Tax 11.32 Tax 11.32 “Sales price” and “purchase price.” (1) General. The amount to which the sales and use tax rate is applied is the “sales price” for sales tax and the “purchase price” for use tax. Both “sales price” and “purchase price” mean the total amount of the consideration for the sale, license, lease or rental from retail sales of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services, valued in money, whether received in money or otherwise.

Tax 11.32(2) (2) Delivery, handling and service charges. A retailer’s charges for customer alterations, handling services, small orders, returned merchandise, restocking, split shipments, shipping, postage, crating, packing, fuel surcharges, and similar charges for services related to retail sales, are included in the sales price derived from the sale of taxable tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services. Cancelled order charges are not taxable if there is no transfer of merchandise to a customer. For orders that include property and items that are subject to tax and property and items that are not subject to tax, the amount of the delivery charge that the seller allocates to the property and items subject to tax shall be based either upon the total sales price of property and items that are subject to tax as compared to the total sales price of all of the property and items included in the shipment or on the weight of the property and items subject to tax compared to the total weight of all of the property and items included in the shipment.

Tax 11.32(3) (3) Cash discounts or price rebates.

Tax 11.32(3)(a) (a) Cash discounts, term discounts and coupons that are not reimbursed by a third party and which are allowed by a retailer directly to customers reduce the sales price subject to the tax. The customer must receive the discount for the retailer to exclude it from the sales price.

Tax 11.32 Note Example: A payment made to a nonprofit organization based on a percentage of the purchases made by the group’s members is not a cash discount for sales and use tax purposes.

Tax 11.32(3)(b) (b) A retail cooperative’s rebates to members, which are made after the net profit is determined at the end of a year, are patronage dividends rather than cash discounts, and are not deductible from the cooperative’s sales price.

Tax 11.32(3)(c) (c) A manufacturer’s cash rebate to a person who purchases tangible personal property, items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or taxable services from a retailer is not a reduction in the retailer’s sales price or purchase price for the item, regardless of whether the rebate is paid in cash or is used to reduce the selling price.

Tax 11.32 Note Example: An automobile is sold for a sticker price of $18,000. The manufacturer offers a $1,500 rebate with the purchase. Regardless of whether the customer pays the retailer $18,000 and later receives $1,500 from the manufacturer or the customer pays the retailer $16,500 ($18,000 sticker price less $1,500 rebate), the retailer shall report a taxable sales price of $18,000 from the sale.

Tax 11.32(3)(d) (d) “Sales price” and “purchase price” include consideration paid by third parties if all of the following apply:

Tax 11.32(3)(d)1. 1. The seller actually receives consideration from a third party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale.

Tax 11.32(3)(d)2. 2. The seller is obligated to pass the price reduction or discount to the purchaser.

Tax 11.32(3)(d)3. 3. The amount of the consideration that is attributable to the sale is a fixed amount and the seller is able to determine that amount at the time of the sale to the purchaser.

Tax 11.32(3)(d)4. 4. One of the following applies:

Tax 11.32(3)(d)4.a. a. The purchaser presents a coupon, certificate or other documentation to the seller to claim the price reduction or discount, if the coupon, certificate or other documentation is authorized, distributed or granted by a third party with the understanding that the third party will reimburse the seller for the amount of the price reduction or discount.

Tax 11.32(3)(d)4.b. b. The purchaser identifies himself or herself to the seller as a member of a group or organization that may claim the price reduction or discount.

Tax 11.32(3)(d)4.c. c. The seller provides an invoice to the purchaser, or the purchaser presents a coupon, certificate or other documentation to the seller that identifies the price reduction or discount as a third party price reduction or discount.

Tax 11.32(3m) (3m) Lease, license, and rental receipts.

Tax 11.32(3m)(a) (a) The following charges related to the lease, license, or rental of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are also included in the “sales price” or “purchase price”:

Tax 11.32(3m)(a)1. 1. Personal property taxes, including any personal property tax administration fee, imposed on the lessor or licensor that are passed on to the lessee or licensee.

Tax 11.32 Note Example: Company A leases a piece of equipment to Company B. Taxing Authority C imposes property tax of $125 on Company A on the piece of equipment that Company A is leasing to Company B. The lease agreement provides that Company B is required to pay Company A the amount of property taxes imposed on Company A on that piece of equipment. Therefore, the $125 payment that Company B is required to make to Company A for the property taxes imposed on the piece of equipment is part of the sales price subject to tax.

Tax 11.32(3m)(a)2. 2. Contract documentation or administration fees.

Tax 11.32(3m)(a)3. 3. Disposal and return fees.

Tax 11.32 Note Examples: 1) Lessor X leases a motor vehicle to Company Y. As part of the lease agreement, Company Y agrees to pay Lessor X, at the end of the lease term, a fee to prepare the vehicle for sale. This disposition fee is to cover costs incurred by Lessor X for cleaning the motor vehicle, tuning up the vehicle and performing final maintenance on the vehicle before it is sold. The disposition fee is part of the “sales price” of the lease of the motor vehicle.

Tax 11.32 Note 2) Lessor A leases laptop computers to Company B. As part of the lease agreement, Company B agrees to pay Lessor A a fee to remove all data from the hard drive of the laptop computer at the end of the lease term after Company B returns the computer to Lessor A. The fee charged by Lessor A to Company B for removing all of the data from the hard drive is part of the “sales price” of the lease of the laptop computer.

Tax 11.32(3m)(a)4. 4. Service contract charges, warranty charges, and maintenance agreement charges.

Tax 11.32(3m)(b) (b) The following charges related to the lease, license, or rental of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., are not included in the “sales price” or “purchase price” if they are separately stated on the invoice, bill of sale, or similar document provided to the lessee or licensee:

Tax 11.32(3m)(b)1. 1. Personal property taxes imposed directly on the lessee or licensee.

Tax 11.32 Note Example: Company A leases a piece of equipment to Company B. Taxing Authority C imposes property tax of $100 on Company B on that piece of equipment. The lease agreement provides that Company B is responsible for any property taxes imposed on that piece of equipment. Since the $100 of property taxes are imposed directly on Company B, as opposed to being imposed on Company A, the property taxes imposed on the piece of equipment are not part of the sales price and are not subject to tax.

Tax 11.32(3m)(b)2. 2. Title and registration fees.