Chapter 77

77.52(21)(b) (b) Except as provided in sub. (2m) (a), a person who provides a product that is not distinct and identifiable because it is provided free of charge to a purchaser who must also purchase another product that is subject to the tax imposed under this subchapter from that person in the same transaction may purchase the product provided free of charge without tax, for resale.

77.52(22) (22) With regard to transactions described in s. 77.51 (1f) (b), the service provider is the consumer of the tangible personal property or items, property, or goods under sub. (1) (b), (c), or (d) and shall pay the tax imposed under this subchapter on the purchase price of the property, items, or goods.

77.52(23) (23) With regard to transactions described in s. 77.51 (1f) (c), the service provider is the consumer of the service that is essential to the use or receipt of the other service and shall pay the tax imposed under this subchapter on the purchase price of the service that is essential to the use or receipt of the other service.

77.52 History History: 1973 c. 156; 1975 c. 39; 1977 c. 29, 142, 418; 1979 c. 174, 221; 1981 c. 20, 317; 1983 a. 2, 27; 1983 a. 189 ss. 99, 103, 107, 329 (12); 1983 a. 341, 510, 544; 1985 a. 29, 149; 1987 a. 27, 399; 1989 a. 31, 335; 1991 a. 39, 316; 1993 a. 112, 213, 308, 437; 1995 a. 27, 225, 351; 1997 a. 27, 237, 291; 1999 a. 9, 83; 1999 a. 150 s. 672; 2001 a. 16, 104, 109; 2003 a. 33, 321; 2005 a. 149, 327, 344; 2007 a. 11, 20, 42, 97; 2009 a. 2, 12, 28, 330; 2011 a. 18, 32; 2013 a. 20, 185; 2015 a. 84, 216; 2017 a. 17, 59, 324, 365, 367; 2019 a. 10; 2021 a. 1; 2021 a. 239 s. 74; 2023 a. 121, 138, 141; s. 13.92 (1) (bm) 2.; s. 13.92 (2) (i); s. 35.17 correction in (13).

77.52 Annotation Meals served by a religious order in carrying out its religious work were not subject to sales tax for that portion of charges made to guests for lodging, food, and use of the order’s facilities. Kollasch v. Adamany, 104 Wis. 2d 552, 313 N.W.2d 47 (1981).

77.52 Annotation Sub. (18) provides no relief from successor liability when the entire purchase price is paid to a secured creditor. Kastengren v. DOR, 179 Wis. 2d 587, 508 N.W.2d 431 (Ct. App. 1993).

77.52 Annotation Contractors are considered to be the consumers of personal property used by them in real property construction and are subject to sales tax. Performing a real property construction activity for an exempt entity does not make a contractor exempt. Zignego Co. v. DOR, 211 Wis. 2d 819, 565 N.W.2d 590 (Ct. App. 1997), 96-1965.

77.52 Annotation A resort’s sale of flexible time-share interests in condominiums was subject to sales tax. Sub. (2) (a) 1., as applied to sales of flexible time-shares, does not violate the article VIII, section 1, of the Wisconsin Constitution, “uniformity clause,” nor does it violate guarantees of equal protection. Telemark Development, Inc. v. DOR, 218 Wis. 2d 809, 581 N.W.2d 585 (Ct. App. 1998), 97-3133.

77.52 Annotation A communications tower constructed on leased land was properly deemed “personal property.” The owner of the tower was liable for sales tax on proceeds from renting or leasing space on the tower, and a renter of space on the tower was liable for use tax on its rental of space on the tower. All City Communication Co. v. DOR, 2003 WI App 77, 263 Wis. 2d 394, 661 N.W.2d 845, 02-1201.

77.52 Annotation Whether Milwaukee Symphony Orchestra concerts were entertainment events, ticket sales to which are subject to sales tax under sub. (2) (a) 2., depends on the “primary purpose” of the event. The determination is a holistic one that looks to the motivation, mission, or purpose of the sponsoring organization, as well as any evidence of the motivation and reaction of those paying admission and ultimately the nature of the place or event itself. If the primary purpose of an event or place is 50 percent or more “amusement, athletic, entertainment or recreational,” then admission to the event or place is taxable under this provision of the statute. Milwaukee Symphony Orchestra, Inc. v. DOR, 2010 WI 33, 324 Wis. 2d 68, 781 N.W.2d 674, 08-1684.

77.52 Annotation Sub. (2) (a) 1. does not impose a sales tax on those selling the service of making reservations on behalf of members of the public with those who furnish rooms or lodging. The omission of the words “the sale of” in sub. (2) (a) 1. indicates that the legislature did not intend to impose a tax on those selling the services of making hotel reservations but not actually furnishing the accommodations. DOR v. Orbitz, L.L.C., 2016 WI App 22, 367 Wis. 2d 593, 877 N.W.2d 372, 15-0200.

77.52 Annotation The term “processing” in sub. (2) (a) 11. encompasses the performance of a mechanical or chemical operation on tangible personal property, a task that can be completed without transforming the property into a new product or adding anything to it that was not already there. Processing includes the separation of river sediment into its component parts. Tetra Tech EC, Inc. v. DOR, 2018 WI 75, 382 Wis. 2d 496, 914 N.W.2d 21, 15-2019.

77.52 Annotation The term “laundry services” in sub. (2) (a) 6. means work done for another to wash soiled clothes and linens. The undisputed facts of this case plainly show that, in exchange for a fee, the petitioner washed its clients’ soiled clothes and linens. The primary purpose of the petitioner’s contracts with its clients was not to have the petitioner merely provide a laundry department manager or the attendant managerial and administrative functions; it was for the client to obtain laundry services. The petitioner could not evade tax on laundry services simply by calling its services departmental or managerial, when the essence of those services was to clean its clients’ laundry. Healthcare Services Group, Inc. v. DOR, 2018 WI App 48, 383 Wis. 2d 699, 916 N.W.2d 635, 17-0567.

77.52 Annotation Under sub. (1) (a) and s. 77.51 (15b) (a), the sales tax applies to the “sales price”—that is, the total amount of consideration paid for a sale, lease, or service, with no deductions for the seller’s or lessor’s costs. The sale of aircraft parts and maintenance, however, is exempt from sales tax under sub. (2) (a) 10. and s. 77.54 (5) (a) 3. When a lessor or lessee buys aircraft repairs or engine maintenance directly, that transaction is tax-exempt. But when a lessor passes those costs along to its lessees as part of the total amount of consideration in a lease, that transaction is taxable. When a lessor leases its aircraft, it is not selling aircraft repairs or engine maintenance. It is leasing an aircraft. Thus, the total lease price is taxable. Citation Partners, LLC v. DOR, 2023 WI 16, 406 Wis. 2d 36, 985 N.W.2d 761, 20-1683.

77.52 Annotation A state may tax exclusively interstate commerce so long as the tax does not create any effect forbidden by the commerce clause. A court will sustain a tax so long as it: 1) applies to an activity with a substantial nexus with the taxing state; 2) is fairly apportioned; 3) does not discriminate against interstate commerce; and 4) is fairly related to the services the state provides. An out-of-state seller’s liability to collect and remit sales taxes to the consumer’s state does not depend on whether the seller has a physical presence in that state. Physical presence is not necessary to create a substantial nexus. South Dakota v. Wayfair, Inc., 585 U.S. ___, 138 S. Ct. 2080, 201 L. Ed. 2d 403 (2018).

77.52 Annotation Changes on the Horizon: Sales and Use Tax in the E-Commerce Era. Pascaly. Wis. Law. Oct. 2015.

77.522 77.522 Sourcing.

77.522(1) (1) General.

77.522(1)(a) (a) In this section:

77.522(1)(a)1. 1. “Receive” means taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c); making first use of services; or taking possession or making first use of digital goods under s. 77.52 (1) (d), whichever comes first. “Receive” does not include a shipping company taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or (c) on a purchaser’s behalf.

77.522(1)(a)2. 2. “Transportation equipment” means any of the following:

77.522(1)(a)2.a. a. Locomotives and railcars that are used to carry persons or property in interstate commerce.

77.522(1)(a)2.b. b. Trucks and truck tractors that have a gross vehicle weight rating of 10,001 pounds or greater, trailers, semitrailers, and passenger buses, if such vehicles are registered under the international registration plan under s. 341.405 and operated under the authority of a carrier that is authorized by the federal government to carry persons or property in interstate commerce.

77.522(1)(a)2.c. c. Aircraft that are operated by air carriers that are authorized by the federal government or a foreign authority to carry persons or property in interstate or foreign commerce.

77.522(1)(a)2.d. d. Containers that are designed for use on the vehicles described in subd. 2. a. to c. and component parts attached to or secured on such vehicles.

77.522(1)(b) (b) Except as provided in par. (c) and subs. (3), (4), and (5), the location of a sale is determined as follows:

77.522(1)(b)1. 1. If a purchaser receives the product at a seller’s business location, the sale is sourced to that business location.

77.522(1)(b)2. 2. If a purchaser does not receive the product at a seller’s business location, the sale is sourced to the location where the purchaser, or the purchaser’s designated donee, receives the product, including the location indicated by the instructions known to the seller for delivery to the purchaser or the purchaser’s designated donee.

77.522(1)(b)3. 3. If the location of a sale of a product cannot be determined under subds. 1. and 2., the sale is sourced to the purchaser’s address as indicated by the seller’s business records, if the records are maintained in the ordinary course of the seller’s business and if using that address to establish the location of a sale is not in bad faith.

77.522(1)(b)4. 4. If the location of a sale of a product cannot be determined under subds. 1. to 3., the sale is sourced to the purchaser’s address as obtained during the consummation of the sale, including the address indicated on the purchaser’s payment instrument, if no other address is available and if using that address is not in bad faith.

77.522(1)(b)5. 5. If the location of a sale of a product cannot be determined under subds. 1. to 4., including the circumstance in which the seller has insufficient information to determine the locations under subds. 1. to 4., the location of the sale is determined as follows:

77.522(1)(b)5.a. a. If the item sold is tangible personal property or an item or property under s. 77.52 (1) (b) or (c), the sale is sourced to the location from which the tangible personal property or item or property under s. 77.52 (1) (b) or (c) is shipped.

77.522(1)(b)5.b. b. If the item sold is a digital good or computer software delivered electronically, the sale is sourced to the location from which the digital good or computer software was first available for transmission by the seller, not including any location that merely provided the digital transfer of the product sold.

77.522(1)(b)5.c. c. If a service is sold, the sale is sourced to the location from which the service was provided.

77.522(1)(c) (c)

77.522(1)(c)1. 1. Except as provided in subd. 3., the sale of advertising and promotional direct mail, including a sale characterized under the laws of this state as the sale of a service when that service is an integral part of the production and distribution of printed material that meets the definition of advertising and promotional direct mail, is sourced to the location from which the advertising and promotional direct mail is shipped, if the purchaser does not provide to the seller a direct pay permit, an exemption certificate claiming direct mail, or other information that indicates the appropriate taxing jurisdiction to which the advertising and promotional direct mail is delivered to the ultimate recipients. If the purchaser provides an exemption certificate claiming direct mail or direct pay permit to the seller, the purchaser shall source the sales to the jurisdictions to which the advertising and promotional direct mail is delivered to the recipients and pay or remit, as appropriate, to the department the tax imposed under s. 77.53 on all purchases for which the tax is due and the seller, in the absence of bad faith, is relieved of all obligation to collect, pay, or remit the tax on any transaction to which the direct pay permit or exemption certificate applies. If the purchaser provides delivery information indicating the jurisdictions to which the advertising and promotional direct mail is to be delivered to the recipients, the seller shall source the sale to those jurisdictions and collect and remit the tax according to the delivery information provided by the purchaser and, in the absence of bad faith, the seller shall be relieved of any further obligation to collect tax on the sale of advertising and promotional direct mail for which the seller has sourced the sale and collected tax pursuant to the delivery information provided by the purchaser. If a transaction is a bundled transaction that includes advertising and promotional direct mail, this subdivision only applies if the primary purpose of the transaction is the sales of products or services that meet the definition of advertising and promotional direct mail.

77.522(1)(c)2. 2. The sale of other direct mail, including a sale characterized under the laws of this state as the sale of a service when that service is an integral part of the production and distribution of printed material that meets the definition of other direct mail, is sourced under par. (b) 3. if the purchaser does not provide to the seller a direct pay permit or an exemption certificate claiming direct mail. If the purchaser provides an exemption certificate claiming direct mail or direct pay permit to the seller, the purchaser shall source the sale to the jurisdictions to which the other direct mail is to be delivered to the recipients and the purchaser shall pay or remit, as appropriate, to the department the tax imposed under s. 77.53 on all purchases for which the tax is due and the seller, in the absence of bad faith, is relieved of all obligation to collect, pay, or remit tax on any transaction to which the direct pay permit or exemption certificate claiming direct mail applies.

77.522(1)(c)3. 3. If advertising and promotional direct mail and other direct mail are included in a single mailing, the sale of that mailing is sourced the same as a sale of other direct mail.

77.522(1)(c)4. 4. Transactions that include the development of billing information or the provision of a data processing service that is more than incidental to producing direct mail are not direct mail and are sourced under par. (b), but transactions that include incidental data processing services are direct mail and are sourced under this paragraph. For purposes of this subdivision, “incidental” has the meaning given in s. 77.51 (5).

77.522(3) (3) Lease or rental.

77.522(3)(a) (a) Except as provided in pars. (b) and (c), with regard to the first or only payment on the lease or rental, the lease or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) is sourced to the location determined under sub. (1) (b). Subsequent periodic payments on the lease or rental are sourced to the property’s, item’s, or good’s primary location as indicated by an address for the property, item, or good that is provided by the lessee and that is available to the lessor in records that the lessor maintains in the ordinary course of the lessor’s business, if the use of such an address does not constitute bad faith. The location of a lease or rental as determined under this paragraph shall not be altered by any intermittent use of the property, item, or good at different locations.

77.522(3)(b) (b) The lease or rental of motor vehicles, trailers, semitrailers, and aircraft, that are not transportation equipment, is sourced to the primary location of such motor vehicles, trailers, semitrailers, or aircraft as indicated by an address for the property that is provided by the lessee and that is available to the lessor in records that the lessor maintains in the ordinary course of the lessor’s business, if the use of such an address does not constitute bad faith, except that a lease or rental under this paragraph that requires only one payment is sourced to the location determined under sub. (1) (b). The location of a lease or rental as determined under this paragraph shall not be altered by any intermittent use of the property at different locations.

77.522(3)(c) (c) The lease or rental of transportation equipment is sourced to the location determined under sub. (1) (b).

77.522(3)(d) (d) A license of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) shall be treated as a lease or rental of such tangible personal property, items, property, or goods under this subsection.

77.522(4) (4) Telecommunications.

77.522(4)(a) (a) In this subsection:

77.522(4)(a)1. 1. “Air-to-ground radiotelephone service” means a radio service in which common carriers are authorized to offer and provide radio telecommunications service for hire to subscribers in aircraft.

77.522(4)(a)2. 2. “Call-by-call basis” means any method of charging for telecommunications services by which the price of such services is measured by individual calls.

77.522(4)(a)3. 3. “Communications channel” means a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points.

77.522(4)(a)4. 4. “Customer” means a person who enters into a contract with a seller of telecommunications services or, in any transaction for which the end user is not the person who entered into a contract with the seller of telecommunications services, the end user of the telecommunications services. “Customer” does not include a person who resells telecommunications services or, for mobile telecommunications services, a serving carrier under an agreement to serve a customer outside the home service provider’s licensed service area.

77.522(4)(a)5. 5. “Customer channel termination point” means the location where a customer inputs or receives communications.

77.522(4)(a)6. 6. “End user” means the person who uses a telecommunications service. In the case of an entity, “end user” means the individual who uses the telecommunications service on the entity’s behalf.

77.522(4)(a)7. 7. “Home service provider” means a home service provider under section 124 (5) of P.L. 106-252.

77.522(4)(a)8. 8. “Mobile telecommunications service” means a mobile telecommunications service under 4 USC 116 to 126, as amended by P.L. 106-252.

77.522(4)(a)9. 9. “Place of primary use” means the residential street address or the primary business street address of the customer. In the case of mobile telecommunications services, “place of primary use” means a street address within the licensed service area of the home service provider.

77.522(4)(a)10. 10. “Postpaid calling service” means a telecommunications service that is obtained by paying for it on a call-by-call basis using a bankcard, travel card, credit card, debit card, or similar method, or by charging it to a telephone number that is not associated with the location where the telecommunications service originates or terminates. “Postpaid calling service” includes a telecommunications service, not including a prepaid wireless calling service, that would otherwise be a prepaid calling service except that the service provided to the customer is not exclusively a telecommunications service.

77.522(4)(a)14. 14. “Radio service” means a communication service provided by the use of radio, including radiotelephone, radiotelegraph, paging, and facsimile service.

77.522(4)(a)15. 15. “Radiotelegraph service” means transmitting messages from one place to another by means of radio.

77.522(4)(a)16. 16. “Radiotelephone service” means transmitting sound from one place to another by means of radio.

77.522(4)(b) (b) Except as provided in pars. (d) to (j), the sale of a telecommunications service that is sold on a call-by-call basis is sourced to the taxing jurisdiction for sales and use tax purposes where the call originates and terminates, in the case of a call that originates and terminates in the same such jurisdiction, or the taxing jurisdiction for sales and use tax purposes where the call originates or terminates and where the service address is located.

77.522(4)(c) (c) Except as provided in pars. (d) to (j), 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.

77.522(4)(d) (d) 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.

77.522(4)(e) (e) 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.

77.522(4)(f) (f) The sale of a prepaid calling service or a prepaid wireless calling service is sourced to the location determined under sub. (1) (b), except that, if the service is a prepaid wireless calling service and the location cannot be determined under sub. (1) (b) 1. to 4., the prepaid wireless calling service occurs at the location determined under sub. (1) (b) 5. c. or at the location associated with the mobile telephone number, as determined by the seller.

77.522(4)(g) (g)

77.522(4)(g)1. 1. 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.

77.522(4)(g)2. 2. 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.

77.522(4)(g)3. 3. 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 to an equal percentage in both such jurisdictions.

77.522(4)(g)4. 4. 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 such 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.

77.522(4)(i) (i) The sale of an ancillary service is sourced to the customer’s place of primary use.

77.522(4)(j) (j) 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 section, the customer’s service address, channel termination point, or place of primary use.

77.522(5) (5) Florists.

77.522(5)(a) (a) For purposes of this subsection, “retail florist” means a person engaged in the business of selling cut flowers, floral arrangements, and potted plants and who prepares such flowers, floral arrangements, and potted plants. “Retail florist” does not include a person who sells cut flowers, floral arrangements, and potted plants primarily by mail or via the Internet.

77.522(5)(b) (b) Sales by a retail florist are sourced to the location determined by rule by the department.

77.522 History History: 2009 a. 2, 28, 276, 330; 2013 a. 20; 2017 a. 59.

77.523 77.523 Liability of marketplace providers, retailers, and marketplace sellers.

77.523(1) (1) A marketplace provider shall collect and remit tax on a sale facilitated on behalf of a marketplace seller, unless the marketplace provider has been granted a waiver under s. 77.52 (3m) (b).

77.523(2) (2) A marketplace provider who collects and remits tax on a sale under sub. (1) shall notify the marketplace seller that the marketplace provider is collecting and remitting the tax. Only the marketplace provider may be audited and held liable for the tax on the sale. Except for transactions for which a marketplace provider seeks relief under sub. (4), a marketplace seller shall not be subject to audit or held liable on marketplace provider transactions.

77.523(4) (4) A marketplace provider is relieved of liability under this section for failure to collect and remit the correct amount of tax to the extent that the marketplace provider demonstrates to the satisfaction of the department that the error is due to insufficient or incorrect information given to the marketplace provider by the marketplace seller, except that this subsection does not apply if the marketplace provider and the marketplace seller are related entities, as defined in s. 71.01 (9am). A marketplace seller that provides insufficient or incorrect information to the marketplace provider may be audited and held liable for the tax if the marketplace provider is relieved of liability under this subsection.

77.523(6) (6) Nothing in this section affects the obligations of a purchaser to remit use tax on a transaction for which the retailer or marketplace provider and marketplace seller did not collect and remit the tax.

77.523 History History: 2019 a. 10.

77.524 77.524 Seller and 3rd-party liability.

77.524(1) (1) In this section:

77.524(1)(ag) (ag) “Agent” means a person appointed by a seller to represent the seller before the states that are signatories to the agreement, as defined in s. 77.65 (2) (a).

77.524(1)(am) (am) “Certified automated system” means software that is certified jointly by the states that are signatories to the agreement, as defined in s. 77.65 (2) (a), and that is used to calculate the sales tax and use tax imposed under this subchapter and subch. V on a transaction by each appropriate jurisdiction, to determine the amount of tax to remit to the appropriate state, and to maintain a record of the transaction.

77.524(1)(c) (c) “Seller” has the meaning given in s. 77.65 (2) (e).

77.524(1g) (1g) “Certified service provider” means an agent that is certified jointly by the states that are signatories to the agreement, as defined in s. 77.65 (2) (a), and that performs all of a seller’s sales tax and use tax functions related to the seller’s retail sales, except that a certified service provider is not responsible for a retailer’s obligation to remit tax on the retailer’s own purchases.

77.524(2) (2) A certified service provider is the agent of the seller with whom the certified service provider has contracted and is liable for the sales and use taxes that are due the state on all sales transactions that the provider processes for a seller, except as provided in sub. (3).

77.524(3) (3) A seller that contracts with a certified service provider is not liable for sales and use taxes that are due the state on transactions that the provider processed, unless the seller has misrepresented the type of items that the seller sells or has committed fraud. The seller is subject to an audit on transactions that the certified service provider processed only if there is probable cause to believe that the seller has committed fraud or made a material misrepresentation. The seller is subject to an audit on transactions that the certified service provider does not process. The states that are signatories to the agreement, as defined in s. 77.65 (2) (a), may jointly check the seller’s business system and review the seller’s business procedures to determine if the certified service provider’s system is functioning properly and to determine the extent to which the seller’s transactions are being processed by the certified service provider.