Tax 11.29(5)(a) (a)

Tax 11.29(5)(a)1. 1. If an item of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is provided along with an operator that is necessary for the tangible personal property or item, property, or good to operate in the manner for which it is designed and does more than maintain, inspect, or set up the tangible personal property or item, property, or good, the transaction is considered a service and not a lease, license, or rental of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats.

Tax 11.29 Note Example: A backhoe and operator are provided to dig a trench. This transaction is the sale of a service and not a rental of the backhoe.

Tax 11.29(5)(a)2. 2. The purchaser of tangible personal property or items, property, or goods that are used in a transaction described in subd. 1. to provide a service is the consumer of that property, item, or good.

Tax 11.29(5)(a)3. 3. The charge by the person providing the service described in subd. 1. is subject to Wisconsin sales and use tax if the service is specifically identified as a taxable service in s. 77.52, Stats.

Tax 11.29 Note Example: Company A provides a tractor with a rototiller attachment and an operator to till up the lawn area around Customer B’s new home to prepare the seedbed for planting. Company A charges Customer B $50 per hour for the use of the tractor and rototiller attachment and $25 per hour for the operator. Since Company A is providing the tractor and rototiller along with the operator, this is not a lease or rental of the equipment, but instead is deemed to be a service. The charge by Company A to Customer B is subject to Wisconsin sales tax, since Company A is providing a landscaping service. Company A is also required to pay Wisconsin sales or use tax on its purchase of the tractor and rototiller used in providing the service.

Tax 11.29(5)(b) (b) If an item of tangible personal property or item, property or good under s. 77.52 (1) (b), (c), or (d), Stats., is provided along with an operator that only maintains, inspects, or sets up the tangible personal property or item, property, or good, the transaction is considered a lease, license, or rental of the tangible personal property or item, property, or good.

Tax 11.29 Note Example: Company A rents scaffolding from Company B. Company B provides a person to set up the scaffolding as requested by Company A and to make sure none of the nuts and bolts holding the scaffolding together have loosened up. The entire charge by Company B to Company A is for the lease or rental of the scaffolding.

Tax 11.29(5)(c) (c) Charges for the rental of motor trucks shall be taxable. However, if drivers are provided by the truck’s owner to operate the trucks, this shall be considered a service and not a lease or rental of the trucks.

Tax 11.29(5)(d) (d) The sales price from the lease, license, or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., incidental to the providing of a nontaxable service shall not be taxable. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is incidental to the providing of a nontaxable service, the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is consumed by the service provider and the service provider is required to pay any applicable sales or use tax.

Tax 11.29(6) (6) Credit for sales tax paid. If a lessor of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., paid a Wisconsin sales tax on the acquisition of the property, item, or good used solely for leasing purposes, the lessor may either request a refund of the sales tax from the seller or the department or may claim a credit against the tax due on rental receipts from the property, item, or good involved, under s. 77.585 (2), Stats. If a credit is claimed, it shall expire when the cumulative rental receipts equal the sales price upon which the vendor paid sales tax to Wisconsin.

Tax 11.29(7) (7) Sourcing lease, license and rental payments.

Tax 11.29(7)(a) (a) First or only payment. Except as provided in pars. (c) and (e), for lease, license, and rental agreements that only require one payment and for the first payment on lease, license, and rental agreements that require more than one payment, the lease, license, or rental is sourced to the location where the purchaser receives the product, as follows:

Tax 11.29(7)(a)1. 1. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the lessor’s or licensor’s business location.

Tax 11.29(7)(a)2. 2. If the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., is not received by the lessee or licensee at the lessor’s or licensor’s business location, the first or only payment is sourced to the location where the lessee or licensee or the lessee’s or licensee’s designated donee receives the product. This would include the location indicated by instructions known to the lessor or licensor for delivery to the lessee or licensee or the lessee’s or licensee’s designated donee. The delivery may be made by the lessor or licensor or by a shipping company hired by the lessee or licensee.

Tax 11.29(7)(a)3. 3. If the location cannot be determined under subds. 1. and 2., the first or only payment is sourced to the lessee’s or licensee’s address as indicated by the lessor’s or licensor’s business records, if the records are maintained in the ordinary course of the lessor’s or licensor’s business and if using that address to establish the location of the lease, license, or rental is not in bad faith.

Tax 11.29(7)(a)4. 4. If the location cannot be determined under subd. 1., 2., or 3., the first or only payment is sourced to the lessee’s or licensee’s address as obtained during the consummation of the lease, license, or rental, including the address indicated on the lessee’s or licensee’s payment instrument, if no other address is available and if using that address to determine the location of the lease, license, or rental is not in bad faith.

Tax 11.29(7)(a)5. 5. If the location cannot be determined under subd. 1., 2., 3. or 4., the first or only payment is sourced as follows:

Tax 11.29(7)(a)5.a. a. For tangible personal property and items and property under s. 77.52 (1) (b) or (c), Stats., except for prewritten computer software, the first or only payment is sourced to the location from which the property or item was shipped.

Tax 11.29(7)(a)5.b. b. For prewritten computer software delivered electronically and digital goods under s. 77.52 (1) (d), Stats., the first or only payment is sourced to the location from which the computer software or digital good was first available for transmission by the seller, but not including any location that merely provided the digital transfer of the product sold.

Tax 11.29(7)(b) (b) Subsequent periodic payments. Except as provided in pars. (d) and (e), subsequent periodic payments on the lease, license, or rental of tangible personal property and items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are sourced to the property’s, item’s, or good’s primary location. The primary location is the address of the property, item, or good provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith.

Tax 11.29(7)(c) (c) Motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment. Leases, licenses, and rentals of motor vehicles, trailers, semitrailers, and aircraft that are not transportation equipment are sourced to the primary location of such property as indicated by an address for the property that is provided by the lessee or licensee and that is available in the business records of the lessor or licensor that are maintained in the ordinary course of the lessor’s or licensor’s business, provided the use of such address does not constitute bad faith, and except that a lease, license, or rental that only requires one payment, shall be sourced as provided in par. (a).

Tax 11.29(7)(d) (d) Intermittent use. The sourcing of the lease, license, and rental payments as described in pars. (a), (b), and (c) shall not be altered by any intermittent use of the property, item, or good at different locations.

Tax 11.29 Note Example: Company A leases laptop computers that are normally kept in State A and the lease payments are sourced to State A. However, when an employee is travelling and consulting with clients in other states, the employee brings the laptop computer to these other states. The intermittent use of the laptop computer in the other states does not affect the sourcing of these lease payments.

Tax 11.29(7)(e) (e) Transportation equipment. Leases, licenses, and rentals of transportation equipment are sourced to the location determined in par. (a).

Tax 11.29(8) (8) Special rental situations.

Tax 11.29(8)(a) (a) Demurrage. The charge a gas supplier makes to a customer-consumer, because a gas cylinder is retained beyond a 30-day or other period, shall be taxable. The “demurrage” charges shall constitute rentals paid for the continuing possession of the cylinders.

Tax 11.29(8)(b) (b) Water softeners. The sales price from the rental of a cylinder type water softener which is periodically removed from a customer’s premises for recharging and replaced by another unit shall be taxable.

Tax 11.29(8)(c) (c) Chemical toilets. A lessor’s entire charge for the use of chemical toilets used at fairs and other similar events shall be taxable, including cleaning services provided as part of the total charge.