Tax 11.29 NoteExample: 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)(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.

Tax 11.29(8)(d)(d) Mobile homes and manufactured homes. Rental of a mobile home as defined in s. 101.91 (10), Stats., and manufactured homes as defined in s. 101.91 (2), Stats., shall be taxable unless:

Tax 11.29(8)(d)1.1. The mobile home or manufactured home is converted to real property by hooking it up to utilities and placing it on a foundation on land owned by the lessor. However, even if it is placed on a foundation and hooked up to utilities, a mobile home or manufactured home shall remain tangible personal property if the lessor does not own the realty on which it is located.

Tax 11.29(8)(e)(e) Lease cancellation charge. A payment by a lessee to a lessor for the cancellation of a lease of tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., shall be taxable. The payment shall be deemed consideration arising from the original lease since it effectively decreases the term of the lease and thereby increases the rental payments for the actual period the property, item, or good was used.

Tax 11.29(8)(f)(f) Delivery and erection. Lessors of scaffolding or other tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., who set forth separate charges for transportation, assembly, and disassembly shall pay tax on their total sales price. A lessee rents property, items, or goods when it is assembled and in place and the charges for transportation, assembly, and disassembly shall be deemed part of a lessor’s rental receipts.

Tax 11.29(8)(g)(g) Funeral coaches. The sales price that the owner of a hearse receives when the owner furnishes it without a driver, to a funeral director is subject to tax. However, the sales price the owner of a hearse receives when the owner furnishes it with a driver that does more than maintain, inspect, or set up the hearse is not subject to tax.

Tax 11.29(8)(h)(h) Waste reduction and recycling equipment. The lease or rental of waste reduction or recycling machinery and equipment shall not be taxable if used exclusively and directly for waste reduction or recycling activities described in s. 77.54 (26m), Stats.

Tax 11.29 NoteNote: The interpretations in s. Tax 11.29 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for mobile homes used for lodging for a continuous period of 1 month or more became effective July 1, 1984, pursuant to 1983 Wis. Act 341; (b) The exemption for the lease or rental of incidental property transferred in providing a nontaxable service became effective as a result of Dept. of Revenue vs. Dow Jones & Company, Inc., (COA-District IV, 1/26/89); (c) The exemption for waste reduction and recycling equipment became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (d) The definitions of “lease,” “receive,” and “transportation equipment” became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (e) The sourcing rules related to leases became effective October 1, 2009 pursuant to 2009 Wis. Act 2; and (f) 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.

Tax 11.29 HistoryHistory: Cr. Register, July, 1977, No. 259, eff. 8-1-77; cr. (4) (d), (6) (d) 2. and (h), am. (1), (3), (4) (b), (5) and (6) (a), (d) and (g), Register, June, 1991, No. 426, eff. 7-1-91; correction in (6) (d) 2. made under s. 13.93 (2m) (b) 7., Stats., Register July 2002 No. 559; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction to numbering of (8) made under s. 13.92 (4) (b) 1., Stats., Register May 2010 No. 653.

Tax 11.30(1)(a)(a) Sales. If taxable personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are sold on credit, the entire amount of the retailer’s sales price from the sale shall be taxable and shall be reported on the tax return for the period in which the sale is made, without any reduction in the amount of tax payable by the retailer by reason of the retailer’s transfer at a discount of any open account, note, conditional sales contract, lease contract or other evidence of indebtedness. A sale involving the transfer of ownership of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., is completed at the time possession is transferred by the seller or the seller’s agent to the purchaser or the purchaser’s agent. The location to which the sale is sourced is based on s. 77.522, Stats. The tax shall be reported on the accrual basis, except when the department is satisfied that an undue hardship would exist and authorizes reporting on some other basis.

Tax 11.30(1)(b)(b) Repossessions. No deduction from the sales price shall be made if property, items, or goods sold on credit are repossessed unless the entire consideration paid by the purchaser is refunded to the purchaser or a deduction for worthless accounts is allowable as a bad debt under s. 77.585 (1), Stats.

Tax 11.30(2)(a)(a) Definition of bad debt. “Bad debt” is defined in s. 77.585 (1) (a), Stats., to mean the portion of the sales price or purchase price that the seller has reported as taxable and for which the seller has paid the tax under subch. III of ch. 77, Stats., and that the seller may claim as a deduction under section 166 of the Internal Revenue Code. “Bad debt” does not include financing charges or interest, sales or use taxes imposed on the sales price or purchase price, uncollectible amounts on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that remain in the seller’s possession until the full sales price or purchase price is paid, expenses incurred in attempting to collect any debts, debts sold or assigned to 3rd parties for collection, and repossessed property or items.

Tax 11.30(2)(b)(b) Deduction from measure of tax. A seller may claim as a deduction on a return under s. 77.58, Stats., the amount of any bad debt the seller writes off as uncollectible in the seller’s books and records and that is eligible to be deducted as a bad debt for federal income tax purposes, regardless of whether the seller is required to file a federal income tax return. Only a seller who has previously paid sales or use tax to this state on the accounts may claim the bad debt deduction. However, if a seller uses a certified service provider to file the returns and report the taxes due, the certified service provider may claim the bad debt deduction on the seller’s behalf if the seller has not and will not claim the same deduction. In either case, the deduction shall be claimed on the return for the period in which the seller writes off the amount of the deduction as uncollectible and the amount is eligible to be deducted as a bad debt for federal income tax purposes. That period is defined as any time within the seller’s fiscal or calendar year in which the account is written off. If the seller is out of business when the account becomes worthless, a bad debt deduction may be claimed on the last return filed by that business, or through a refund claim or amended return filed within the statutory time allowed. Notes, which later become worthless, received on the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., shall be treated in the same manner as other worthless accounts.

Tax 11.30(2)(c)(c) Recovery of bad debts charged off. If any accounts found worthless and charged off as bad debts are thereafter in whole or in part collected by the seller, the amount so collected shall be included in the first return filed after such collection and the amount of the tax thereon paid with the return. The amounts recovered are first applied to the price of the property, item, good, or service and the proportionate share of the sales tax on that property, item, good, or service and then to interest, service charges and other charges related to the sale.

Tax 11.30(2)(d)(d) Amount deductible.

Tax 11.30(2)(d)1.1. ‘Nontaxable receipts.’ If an account found worthless and charged off as a bad debt is comprised in part of nontaxable receipts, such as interest, financing, or insurance, and in part of taxable receipts upon which tax has been paid, a bad debt deduction may be claimed only for the unpaid amount upon which tax has been paid. In determining that amount, all payments and credits to the account shall be applied proportionately against the various charges comprising the amount the purchaser contracted to pay.