Tax 11.70(5)(a) (a) The tax applies to an agency’s sales price from a sale of or the storage, use, or consumption of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., sourced to Wisconsin under s. 77.522, Stats., regardless of whether:

Tax 11.70(5)(a)1. 1. The transfer is to the advertiser or to a third party at the direction of or on behalf of the client.

Tax 11.70(5)(a)2. 2. The client is located in or outside Wisconsin.

Tax 11.70 Note Example: An agency’s billing to a client in Minnesota for finished artwork transferred to a business in Wisconsin is taxable.

Tax 11.70(5)(b) (b) The sale of tangible personal property, items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable services occurs when the advertising agency transfers possession of the tangible personal property or item, property, or good under s. 77.52 (1) (b), (c), or (d), Stats., to the client or the client realizes the economic benefits of the property’s, item’s, or good’s use, even though the property, item, or good may not be physically transferred to the client.

Tax 11.70(6) (6) Fees added to billings. When an amount billed as an agency “fee,” “retainer,” “service charge,” or “commission” represents services rendered which are a part of the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., the amount is taxable. If it clearly represents a charge or a part of a charge for any nontaxable service rather than for the sale of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., it is not taxable. A fee representing both taxable and nontaxable sales shall be reasonably allocated between taxable and nontaxable sales, unless the fee is a bundled transaction, as defined in s. 77.51 (1f), Stats.

Tax 11.70(7) (7) Purchases by agencies.

Tax 11.70(7)(a) (a) An advertising agency is the seller of, and may purchase without tax for resale, any item that:

Tax 11.70(7)(a)1. 1. Is resold before use by the advertising agency.

Tax 11.70 Note Example: Company L is an advertising agency. Company L purchases various art equipment such as paint brushes, easels, etc., that it uses in its operations. A portion of the art equipment is sold to the general public for use. The art equipment Company L sells to the general public may be purchased by Company L without Wisconsin sales or use tax as property for resale, provided Company L gives its supplier a properly completed exemption certificate claiming resale.

Tax 11.70(7)(a)2. 2. Physically becomes an ingredient or component part of tangible personal property or items or property under s. 77.52 (1) (b) or (c), Stats., the advertising agency produces and sells.

Tax 11.70 Note Example: Company M is an advertising agency that produces displays for customers. The displays are usually framed or matted photographs or prints. Company M may purchase the frames, matting, and paper for photographs and prints without Wisconsin sales or use tax as property for resale, provided it gives its supplier a properly completed exemption certificate claiming resale.

Tax 11.70(7)(b) (b) An advertising agency is the consumer of all tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased by the agency, other than tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased for immediate sale to customers or that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or an item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or the item or property under s. 77.52 (1) (b) or (c), Stats., that is destined for sale. As the consumer, the advertising agency is subject to Wisconsin sales or use tax on the tangible personal property and items, property, and goods under s. 77.52 (1) (b), (c), and (d), Stats., purchased.

Tax 11.70 Note Example: Company N purchases various office equipment, such as typewriters, computers, tables and cabinets which it uses in its advertising agency office. Company N purchases the equipment from an out-of-state supplier that is not required to collect Wisconsin sales or use tax. Company N is subject to Wisconsin use tax on its purchase of the office equipment.

Tax 11.70 Note Note: Exemption certificates and their instructions may be obtained free of charge from the department’s web site at www.revenue.wi.gov, by writing to Wisconsin Department of Revenue, P.O. Box 8902, Madison, WI 53708-8902, or by calling [phone].

Tax 11.70 Note Note: Section Tax 11.70 interprets ss. 77.51 (1f), (1fr), (3rm), (14) (intro.) and (h), 77.52 (1) and (2), 77.522, 77.54 (2), (2m), (6) (am) 2., (25), (25m), (43), and (59), and 77.585 (8), Stats.

Tax 11.70 Note Note: The interpretations in s. Tax 11.70 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 for advertising became effective March 1, 1970; (b) The exemption for printed advertising material used out-of-state became effective May 21, 1972; (c) The exemption for ingredients or components of shoppers guides, newspapers, and periodicals became effective July 7, 1983; (d) The sales and use tax exemption for raw materials for printed materials transported and used solely outside Wisconsin became effective December 1, 1997, pursuant to 1997 Wis. Act 27; (e) The exemption for catalogs and their mailing envelopes became effective April 1, 2009, pursuant to 2007 Wis. Act 20; (f) The provision that items must be consumed exclusively and directly by a manufacturer in manufacturing property or items destined for sale became effective August 1, 2009, pursuant to 2009 Wis. Act 28; (g) The definitions of bundled transaction and finished artwork became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (h) 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; (i) The definition of “direct mail” became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (j) The definition of “advertising and promotional direct mail” became effective May 27, 2010, pursuant to 2009 Wis. Act 330; (k) The sales and use tax exemption for advertising and promotional direct mail became effective July 1, 2013, pursuant to 2011 Wis. Act 32; and (L) Services resulting in advertising and promotional direct mail were excluded from taxable services effective July 1, 2013, pursuant to 2013 Wis. Act 20.

Tax 11.70 History History: Cr. Register, December, 1977, No. 264, eff. 1-1-78; r. and recr. Register, April, 1993, No. 448, eff. 5-1-93; cr. (3) (m), Register, June, 1999, No. 522, eff. 7-1-99; EmR0924: emerg. renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a) and (3) (gm), am. (2) (a) to (c), (e), (3) (a), (d), (g) to (m), (4), (5) (a) (intro.), (b), (6), (7) (a) 2. and (b), eff. 10-1-09; CR 09-090: renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a) and (3) (gm), am. (2) (a) to (c), (e), (3) (a), (d), (g) to (m), (4), (5) (a) (intro.), (b), (6), (7) (a) 2. and (b) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2) (c), (e) Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (7) (a) 2. Register August 2012 No. 680, eff. 9-1-12; CR 13-011: renum. (1) (a) to (c) to (1) (b), (d), (e), cr. (1) (a), (c), am. (2) (c), (3) (gm), cr. (3) (n) Register August 2013 No. 692, eff. 9-1-13; correction in (1) (c) made under s. 13.92 (4) (b) 7., Stats., Register August 2013 No. 692; CR 13-012: am. (2) (e) Register August 2013 No. 692, eff. 9-1-13; CR 14-006: am. (2) (e) Register August 2014 No. 704, eff. 9-1-14; correction in (3) (j) (Example [2]) Register August 2014 No. 704.

Tax 11.71 Tax 11.71 Computer industry.

Tax 11.71(1) (1) Definition of terms. In this section:

Tax 11.71(1)(a) (a) “Application” means the specific job performance by an automatic data processing installation.

Tax 11.71(1)(b) (b) “Automatic data processing equipment” includes computers used for data processing purposes and their peripheral equipment as well as punched card tabulating machines. It does not include tape-controlled automatic drilling, milling, or other manufacturing machinery or equipment.

Tax 11.71(1)(c) (c) “Coding” means the list, in computer code, of the successive computer instructions for successive computer operations for solving a specific problem.

Tax 11.71(1)(d) (d) “Computer” means an electronic device that accepts information in digital or similar form and that manipulates such information to achieve a result based on a sequence of instructions.

Tax 11.71(1)(e) (e) “Computer software” means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.

Tax 11.71(1)(em) (em) “Computer software maintenance contract” means a contract that obligates a vendor of computer software to provide a customer with future updates or upgrades to computer software, computer software support services, or both.

Tax 11.71(1)(f) (f) “Data processing” means the recording and handling of information by means of mechanical or electronic equipment, commonly referred to as automatic data processing.

Tax 11.71(1)(g) (g) “Input” means the information or data transferred, or to be transferred, from external storage media including punched cards, punched paper tape, and magnetic media into the internal storage of the computer.

Tax 11.71(1)(h) (h) “Keypunching” means recording information in cards, paper tapes, or magnetic tapes, disc, or drum by punching holes or otherwise entering information in the cards, tapes, discs, or drums, or recording data on any media to represent letters, digits, and special characters. Keypunching includes the necessary preliminary encoding or marking of the source documents.