Expand List of Qualifying Exempt Entities for Building Materials Exemption

(2017 Wis. Act 190, amend sec. 77.54(9m), first applies to contracts entered into on July 1, 2018; 2017 Wis. Act 231, amend sec. 77.54(9m), first applies retroactively to contracts entered into on September 1, 2017)

The building materials exemption for contracts with certain exempt entities is expanded to include (a) holding companies that are exempt from federal income tax under sec. 501(c)(2), IRC, and (b) state veterans organizations, as qualifying exempt entities.

Section 77.54(9m), Wis. Stats., provides a sales and use tax exemption for the sale of building materials sold to a construction contractor who, in fulfillment of a real property construction activity, transfers the building materials to qualifying exempt entities, if the building materials become part of a facility in Wisconsin owned by the exempt entity. Refer to Wisconsin Tax Bulletin 192 – January 2016, pages 19-21, for more information about this exemption.

Retroactively for contracts entered into on September 1, 2017, and thereafter, a qualifying exempt entity includes holding companies which are:

  • Described under sec. 501(c)(2), IRC;
  • Exempt from federal income tax under sec. 501(a), IRC; AND
  • Organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to any corporation, community chest fund, foundation or association organized and operated exclusively for religious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals, except hospital service insurance corporations under sec. 613.80 (2), Wis. Stats., no part of the net income of which inures to the benefit of any private stockholder, shareholder, member or corporation

For contracts entered into on July 1, 2018, and thereafter, a qualifying exempt entity includes a state veterans organization. "State veterans organization" means the state organization or department of a national veterans organization incorporated by an act of Congress.

Previously, this exemption was expanded to include technical colleges, any institution or campus in the University of Wisconsin System, and the University of Wisconsin-Extension as qualifying exempt entities for contracts entered into on July 1, 2018, and thereafter.

Documentation a contractor must obtain to show that its customer is a qualifying exempt entity for this exemption is as follows:

  • Section 501(c)(2), IRC, holding company – Wisconsin Certificate of Exempt Status number issued by the department
  • State veterans organization – These organizations will not be issued a Wisconsin Certificate of Exempt Status number. The contractor must document that its contract is with is a state veterans organization.
  • Technical colleges, any institution or campus in the University of Wisconsin System, and the University of Wisconsin-Extension – The contractor must document that it is a qualifying University of Wisconsin institution or campus

April 30, 2018