Current through August 26, 2024
(1) PROPERTY EXEMPT
UNDER S.
77.54(6) (AM) 2, STATS.
(a) To be exempt, containers, labels, sacks,
cans, boxes, drums, bags, or other packaging and shipping materials for use in
packing, packaging, or shipping tangible personal property or items or property
under s.
77.52(1) (b) or (c), Stats., shall be "used by the purchaser
to transfer merchandise to customers." Whether the containers or other
packaging or shipping materials are returnable or nonreturnable is not a
factor. The exemption does not apply to containers used in the incidental
transfer of property to customers by persons providing services.
(b) Containers include barrels, bottles,
cartons, chemical carboys, and kegs. Packaging and shipping materials include
property used inside a package to shape, form, preserve, stabilize, or protect
the contents, such as excelsior, straw, cotton, cardboard fillers, separators,
shredded paper, ice, dry ice, and batting, and rope, twine, gummed tape,
wrapping paper, rubber bands, crates, and crating materials, pallets, skids,
and mailing tubes.
(c) The sales
price from the sale of the following items is within the exemption:
1. Cans in which canned goods, paints, and
other commodities are contained; medicine bottles; boxes in which jewelry,
candy, suits, dresses, and hats are delivered to customers; and ice cream
cartons.
2. Bottles and cases used
by breweries, wineries, or soda water beverage producers to transfer the
product to customers.
3. Barrels,
half-barrels, kegs, and the like, used by a brewery to transfer draft beer to
wholesalers or retailers.
4. Caps
for milk, beer, and soda water bottles.
5. "Fragile," "Handle with Care," or other
shipping labels.
6. Paper food
dividers used to separate food sections in a container for transfer to a
customer.
7. Paper bags purchased
by grocery stores, bakeries, or other retailers and used by their customers in
carrying out their purchases.
8.
Feed bags purchased by feed dealers who use the bags to transfer merchandise
sold to their customers.
9. Bale
ties sold to a hay owner and used to deliver hay to the owner's
customers.
10. Ice used by a
commercial fisher inside a box of fish to preserve the fish during shipment to
market.
11. LPG tanks used to
transfer fuel to customers which are replaced each time the fuel is
exhausted.
12. Packaging and
shipping materials for use in packing, packaging, or shipping meat or meat
products, regardless of whether these items are used to transfer merchandise to
customers.
Note: See
Tax 11.12 for information on farmer's container
exemption.
(2) PROPERTY NOT EXEMPT UNDER S.
77.54(6) (AM) 2, STATS. Sales of the following items
are not within this exemption:
(a) Wrapping
equipment such as paper holders, tape dispensers, staplers, and string
holders.
(b) Coat hangers used on
display racks in stores.
(c)
Shopping carts or baskets and similar equipment.
(d) Computer produced gummed label mailing
lists used to address envelopes. However, labels for envelopes used to transfer
tangible personal property or items or property under s.
77.52(1) (b) or (c), Stats., to customers are
exempt.
(e) Containers or other
packaging and shipping materials used merely for storage or to transfer
merchandise owned by a person from one location to another, such as bakery
delivery carts and containers used in delivering bakery products to retailers,
where the carts are not transferred by the bakery to the retailer.
Examples:
1) Wholesaler A's truck driver delivers
bakery products to Grocery Store B. The truck driver brings the bakery products
into Grocery Store B on a cart, puts the bakery products from the cart onto
Grocery Store B's shelves and returns the cart to the truck and provides
Grocery Store B with an invoice for the bakery products. The cart is not
transferred to Grocery Store B (the bakery retailer), and is not an exempt
container.
2) Wholesaler C's truck
driver delivers bread to Grocery Store D. The truck driver brings the bread
into Grocery Store D on a cart, and leaves the bread on the cart at Grocery
Store D. The truck driver picks up the cart that was left with the last
delivery. The truck driver provides Grocery Store D with an invoice for the
bread. Grocery Store D's employees stock its shelves as needed with the bread
from the cart. The cart is transferred to Grocery Store D (the bakery
retailer), and is an exempt container.
(f) Lumber or other material used for
bracing, blocking, skidding, or shoring items while in transit that is not
transferred to the customer of the shipped items; and cardboard and paper used
to line box cars.
(g) Price tags
and advertising matter used in connection with the sale of tangible personal
property or items, property, or goods under s.
77.52(1) (b), (c), or (d), Stats., including counter display
cards used for advertising and display purposes.
(h) Tanks on trucks used to deliver
merchandise to customers.
(i)
Corrugated boxes and other containers and related packing materials purchased
by movers for use in transporting a customer's goods.
(j) Bags, boxes, hangers, and other
containers transferred to customers by laundries, dry cleaners, and other
persons providing services.
Note: In a decision dated November 23, 1979 in
the case of Leicht Transfer & Storage Co., Inc. vs. Wisconsin
Department of Revenue the Wisconsin Tax Appeals Commission held that
corrugated boxes and related packing materials used by Leicht to transport a
customer's property from one location to another do not come within the
exemption in s.
77.54(6) (b), 2011 Stats. This decision was affirmed
by the Dane County Circuit Court on May 19, 1980, by the Court of Appeals,
District IV on May 26, 1981.
(3) DEPOSITS ON RETURNABLE CONTAINERS.
(a) Returnable container deposits received by
a retailer at the time of the retail sale of tangible personal property or
items or property under s.
77.52(1) (b) or (c), Stats., such as soft drink bottles, beer
bottles and containers, and refunds of the deposits may be excluded from the
computation of the taxable sales price if they are excluded from the sales
price on the retailer's books of account.
(b) If a retailer's books of account include
container deposits in the sales price and if refunds of the deposits are
deducted from the sales price, the retailer shall use this method of reporting
the taxable sales price on a sales tax return. Under this method, the sales
price from the deposit is subject to the tax and the tax may be collected from
the customer. However, when the deposit is refunded to the customer, the
applicable sales tax shall also be refunded to the customer.
(4) DISPOSABLE ITEMS USED BY
RESTAURANTS.
(a) The sales price from sales
to restaurants, cafeterias, caterers, nursing homes, or vending machine
operators of disposable items, including paper and plastic cups, plates, butter
chips, hamburger and frankfurter baskets or buckets, utensils, straws,
placemats, napkins, doggie bags, wrapping materials, and toothpicks,
transferred to customers for a valuable consideration by these persons as part
of the sale of food, food products, and beverages to customers are not subject
to the tax.
(b) The sales price
from the sale of disposable products to a restaurant that are transferred with
candy, soft drinks, dietary supplements, and prepared foods furnished for no
consideration by the restaurant to the restaurant's own employees during the
employee's work hours is not subject to the tax.
(5) DEMURRAGE, LEASE, OR RENTAL OF FUEL
STORAGE TANKS. A gas supplier's monthly charge to a customer for the use of an
LPG or other fuel storage tank which remains indefinitely on the customer's
premises is taxable. The charge a supplier makes because a gas cylinder is
retained by a customer beyond a 30-day period is also taxable. These
"demurrage" charges constitute taxable rentals paid for the continuation of
possession of the container. If a charge is made to the customer for the use of
the container and the container is used exclusively for those
leasing purposes, the gas supplier may issue an exemption certificate claiming
resale when the supplier purchases the container.
(6) CONTAINERS AND PACKAGING MATERIALS SOLD.
(a) If a charge is made by a seller or lessor
of tangible personal property or items or property under s.
77.52(1) (b) or (c), Stats., to a customer for a container or
packaging materials used in connection with the shipment of the property or
item, the charge for the container or packaging materials becomes a part of the
sales price or rental charge. If the sale of the property or item shipped is
not subject to or is exempt from tax, the charge for the container or packaging
materials is not subject to or is exempt from tax. If the sale of the property
or item shipped is subject to tax, the charge for the container or packaging
materials is subject to tax. This paragraph is applicable to the taxation of
containers and packaging materials regardless of whether the charge for the
containers or packaging materials is separately stated or not separately
stated.
(b) Any credit given by a
seller or lessor to a customer for the container or packaging materials used in
connection with the shipment of property or items which the customer returns to
the seller or lessor shall reduce the seller's or lessor's sales price subject
to tax in the reporting period during which the materials are returned, if the
seller or lessor included the selling price of the container or packaging
materials in the sales price subject to tax, and the seller or lessor returns
the tax to the customer.
(7) GIFT WRAPPING. The amount charged for
gift wrapping packages is taxable.
Section Tax 11.15 interpretss.
77.51(14) (intro) and (j) and (15b),
77.52(1) and (2) (a) 10., and 77.54 (3m), (6) (am) 2. and 2m.,
and (20r), Stats.
The interpretations in s. Tax 11.15 are effective under
the general sales and use tax law on and after September 1, 1969, except: (a)
The exemption for meat packaging and shipping materials became effective on May
20, 1978, pursuant to Chapter 368, Laws of 1977; (b) Laundries and dry cleaners
became the consumers of bags, boxes, hangers, and other containers transferred
to customers effective September 1, 1983, pursuant to 1983 Wis. Act 27; and (c)
The change of the term "gross receipts" to "sales price" and the separate
impositions of tax on coins and stamps sold above face value under s.
77.52(1) (b), Stats., certain leased property affixed
to real property under s.
77.52(1) (c), Stats., and digital goods under s.
77.52(1) (d), Stats., became effective October 1,
2009, pursuant to 2009 Wis. Act 2.
In Dernehl-Taylor Co. v. Department of Revenue (Wisconsin
Tax Appeals Commission, May 26, 1978), it was held that the gross receipts for
doggie bags qualify for the exemption under s.
77.54(6) (b), 2011 Stats., because they are used to
transfer merchandise to customers.
