Products Purchased Prior to October 1, 2009 That No Longer Qualify for Exemption Because of Changes in Definitions - Use Tax

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The legislation conforming Wisconsin's sales and use tax laws to the requirements of the Streamlined Sales and Use Tax Agreement (SSUTA) contained numerous changes in how certain terms were defined and what was or was not included within a particular definition. As a result of the adoption of these new definitions, sales of various products that qualified for an exemption from Wisconsin sales and use tax prior to October 1, 2009, will no longer qualify for exemption on and after October 1, 2009. For example, bottles of sweetened tea were not subject to Wisconsin sales or use tax prior to October 1, 2009, but with the adoption of the new definition of "soft drink" in sec. 77.51(17w), Wis. Stats., as created by 2009 Wis. Act 2, sales of bottles of sweetened tea are taxable on and after October 1, 2009.

A person who purchased an item prior to October 1, 2009 that qualified for exemption from Wisconsin sales and use tax at that time because it fell within the definition of a particular exempt item and who subsequently stores, uses, or consumes the item in Wisconsin on or after October 1, 2009 when the "new" definition (i.e., a definition that no longer includes the item) applies, will not owe Wisconsin sales or use tax on the subsequent storage, use, or consumption of that item in Wisconsin.

      Example:

  • Individual A purchases a case of a sweetened tea beverage prior to October 1, 2009.
  • The purchase of the sweetened tea was not subject to tax prior to October 1, 2009 because it was a "tea."
  • Effective October 1, 2009, a purchase of that same tea is subject to Wisconsin sales and use tax because it meets the definition of a "soft drink."
  • Individual A did not drink any of the tea prior to October 1, 2009. Individual A continued to store the tea in Wisconsin after October 1, 2009 and drank it (used or consumed it) in Wisconsin after October 1, 2009.

Is Individual A's purchase of the "tea" subject to Wisconsin use tax since it is stored, used, or consumed in Wisconsin on or after October 1, 2009?

No. Since Individual A purchased the tea prior to October 1, 2009, at which time the tea qualified for exemption from Wisconsin sales and use tax, the subsequent change in the definition of "soft drink" (which on and after October 1, 2009 includes this sweetened tea), does not subject the original purchase price of the sweetened tea to Wisconsin sales or use tax.

January 27, 2010