Separate and optional charges for motor vehicle fuel by a rental car company to a person who rented a motor vehicle are not subject to Wisconsin sales and use tax if the proper excise taxes were paid by the rental car company to the motor vehicle fuel supplier.
Example 1: ABC Car Rental is a short-term car rental provider. ABC charges Customer XYZ for the use of a rental car. If Customer XYZ returns the car with a full tank of gas, ABC does not charge Customer XYZ for any motor vehicle fuel. However, if Customer XYZ doesn't return the car with a full tank of gas, ABC fills up the tank and charges Customer XYZ $6 per gallon for each gallon of fuel needed. This charge covers ABC's cost of the fuel, mark-up on the fuel and any related overhead costs. ABC pays the appropriate motor vehicle excise taxes on the fuel when ABC purchases it from its supplier. The $6 per gallon charge by ABC is not subject to Wisconsin sales or use tax since this was a separate and optional charge made by ABC (i.e., the customer chose to pay this fee rather than fill up the car with gas) and because ABC paid the appropriate motor vehicle excise tax when it purchased the motor vehicle fuel.
Example 2: Same as Example 1, except that ABC offers Customer XYZ the option of "prepaying" for a full tank of gas and then not having to worry about filling up the car with gas before returning it to ABC. This charge is a flat $35 fee. The $35 fee charged by ABC is not subject to Wisconsin sales or use tax since this is a separate and optional charge made by ABC specifically for fuel.
February 21, 2012