Tax 11.51 Note 2) A bakery mixes 2 or more ingredients together to make a bagel. The bagel is then heated and placed in a heated display case for sale to a customer. The bagel is prepared food since it is sold heated. Although the bagel would meet the exception provided in par. (b) 2., since it is sold heated, it is prepared food.

Tax 11.51(4)(b)3. 3. Two or more food ingredients mixed or combined by a retailer for sale as a single item, sold unheated, and sold by volume or weight.

Tax 11.51 Note Example: Grocery Store A prepares potato salad for sale to its customers. Grocery Store A boils the potatoes, cuts the potatoes up, and combines the potatoes with various other ingredients to make potato salad. Once the potato salad has cooled, Grocery Store A sells the potato salad for $2 per pound. Although the potatoes were previously heated by the retailer when the potato salad was being made, the potato salad is not prepared food since it is sold unheated by weight, assuming the potato salad does not meet any of the other definitions of prepared food.

Tax 11.51(4)(c) (c) Two or more food ingredients mixed or combined by the retailer for sale as a single item, except if any of the following apply:

Tax 11.51(4)(c)1. 1. The retailer’s primary classification in the North American Industry Classification System, 2002 edition, published by the federal office of management and budget is manufacturing under subsector 311, but not including bakeries and tortilla manufacturing under industry group number 3118.

Tax 11.51(4)(c)2. 2. The item is sold unheated and by volume or weight.

Tax 11.51(4)(c)3. 3. The item is a bakery item made by the retailer, including breads, rolls, pastries, buns, biscuits, bagels, croissants, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.

Tax 11.51 Note Examples: 1) Restaurant A purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make cakes with an ice cream layer. Restaurant A makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layers are baked and cooled, Restaurant A covers one of the cake layers with a layer of fudge and cookie bits. Restaurant A then places another cake layer over the fudge and cookie bits and covers the second cake layer with a layer of ice cream. Restaurant A decorates the top of the cake according to instructions provided by its customer. Although this cake is two or more ingredients mixed or combined by the retailer for sale as a single item, it is excluded from the definition of prepared food because it is primarily a bakery item and is not subject to Wisconsin sales or use tax, assuming the cake does not meet any of the other definitions of prepared food.

Tax 11.51 Note 2) Restaurant B purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make a layered ice cream cake. Restaurant B makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layer is baked and cooled, Restaurant B places the cake layer between two layers of ice cream. Restaurant B decorates the top of the cake according to instructions provided by its customer. This cake is prepared food and subject to Wisconsin sales or use tax since Restaurant B mixed or combined 2 or more ingredients to make the cake, and the ice cream cake is not primarily a bakery item.

Tax 11.51(4)(c)4. 4. The food and food ingredients are only sliced, repackaged, or pasteurized by the retailer.

Tax 11.51 Note Example: Grocer C sells cheese trays. The cheese trays are put together by the grocer selecting the various types of cheeses and slicing the amount of each type of cheese it wants to include, placing each type of sliced cheese on the tray, and then wrapping the cheese tray. The cheese tray is not prepared food since the cheese on the tray was only sliced and repackaged, assuming the cheese tray does not meet any of the other definitions of prepared food.

Tax 11.51(4)(c)5. 5. The item contains eggs, fish, meat, or poultry in raw form that requires cooking by the consumer, as recommended by the food and drug administration in chapter 3, part 401.11 of its food code to prevent food-borne illnesses.

Tax 11.51(4)(d) (d)

Tax 11.51(4)(d)1. 1. Food and food ingredients sold with eating utensils that are provided by the retailer of the food and food ingredients, including plates, bowls, knives, forks, spoons, glasses, cups, napkins, or straws. However a “plate” does not include a container or packaging used to transport the food and food ingredients. Eating utensils are provided by the retailer if:

Tax 11.51(4)(d)1.a. a. The eating utensils are available to the purchasers and the retailer’s sales of food and food ingredients as described in pars. (a), (b), and (c) and food for which plates, bowls, glasses, or cups are necessary to receive the food are more than 75 percent of the retailer’s total sales of all food and food ingredients at that establishment; or

Tax 11.51(4)(d)1.b. b. The retailer’s customary practice is to physically give or hand the utensils to the purchaser, except that plates, bowls, glasses, or cups that are necessary for the purchaser to receive the food and food ingredients need only be made available to the purchaser.

Tax 11.51 Note Examples: 1) Deli A has a self-service salad bar. Customers go to the salad bar, pick up a clam shell container at the salad bar, and place the items they would like in the clam shell container. The clam shell container is a plate or bowl necessary for the customer to receive the food and is made available to the customer. Therefore, sales from the self-service salad bar are sales of prepared food.

Tax 11.51 Note 2) Retailer X has a self-service milk machine.  Customers go to the milk machine, pick-up a disposable cup, and fill it with whatever kind of milk they want. The cup is necessary for the customer to receive the milk and is made available to the customer. Therefore, sales of milk in this manner are sales of prepared food.

Tax 11.51(4)(d)2. 2.

Tax 11.51(4)(d)2.a. a. The numerator of the percentage described in subd. 1. a. includes only sales of prepared food as defined in pars. (a), (b), and (c) and food for which plates, bowls, glasses, or cups are necessary to receive the food, but not including alcoholic beverages.

Tax 11.51(4)(d)2.b. b. The denominator of the percentage described in subd. 1. a. includes all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks, but not including alcoholic beverages.

Tax 11.51(4)(d)3. 3.

Tax 11.51(4)(d)3.a. a. If the percentage determined under subd. 2. is 75 percent or less, utensils are considered to be provided by the retailer if the retailer’s customary practice is to physically give or hand the utensils to the purchaser or, in the case of plates, bowls, glasses, or cups that are necessary to receive the food, to make such items available to the purchaser.

Tax 11.51(4)(d)3.b. b. If the percentage determined under subd. 2. is greater than 75 percent, utensils are considered to be provided by the retailer if the utensils are made available to the purchaser.

Tax 11.51(4)(d)4. 4.

Tax 11.51(4)(d)4.a. a. For a retailer whose percentage determined under subd. 2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does not become prepared food simply because the retailer makes utensils available to the purchaser of the item.

Tax 11.51(4)(d)4.b. b. For a retailer whose percentage determined under subd. 2. is greater than 75 percent, an item sold by the retailer that contains 4 or more servings packaged as one item and sold for a single price does become prepared food if the retailer physically gives or hands utensils to the purchaser of the item, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food, need only be made available to the purchaser.

Tax 11.51(4)(d)4.c. c. For purposes of subd. 4. a. and b., serving sizes are based on the information contained on the label of each item sold, except that, if the item sold has no label, the serving size is based on the retailer’s reasonable determination.

Tax 11.51(4)(d)5. 5.