement device operation, as created in 2017 Wis. Act 59, and clarify property that does not qualify for the exemption.s.
Exemption for Public Service Surcharge Repealed. Amend ss. Tax 11.05 (3) (u) and 11.66 (4) (b) and repeal s. Tax 11.26 (3) (g) to reflect 2017 Wis. Act 59, which repealed the surcharge established by the Public Service Commission under s. 256.35 (3m) (f), Stats. u.
Tournament and League Entry Fees. Amend s. Tax 11.65 to reflect the exemption for tournament and league entry fees used as prize money, as created in 2017 Wis. Act 59.v.
Video and Electronic Games Sold to Amusement Device Operators. Amend s. Tax 11.52 (7) (a) and create s. Tax 11.52 (7) (e) to reflect the exemption for a video or electronic game sold to a person who provides a taxable service through an amusement device, as created by 2017 Wis. Act 59.Summary of, and comparison with, existing or proposed federal regulations: The passage of the permanent Internet Tax Freedom Act, as part of Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114–125) on February 24, 2016, prohibited states like Wisconsin, that were grandfathered in temporary versions, from imposing sales tax on internet access services by July 1, 2020. Wisconsin law was revised to reflect this federal preemption effective July 1, 2020. There is no other existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states: The department is not aware of a similar rule in an adjacent state.
Analysis and supporting documents used to determine effect on small business: This rule makes changes to reflect current law and current department policy. This proposed rule order makes no policy or other changes having an effect on small business except for the removal of butcher shops from the list of non-manufacturers. The department recognizes that some butcher shops could qualify as manufacturers and take advantage of various sales and use tax exemptions.
Anticipated costs incurred by private sector: This proposed rule does not have a fiscal effect on the private sector.
Effect on small business: This proposed rule order may have an effect on small business, as described above.
Agency contact person: Please contact Jen Chadwick at (608) 266-8253 or jennifer.chadwick@wisconsin.gov, if you have any questions regarding this proposed rule. Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jen Chadwick
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
SECTION 1. Tax 11.04 (1) is amended to read:
Tax 11.04 (1) Definition. In this rule, "exempt entity" means a person qualifying for an exemption under s. 77.54 (9a) or 77.55 (1), Stats. (a) Section 77.54 (9a), Stats., provides an exemption for sales to this state all of the following: 1. The state of Wisconsin or any agency thereof of the state of Wisconsin, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority any;.
2. Any county, city, village, town or school district in this state;a Wisconsin.
3. A county-city hospital established under s. 66.0927, Stats.; a 5. Any other unit of government in this state or any agency or instrumentality of one or more units of government in this state; any Wisconsin.
6. Any federally recognized American Indian tribe or band in this state; any Wisconsin.
7. Any joint local water authority created under s. 66.0823, Stats.; any 8. Any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under s. 613.80 (2), Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation;a. 10. A local exposition district under subch. II of ch. 229, Stats.;a 11. A local cultural arts district under subch. V of ch. 229, Stats.;a 12. A cemetery company or corporation described under section 501 (c) 13 of the Internal Revenue Code, if the tangible personal property or taxable services are used exclusively by the cemetery company or corporation for the purposes of the company or corporation. (b) Section 77.55 (1), Stats., provides an exemption for sales to the all of the following: 1. The United States, its unincorporated agencies and instrumentalities, and any unincorporated [.
2. Any incorporated] agency or instrumentality of the United States wholly owned by the United States or by a corporation wholly owned by the United States.
