ORDER OF THE DEPARTMENT OF REVENUE RENUMBERING AND AMENDING, AMENDING, AND CREATING RULES
The Wisconsin Department of Revenue proposes an order to: renumber and amend Tax 11.20 (3) (c); amend Tax 11.20 (4) (a); and create Tax 11.20 (3) (c) 2. and (4) (am) and (Example); relating to sales and use tax provisions and affecting small business.
The scope statement for this rule, SS 085-16, was approved by the Governor on September 15, 2016, published in Register No. 729B, and approved by the Secretary of Revenue on October 14, 2016. Analysis by the Department of Revenue
Explanation of agency authority: Sections 77.51(1d) and 77.54(57)(b) 3. and 4., Stats., require the department to certify biotechnology businesses in the manner prescribed by the department. 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...” Related statute or rule: There are no other applicable statutes or rules.
Plain language analysis: Section Tax 11.20(4), Wis. Adm. Code, requires a person in the business of raising animals to collect evidence from each customer showing the customer is a department-certified biotechnology business. This requirement has shown itself to be burdensome for businesses. The rule is being updated to create an exception to this requirement. The exception allows the person in the business of raising animals to treat a customer, other than a university or government unit, as a biotechnology business if the person obtains an exemption certificate from the customer indicating the customer will use the animals exclusively and directly in qualified research or manufacturing, subject to the department verifying/certifying that the customer actually meets the requirements in current s. Tax 11.20(4), Wis. Adm. Code. The department's existing policy is to treat animals sold to universities and government agencies as sold for exclusive and direct use in qualified research. The rule is being updated to reflect this policy.
In summary, this proposed rule order makes the following changes:
a. Raising Animals for Use in Qualified Research. Treats all animals sold to private institutions of higher learning and government units as deemed exempt for use in qualified research, thus reducing the documentation needed to prove the exemption.
b. Documentation Requirements. Allows a seller, the person in the business of raising animals, to treat a customer, other than a university or government unit, as a biotechnology business if the person obtains an exemption certificate from the customer indicating the customer will use the animals exclusively and directly in qualified research or manufacturing, subject to the department verifying that the customer actually meets the requirements in current s. Tax 11.20(4), Wis. Adm. Code. This requires a change to Tax 11.20 (4) (a) and creation of (4) (am) and Example. Summary of, and comparison with, existing or proposed federal regulation: There is no 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 has not found a similar rule in an adjacent state.
Summary of factual data and analytical methodologies: The rule relates to law created in 2009 Wis. Act 28, and amended by 2013 Wis. Act 20. This proposed rule order eases the administrative burden on persons affected by the law. Analysis and supporting documents used to determine effect on small business. Based on past audit experience, it is difficult for persons claiming the exemption to obtain required documentation from their customers, including small businesses.
Anticipated costs incurred by private sector: This rule order does not have a fiscal effect on the private sector.
Effect on small business: This proposed rule order eases the administrative burden on all businesses.
Agency contact person: Please contact Jennifer Chadwick at (608) 266-8253 or jennifer.chadwick@wisconsin.gov, if you have any questions regarding this rule order. Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below no later than the date on which the public hearing on this proposed rule is conducted. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jennifer Chadwick
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
SECTION 1. Tax 11.20 (3) (c) is renumbered 11.20 (3) (c) 1. and amended to read:
Tax 11.20 (3) (c) 1. A Except as provided in subd. 2. and sub. (4) (am), a person claiming an exemption under par. (a) shall obtain a “Purchaser's Statement to Seller for Animals Used in Qualified Research or Manufacturing," form Form S-209, from each of its customers described in par. (a) (intro.) and keep the completed forms as a part of its records to document the number of animals that were raised by the seller and sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use in qualified research or manufacturing. When completing Form S-209, the purchaser of the animals is attesting to the number of animals purchased and the number of animals used exclusively and directly in qualified research or manufacturing.
