Sales and Use Tax Treatment of Liquid Nurse Tanks, Dry Fertilizer Tender Units, and Liquid Fertilizer and Chemical Storage

Note: This tax release supersedes any previous rulings on this topic.

Statutes: Sections 77.52(1)(a) and 77.54(3)(a) and (5)(d), Wis. Stats. (2009-10).

Wis. Adm. Code: Section Tax 11.68(6)(j), Wis. Adm. Code (November 2010 Register).

Applicable Wisconsin Statutes:
Section 77.52(1)(a), Wis. Stats. (2009-10), imposes Wisconsin sales and use taxes, in part, on "...the sale, license, lease or rental of tangible personal property sold, licensed, leased or rented at retail in this state..."

Section 77.54(3)(a), Wis. Stats. (2009-10), provides a sales and use tax exemption for, in part:

"The sales price from the sales of and the storage, use, or other consumption of tractors and machines, including accessories, attachments, and parts, lubricants, nonpowered equipment, and other tangible personal property...that are used exclusively and directly, or are consumed or lose their identities, in the business of farming, including dairy farming, agriculture, horticulture, floriculture, silviculture, and custom farming services..."

Section 77.54(5)(d), Wis. Stats. (2009-10), provides a sales and use tax exemption for the sales price from the sale of and the storage, use or other consumption of:

"Mobile units used for mixing and processing and the motor vehicle or trailer on which the unit is mounted, including accessories, attachments, parts, supplies and materials for those vehicles, trailers and units."

Applicable Wisconsin Administrative Code:

Section Tax 11.68(6)(j), Wis. Adm. Code (November 2010 Register), provides that personal property which becomes a part of realty includes storage tanks constructed on site.


Liquid nurse tank. Liquid nurse tanks are purchased by retailers to deliver liquid products to farmers. These units are manufactured with a recirculation pump built into the tank that serves to keep the solution blended during transport and while waiting to load the sprayer/applicator. Because each chemical in the tank has different densities, heavier materials sink to the bottom of the tank, unless the product is continually mixed, both while the product is in route and after it gets to the site. This mixing prevents the product from separating and becoming unusable. The blending pump in the tank has a dual purpose-blending and mixing the product as well as pumping it out of the tank.

The unit is mounted on a trailer and the retailers tow it behind their trucks to farms and back to the retail business location.

Dry fertilizer tender unit. The dry fertilizer tender unit is used only to transport dry fertilizer from the mixing plant (retailer's business location) to the farms for application. The product is blended at the mixing plant, and is put in the hopper of the tender unit. During transport, the product separates as a result of mechanical sorting due to movement and shaking of the load. The hopper on the tender unit is equipped with an auger which serves to remix the product and to expel product at the time of delivery. This mixing is necessary because the larger particles of fertilizer settle to the bottom of the hopper.

Liquid fertilizer & chemical storage tank. These are stationary tanks, used by retailers to store fertilizer and chemicals before delivering them to farms for application. The tanks are constructed before delivery to the site. The retailers have a series of these tanks at their business locations. Each of the tanks in the series has different chemical and liquid fertilizers stored in them. The retailers use material from the tanks to make a blend that fits a particular farmer's needs. This blended product is put in a nurse tank to deliver it to the farmer.

Wisconsin sales and use tax treatment:

Liquid nurse tanks and dry fertilizer tender units. A retailer's purchase of a liquid nurse tank or dry fertilizer tender unit, as described above, is exempt from sales and use taxes under sec. 77.54(5)(d), Wis. Stats. (2009-10). This exemption applies because the liquid nurse tanks and dry fertilizer tender units are mobile units and are used for mixing and processing.

Liquid fertilizer & chemical storage tanks. A retailer's purchase of the liquid fertilizer and chemical storage tank described above is subject to Wisconsin sales or use tax.

Section 77.52(1)(a), Wis. Stats. (2009-10), imposes tax on retail sales of tangible personal property, unless an exemption applies.

Section Tax 11.68(6)(j), Wis. Adm. Code (November 2010 Register), provides that storage tanks constructed on site become a part of real property. Since the tanks are not constructed on site, the tanks remain tangible personal property after the delivery and installation.

A retailer's purchase of a liquid fertilizer or chemical storage tank described above is subject to sales or use tax as a purchase of tangible personal property. The exemption for mobile units discussed above (sec. 77.54(5)(d), Wis. Stats. (2009-10)) does not apply to the purchase because the storage tanks are not mobile, and are not "accessories, attachments, parts, supplies and materials" for mobile units. (Note: This answer assumes that the retailer does not use the storage tank exclusively in providing custom farming services for farmers. Custom farming services would include applying fertilizer and chemicals on farm fields for farmers for a fee, but does not include delivering fertilizer and chemicals to farmers for the farmer's application.)

July 7, 2011