Tax 11.19 NoteNote: Section Tax 11.19 interprets ss. 77.51 (1fr), (8), and (13h), 77.52 (1) and (2) (a) 11., 77.54 (2m), (9a), (15), (25), (25m), (43), and (59), and 77.55 (1), Stats.
Tax 11.19 NoteNote: The interpretations in s. Tax 11.19 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for printing or imprinting of tangible personal property furnished by customers and used out-of-state in sub. (2) (a) became effective March 1, 1970; (b) The exemption for advertising materials used out-of-state in sub. (4) (a) became effective May 21, 1972; (c) The second class mail standard described in sub. (3) became effective August 1, 1974; (d) The exemption for sales of shoppers guides became effective July 1, 1978; (e) The exemption for ingredients and components of shoppers guides, newspapers and periodicals described in sub. (2) (d) became effective July 2, 1983; (f) The definition of newspaper in sub. (3) (a) and the limitation of the periodical exemption to “periodicals sold by subscription” became effective July 2, 1983; (g) The exemption for controlled circulation publication reflected in subs. (2) (b) and (3) (b) became effective September 1, 1983, pursuant to 1985 Wis. Act 149; (h) The provision for foreign publishers described in sub. (2) (e) became effective January 1, 1980 for publishers of books or periodicals or both other than catalogs and January 1, 1990, for all other foreign publishers pursuant to 1989 Wis. Act 336; (i) The definition of storage and use for purposes of imposing use tax does not include storing or using raw materials becoming printed materials to be shipped outside Wisconsin effective October 1, 1993, pursuant to 1993 Wis. Act 16; (j) The sales and use tax exemption for raw materials becoming printed materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (k) The exemption for periodicals sold by subscription by educational associations and corporations which are exempt under s. 77.54 (9a) (f), Stats., became effective December 1, 1997 pursuant to 1997 Wis. Act 27; (L) The exemption for catalogs became effective April 1, 2009 pursuant to 2007 Wis. Act 20; (m) The change of the term “gross receipts” to “sales price” and the separate impositions of tax on coins and stamps sold above face value under s. 77.52 (1) (b), Stats., certain leased property affixed to real property under s. 77.52 (1) (c), Stats., and digital goods under s. 77.52 (1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (n) The definition of “direct mail” became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (o) The definition of “advertising and promotional direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; (p) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; and (q) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20.
Tax 11.19 HistoryHistory: Cr. Register, August, 1979, No. 284, eff. 9-1-79; am. (2) (c) and (4) (b), Register, December, 1983, No. 336, eff. 1-1-84; am. (2) (b) and (3) (c), cr. (2) (d), r. and recr. (3) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (a) and (b), (3) (b) and (4) (a), Register, June, 1990, No. 414, eff. 7-1-90; am. (1), (2) (a), (c) and (d), (3) (d), (4) (a) and (b) and (5), cr. (2) (e), Register, March, 1991, No. 423, eff. 4-1-91; am. (2) (e) and (4) (b), cr. (2) (f) and (5), renum. (5) to be (6), Register, April, 1994, No. 460, eff. 5-1-94; am. (2) (d), (f), (5) (intro.), (b) and (6), Register, June, 1999, No. 522, eff. 7-1-99; EmR0924: emerg. am. (1), (2) (a) to (d), (e) 2., 4., (f), (3) (c), (4) (a), (5) (intro.), (a) and (6), cr. (2) (cm) and (5m), r. and recr. (4) (b), eff. 10-1-09; CR 09-090: am. (1), (2) (a) to (d), (e) 2., 4., (f), (3) (c), (4) (a), (5) (intro.), (a) and (6), cr. (2) (cm) and (5m), r. and recr. (4) (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1), (2) (a), (d) Register November 2010 No. 659, eff. 12-1-10; CR 13-011: cr. (2) (dm), (5s) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: renum. (2) (a) to (2) (a) (intro.) and am., cr. (2) (a) 1. to 3. Register August 2014 No. 704, eff. 9-1-14; CR 20-018: am. (6) Register July 2021 No. 787, eff. 8-1-21.
Tax 11.20Tax 11.20Property used in qualified research and property used to raise research animals.
Tax 11.20(1)(1)Definitions. In this section:
Tax 11.20(1)(a)(a) “Animals” include bacteria, viruses, and other microorganisms.
Tax 11.20(1)(b)(b) “Biotechnology” means the application of biotechnologies, including recombinant deoxyribonucleic acid techniques, biochemistry, molecular and cellular biology, genetics, genetic engineering, biological cell fusion, and other bioprocesses, that use living organisms or parts of an organism to produce or modify products to improve plants or animals or improve animal health, develop microorganisms for specific uses, identify targets for small molecule pharmaceutical development, or transform biological systems into useful processes and products.
Tax 11.20(1)(c)(c) “Biotechnology business” means a business certified, as described in sub. (4), by the department to be primarily engaged in the application of biotechnologies that use a living organism or parts of an organism to produce or modify products to improve plants or animals, develop microorganisms for specific uses, identify targets for small molecule pharmaceutical development, or transform biological systems into useful processes and products.
Tax 11.20(1)(cg)(cg) “Building” has the meaning given in s. 70.111 (10) (a) 1., Stats.
Tax 11.20(1)(cr)(cr) “Combined group” has the meaning given in s. 71.255 (1) (a), Stats.
Tax 11.20(1)(d)(d) “Institution of higher education” means an accredited educational organization providing education after completion of high school, including undergraduate, graduate, and professional education.
Tax 11.20(1)(e)(e) “Machinery” has the meaning given in s. 70.11 (27) (a) 2., Stats., and means a structure or assemblage of parts that transmits forces, motion or energy from one part to another in a predetermined way by electrical, mechanical or chemical means, but “machinery” does not include a building.
Tax 11.20(1)(f)(f) “Person” includes any natural person, firm, partnership, limited liability company, joint venture, joint stock company, association, public or private corporation, the United States, the state, including any unit or division of the state, any county, city, village, town, municipal utility, municipal power district or other governmental unit, cooperative, unincorporated cooperative association, estate, trust, receiver, personal representative, any other fiduciary, any other legal entity, and any representative appointed by order of any court or otherwise acting on behalf of others.
Tax 11.20(1)(g)(g) “Primarily” means more than 50 percent.
Tax 11.20(1)(h)(h) “Qualified research” means qualified research as defined under section 41 (d) (1) of the Internal Revenue Code, except that it includes qualified research that is funded by a member of a combined group for another member of a combined group.
Tax 11.20(1)(i)(i) “Used exclusively” means used to the exclusion of all other uses except for other use not exceeding 5% of total use.
Tax 11.20(2)(2)Exemptions for property and items used in qualified research.
Tax 11.20(2)(a)(a) The sales price from the sale of and the storage, use, or other consumption of machinery and equipment, including attachments, parts, and accessories, and other tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., that are sold to any of the following and that are consumed or destroyed or lose their identities while being used exclusively and directly in qualified research is exempt:
Tax 11.20(2)(a)1.1. A person engaged in manufacturing in this state at a building assessed under s. 70.995, Stats.
Tax 11.20(2)(a)2.2. A person engaged primarily in biotechnology in this state.
Tax 11.20(2)(a)3.3. A combined group member who is conducting qualified research for another combined group member and that other combined group member is a person described under subd. 1. or 2.
Tax 11.20(2)(b)(b) For purposes of determining whether a person is engaged primarily in biotechnology in this state under par. (a), only activities in Wisconsin are considered. When a person conducts activities in Wisconsin in addition to biotechnology, the person must allocate its activities between its biotechnology activities and its other activities using a reasonable and consistent method. If a person’s biotechnology activities in Wisconsin are more than 50% of its total activities in Wisconsin, the person is engaged primarily in biotechnology in this state.
Tax 11.20 NoteExamples: (1) Company A performs research and development services at locations in Wisconsin for its customers. This is Company A’s only activity in Wisconsin. Some of the research and development services are biotechnology and some of the research and development services are not biotechnology. Using the sales price of its services as the measure of activity, more than 50% of the total sales price Company A receives for performing all of its research and development services in Wisconsin is derived from biotechnology. Therefore, Company A is primarily engaged in biotechnology in Wisconsin.
Tax 11.20 Note(2) Company B performs research and development services at locations outside of Wisconsin that constitute biotechnology. Company B also manufactures tangible personal property at a building in Wisconsin, assessed under s. 70.995, Stats. The manufacturing activity does not constitute biotechnology. This is Company B’s only activity in Wisconsin. The products manufactured in Wisconsin are used by Company B in performing its research and development services at locations outside of Wisconsin. Company B is not engaged primarily in biotechnology in Wisconsin but is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats.
Tax 11.20 Note(3) Company X manufactures machinery at a plant outside of Wisconsin. Company X operates a facility in Wisconsin that is devoted solely to research and development relating to the products Company X manufactures. Although Company X’s activities in Wisconsin are research and development activities that constitute qualified research, its activities in Wisconsin are not biotechnology. The research and development activities are Company X’s only activities in Wisconsin. Therefore, Company X is neither engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., nor engaged primarily in biotechnology in Wisconsin.
Tax 11.20 Note(4) Company Z manufactures products at a plant outside of Wisconsin. Company Z operates a facility in Wisconsin that is devoted solely to research and development. This is Company Z’s only activity in Wisconsin. The research and development relates to products Company Z currently manufactures as well as to new products that Company Z may manufacture. Some of its research and development activities in Wisconsin constitute biotechnology and qualified research. Since Company Z only performs research and development activities for itself, it does not have any sales revenue from these activities. Company Z reasonably allocates its costs and expenses incurred in conducting all of these research and development activities in Wisconsin between biotechnology and non-biotechnology. More than 50% of these costs and expenses are for biotechnology. Therefore, Company Z is engaged primarily in biotechnology in Wisconsin.
Tax 11.20 Note(5) Company T is a new business located solely in Wisconsin. In its first year of operation, Company T’s only activity is developing new products for itself. Some of these development activities are biotechnology. Since Company T only performs development activities for itself, it will not have any sales revenues during its first year of operations. Company T reasonably allocates its costs and expenses incurred in conducting all of its development activities in Wisconsin between biotechnology and non-biotechnology during its first year of operations. More than 50% of these costs and expenses are for biotechnology. Therefore, Company T is engaged primarily in biotechnology in Wisconsin.
Tax 11.20(2)(c)(c) For purposes of determining whether an activity is qualified research under par. (a), the regulations under Treas. Reg. section 1.41-4 apply, except that qualified research that is funded by a member of a combined group for another member of a combined group shall remain qualified research for purposes of this subsection.
Tax 11.20 NoteNote: Treas. Reg. section 1.41-4 provides interpretation and guidance concerning what constitutes qualified research under section 41 (d) (1) of the Internal Revenue Code. Treas. Reg. section 1.41-4 is available at https://www.ecfr.gov/cgi-bin/text-idx?SID=55d6d62e711e2571238fb720003f7232&mc=true&node=se26.1.1_141_64&rgn=div8 or https://www.ecfr.gov/cgi-bin/ECFR?page=browse.