Electronics and Information Technology Manufacturing Zone Facilities

​ Section 77.54(65), Wis. Stats., effective September 20, 2017, provides a sales and use tax exemption for the sale of and the storage, use, or other consumption of building materials, supplies, equipment, and landscaping services used to construct or develop a facility in an electronics and information technology manufacturing zone. In order for the exemption to apply, the following criteria must be met:

If property is purchased without tax under this exemption and is subsequently used in a taxable manner (e.g., moved to a different job site, used other than for the construction or development of a qualifying facility), use tax is due based upon the original purchase price of the property.

Example 1: Contractor purchases a crane for use on a construction project for a qualifying facility located in an electronics and information technology manufacturing zone. The contractor provides its vendor with a fully completed exemption certificate (described below). Upon completion of the project, Contractor uses the crane at a different project site. Contractor owes use tax on the original purchase price of the crane at the time the crane is used outside the electronics and information technology manufacturing zone.

Example 2: Contractor rents a crane for use on a construction project for a qualifying facility located in an electronics and information technology manufacturing zone. Contractor makes no use of the crane other than at the project. Contractor may provide its vendor with a fully completed exemption certificate (described below), since the crane was rented solely for, and used solely in, the construction or development of a facility in an electronics and information technology manufacturing zone.

Example 3: Contractor rents a portable toilet for use at its construction site for a qualifying facility located in an electronics and information technology manufacturing zone. Contractor may provide its vendor with a fully completed exemption certificate (described below), since the portable toilet was rented solely for, and used solely in, the construction or development of a facility in an electronics and information technology manufacturing zone.

Example 4: Subcontractor purchases tools, pencils, clipboards, and other supplies for use only on a construction project for a qualifying facility located in an electronics and information technology manufacturing zone. At the completion of the project, the tools and supplies are completely consumed or used up. Subcontractor may purchase the tools, pencils, clipboards, and other supplies without tax by providing its vendor with a fully completed exemption certificate (described below).

Exemption Certificates – Claiming the Exemption

An owner, lessee, contractor, subcontractor, or builder who makes purchases that qualify for this exemption, must provide a fully completed Wisconsin Sales and Use Tax Exemption Certificate (Form S-211 or S-211E) to the seller. The owner, lessee, contractor, subcontractor, or builder should check "other purchases exempted by law" on the certificate and enter "exempt under sec. 77.54(65), Wis. Stats."

Note: A purchaser who provides the seller an exemption certificate claiming an item will be used in this exempt manner, then uses it in a taxable manner, is liable for use tax on its purchase price of such items.

Sales of Tangible Personal Property and Landscaping Services

A contractor or subcontractor must charge sales tax on its sales of tangible personal property sold to the owner or prime contractor, unless it receives a fully completed exemption certificate (described above). The contractor may purchase without tax, for resale, the items physically transferred to the owner or prime contractor as tangible personal property or landscaping services.

Real Property Construction Activities

Real property improvements are not taxable, and the owner or prime contractor is not required to give the contractor or subcontractor an exemption certificate. However, the contractor or subcontractor performing the real property construction activities may purchase building materials without tax that are used in a qualifying electronics and information technology manufacturing zone if the criteria, above, are met. The contractor should provide its supplier with a fully completed exemption certificate (described above).

The contractor is required to maintain records that substantiate its purchases qualify for the exemption. The contractor should keep records to show:

  • What items were purchased exempt (see 1 above);
  • Items were purchased solely for or used solely in the construction or development of a qualifying facility (see 3 above);
  • Location of the facility that is in an electronics and information technology manufacturing zone (see 3 above);
  • Capital expenditures for the construction or development of such facilities are eligible to be claimed as a credit under the required statutes, as certified by WEDC (see 3 above).

The contractor may request that the qualifying facility help to substantiate that the property or service the contractor is purchasing qualifies for exemption under sec. 77.54(65), Wis. Stats. Contractors working on qualifying projects should provide subcontractors with necessary information so that the subcontractor can substantiate its use of this exemption.

May 6, 2019