NEW Sales and Use Tax Laws - 2009 Wis. Act 28

The Wisconsin Legislature passed 2009 Wis. Act 28 (effective July 1, 2009, unless otherwise noted), which includes a number of changes to the Wisconsin sales and use tax laws. A brief summary of each law change is provided, below. Additional detail will be provided in a special edition of the Sales and Use Tax Report, which is available on the Department of Revenue's website at revenue.wi.gov/ise/sales/index.html.

You may access 2009 Wis. Act 28 in its entirety at legis.state.wi.us/2009/data/acts/09Act028.pdf. Additional law changes relating to disregarded entities; the wind, solar, and gas from agricultural waste exemption; nexus; the premier resort area tax; the biotechnology exemption; and regional transit authorities are detailed under separate headings below.

Sales and Use Tax Laws

Disregarded Entities (secs. 77.51(10), 77.58(3)(a), and 77.61(19m), Wis. Stats.)
Under Wisconsin Act 28, a single-owner entity that is disregarded as a separate entity for Wisconsin income and franchise purposes under Ch. 71 is also disregarded as a separate entity for Wisconsin sales and use tax purposes (effective July 1, 2009).

The law includes transitional provisions to ensure that, solely due to this law change, the owner of a single-owner entity that is disregarded as a separate entity under Ch. 71, will not incur a use tax liability on purchases made prior to July 1, 2009 or on real property contracts entered into prior to July 1, 2009.

Act 28 also allows the owner of a disregarded entity the option to either (1) include the information from the disregarded entity on the owner's sales and use tax return, or (2) file a separate electronic sales and use tax return for the disregarded entity (effective September 1, 2009).

Additional information is available in the article on the practitioner's page of the Department of Revenue's website for Tax Professionals.

Exemption Related to Wind, Solar, and Gas from Agricultural Waste - Effective Date Delayed Until July 1, 2011
Section 77.54(56), Wis. Stats., was created by 2007 Wis. Act 20, with an effective date of July 1, 2009. As a result of the enactment of 2009 Wis. Act 28, the effective date of this exemption is now July 1, 2011.

Section 77.54(56) provides an exemption from sales and use taxes for:

(a) The gross receipts from the sale of and the storage, use, or other consumption of a product whose power source is wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural waste, if the product produces at least 200 watts of alternating current or 600 British thermal units per day, except that the exemption under this subsection does not apply to an uninterruptible power source that is designed primarily for computers.

(b) Except for the sale of electricity or energy that is exempt from taxation under sub. (30), the gross receipts from the sale of and the storage, use, or other consumption of electricity or energy produced by a product described under par. (a).

Definition of Nexus - Sales and Use Tax (sec. 77.51(13g)(d), Wis. Stats.)
This provision expands the definition of "retailer engaged in business in this state" to specifically include any person who has an affiliate in Wisconsin, if the person is related to the affiliate and if the affiliate uses facilities or employees in Wisconsin to advertise, promote, or facilitate the establishment of or market for sales of items by the related person to purchasers in Wisconsin or for providing services to the related person's purchasers in Wisconsin, including accepting returns of purchases or resolving customer complaints.

For purposes of this provision, two persons are "related" if any of the following apply:

  1. One person, or each person, is a corporation and one person and any person related to that person in a manner that would require a stock attribution from the corporation to the person or from the person to the corporation under section 318 of the Internal Revenue Code owns directly, indirectly, beneficially, or constructively at least 50% of the corporation's outstanding stock value.
  2. One person, or each person, is a partnership, estate, or trust and any partner or beneficiary; and the partnership, estate, or trust and its partners or beneficiaries; own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the other person or both persons.
  3. An individual stockholder and the members of the stockholder's family, as defined in section 318 of the Internal Revenue Code, owns directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of both persons' outstanding stock value.

The Village of Lake Delton and the City of Wisconsin Dells May Increase Their Premier Resort Area Tax Rates to 1% (secs. 77.994(3) and 77.9941(1), Wis. Stats.)
Under this provision, any municipality that enacted an ordinance imposing the premier resort area tax that became effective before January 1, 2000 (the Village of Lake Delton and the City of Wisconsin Dells), may amend the ordinance to increase the premier resort area tax rate to 1%. For such an increase, the municipality would have to deliver a certified copy of an amended ordinance to the Secretary of Revenue at least 120 days before the effective date of the increase, and such an increase would be effective on January 1, April 1, July 1, or October 1.

Exemptions for Biotechnology and Manufacturing Research (sec. 77.54(57), Wis. Stats.)
Effective January 1, 2012, exemptions from Wisconsin sales and use tax were created for purchases of the following:

Regional Transit Authorities (sec. 77.708, Wis. Stats.)
The Act creates or authorizes the creation of several Regional Transit Authorities, while terminating the existing KRM Regional Transit Authority. In addition, the Act terminates the existing KRM Regional Transit Authority fee, authorizes the new Southeast Regional Transit Authority to impose a fee, and authorizes a sales and use tax for other regional transit authorities that may be created. The changes are summarized below:

KRM Regional Transit Authority - Vehicle Rental Fee
The Act terminates the authorization for the KRM Regional Transit Authority to impose the $2.00 per vehicle rental fee currently being imposed on the rental of passenger automobiles without drivers, for a period of 30 days or less (except the rental of a service or replacement vehicle), that originate in the counties of Kenosha, Racine or Milwaukee. This termination is effective as of July 1, 2009.

The Act terminates the existing KRM Regional Transit Authority effective as of October 1, 2009.

Southeastern Regional Transit Authority - Vehicle Rental Fee
The Act creates the "Southeastern Regional Transit Authority" (SERTA), as of July 1, 2009.

The SERTA is to create, construct and manage a KRM (Kenosha, Racine, and Milwaukee Counties) commuter rail line.

SERTA is authorized to impose the vehicle rental fee under sec. 77.9971 in an amount of up to $18.00 per vehicle rental, indexed for inflation. The SERTA may impose the fee by resolution by its board of directors.

The fee imposed under sec. 77.9971 by SERTA is first effective as of the first day of the first month that is at least 90 days after the board of directors of SERTA imposes the fee and notifies the Department of Revenue. The fee will apply to the rental of passenger automobiles without drivers, for a period of 30 days or less (except the rental of a service or replacement vehicle), that originate in the counties of Kenosha, Racine or Milwaukee.

The Southeast Regional Transit Authority is an entity exempt from Wisconsin sales and use taxes pursuant to sec. 77.54(9a)(er), as created by the Act.

Chequamegon Bay Regional Transit Authority - Sales and Use Tax
The Act authorizes the creation of the Chequamegon Bay Regional Transit Authority if the governing bodies of the counties of Ashland and Bayfield each adopt a resolution authorizing its respective county to become a member of the authority.

Once the Chequamegon Bay Regional Transit Authority is created, any county other than Ashland or Bayfield may join the authority if the governing body of the county adopts a resolution authorizing that county to become a member of the authority and the authority approves that county's joinder.

The Act authorizes the Chequamegon Bay Regional Transit Authority to impose a sales and use tax at a rate of up to 0.5% under sec. 77.708(1). The tax will apply within the area created by the territorial boundaries of Ashland and Bayfield Counties, plus the territorial boundaries of any other county that subsequently joins the authority.

The tax shall only be effective on the first day of a calendar quarter. The Department of Revenue is to receive notice from the authority at least 120 days prior to the effective date of the tax.

If created, the Chequamegon Bay Regional Transit Authority will be an entity exempt from Wisconsin sales and use taxes pursuant to sec. 77.54(9a)(er), as created by the Act.

Chippewa Valley Regional Transit Authority - Sales and Use Tax
The Act authorizes the creation of the Chippewa Valley Regional Transit Authority if the governing body of Eau Claire County adopts a resolution authorizing the county to become a member of the authority.

Once created, Chippewa County may become a member of the authority if the governing body of Chippewa County adopts a resolution to become a member of the authority.

The Act authorizes the Chippewa Valley Regional Transit Authority to impose a sales and use tax at a rate of up to 0.5% under sec. 77.708(1). The tax will apply within the area created by the territorial boundaries of Eau Claire County, plus the territorial boundaries of Chippewa County, if that county subsequently joins the authority.

The tax shall only be effective on the first day of a calendar quarter. The Department of Revenue is to receive a notice from the authority at least 120 days prior to the effective date of the tax.

If created, the Chippewa Valley Regional Transit Authority will be an entity exempt from Wisconsin sales and use taxes pursuant to sec. 77.54(9a)(er), as created by the Act.

Dane County Regional Transit Authority - Sales and Use Tax
The Act authorizes the creation of the Dane County Regional Transit Authority (DC RTA) if the Dane County Board passes a resolution to become a member of the DC RTA. Upon creation, any municipality located in whole or in part within the Madison metropolitan planning area as of January 1, 2003, is a member of the DC RTA. Any municipality that is not initially a member may become a member by voting to join the DC RTA and having its joinder approved by the DC RTA. The initial jurisdiction of the DC RTA is the Madison metropolitan planning area.

If a municipality joins the DC RTA, the area of its territorial boundaries becomes a part of the DC RTA jurisdiction as of the first day of the first calendar quarter that begins at least 120 days after the municipality's joinder is approved by the DC RTA and a certified copy of the joinder is delivered to the Department of Revenue.

The Act authorizes the DC RTA to impose sales and use tax at a rate of up to 0.5% under sec. 77.708(1). The tax will initially apply within the Madison metropolitan planning area, plus the area of any municipality whose territory was a part of the DC RTA's jurisdictional area as of the date the authority acts to impose the tax.

The tax shall only be effective the first day of the first calendar quarter. The Department of Revenue is to receive a notice from the authority at least 120 days prior to the effective date of the tax.

If the boundaries of the DC RTA are other than a county line, the DC RTA is required to furnish to the Department of Revenue a complete list of all the 9 digit zip codes that are entirely within the DC RTA's jurisdictional area, and a complete list of all the street addresses that are within the DC RTA jurisdictional area that are not included in any 9 digit zip code that is entirely within the DC RTA's jurisdictional area. This information is to be furnished in the manner, format and layout prescribed by the Department of Revenue.

If created, the DC RTA will be an entity exempt from Wisconsin sales and use taxes pursuant to sec. 77.54(9a)(er), as created by the Act.

For additional information contact: DORSalesandUse@revenue.wi.gov

Last updated July 14, 2009