Current through August 26, 2024
(1) DEFINITIONS. In this section:
(a) "Actively participates" means the person
performs services for the motor vehicle dealership, including selling,
accounting, managing, and consulting, for more than 500 hours in a taxable year
for which the person receives compensation. "Actively participates" does not
include services performed only in the capacity of an investor, including
studying and reviewing financial statements or reports on the operation of the
business, preparing or compiling summaries or analyses of the finances of the
business for the investor's own use, or monitoring the finances or operations
of the activity in a nonmanagerial capacity.
(am) "Mobility-enhancing equipment" means
equipment, including the repair parts and replacement parts for the equipment,
that is primarily and customarily used to provide or increase the ability of a
person to move from one place to another; that may be used in a home or motor
vehicle; and that is generally not used by a person who has normal mobility.
"Mobility-enhancing equipment" does not include a motor vehicle or any
equipment on a motor vehicle that is generally provided by a motor vehicle
manufacturer. "Mobility-enhancing equipment" does not include durable medical
equipment.
(b) "Motor vehicle"
means a self-propelled vehicle, such as an automobile, truck, truck-tractor, or
motorcycle, designed for and capable of transporting persons or property on a
highway. In this section, "motor vehicle" does not include a self-propelled
vehicle which is not designed or used primarily for transportation of persons
or property, and is only incidentally operated on a public highway, such as a
farm tractor, snowmobile, all-terrain vehicle, utility terrain vehicle,
off-highway motorcycle, fork lift truck, or road machinery as defined in s.
340.01(52),
Stats. "Motor vehicle" does not include a vehicle which is not self-propelled,
such as a trailer or semitrailer.
(2) RETAILERS' TAXABLE SALES. The following
sales in Wisconsin are taxable:
(a) The sale
of a motor vehicle minus any trade-in allowance, if the sale and trade-in are
one transaction. A separate or independent sale of a motor vehicle by either
the buyer or seller of another motor vehicle is not a trade-in, even if the
proceeds from the sale are immediately applied by the seller to a purchase of
another motor vehicle. A dealer does not realize taxable receipts from a
transaction in which one motor vehicle is traded for another of lesser value,
called a "trade-down," unless cash or services are received by the dealer.
Examples:
1) Dealer
A sells a motor vehicle to Individual B and accepts the trade-in of two motor
vehicles owned by Individual B. The selling price of the new vehicle is
$20,000. The values of the two motor vehicles traded in by Individual Bare
$8,000 and $9,000. The sales price subject to sales tax is $3,000, the $20,000
selling price less the $8,000 and $9,000 trade-ins.
2) Dealer A sells two motor vehicles to
Individual C and accepts the trade-in of a motor vehicle owned by Individual C.
The selling prices of the new vehicles are $10,000 and $12,000. The value of
the motor vehicle traded in is $15,000. The sales price subject to sales tax is
$7,000, the $22,000 selling price less the $15,000 trade-in.
(am) The sale of motor vehicles by
any retailer registered or required to be registered to collect Wisconsin sales
or use tax, regardless of whether the retailer is a motor vehicle dealer.
Example: Landscaper A is registered to collect and remit
Wisconsin sales and use tax on its landscaping services. Landscaper A sells a
motor vehicle that it had used in its landscaping business. Landscaper A must
collect Wisconsin sales tax on its sale of the motor vehicle and remit the tax
to the Department of Revenue on its Wisconsin sales and use tax return.
(b) The delivery, handling,
and preparation of a motor vehicle being sold and the sale of a warranty,
relating to the sale of a motor vehicle that is taxable.
Note: See s.
Tax 11.27 for information regarding the sales and use tax
treatment of warranties.
(c)
The sale of equipment and accessories with a motor vehicle. However, equipment
that is not generally provided by a motor vehicle manufacturer, but which is
added to a motor vehicle may qualify for exemption under s.
77.54(22b),
Stats., as mobility-enhancing equipment, as defined in sub. (1) (am).
(d) Sales of parts and labor for
repair, service, and maintenance performed on a motor vehicle, including
charges for installation of accessories or attachments, except charges for
mobility-enhancing equipment, as described in par. (c).
Example: Charges for installation of a radio or air
conditioner into a motor vehicle are taxable.
(e) Towing or hauling a motor vehicle by a
tow truck, as defined in s.
340.01(67n),
Stats.
(3) OCCASIONAL
SALE OR PURCHASE OF MOTOR VEHICLES FROM NON-RETAILERS.
(a) The occasional sale of a motor vehicle is
taxable, unless one of the following applies:
1. The transfer is to the spouse, parent,
stepparent, father-in-law, mother-in-law, child, stepchild, son-in-law, or
daughter-in-law of the transferor or is transferred from an individual to a
corporation which is solely owned by the individual; and the motor vehicle has
been previously registered or titled in Wisconsin in the name of the
transferor, if required to be registered or titled; and the transferor is not
engaged in the business of selling motor vehicles.
2. The motor vehicle is sold by a nonprofit
organization meeting the requirements in s.
Tax 11.35(4).
(b) No motor vehicle shall be registered or
titled in Wisconsin unless the registrant presents proof that the sales or use
taxes imposed by this subchapter have been paid or the registrant pays the tax
due to the department of transportation at the time the vehicle is registered
for use in this state.
(c) A
Wisconsin resident purchasing a motor vehicle in a foreign country, or for
delivery in a foreign country, shall pay the Wisconsin use tax when the
resident registers the vehicle in Wisconsin for use in Wisconsin, subsequent to
use in the foreign country. The tax is measured by the full "purchase price,"
as defined in s.
77.51(12m),
Stats., of the vehicle.
(d) When
one co-owner transfers an interest in a motor vehicle to the other co-owner,
tax shall apply on the transfer of the interest. The measure of the tax shall
be the cash or its equivalent paid for the equity transferred plus the selling
co-owner's share of the liabilities assumed by the buying co-owner.
(4) PURCHASES BY NONRESIDENTS.
(a) The sales price from the sales of motor
vehicles or truck bodies to nonresidents of Wisconsin, including members of the
armed forces, who will not use the vehicles or trucks for which the truck
bodies were made in Wisconsin other than in their removal from Wisconsin is
exempt. Truck bodies include semi-trailers. However, the separate sale of a
"slide-in" camper to a nonresident is taxable if the sale is sourced to
Wisconsin as provided s.
77.522, Stats.
(b) The sales price from charges for the
repair by a Wisconsin retailer of a nonresident's motor vehicle or truck body
is subject to tax.
(c) A motor
vehicle, trailer, semi-trailer, all-terrain vehicle, off-highway motorcycle, or
recreational vehicle as defined in s.
340.01(48r),
Stats., purchased outside Wisconsin by a nonresident of Wisconsin 90 days or
more before bringing the unit into Wisconsin, in connection with a change of
residence to Wisconsin by the individual, is not subject to the Wisconsin use
tax.
(d) Except as provided in par.
(c), nonresidents, including armed forces personnel stationed outside this
state pursuant to military orders, who purchase motor vehicles outside this
state, shall pay the Wisconsin use tax at the time the vehicle is registered
with the Wisconsin department of transportation. However, a tax credit may be
claimed as described in sub. (6).
(5) TEMPORARY USE IN WISCONSIN. Motor
vehicles purchased outside Wisconsin, which are not registered or titled or
required to be registered or titled in Wisconsin, brought into Wisconsin by a
nondomiciliary for that person's own storage, use, or other consumption while
temporarily in Wisconsin are not subject to use tax when the motor vehicle is
not stored, used, or otherwise consumed in Wisconsin in the conduct of a trade,
occupation, business, or profession or in the performance of personal services
for wages or fees.
(6) TAX CREDIT
FOR VEHICLE PURCHASED OUTSIDE WISCONSIN. A motor vehicle purchased outside
Wisconsin and registered in Wisconsin is subject to Wisconsin use tax, except
as noted in sub. (4) (c). However, if the purchase was subject to a sales or
use tax by the state, the District of Columbia, or the Commonwealth of Puerto
Rico, in which the purchase was made, sales or use tax paid to the other state,
the District of Columbia, or the Commonwealth of Puerto Rico may be applied as
a credit against and deducted from the Wisconsin use tax. This credit does not
apply to taxes paid to another country or to motor vehicle registration
fees.
(7) TRANSFER BY INHERITANCE,
GIFT, OR PRIZE.
(a) The distribution of a
motor vehicle to the heir or heirs of an estate is not a transfer subject to
the Wisconsin sales or use tax. However, the sale of a motor vehicle by a
personal representative of an estate is subject to the tax, and the purchaser
shall pay the tax to the department of transportation at the time of
registration.
(b) A motor vehicle
transferred as a gift or as a prize in a contest or drawing is exempt when
registered with the department of transportation by the recipient or prize
winner. However, the sale of the vehicle to the donor of the gift or prize is
taxable, unless the donor is an organization described in s.
77.54(9a),
Stats.
(c) A motor vehicle donated
to an organization described in s.
77.54(9a),
Stats., is not subject to Wisconsin use tax if the motor vehicle has been
purchased by the donor tax-free for resale or upon the presentation of a valid
exemption certificate, and if the donor has made no other use of the motor
vehicle.
(8) VEHICLES
USED BY LICENSED WISCONSIN MOTOR VEHICLE DEALERS.
(a)
General. Motor vehicles
purchased without tax for resale by a Wisconsin motor vehicle dealer licensed
under ss.
218.0101 to
218.0163, Stats.,
and used for a purpose in addition to retention, demonstration, or display,
except motor vehicles loaned to any school or school district for a driver
training educational program conducted by the school or school district, are
subject to Wisconsin use tax. Motor vehicles used by the dealership solely for
retention, demonstration, and display, while holding them for sale in the
regular course of business, or solely for leasing to others, such as customers
and employees, are not subject to Wisconsin use tax.
(b)
Amount subject to use
tax. The amount subject to use tax on a motor vehicle used by a
licensed motor vehicle dealer for a purpose in addition to retention,
demonstration, or display is one of the following:
1. Motor vehicles held for sale which are
assigned to and used by a specific dealer employee subject to withholding from
federal income tax on wages are subject to Wisconsin use tax on $140 per motor
vehicle registration plate per month. The $140 amount is effective January 1,
2009 and is subject to change annually as explained in the notes following par.
(b).
2. Motor vehicles held for
sale which are assigned to and used by persons holding an ownership interest in
Wisconsin licensed motor vehicle dealerships who are not subject to withholding
for federal income tax purposes, but who actively participate in the day-to-day
operation of the dealership, are subject to Wisconsin use tax on $140 per motor
vehicle registration plate per month. The $140 amount is effective January 1,
2009 and is subject to change annually as explained in the notes following this
subdivision.
Note: As provided in s.
77.53(1m),
Stats., the department will annually adjust the amount per plate to the nearest
whole dollar to reflect the annual percentage change in the U.S. consumer price
index for all urban customers, U.S. city average, as determined by the United
States department of labor, for the 12 months ending on June 30 of the year
before the change. The department will publicize any rate change in an issue of
the Wisconsin Tax Bulletin and Sales and Use Tax Report prior to the January 1
that the change becomes effective.
Note: The amount per plate subject to use tax
under par. (b) 1. and 2. was $96 for the period September 1, 1995 through
December 31, 1996, $99 for the period January 1, 1997, and $102 for the period
January 1, 1998 through December 31, 1998.
3. Motor vehicles used by the dealer or any
person other than an employee of the dealer and which are held for sale and not
assigned to and used by a specific dealer employee subject to federal
withholding on wages are subject to Wisconsin use tax on the lease value of the
motor vehicle computed on a calendar month basis. If a motor vehicle is used by
the dealer for a period of less than one calendar month, the amount subject to
use tax is the daily lease value calculated by multiplying the applicable
monthly lease value by a fraction, the numerator of which is the number of days
used by the dealer for a purpose in addition to retention, demonstration, or
display and the denominator of which is the number of days in the calendar
month. Lease value is computed using the internal revenue service lease value
table contained in
26 CFR 1.61-21(d)
(2). In the lease value table, the
"automobile fair market value" is one of the following:
a. The amount an individual would have to pay
in an arm's length transaction to purchase the motor vehicle. The amount
includes all amounts attributable to the purchase of the automobile such as
sales tax and title fees.
b. The
motor vehicle dealer's cost of purchasing the automobile, including all
expenses attributable to that purchase, provided the automobile is owned by the
dealer and the purchase was made at arm's length.
4. Motor vehicles not held for sale,
including motor vehicles properly capitalized for Wisconsin income or franchise
tax purposes, are subject to use tax based on the purchase price of the motor
vehicle as defined in s.
77.51(12m),
Stats.
(c)
Recordkeeping. It is presumed that all dealer plates issued by
the department of transportation to a licensed motor vehicle dealer are used
each month on motor vehicles assigned to employees subject to withholding for
federal income tax purposes or owners who actively participate in the
day-to-day operations of the dealership for a purpose in addition to retention,
demonstration, or display and are subject to use tax as provided in par. (b) 1.
and 2., unless one of the following applies:
1. The motor vehicle dealer keeps adequate
records showing that the dealer plates were not used during the month on motor
vehicles for a purpose in addition to retention, demonstration, or
display.
2. The motor vehicle to
which the dealer plate is assigned is subject to use tax as computed in par.
(b) 3. or 4.
(9) SALES BY DEALERS TO THEIR SALESPERSONS OR
OTHER EMPLOYEES. When a licensed Wisconsin motor vehicle dealer sells a motor
vehicle to one of the dealer's salespersons or other employees, the transaction
is subject to the sales tax.
(10)
HEAVY EQUIPMENT DEALERS. Heavy equipment dealers who are not registered with
the Wisconsin department of transportation as motor vehicle dealers because
their sales are too few in number to require registration, but who are
retailers that hold a Wisconsin seller's permit, must charge the sales tax on
their sales of motor vehicles. The heavy equipment dealers may purchase motor
vehicles they are going to resell without tax for resale by providing a
properly completed exemption certificate.
(11) MOTOR VEHICLE REPAIR PARTS AND SUPPLIES.
(a) Motor vehicle dealers with body shops and
any other person engaged in motor vehicle repair may purchase for resale
without tax tangible personal property and items, property, and goods under s.
77.52(1) (b), (c), and (d), Stats., which are physically
transferred to the customer's vehicle and which leave the repair facility with
the customer. The property includes paints, paint hardeners, plastic fillers,
welding rods, and auto parts.
(b)
Tangible personal property and items, property, and goods under s.
77.52(1) (b), (c), and (d), Stats., not physically transferred
to a customer's motor vehicle and which do not leave the repair facility with
the customer are subject to tax. The property includes tools, equipment, and
supplies used or consumed in performing motor vehicle repair service. Taxable
supplies include sandpaper, masking paper and tape, buffing pads, paint and
lacquer thinner, clean and glaze compound, disc pads, paint remover, paint
masks, tack rags, steel wool, industrial gases, metal conditioner, brushes,
lacquer removing solvent, rubbing compound, wax and grease remover, fluxing
materials, disc adhesive, and all other items not physically transferred to the
customer even though a separate charge may be made to the customer for these
supplies.
(12) EXEMPTION
FOR MIXING AND PROCESSING UNITS. Sales, licenses, leases, and rentals of mobile
units used for mixing and processing, and the motor vehicles or trailers on
which the units are mounted, including accessories, attachments, parts,
supplies, and materials for those vehicles, trailers, and units, are exempt
from sales and use tax.
(13)
EXEMPTION FOR VEHICLES USED IN WASTE REDUCTION OR RECYCLING. The sales price
from the sale, license, lease, or rental of vehicles which are not required to
be licensed for highway use and which are used exclusively and directly in
waste reduction or recycling activities is exempt from sales and use
tax.
(14) REFUNDS UNDER "LEMON
LAW." Sales tax refunds made under s.
218.0171(2) (f), Stats., the "lemon law," are normally
made in the same manner as the other sales tax refunds. However, when a
defective motor vehicle is returned to the manufacturer for a refund of the
purchase price, the purchaser is permitted to collect a sales tax refund
directly from the department if the manufacturer fails to refund the
tax.
(15) VEGETABLE OIL AND ANIMAL
FAT. Sales of vegetable oil and animal fat to an individual that will be
converted to motor vehicle fuel for use in that individual's personal motor
vehicle are exempt from sales and use tax if the individual does not sell any
of that fuel during the year. This exemption only applies if the motor vehicle
fuel is exempt from the motor vehicle fuel tax under s.
78.01(1),
Stats.
Note: Section Tax 11.83 interprets ss.
77.51(7m), (13) (am), (14) (j), and (15b) (b) 6,
77.52(1), (2)
(a) 10. and 13m., and (15), 77.53 (1), (1m),
(16), (17), and (18), 77.54 (5) (a), (c) and (d), (7) and (22b), 77.56 (2) and
(3), 77.61 (1), 77.71 (2) and (4), and 77.73, Stats.
The interpretations in s. Tax 11.83 are effective under
the general sales and use tax law on and after September 1, 1969, except: (a)
The exemption for a transfer from an individual to a corporation solely owned
by an individual became effective January 1, 1983, pursuant to Chapter 264,
Laws of 1981; (b) The exemption for motor vehicles used in waste reduction and
recycling became effective July 1, 1984, pursuant to 1983 Wis. Act 426; (c) The
exemption for mobile mixing and processing units became effective July 20,
1985, pursuant to 1985 Wis. Act 29; (d) The exemption for adaptive equipment
for disabled persons to enter, operate or leave a vehicle became effective June
1, 1990, pursuant to 1989 Wis. Act 238; (e) The exemption for motor vehicles
donated to exempt organizations became effective August 9, 1989, pursuant to
1989 Wis. Act 31; (f) The exemption for transfers of motor vehicles to in-laws
became effective August 15, 1991, pursuant to 1991 Wis. Act 39; (g) The
exemption for parts and accessories for adaptive equipment for motor vehicles
of disabled persons became effective October 1, 1991, pursuant to 1991 Wis. Act
39; (h) The measure of use tax on motor vehicles as described in sub. (8) (b)
1., 3. and 4. became effective September 1, 1995, pursuant to 1995 Wis. Act 27;
(i) The use of the amount per plate rather than the lease value, as described
in sub. (8) (b) 2., as the measure of use tax for motor vehicles assigned to
owners of a dealership became effective December 1, 1997, pursuant to 1997 Wis.
Act 27; (j) The trade-in provisions related to lemon law refunds became
effective June 1, 2002, pursuant to 2001 Wis. Act 45; (k) The imposition of tax
on towing and hauling motor vehicles by a tow truck became effective July 1,
2009, pursuant to 2009 Wis. Act 28; (L) The exemption for mobility-enhancing
equipment became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (m)
The requirement to collect the tax by persons who are not dealers but who hold
a Wisconsin seller's permit became effective October 1, 2009, pursuant to 2009
Wis. Act 2; and (n) 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.
