State of Wisconsin
Department of Revenue
Sales and Use Tax
Information for
Motor Vehicle Sales,
Leases, and Repairs
Publication 202 (5/17)
Printed on
Recycled Paper
Important Rate Changes!
โข Manitowoc County begins January 1, 2025
โข Milwaukee County tax increases January 1, 2024
โข City of Milwaukee tax begins January 1, 2024
โข Menominee County tax begins April 1, 2020
โข Baseball stadium district tax ends March 31, 2020
โข Outagamie County tax begins January 1, 2020
โข Calumet County tax begins April 1, 2018
โข Brown County tax begins January 1, 2018
See the Sales Tax Rate Chart for more information.
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Table of Contents
Page
I.
INTRODUCTION .................................................................................................................................................. 5
A. General ....................................................................................................................................................................... 5
B. Motor Vehicle Defined ............................................................................................................................................... 6
C. Nature of the Sales and Use Tax ................................................................................................................................ 6
D. Who Must Obtain a Sellerโs Permit ........................................................................................................................... 6
E. When Should You Apply For a Seller's Permit? ........................................................................................................ 6
F. Obtaining a Seller's Permit and Filing Returns .......................................................................................................... 7
II. SALES PRICE AND PURCHASE PRICE .......................................................................................................... 7
A. Sales Price and Purchase Price Include ...................................................................................................................... 7
B. Sales Price and Purchase Price Do Not Include ....................................................................................................... 11
C. Vehicles Used in Taxable Manner ............................................................................................................................ 15
D. Courtesy Delivery .................................................................................................................................................... 15
III. WHAT IS SUBJECT TO TAX? .......................................................................................................................... 15
I V. TAXABLE SALES, LEASES AND RENTALS OF PRODUCTS .................................................................... 16
A. Motor Vehicles ......................................................................................................................................................... 16
B. Motor Vehicle Parts .................................................................................................................................................. 16
C. Leases ...................................................................................................................................................................... 16
D. Sales to Donor .......................................................................................................................................................... 17
E. Motor Vehicle Dealer Employees ............................................................................................................................ 17
F. Vans for Transporting Children ................................................................................................................................ 17
G. Taking Over Payments ............................................................................................................................................. 17
H. Transfer Between Parent and Subsidiary ................................................................................................................. 18
I. Judicial Sale ............................................................................................................................................................. 18
J. Sale to Enforce Lien................................................................................................................................................. 18
K. Repairs Under Insurance Plan .................................................................................................................................. 18
V. EXEMPT SALES, LEASES, AND RENTALS OF PRODUCTS ..................................................................... 18
A. Sales for Resale ........................................................................................................................................................ 18
B. Governmental Units ................................................................................................................................................. 19
C. Common or Contract Carriers .................................................................................................................................. 19
D. Tax-Exempt Nonprofit Organizations ...................................................................................................................... 20
E. Motor Fuel for Highway Use ................................................................................................................................... 20
F. Sales to Nonresidents ............................................................................................................................................... 21
G. Purchases Prior to Becoming Wisconsin Resident ................................................................................................... 21
H. Delivery Outside Wisconsin..................................................................................................................................... 21
I. Driverโs Education Vehicles ..................................................................................................................................... 21
J. Volunteer Fire Departments ..................................................................................................................................... 22
K. Native Americans ..................................................................................................................................................... 22
L. Beneficiaries ............................................................................................................................................................ 22
M. Repossessions .......................................................................................................................................................... 22
N. Federal Banks and Credit Unions ............................................................................................................................ 22
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O. Entity Organizations ................................................................................................................................................ 22
P. Entity Distributions .................................................................................................................................................. 23
Q. Disregarded Entities ................................................................................................................................................. 23
R. Farming .................................................................................................................................................................... 23
S. School Buses ............................................................................................................................................................ 23
T. Occasional Sales ...................................................................................................................................................... 23
U. Transfer Incident to Divorce .................................................................................................................................... 24
V. Manufactured Homes ............................................................................................................................................... 24
W. Repairs Under Extended Warranties or Service Contracts ....................................................................................... 24
X. Mobility-Enhancing Equipment ............................................................................................................................... 25
Y. Raffles ...................................................................................................................................................................... 25
VI. TAXABLE SALES OF SERVICES .................................................................................................................... 25
A. Labor ........................................................................................................................................................................ 25
B. Towing and Hauling ................................................................................................................................................. 25
C. Parking ..................................................................................................................................................................... 27
VII. SALES OF SERVICES NOT SUBJECT TO TAX ............................................................................................ 27
A. Repairs, Etc. of Exempt Tangible Personal Property ............................................................................................... 27
B. Limousine Service ................................................................................................................................................... 28
VIII. PURCHASES ........................................................................................................................................................ 28
A. Parts and Supplies .................................................................................................................................................... 28
B. Dealerโs Use of Motor Vehicles ............................................................................................................................... 29
C. Mixed Use Vehicles ................................................................................................................................................. 32
D. Donation of Property................................................................................................................................................ 32
IX. WHEN AND WHERE A SALE OCCURS ......................................................................................................... 33
A. When a Sale or Lease Occurs .................................................................................................................................. 33
B. Where a Sale or Lease Occurs ................................................................................................................................. 33
X. COUNTY AND STADIUM SALES AND USE TAXES .................................................................................... 35
A. Motor Vehicles, Boats, Recreational Vehicles, and Aircraft..................................................................................... 35
B. Snowmobiles, Trailers, Semitrailers, All-Terrain Vehicles, Utility-Terrain Vehicles, and Off-Road Motorcycles .. 36
C. Sales By Persons Not Holding and Not Required to Hold a Sellerโs Permit or Use Tax Registration Certificate ... 37
XI. OTHER ................................................................................................................................................................. 38
A. Credit for Tax Paid in Another State ........................................................................................................................ 38
B. Refunds Under โLemon Lawโ ................................................................................................................................. 39
C. Rental Vehicle Fee ................................................................................................................................................... 39
D. Limousine Fee.......................................................................................................................................................... 41
E. Local Exposition District Rental Car Tax ................................................................................................................ 42
XII. RECORD KEEPING ........................................................................................................................................... 42
A. General Records to Keep ......................................................................................................................................... 42
B. Records to Keep โ Exempt Sales, Exemption Certificates ...................................................................................... 42
XIII. QUESTIONS OR ADDITIONAL INFORMATION ......................................................................................... 44
A. Department of Revenue Assistance .......................................................................................................................... 44
X IV. AVOIDING COMMON ERRORS ...................................................................................................................... 44
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APPENDIX A: Motor Vehicle Lease Dealers โ "Trade-Ins" and "Turn-Ins\ .................................................................. 47
APPENDIX B: County Chart ............................................................................................................................................... 65
APPENDIX C: Section Tax 11.83 โ Motor Vehicles ........................................................................................................... 66
APPENDIX D: Section Tax 11.16 โ Common or Contract Carriers ................................................................................. 70
APPENDIX E: Section Tax 11.27 โ Insurance and Warranties......................................................................................... 73
APPENDIX F: Section Tax 11.49 โ Service Stations and Fuel Oil Dealers ...................................................................... 76
APPENDIX G: Section Tax 11.79 โ Leases of Highway Vehicles and Equipment ........................................................... 79
APPENDIX H: Section Tax 11.14 โ Exemption Certificates ............................................................................................. 81
APPENDIX I: Wisconsin Sales and Use Tax Exemption Certificate (Form 211) ............................................................ 86
APPENDIX J: IRS Annual Lease Value Table.................................................................................................................... 88
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
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IMPORTANT CHANGES
Football Stadium District Tax Terminated. The Green Bay/Brown County football stadium district sales and
use tax ended on September 30, 2015.
Tax Must Be Paid on Purchases of Off-Road Motorcycles and Utility-Terrain Vehicles. Various pages.
Sales of after-market products and services. Information has been added for sales of rustproofing, paint pro-
tection, and etching of motor vehicles. Page 8.
Insurance. Examples have been added to clarify that "insurance" includes "Excess Wear and Tear Protection
Plans" but "insurance" does not include charges for excess wear and tear assessed by the lessor at the end of the
lease. Page 14.
County and Stadium District Use Taxes for "One-Pay" Leases. Effective March 3, 2016, the applicable
county and stadium district use tax due with respect to a lease or rental of a motor vehicle that does not require
periodic payments (i.e., the lease or rental requires only one payment), is based on the location where the lessee
or renter receives possession of the vehicle from the retailer. Page 35.
Sheboygan and Kewaunee Counties Adopted the County Tax. The 0.5% tax in Sheboygan County became
effective on January 1, 2017, and Kewaunee County tax became effective April 1, 2017. Page 38.
I. INTRODUCTION
A. General
This publication provides information about the Wisconsin state, county, and stadium sales and use taxes as they
affect persons in the business of selling, leasing, renting, or repairing motor vehicles. It includes information of
interest to new and used motor vehicle dealers, lessors, and persons operating garages, body shops, and service
stations.
The information provided generally relates to the stateโs 5% sales and use tax. However, in counties which have
adopted the 0.5% county sales and use tax and counties where the 0.1% or 0.5% stadium tax is imposed, the coun-
ty tax and stadium tax may also apply to any transaction which is subject to the state tax. (Note: The 0.5%
football stadium tax ended on September 30, 2015).
Information on the local exposition 3% rental car tax can be found in Wisconsin Publication 410, Local Exposi-
tion Taxes.
Information on the 0.5% premier resort area tax in effect in the Cities of Bayfield, Eagle River, and Rhinelander,
and the Village of Stockholm, and the 1.25% premier resort area tax in effect in the City of Wisconsin Dells and
the Village of Lake Delton, can be found in Wisconsin Publication 403, Premier Resort Area Taxes. (Note: The
premier resort area tax became effective January 1, 2017 in the City of Rhinelander.)
Information on the Wisconsin rental vehicle fee and the Wisconsin limousine fee can be found in Part XI.C. and
D. of this publication.
Important: For purposes of this publication, the phrase "taxable products and services" refers to tangible personal
property, certain coins and stamps, certain leased property affixed to realty, certain digital goods, and certain ser-
vices which are subject to the Wisconsin state sales and use tax. For further information about these taxable
products and services, see Publication 201, Wisconsin Sales and Use Tax Information.
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If, after reading this publication, you have questions about the sales and use tax, refer to Part XIII. for additional
assistance.
CAUTION
The information in this publication reflects the positions of the Wisconsin Department of Revenue of laws enact-
ed by the Wisconsin Legislature and in effect as of May 1, 2017. Laws enacted and in effect after this date,
administrative rules, and court decisions may change the interpretations in this publication. Also note that lists of
taxable or exempt items in this publication are not all-inclusive. They merely set forth common examples.
B. Motor Vehicle Defined
โMotor vehicleโ means a self-propelled vehicle (for example, an automobile, truck, truck-tractor, or motorcycle)
designed for and capable of transporting persons or property on a highway.
โMotor vehicleโ does not include a self-propelled vehicle which is not designed or used primarily for transporta-
tion 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-road motorcycle, forklift truck, and road machinery.
C. Nature of the Sales and Use Tax
1. Sales tax is imposed on retailers who sell, license, lease, or rent any taxable product or services at retail, if the
transaction is sourced (see Part IX.B.) to a location in Wisconsin. The tax is based on the retailerโs sales price
from such transactions.
2. Use tax is imposed on purchasers of any taxable products or services purchased from a retailer, if:
(a) the product or service is stored, used, or consumed in Wisconsin by the purchaser in a taxable manner,
and
(b) no Wisconsin sales tax was paid by the purchaser to the retailer of the product or service.
The use tax is based on the purchase price of the taxable product or service paid by the purchaser to the retail-
er.
D. Who Must Obtain a Sellerโs Permit
Any person making sales, licenses, leases, or rentals of any taxable product or service at retail and which take
place in (i.e., are "sourced to") Wisconsin, is required to obtain a sellerโs permit from the Wisconsin Department
of Revenue.
If a seller makes only exempt sales, the seller is not required to hold a Wisconsin sellerโs permit.
E. When Should You Apply For a Seller's Permit?
Apply for a sellerโs permit at least three weeks before you open your business. If you buy an existing business, the
sellerโs permit cannot be transferred to you. You must apply for a new permit. If you applied for a sellerโs permit
before you opened your business but did not receive the permit at the time of opening the business, you are al-
lowed to make retail sales. However, you are liable for the sales and use taxes and for keeping proper records
from the date of opening the business.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
7
F. Obtaining a Seller's Permit and Filing Returns
See Part III. of Publication 201, Wisconsin State and County Sales and Use Tax Information, for information
about how to obtain a seller's permit. Information about filing sales and use tax returns is also provided in
Part VIII. of Publication 201.
II. SALES PRICE AND PURCHASE PRICE
A. Sales Price and Purchase Price Include
Sales price and purchase price means the total amount of consideration a retailer receives from the sale or pur-
chase, whether received in money or otherwise, except as provided in Parts II.B. and C. and VIII.B.
Sales price and purchase price, for purposes of imposing Wisconsin sales or use tax, assuming the sale of the
property or service is subject to tax, include the following (this list is not all-inclusive):
1. Delivery, Handling, and Preparation
Charges for delivery, handling, and preparation of a motor vehicle are included in the sales price subject to
Wisconsin sales or use tax.
2. โService Feesโ
Sales price subject to tax includes amounts charged by the seller as โservice feesโ for completing any
salesโrelated or leaseโrelated vehicle inspection or forms which are required by law or rule, pursuant to
sec. Trans 139.05(8), Wis. Adm. Code. Note: Dealer service fees for submitting an electronic application for
vehicle titling/registration to the Wisconsin Department of Transportation are not included in the dealerโs
sales price of the motor vehicle and are not subject to tax. See Part II.B.4.
3. Extended Warranties and Service Contracts
Sales price subject to sales tax includes charges for extended warranties or service contracts, if the purchase
of the motor vehicle to which the warranty or service contract relates is or was subject to Wisconsin sales or
use tax.
A โwarrantyโ is a contract or agreement which promises indemnity against defects in tangible personal prop-
erty sold.
Example 1: Customer, a resident of Wisconsin, purchases a motor vehicle in Wisconsin. The motor vehicle is
subject to Wisconsin sales or use tax. Therefore, the sale of an extended warranty contract for this motor vehi-
cle is also subject to Wisconsin sales or use tax.
Example 2: Customer purchases a motor vehicle in Wisconsin. Customer also purchases an extended warran-
ty with the motor vehicle. Customer lives in Minnesota. Customer will make no other use of the motor vehicle
in Wisconsin other than its removal from Wisconsin to Minnesota. The motor vehicle is not subject to Wis-
consin sales or use tax. Therefore, the extended warranty is also not subject to Wisconsin sales or use tax.
Example 3: Customer, a resident of Wisconsin, purchases a motor vehicle in Wisconsin. At the time of sale,
Customer decides not to purchase an extended warranty with the motor vehicle. Six weeks after the sale of the
motor vehicle, the dealer contacts Customer to determine her satisfaction with the motor vehicle. At that time,
Customer decides to purchase an extended warranty on the motor vehicle from the dealer. Because the sale of
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the motor vehicle to which the extended warranty relates was subject to Wisconsin sales tax, the sale of the
extended warranty is also subject to Wisconsin sales tax.
Example 4: Customer, a resident of Wisconsin, purchases a motor vehicle in a county which has not adopted
the county tax (nontaxable county). Customer also purchases an extended warranty with the motor vehicle.
Customer lives in a county which has adopted the county tax (taxable county). The motor vehicle will cus-
tomarily be kept in the taxable county. The purchase of the motor vehicle is subject to the county tax.
Therefore, the purchase of the extended warranty is also subject to the county tax.
Example 5: Customer, a resident of Wisconsin, purchases a motor vehicle in a county which has adopted the
county tax (taxable county). Customer also purchases an extended warranty with the motor vehicle. Customer
lives in a county which has not adopted the county tax (nontaxable county). The motor vehicle will customari-
ly be kept in the nontaxable county. The purchase of the motor vehicle is not subject to the county tax.
Therefore, the purchase of the extended warranty is also not subject to the county tax.
Example 6: Customer, a resident of Wisconsin, purchases a motor vehicle in a county which has adopted the
county tax (taxable county). At the time of sale, Customer decides not to purchase an extended warranty with
the motor vehicle. Customer will keep the motor vehicle in a county which has not adopted the county tax
(nontaxable county). Six months after the sale of the motor vehicle, the dealer contacts Customer to determine
satisfaction with the motor vehicle. At that time, Customer decides to purchase an extended warranty on the
motor vehicle from the dealer. Because the purchase of the motor vehicle to which the extended warranty re-
lates was not subject to the county tax, the purchase of the extended warranty is also not subject to the county
tax.
Note: A charge by an extended warranty or service contract provider to a subsequent owner of a motor vehi-
cle for transferring the extended warranty or service contract is not subject to Wisconsin sales or use tax.
Similarly, a charge by a vehicle manufacturer to reassign the vehicle manufacturer warranty to a subsequent
purchaser is not subject to Wisconsin sales or use tax.
See Part V. W. for treatment of repair work provided under an extended warranty or service contract.
See Part II.B.7 for the definition and treatment of insurance.
4. After-Market Products and Services
A car dealer may sell after-market products or services to new or used car buyers. Common after-market
products and services include rustproofing, paint protection, and etching.
a. Rustproofing
Rustproofing a motor vehicle involves applying a material to portions of the vehicle subject to road salt
spray for the purpose of eliminating rusting or corrosion of such parts of the vehicle. The contract for
rustproofing a vehicle may include a warranty covering repair or replacement of rusted or corroded por-
tions of the vehicle to which the rustproofing material was applied.
Charges for rustproofing a motor vehicle are subject to tax.
b. Paint Protection
Paint protection involves the application of materials to the vehicle's paint or other external parts of the
vehicle as protection against elements that may otherwise damage the vehicle's paint or parts. The plan
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
9
may include a warranty covering the repair of vehicle paint or parts to which the protection material was
applied.
Charges for paint protection are subject to tax.
c. "Etching" a Motor Vehicle
Etching a motor vehicle involves the application of the vehicle's VIN or other unique identifying number
into various parts of the vehicle. The purpose of etching is to deter vehicle thefts and to aid in the recov-
ery of a stolen vehicle. The seller of the etching service may guarantee the effectiveness of its product
with the offer to make a payment to the vehicle owner if the vehicle is stolen and not recovered.
Charges for etching a motor vehicle are taxable.
5. Federal Gas Guzzler Tax
The federal gas guzzler tax imposed under sec. 4064 of the Internal Revenue Code is included in the sales
price or purchase price subject to Wisconsin sales or use tax.
6. Manufacturerโs Rebates and Coupons
a. Manufacturerโs Rebates
An amount received from a manufacturer after the sale of the vehicle by the motor vehicle dealer where
the manufacturer specifies the amount and that the amount must be passed on to the customer is a manu-
facturerโs rebate. Amounts received by a motor vehicle dealer from a manufacturer which the motor
vehicle dealer is not required to pass on to a customer are manufacturerโs wholesale incentives and are
discussed in Part II.B.3.
The amount of a manufacturerโs rebate applied against the sales price of a vehicle does not reduce the
dealerโs receipts subject to sales tax. The customer is still responsible for sales tax on the amount of the
manufacturerโs rebate.
It should be noted that the sales tax under sec. 77.52(1)(a), Wis. Stats., is imposed on the retailerโs sales
price the retailer receives from sales of tangible personal property. The retailer may, in turn, collect the
sales tax from the customer per sec. 77.52(3), Wis. Stats.
Example: A manufacturer sells a motor vehicle to a motor vehicle dealer who in turn places the vehicle
into inventory, with a sticker price of $18,000. At some later date, to generate sales, the manufacturer of-
fers a rebate (e.g., $1,500) to a customer for purchasing the vehicle within a specified time frame. This
rebate must be passed on to the customer.
Assuming the motor vehicle is sold for the sticker price, the motor vehicle dealerโs sales price from the
sale of the motor vehicle under this example is $18,000. The motor vehicle dealer will receive $18,000
from the sale of the vehicle whether the customer pays the dealer $18,000 and later receives a check for
the $1,500 rebate amount or if the dealer receives $16,500 from the purchaser and the $1,500 rebate
amount from the manufacturer.
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10
b. Manufacturerโs Coupons
A โmanufacturerโs couponโ distributed by the manufacturer of a motor vehicle through circulars or other
mailings which may be used at a motor vehicle dealership does not reduce the motor vehicle dealerโs re-
ceipts subject to Wisconsin sales or use tax.
A manufacturerโs coupon is, in effect, a sharing of the sales price with the customer. Therefore, the motor
vehicle dealerโs receipts from the sale are not reduced by the coupon amount because the retailer receives
the full purchase price for the item sold (i.e., a portion from the customer and the remainder from the
manufacturer).
Example: A motor vehicle dealership services motor vehicles. A customer brings his or her motor vehicle
in for an oil change. The charge for the oil change is $30. The customer presents a manufacturerโs coupon
that he or she received in the mail for $5 off the cost of an oil change and pays the motor vehicle dealer
$25 cash.
The motor vehicle dealerโs receipts subject to Wisconsin sales or use tax are $30 ($25 received from the
customer plus $5 received from the manufacturer).
See Part II.B.3 regarding dealer coupons.
7. Credit Card Points or Dollars
In some cases, the purchaser of a new motor vehicle has accrued points or dollars towards the purchase of a
certain manufacturerโs vehicles through the use of a certain credit card. When the credit card holder purchases
a qualifying vehicle, part of the consideration towards the selling price is furnished by the rewards program of
the credit card issuer. The portion of the selling price that is furnished by the rewards program on behalf of the
credit card user is subject to sales tax.
Example: Individual applies for and receives a credit card issued by Bank. Individual receives 1 point for
each dollar in purchases charged to the credit card. Each point is worth $0.01 towards the purchase of a motor
vehicle manufactured by XYZ Motor Company, up to a maximum of 300,000 points that may be redeemed
per new motor vehicle purchased. Individual purchases a qualifying new XYZ Motor Company motor vehicle
from Dealer for $30,000. Individual redeems 300,000 points towards the purchase. Dealer Receives $27,000
from Individual and $3,000 from Bankโs credit card awards program. Dealer has $30,000 in taxable receipts
from the sale of the motor vehicle to Individual.
8. Exchanges or Barter
The sales price subject to Wisconsin sales or use tax includes the exchange or barter of tangible personal
property for taxable or nontaxable services and realty or intangibles. Sales price or purchase price is the value
of the services, realty, or intangibles received.
Example: A dealer exchanges a vehicle having a retail price of $6,000 for printing services which have an es-
tablished price of $6,000. The dealer must report receipts from the sale of the motor vehicle of $6,000, the
established price of the printing services received.
9. Capitalized Cost Reductions
Capitalized cost reductions made in cash do not reduce the sales price or purchase price subject to sales or use
tax.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
11
Example: Dealer leases a new motor vehicle for 36 months. Monthly lease payments are $350 per month due
at the beginning of each monthly lease period and a one-time cash payment of $2,000 applied as a capitalized
cost reduction is due at lease signing. The $2,000 payment, as well as each monthly lease payment, are taxa-
ble.
10. Lease Cancellation Charges
A payment by a lessee to a lessor for the cancellation of a lease of a motor vehicle or any other product is tax-
able.
B. Sales Price and Purchase Price Do Not Include
Sales price and purchase price, for purposes of imposing Wisconsin sales or use tax, do not include the following
(this list is not all-inclusive):
1. Trade-In Allowances
a. General
If the sale of a motor vehicle and the trade-in are one transaction, the sales price or purchase price subject
to Wisconsin sales or use tax does not include the amount allowed for the trade-in. Therefore, if a motor
vehicle (or any other product) is traded in for a motor vehicle of greater value, the amount subject to tax is
only that amount representing the difference between the full purchase price and the amount allowed for
the product traded-in.
If a product is traded in for a motor vehicle of lesser value, and there is no other consideration given, the
amount subject to tax is zero.
Note: When products are traded-in towards the purchase of a service, the retailerโs sales price of the ser-
vice is not reduced by the amount the retailer allows for the value of any products traded-in towards the
purchase of the service.
Example 1: Individual owns a motor vehicle that is traded towards the purchase of a new motor vehicle
from Dealer. Individual also purchases an extended warranty contract from Dealer relating to the new mo-
tor vehicle at the same time as the new motor vehicle itself. Dealer sells the new motor vehicle for
$20,000, the warranty contract for $2,000 and allows a trade-in of $22,000 for Individualโs used motor
vehicle. Dealerโs taxable receipts from its sale of the new motor vehicle are zero. Dealerโs taxable receipts
from its sale of the extended warranty contract are $2,000. Even though the trade-in value allowed for In-
dividualโs used vehicle exceeds the purchase price of the motor vehicle purchased by $2,000, no portion
of the trade-in value for the used motor vehicle may be applied to reduce Dealerโs selling price of the ex-
tended warranty contract.
Example 2: Individual owns a motor vehicle subject to a lien of $10,000. Individual trades in this vehicle
to Dealer on the purchase of a new vehicle. Dealer determines the trade-in value of the vehicle owned by
Individual at $12,400. The selling price of the new vehicle is $20,000. Dealer will pay off the bank lien.
Sales price subject to sales tax on the sale of the new vehicle to Individual is $7,600 ($20,000 selling
price less $12,400 trade-in). The amount of debt assumed by Dealer does not reduce the amount of the
trade-in allowed by Dealer for purposes of computing the sales price subject to sales tax.
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12
A reduction in the sales price for trade-in allowance does not apply in the following situations:
1. The proceeds from a separate sale of another vehicle or other product are applied by the seller to-
wards the purchase of another motor vehicle.
Example: Mr. โAโ sells his old motor vehicle to โBโ for $2,000. Upon receipt of the $2,000, Mr. โAโ
purchases a new motor vehicle from his motor vehicle dealer for $16,000, using the $2,000 received
from โBโ as a down payment. This $2,000 paid to the dealer is not a trade-in. In this situation, โBโ
would pay $100 tax ($2,000 x 5%) at the time of registering the motor vehicle with the Department of
Transportation. The sale of the $16,000 motor vehicle by the dealer to โAโ is subject to $800 tax
($16,000 x 5%).
2. Proceeds received from an insurance company are used to purchase another motor vehicle because
the insured motor vehicle was damaged or demolished, even though the insurer remits the insurance
proceeds directly to the dealer.
b. Trade-In of a Leased Motor Vehicle for a New or Used Motor Vehicle
There are two transactions that occur when a leased motor vehicle is โtraded-inโ for another motor vehi-
cle. One is the sale of the leased motor vehicle (with permission of lessee if the lessee has the option to
purchase or at the discretion of the lessor if the lessee does not have the option to purchase) from the les-
sor to the dealer at the buy out price. The other is the sale of the replacement motor vehicle to the dealerโs
customer. The dealer typically will buy the leased motor vehicle from the lessor without tax for resale.
The dealer is required to collect and report the sales tax on the total receipts received from the customer
on the sale of the replacement motor vehicle no matter how designated.
c. Trade-In of an Owned Motor Vehicle on a Leased Motor Vehicle
If a customer trades in an owned motor vehicle to a lessor on the lease of a new motor vehicle, the value
of the trade-in reduces the taxable lease payments on the new motor vehicle.
d. Trade-In of a Leased Motor Vehicle on a Leased Motor Vehicle
There are two transactions that occur when a leased motor vehicle is โtraded inโ on another leased motor
vehicle. One is the sale of the leased motor vehicle from Lessor 1 to Lessor 2 (with the permission of the
lessee, if the lessee has an option to purchase or at the discretion of the lessor, if the lessee does not have
the option to purchase). The other is the lease of a new motor vehicle from Lessor 2 to the lessee.
e. Replacement (โTrade-Inโ) of a Capitalized Service Motor Vehicle (also see Part VIII.B.)
If a dealer retires a service vehicle from use that was properly capitalized and depreciated for income or
franchise tax purposes, puts it into inventory, and selects a new service vehicle from inventory to replace
it, there is no reduction in the dealerโs purchase price of the new vehicle for purposes of computing the
purchase price subject to use tax.
Note: See Appendix A for examples illustrating the application of Part II.B.1.b.to e. for leased vehicles.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
13
2. Dealer Refunds or Credits.
a. General
Sales price and purchase price do not include such part of the selling price that is refunded in cash or
credit as a result of property returned or adjustments in the sales price or purchase price after the sale has
been completed, provided the retailer has included the refunded receipts in a prior sales and use tax re-
turn, paid the tax on such receipts, and has returned to the purchaser the tax originally paid by the
purchaser on the amount of the refund. The seller may then claim, as a deduction on the sales tax return
filed for the period in which such refund was made, the amount of the sales price or purchase price re-
funded.
b. Dealer โBuy-Backโ or โCash-Backโ Settlement With Customer
Occasionally a dealer, in order to resolve a dispute with a customer, or in settlement of litigation, may ei-
ther buy a vehicle back from a customer, or return a portion of the customerโs purchase price. The
amounts returned to the customer may be deducted from the dealerโs receipts subject to sales or use tax as
described in Part II.B.2.a.
Lessor 2 typically buys the used motor vehicle from Lessor 1 without tax for resale. Lessor 2 is required
to collect and report sales tax on the total receipts it receives from the lessee of the new motor vehicle.
3. Dealer Rebates and Manufacturerโs Incentives
a. Dealer Rebates or Coupons
Cash discounts, price reductions for dealer coupons, and dealer rebates allowed by a dealer directly to
customers reduce the dealerโs receipts subject to the tax.
b. Manufacturerโs Wholesale Incentive
A manufacturerโs wholesale incentive is an incentive from the manufacturer to the dealer to sell X number
of motor vehicles or to sell X number of a specific model. This arrangement is between the manufacturer
and the dealer. The dealer may or may not pass a portion of the price reduction along to the customer. If
the dealer does pass a portion along to the customer in the form of a price reduction, although not required
to do so by the manufacturer, the dealerโs receipts subject to the tax are reduced by the amount passed
along to the customer.
4. Registration, Titling, and Filing Fees
Amounts paid to the Wisconsin Department of Transportation (WDOT) for registration and titling fees for the
motor vehicle are not subject to tax. In addition, a fee charged by the dealer for electronically filing the pur-
chaserโs registration and titling application with the WDOT is not subject to tax.
5. Bad Debts
If a retailer allows customers to buy on credit and the customer fails to pay, a deduction from taxable receipts
reported on the sales and use tax return (Form ST-12) is allowed for a bad debt (to the extent the selling price
was included in the retailerโs taxable receipts in a prior return and the tax was paid by the retailer to the de-
partment). The deduction is taken at the time the debt is properly written off as a bad debt for Wisconsin
income or franchise tax purposes.
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Example: Company A reported taxable receipts of $100 from the repair of a motor vehicle on its January
2014 sales and use tax return and paid tax of $5. In May 2014, Company A determines that the amount is un-
collectible. Company A may reduce its taxable receipts on its May 2014 sales and use tax return by $100 for
the taxable receipts previously reported and paid, that are uncollectible.
6. Interest, Financing, and Carrying Charges
Interest, financing, and carrying charges are excluded from sales price and purchase price if such charges are
separately stated on the invoice (e.g., retail installment contract) given to the customer.
7. Insurance
Charges for insurance are specifically exempt from sales and use tax provided the charge is separately stated
on the invoice (e.g., retail installment contract) given to the customer.
Insurance is a contract or agreement which promises indemnity against loss or damage resulting from perils
outside of and unrelated to defects in tangible personal property. The following examples illustrate what is
and what is not "insurance."
Example 1: Lessor sells an Excess Wear and Tear Protection plan to Lessee. The Excess Wear and Tear Pro-
tection Plan protects Lessee from liability if Lessee puts too many miles on the car or returns the automobile
with more damage than standard wear and tear. Lessor separately states the charge for the Excess Wear and
Tear Protection Plan on the invoice. Lessor's sale of the Excess Wear and Tear Protection Plan meets the def-
inition of "insurance" and is not taxable.
Example 2: An automobile lease contract states that Lessee is allowed to use the automobile for 60,000 miles
over the term of the four year lease. The lease provides that Lessee must pay Lessor an additional $0.20 per
mile for each mile in excess of 60,000. The additional charge by Lessor to Lessee for miles in excess of
60,000 is subject to tax, unless the lease of the automobile qualified for exemption. The charge for the excess
miles is not for "insurance."
Example 3: Lessor sells a "Tire and Wheel Road Hazard Coverage" policy to Lessee. If a tire or wheel on
Lessee's vehicle is damaged as a result of debris on the road surface or because of poor road surface condi-
tions such a potholes, cracks, or breaks, the policy will pay for the tire or heel to be repaired or replaced. This
coverage meets the definition of "insurance," and the Lessor's sale of the "Tire and Road Hazard Coverage" is
not taxable.
See Part IV.C. for treatment of insurance charges relating to the lease of motor vehicles and Part IV.K. for
treatment of repair work under an insurance plan.
Note: Charges for extended warranties or service contracts are subject to Wisconsin sales or use tax even
though referred to as โinsurance,โ and even though separately stated, if the motor vehicle to which the warran-
ty relates is subject to Wisconsin sales or use tax. See Part II.A.3.
8. Rental Vehicle Fee
The 5% rental vehicle fee imposed under sec. 77.995, Wis. Stats., on the lease of certain motor vehicles for
periods of 30 days or less is not included in the sales price or purchase price subject to Wisconsin sales or use
tax.
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15
C. Vehicles Used in Taxable Manner
If a person properly purchased a motor vehicle without tax because it was for resale or otherwise exempt and uses
the motor vehicle in some other manner or for some other purpose, the purchaser is subject to sales or use tax on
the purchase of the motor vehicle.
The amount subject to tax is the sales price or purchase price as defined in Part II with the following exception:
If the person is a motor vehicle dealer, see Part VIII.B.
Example 1: In 2012, Company purchased a truck without Wisconsin sales or use tax because it was used exclu-
sively in common or contract carriage. Company gave its supplier a fully completed exemption certificate. In
January 2015, Company begins to use the truck to haul its own products. Company is subject to Wisconsin sales
or use tax on the original purchase price of the truck.
Example 2: In 2012, Individual, a resident of another state, purchased a car in another state without sales or use
tax. In 2015, Individual, still a nonresident of Wisconsin, registers the car in Wisconsin where he will keep it at his
vacation home. Individual is subject to Wisconsin use tax on the purchase price of the car.
D. Courtesy Delivery
A Wisconsin motor vehicle dealer making a โcourtesy deliveryโ of a motor vehicle in the State of Wisconsin on
behalf of an out-of-state motor vehicle dealer who is not registered to collect Wisconsin sales or use taxes, is re-
quired to collect the applicable Wisconsin state and local use taxes from the purchaser and remit this tax to the
Wisconsin Department of Revenue. Wisconsin sales and use tax law provides that no motor vehicle may be titled
or registered in Wisconsin unless the registrant presents proof that the applicable Wisconsin sales or use taxes
have been paid. The Wisconsin motor vehicle dealer may not submit the application for Wisconsin title and/or
registration unless it has collected the applicable Wisconsin sales or use taxes from the purchaser. A dealer who
collects the applicable taxes from the purchaser must include the sales price of the motor vehicle as part of the
taxable receipts on its Wisconsin sales tax return filed for the period which includes the date of the โcourtesy de-
liveryโ of the motor vehicle, and pay the tax as part of its payment of the total tax due for that return.
Example: Individual purchases a new motor vehicle from Dealer A. Dealer A is an out-of-state motor vehicle
dealer. Dealer A does not hold a Wisconsin sellerโs permit or Wisconsin use tax registration certificate. Individual
requests Dealer A to deliver the motor vehicle to Individual at a location near Individualโs Wisconsin residence.
Dealer A arranges with Dealer C, a Wisconsin motor vehicle dealer, to accept delivery of the motor vehicle from
the manufacturer and deliver it to Individual B at Dealer Cโs location in LaCrosse County, Wisconsin. The sales
price of the motor vehicle is $20,000, and Individual accepts delivery on January 15, 2015. Individual will cus-
tomarily keep the vehicle at his residence, in LaCrosse County, Wisconsin. Dealer C collects the 5% Wisconsin
state and 0.5% LaCrosse County use taxes of $1,100 from Individual. Dealer C completes the application for
Wisconsin title and vehicle registration on behalf of Individual, and submits it to the Wisconsin Department of
Transportation. Dealer C includes the sales price of $20,000 in the amount of โtotal salesโ it reports on line 1 and
in the amount of โsales subject to taxโ for LaCrosse County on its January 2015 Wisconsin sales tax return, and
remits the $1,100 as part of the total amount of Wisconsin sales and use taxes due for January 2015.
III. WHAT IS SUBJECT TO TAX?
Sales, licenses, leases, and rentals of tangible personal property, certain coins and stamps, certain leased property af-
fixed to realty, certain digital goods, and certain services are subject to the Wisconsin state sales tax, and are also
subject to the premier resort area tax if both of the conditions in Part III.A. of Publication 403: Premier Resort Area
Tax, are met.
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For further information about these taxable products and services, see Publication 201, Wisconsin Sales and Use Tax
Information.
IV. TAXABLE SALES, LEASES AND RENTALS OF PRODUCTS
All sales, leases, and rentals of products described in Part III., including motor vehicles and motor vehicle parts, are
subject to sales tax, unless the transaction is specifically exempt by law. Listed below are examples of retailersโ trans-
actions involving sales of tangible personal property which are taxable (this list is not all-inclusive):
A. Motor Vehicles
The sale of a motor vehicle by any person holding or required to hold a Wisconsin sellerโs permit or use tax regis-
tration certificate is subject to Wisconsin sales or use tax.
A Wisconsin resident purchasing a motor vehicle in a foreign country or another state, or for delivery in a foreign
country or another state, must pay the Wisconsin use tax, based upon the purchase price, when the resident regis-
ters the motor vehicle in Wisconsin for use in Wisconsin. See Part XI.A. regarding credit for tax paid to another
state.
A Wisconsin motor vehicle dealer making a โcourtesy deliveryโ of a motor vehicle in the State of Wisconsin on
behalf of an out-of-state motor vehicle dealer who is not registered to collect Wisconsin sales or use taxes, is re-
quired to collect the applicable Wisconsin state and local use taxes from the purchaser and remit this tax to the
Wisconsin Department of Revenue as a condition of submitting the application for a Wisconsin title and/or regis-
tration for the motor vehicle. A Wisconsin motor vehicle dealer making a โcourtesy deliveryโ of a motor vehicle
in the State of Wisconsin on behalf of an out-of-state motor vehicle dealer who is not registered to collect Wis-
consin sales or use taxes, is required to collect the applicable Wisconsin state and local use taxes from the
purchaser and remit this tax to the Wisconsin Department of Revenue as a condition of submitting the application
for a Wisconsin title and/or registration for the motor vehicle. See Part II.D.
B. Motor Vehicle Parts
The sale of parts, accessories, and attachments for motor vehicles is subject to Wisconsin sales or use tax.
C. Leases
The lease of a motor vehicle is subject to Wisconsin sales or use tax.
Taxable lease receipts include early termination fees and charges for excess wear and tear assessed at the termina-
tion of a lease.
In determining its taxable receipts, a lessor may deduct the cost of motor fuel, vehicle license fees, federal high-
way use taxes, public liability insurance issued to the lessee solely for the protection of the lessee, GAP insurance,
and excess wear and tear insurance, provided the deductions meet the following conditions:
1. The charge is reasonable.
2. The charge is separately stated in the lease agreement, billing, or invoice.
3. The lessor is willing and able to lease the motor vehicle or mobile equipment without providing such deducti-
ble items.
4. The lessorโs deduction is limited to its cost of the items furnished with the leased equipment.
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17
The lessor may deduct from the sales price the above items regardless of whether the lease is short-term or
long-term, provided these conditions are met.
The lessor may not deduct the cost of maintenance or repair charges or interest or financing costs it incurs, nor
amounts spent for the lessorโs own protection or for the protection of leased property, including collision, other
insurance protection, or dispatch service.
The sales price from leases or rentals of motor vehicles and mobile equipment used on highways in Wisconsin
and out-of-state is subject to Wisconsin sales tax if the lease payments are sourced to a location in Wisconsin, as
provided in Part IX.B.2. to 4.
Note: Capitalized cost reductions made in cash do not reduce the amount subject to Wisconsin sales or use tax.
Short term rentals of certain motor vehicles without drivers are subject to the 5% state rental vehicle fee and may
be subject to the 3% local exposition tax. Amounts that a lessor collects from the renter for the 5% state vehicle
rental fee and the 3% local exposition tax are not included in the lessorโs receipts that are subject to Wisconsin
sales or use tax. See Part XI.C. for additional information on the 5% state rental vehicle fee. See Publication 410,
Local Exposition Taxes, for additional information on the 3% local exposition car rental tax.
See Appendix G, sec. Tax 11.79, Wis. Adm. Code, for more information on leases.
D. Sales to Donor
The sale of a motor vehicle to a donor (person or organization giving away the motor vehicle as a gift or prize) is
subject to Wisconsin sales or use tax unless the motor vehicle is sold to a nonprofit organization holding a Certifi-
cate of Exempt Status (CES) or to a governmental unit described in Part V.B .
The amount subject to tax is the selling price of the motor vehicle.
If the donor, such as a motor vehicle dealer, purchased without tax as property for resale the motor vehicle that is
donated, the donor is subject to use tax on the purchase price of the motor vehicle, except as provided in
Part VIII.D.
The gift recipient or prize winner is not subject to sales or use tax on the value of the motor vehicle when the mo-
tor vehicle is registered.
E. Motor Vehicle Dealer Employees
The sale or lease of a motor vehicle by a motor vehicle dealer to a salesperson or other person employed by that
dealer is subject to Wisconsin sales or use tax.
F. Vans for Transporting Children
Sales of vans used in transporting school children, if the seating capacity is less than 10, are subject to Wisconsin
sales or use tax. However, if the van is sold to a Wisconsin school or school district, the sale is exempt from tax as
discussed in Parts V. B . and D.
G. Taking Over Payments
If a motor vehicle is transferred from A to B and no money is exchanged, but B agrees to pay off the loan balance
on the motor vehicle, the amount of the loan assumed by B is considered the sales price of the motor vehicle
which is subject to Wisconsin sales or use tax.
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H. Transfer Between Parent and Subsidiary
The sale of a motor vehicle by a parent corporation to its wholly owned subsidiary corporation, or by a subsidiary
to its parent, is a taxable transfer of a motor vehicle, except as provided in Parts V. O . , P., and Q.
Note: A sale of a motor vehicle to a subsidiary or parent that will sell or lease the vehicle is not subject to Wiscon-
sin sales or use tax because it is for resale.
I. Judicial Sale
Motor vehicles sold under a court order are taxable, including a sale by a trustee in bankruptcy pursuant to the or-
der of a federal bankruptcy court.
J. Sale to Enforce Lien
Motor vehicles sold pursuant to sec. 779.415, Wis. Stats., (tow truck operator selling a motor vehicle to enforce a
towing or storage lien) are taxable.
K. Repairs Under Insurance Plan
Receipts from an insurer for repair parts or services performed to satisfy a claim under an insurance plan are sub-
ject to Wisconsin sales or use tax.
V. EXEMPT SALES, LEASES, AND RENTALS OF PRODUCTS
As mentioned in Part IV. , all retail sales, leases, and rentals of products described in Part III., are taxable unless spe-
cifically exempt by law. An exemption certificate (e.g., Wisconsin Sales and Use Tax Exemption Certificate
(Form S-211), or similar document) is required to support the exempt sale. See Part XII.B. for more information on
exemption certificates.
The following are examples of transactions or amounts involving motor vehicles which are exempt from sales and use
tax (this list is not all-inclusive):
A. Sales for Resale
Sales for resale include sales of motor vehicles to dealers who sell them to customers, to leasing companies who
lease them, and to organizations who auction them, without making any use of the vehicle in addition to retention,
demonstration, or display while holding them for sale or lease.
See Part VIII.B. for information on a motor vehicle dealerโs use of a motor vehicle for a purpose in addition to re-
tention, demonstration, or display while holding it for sale.
If there is a sale for resale to a Wisconsin dealer or lessor and the motor vehicle is to be registered in Wisconsin,
Form e-MV11, Application For Title/Registration, must be used to claim the resale exemption. If there is a sale
for resale to a Wisconsin dealer and the vehicle is not registered in Wisconsin, the Wisconsin Sales and Use Tax
Exemption Certificate (Form S-211) or Streamlined Sales and Use Tax Exemption Certificate โ Wisconsin version
(Form S-211-SST) should be used to claim exemption from Wisconsin sales or use tax.
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19
B. Governmental Units
Sales, licenses, leases, and rentals to the following governmental units are exempt from Wisconsin sales and use
taxes:
โข The United States, its unincorporated agencies and instrumentalities, and any agency or instrumentality of the
United States wholly owned by the United States or by a corporation wholly owned by the United States.
โข The State of Wisconsin or any of its agencies.
โข Any federally recognized American Indian tribe or band in Wisconsin.
โข The University of Wisconsin Hospitals and Clinics Authority.
โข The Wisconsin Aerospace Authority.
โข The Wisconsin Economic Development Corporation.
โข The Fox River Navigational System Authority.
โข Any unit of Wisconsin government or an agency or instrumentality of one or more units of Wisconsin gov-
ernment. This includes any county, city, village, or public school district, in Wisconsin.
โข A county-city hospital established under sec. 66.0927, Wis. Stats.
โข A sewerage commission organized under sec. 281.43(4), Wis. Stats., or a metropolitan sewerage district orga-
nized under secs. 200.01 to 200.15 or 200.21 to 200.65, Wis. Stats.
โข A joint local water authority created under sec. 66.0823, Wis. Stats.
โข A local exposition district, professional baseball park district, or professional football stadium district under
subchs. II, III, or IV of ch. 229, Wis. Stats.
โข A local cultural arts district created under subch. V of Ch. 229, Wis. Stats.
Sellers may obtain from the customer (1) a Wisconsin Sales and Use Tax Exemption Certificate (Form S-211) or
Streamlined Sales and Use Tax Exemption Certificate โ Wisconsin version (Form S-211-SST), (2) a purchase or-
der, in lieu of an exemption certificate, or (3) may record the governmental unitโs Certificate of Exempt Status
(CES) number on the invoice it keeps as part of its records as evidence that the transaction is exempt.
This exemption does not apply to sales that take place in Wisconsin to foreign countries or to other states, their
agencies, and other states' local governmental units.
C. Common or Contract Carriers
Sales, licenses, leases, and rentals of motor trucks, truck tractors, road tractors, buses, trailers, and semitrailers,
and accessories, attachments, parts, supplies, and materials therefor, to common or contract carriers who use such
motor trucks, truck-tractors, road tractors, buses, trailers, and semitrailers exclusively as common or contract car-
riers, including the urban mass transportation of passengers as defined in sec. 71.38, Wis. Stats., are exempt from
Wisconsin sales or use tax.
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Accessories, attachments, and parts for motor vehicles which are exempt from sales or use tax include the follow-
ing items if they are assigned to and carried on vehicles which are used exclusively as common or contract
carriers: dollies, pianoboards, ladders, walkboards, tire chains, fire extinguishers, flares, bug deflectors, engine
block heaters, defroster fans, auxiliary heaters and cooling units and their fuel, radios, flag kits, including flags
and reflectors, items designed to be used with a vehicle which protect or secure the vehicleโs load, such as tape,
fitted tarpaulins, tarpaulin straps, furniture pads and covers, load holding chains, logistic straps, and shoring
beams.
Accessories, attachments, and parts do not include: clean towel service, cleaning supplies, wrenches and repair
tools, welding torches and welding gas, battery chargers, grinding discs, and shovels, regardless of whether or not
assigned to and carried on vehicles used exclusively as common or contract carriers.
Refer to sec. Tax 11.16(1)(am), Wis. Adm. Code, Appendix D, for the definition of โexclusivelyโ as used in this
publication.
Common or contract carriers have an I.C., L.C., or M.C. number issued by the appropriate federal or state agency.
They must show this I.C., L.C., or M.C. number when claiming an exemption from sales and use tax on
Form MV1, e-MV11, Form S-211, or similar document.
Wrecker operators that have an L.C. number issued by the Transportation Commission may purchase wreckers
without tax if they are to be used exclusively in โfor hireโ common or contract carriage.
D. Tax-Exempt Nonprofit Organizations
Sales, licenses, leases, and rentals to the following nonprofit organizations are exempt from Wisconsin sales and
use taxes.
โข Any corporation, community chest fund, foundation or association organized and operated exclusively for re-
ligious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals,
except hospital service insurance corporations under sec. 613.80 (2), Wis. Stats., no part of the net income of
which inures to the benefit of any private stockholder, shareholder, member or corporation. Included within
this group are nonprofit churches, hospitals, private schools, the Scouts, YMCAs, Red Cross, and Community
Chests.
โข A cemetery company or corporation described under section 501 (c) (13) of the Internal Revenue Code, if the
tangible personal property or taxable services are used exclusively by the cemetery company or corporation
for the purposes of the company or corporation.
These organizations are issued a Certificate of Exempt Status (CES) number by the Wisconsin Department of
Revenue. To claim the exemption, the CES number must be written on the bill of sale, Form MV1, or
Form e-MV11, or supported by a Wisconsin Sales and Use Tax Exemption Certificate (Form S-211) or a Stream-
lined Sales and Use Tax Exemption Certificate โ Wisconsin version (Form S-211-SST).
The motor vehicle purchased or leased must be registered in the name of the organization, not an individual, for
the transaction to be exempt.
E. Motor Fuel for Highway Use
Sales of motor vehicle fuel (e.g., gasoline or diesel) or alternate fuel (e.g., CNG or LPG) subject to the Wisconsin
excise tax on highway fuels are not subject to Wisconsin sales or use tax, except when sold without the excise tax
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
21
or when the excise tax is subsequently refunded because the buyer does not use the fuel in operating a motor ve-
hicle upon public highways.
F. Sales to Nonresidents
Sales, leases, and rentals of motor vehicles or truck bodies (truck bodies include semitrailers) to persons who are
not residents of Wisconsin, if use in Wisconsin is limited to removing the motor vehicle or truck body from Wis-
consin, are exempt from Wisconsin sales or use tax. If the vehicle is to be used in Wisconsin (e.g., at a vacation
home), prior to removal from Wisconsin, the exemption does not apply.
Trailers, including car transport devices such as car caddies, but not including semi-trailers, do not qualify for this
exemption because they are not motor vehicles or truck bodies.
Retailers should document exemptions from Wisconsin sales or use tax on sales to nonresidents by obtaining an
exemption certificate (Form S-211) from the purchaser or completing section โEโ of Form e-MV11.
This exemption applies to motor vehicles sold to nonresident corporations. A nonresident corporation is a corpora-
tion incorporated outside Wisconsin.
If this exemption does not apply, a credit may be allowed in the state of residence for the Wisconsin sales or use
tax paid. The customer should contact the resident state for more information.
Caution: This exemption applies only to truck bodies and motor vehicles as defined in sec. Tax 11.83(1), Wis.
Adm. Code, and does not include boats, snowmobiles, all-terrain vehicles, utility-terrain vehicles, off-road motor-
cycles, trailers, or the separate sale of a โslide-inโ camper.
G. Purchases Prior to Becoming Wisconsin Resident
An aircraft, motor vehicle, boat, snowmobile, mobile home, trailer, semitrailer, all-terrain vehicle, utility-terrain
vehicle, or off-road motorcycle purchased outside Wisconsin for personal use by a nonresident of Wisconsin
90 days or more before bringing it into Wisconsin, in connection with a change of domicile to Wisconsin, is ex-
empt from Wisconsin use tax.
H. Delivery Outside Wisconsin
Sales of any type of motor vehicle, trailer, car caddie, slide-in camper, etc., are not subject to Wisconsin sales tax if
delivery is physically made outside of Wisconsin to a customer or the customerโs agent. The item is also exempt from
Wisconsin sales tax if delivery is made by a shipping company at a location outside of Wisconsin, regardless of
whether the buyer or the seller hires or pays the shipping company. NOTE: While the preceding sales are exempt
from Wisconsin sales tax:
โข The seller is liable for collecting and remitting Wisconsin use tax if the seller is submitting an application for
Wisconsin registration of the property on behalf of the purchaser
โข The buyer is liable for Wisconsin use tax as of the time the property is used in a taxable manner in Wisconsin,
subject to a credit for sales or use tax properly paid to another state.
I. Driverโs Education Vehicles
The loan of a motor vehicle by a motor vehicle dealer to any school or school district for a driver training educa-
tional program conducted by the school or school district is not subject to Wisconsin sales or use tax.
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J. Volunteer Fire Departments
Sales, leases, and rentals of fire trucks, ambulances, and rescue vehicles and related equipment, and parts and
supplies therefor, to volunteer fire departments are exempt from Wisconsin sales or use tax.
K. Native Americans
Sales to Native Americans who live on a Native American reservation, by retailers located either on or off a Na-
tive American reservation, are not subject to Wisconsin sales or use tax, if delivery of the motor vehicle occurs on
the Native Americanโs tribal reservation. (Caution: If a retailer knows the property or service is intended for stor-
age, use, or consumption in Wisconsin, but off the Native Americanโs tribal reservation, the retailer is required to
collect sales or use tax on such property or service.)
In order to show that the sale is exempt, the dealer should obtain a Wisconsin Sales and Use Tax Exemption Certif-
icate (Form S-211) or Streamlined Sales and Use Tax Exemption Certificate - Wisconsin version
(Form S-211-SST), signed by the Native American stating that the Native American took possession of the motor
vehicle on the reservation of which he or she is an enrolled member.
Note: Sales to any federally recognized American Indian tribe or band in Wisconsin are exempt as explained in
Part V.B.
For more information about taxation of Native Americans, refer to Publication 405, Wisconsin Taxation of Native
Americans.
L. Beneficiaries
A motor vehicle received as a bequest or inheritance from an estate is not subject to Wisconsin sales or use tax.
However, the sale of a motor vehicle by a personal representative of an estate is taxable.
M. Repossessions
Repossessions of motor vehicles by a motor vehicle dealer or other person providing financing (e.g. banks), when
the only consideration is cancellation of the customerโs obligation to pay for the motor vehicle, are not subject to
tax. However, the sale of the repossessed motor vehicle is subject to Wisconsin sales or use tax, unless an exemp-
tion applies.
N. Federal Banks and Credit Unions
Sales, leases, and rentals to Federal Reserve Banks and federally chartered credit unions are not subject to tax.
However, sales, leases, and rentals to state chartered credit unions or other credit unions not federally chartered
are taxable.
O. Entity Organizations
The following are not subject to Wisconsin sales or use tax:
1. Transfers to a corporation upon its organization solely in consideration for the issuance of its stock.
2. Transfers to a newly formed partnership solely in exchange for a partnership interest.
3. Transfers to a limited liability company upon its organization solely in consideration for a membership inter-
est.
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23
P. Entity Distributions
The following are not subject to Wisconsin sales or use tax:
1. Distribution of property by a corporation to its stockholders as a dividend or in whole or partial liquidation.
2. Distribution by a partnership to its partners in whole or partial liquidation.
3. The distribution of property by a limited liability company to its members in whole or partial liquidation.
Q. Disregarded Entities
Generally, transfers of motor vehicles between a parent corporation and its single-owner subsidiary or between a
member and its single-owner limited liability company, where the subsidiary or the limited liability company is
disregarded as a separate entity for Wisconsin income and franchise tax purposes, are not subject to Wisconsin
sales or use taxes effective July 1, 2009. As of July 1, 2009, a single-owner subsidiary or single-owner limited li-
ability company that is disregarded as a separate entity for Wisconsin income and franchise tax purposes is also
disregarded as a separate entity for Wisconsin sales and use tax purposes. However, exceptions may apply if the
motor vehicle being transferred was purchased by the transferor prior to July 1, 2009.
For additional information, see Wisconsin Tax Bulletin # 162 (July 2009) at pages 38-39, Part G.5.
R. Farming
Sales of all-terrain vehicles, utility-terrain vehicles, off-road motorcycles, and trucks not licensed for highway use
to farmers for use directly and exclusively in farming are not subject to Wisconsin sales or use tax.
S. School Buses
Sales of school buses are not subject to Wisconsin sales or use tax when used exclusively as common or contract
carriers. A school bus is defined as a motor vehicle designed primarily for the transportation of pupils having a
seating capacity of 10 or more persons, in addition to the driver. A school bus does not include a motor vehicle
registered as an automobile.
T. Occasional Sales
1. Immediate Family
There is an exemption from tax for the sale of a motor vehicle, snowmobile, recreational vehicle as defined in
sec. 340.01(48r), Wis. Stats., trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, off-road motorcycle,
aircraft registered or titled under the laws of Wisconsin, or boat registered or titled under the laws of Wiscon-
sin or the United States to the spouse, mother, mother-in-law, father, father-in-law, stepparent, child, stepchild,
daughter-in-law, or son-in-law of the seller in whose name the item was previously registered in Wisconsin if
the seller is not engaged in the business of selling that type of property.
Caution: A motor vehicle dealerโs sale of a motor vehicle to the dealerโs spouse, mother, mother-in-law, fa-
ther, father-in-law, stepparent, child, stepchild, daughter-in-law, or son-in-law is taxable because the dealer is
in the business of selling this type of property.
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2. Sole Shareholder
The sale of a motor vehicle to a corporation by a person who is the sole owner of that corporation is exempt
from sales or use tax as an occasional sale if the sole shareholder is not in the business of selling motor vehi-
cles and the motor vehicle was registered or titled in the name of the sole shareholder or the sole shareholderโs
spouse.
Other transfers between stockholders and the corporation they own are taxable (e.g. the sale of a motor vehi-
cle by a corporation to its sole shareholder), except as provided in Parts V. O . , P., and Q.
U. Transfer Incident to Divorce
The transfer of an ownership interest in a motor vehicle, snowmobile, recreational vehicle as defined in
sec. 340.01(48r), Wis. Stats., trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, off-road motorcycle or
aircraft from one person to their former spouse, pursuant to a divorce decree, with the transfer occurring after the
divorce is final (i.e., the persons are no longer legally married to each other), is treated as an exempt occasional
sale of the property as described in Part V.T., unless the transferor is a dealer in the type of property transferred.
The transfer of an interest in a motor vehicle, snowmobile, recreational vehicle as defined in sec. 340.01(48r),
Wis. Stats., trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, off-road motorcycle or aircraft from one
person to their former spouse occurring after the divorce is final (i.e., the persons are no longer legally married to
each other), where the transfer is not a part of the divorce decree, is a taxable transfer and cannot qualify as an ex-
empt occasional sale.
V. Manufactured Homes
1. New
A sales and use tax exemption is provided for 35% of the total amount for which a new manufactured home,
as defined in sec. 101.91(11), Wis. Stats., is sold.
This exemption only applies to sales, not to leases and rentals.
No credit is allowed for trade-ins.
2. Used
A sales and use tax exemption is also provided for the full amount for which a used manufactured home, as
defined in sec. 101.91(12), Wis. Stats., is sold.
See Publication 231, Sales and Use Tax Treatment of Manufactured and Modular Homes, for additional information
about manufactured homes.
W. Repairs Under Extended Warranties or Service Contracts
Receipts from an extended warranty or service contract provider for repair parts or services performed to satisfy a
claim under a vehicle manufacturer warranty, extended warranty, or service contract are not subject to Wisconsin
sales or use tax.
Caution: Receipts from a customer for a deductible or co-payment for repair parts or services performed to satis-
fy a claim under a vehicle manufacturer warranty, extended warranty, or service contract are subject to Wisconsin
sales or use tax.
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25
X. Mobility-Enhancing Equipment
The sale of adaptive equipment that is primarily and customarily used to provide or increase the ability of a per-
son 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, is exempt from Wisconsin sales and use taxes as โmobility-enhancing
equipment.โ The exemption includes repair parts and replacement parts for exempt equipment.
The exemption does not apply to a motor vehicle or any equipment on a motor vehicle that is generally provided
by a motor vehicle manufacturer, and also does not apply to products meeting the definition of โdurable medical
equipment,โ as defined in sec. 77.51(3pm), Wis. Stats.
See Publication 201, Part XI.B.7., for additional information about mobility-enhancing equipment.
Y. Raffles
Sales of raffle tickets for the chance to win a motor vehicle are not subject to Wisconsin sales or use tax.
See Parts IV.D and V.D. for information on the sales or use tax treatment of the motor vehicle that is raffled.
VI. TAXABLE SALES OF SERVICES
Sales of the following services are subject to Wisconsin sales or use tax, unless an exemption applies (this list is not
all-inclusive):
A. Labor
Labor for repair, service, alteration, fitting, cleaning, painting, coating, inspection, and maintenance performed on
a motor vehicle is subject to Wisconsin sales or use tax. Also subject to tax is labor for installation of accessories
or attachments to motor vehicles, such as a radio or air conditioner.
Example: Individual locked his keys in his motor vehicle. Company, a locksmith, unlocks the motor vehicle for
Individual. The charge by Company to Individual is subject to Wisconsin sales or use tax.
B. Towing and Hauling
The entire charge for towing or hauling a motor vehicle by a tow truck, as defined by sec. 340.01(67n), Wis.
Stats., into Wisconsin is taxable, but towing or hauling a motor vehicle from Wisconsin to an out-of-state location
is not taxable. Towing or hauling a motor vehicle for an automobile club or service agency, such as the AAA, is
taxable to the same extent as towing for any other customer.
Section 340.01(67n), Wis. Stats., defines โtow truckโ to mean a motor vehicle that is equipped with mechanical or
hydraulic lifting devices or winches capable of, and used for, the recovery or transport or both of wrecked, disa-
bled, abandoned, used or replacement vehicles.
Other examples of taxable servicing of a motor vehicle by tow truck operators include: (a) returning a truck or
other motor vehicle to an upright position after it has tipped over, (b) winching a motor vehicle back on a high-
way, and (c) freeing a truck from a โLow Clearanceโ overhead structure.
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The following examples illustrate the sales and use tax treatment of towing and hauling by a tow truck:
Example 1: Company operates a service station that offers towing service. Company is contacted by Individual
who indicates that his motor vehicle will not start. Company tows Individualโs motor vehicle to its service station
and repairs the motor vehicle. Company charges $30 for towing services provided.
The towing charge is subject to Wisconsin sales or use tax.
Example 2: Company A provides towing services. Company A does not provide repair services. Company A is
contacted by Individual who indicates that her motor vehicle will not start. Company A tows the motor vehicle to
Company B, a service station, who repairs Individualโs motor vehicle. Company A charges Individual $30 for the
towing services provided.
The towing charge is subject to Wisconsin sales or use tax.
Example 3: Towing Company has contracted with a Wisconsin county to haul vehicles abandoned or damaged on
the county highways. The county contacts Towing Company and indicates that a vehicle has been abandoned on a
highway. Towing Company hauls the vehicle to its location and keeps it there until the owner is located and picks
up the motor vehicle. The motor vehicle may or may not require repair. The owner of the motor vehicle pays
Company $40 for the hauling services provided.
The $40 hauling charge is subject to Wisconsin sales or use tax.
Example 4: Towing Company has contracted with a Wisconsin city to remove motor vehicles from โno parkingโ
zones. Towing Company hauls the motor vehicle to the city garage. Towing Company bills the city on a monthly
basis for the hauling services it provides. The owner of the motor vehicle pays a $50 fine and/or a hauling charge
to the city and is allowed to claim his or her motor vehicle.
The city does not resell the hauling service to the owners of hauled motor vehicles. The city is the consumer of the
hauling service. However, the hauling charge by Company to the city is not subject to Wisconsin sales or use tax
because it is a sale to a Wisconsin governmental unit.
Example 5: Service Station is contacted by an insurance company to tow a damaged motor vehicle to Service
Station and repair the motor vehicle. Service Station charges the insurance company $45 for the towing service
provided.
The $45 towing charge is subject to Wisconsin sales or use tax.
Example 6: Towing Company is contacted by an insurance company to tow a damaged motor vehicle to a salvage
yard for disposal. Towing Company charges the insurance company $45 for the towing service provided.
The $45 towing charge is subject to Wisconsin sales or use tax.
Example 7: Service Station is contacted by Common Carrier to tow its truck, which is used exclusively and di-
rectly in common carriage for hire, to Service Station and repair the truck. Service Station charges Common
Carrier $100 for towing service provided.
The $100 towing charge is not subject to Wisconsin sales or use tax because at the time the truck is towed, a sale
of the truck to common carrier would have been exempt from Wisconsin sales or use tax. Motor trucks sold to
common or contract carriers who use the trucks exclusively as common or contract carriers are exempt from Wis-
consin sales or use tax. Service Station should obtain a properly completed exemption certificate from Common
Carrier.
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27
Example 8: Towing Company is contacted by Individual, a nonresident of Wisconsin, to tow her damaged motor
vehicle to a salvage yard in Wisconsin for disposal. Towing Company charges Individual $30 to tow the motor
vehicle.
The $30 towing charge is subject to Wisconsin sales or use tax. Although the motor vehicle at the time of towing
is exempt from Wisconsin tax if sold for immediate removal from Wisconsin, sec. 77.52(2)(a)8m., Wis. Stats.,
specifically excludes from exemption towing and hauling of motor vehicles exempt from sales and use tax under
sec. 77.54(5)(a), Wis. Stats.
Example 9: Service Station is contacted by Individual, whose car wonโt start. Service Station contacts Towing
Company, who tows Individual's vehicle to Service Station for repair. Towing company charges Service Station
$30 for the towing service. Service Station charges Individual $40 for the towing service.
The $40 charge by Service Station to Individual for towing services is taxable. The $30 charge by Towing Com-
pany to Service Station is not taxable, as Service Station is purchasing the services for resale. Service Station
should furnish Towing Company a fully completed resale certificate.
C. Parking
Charges for parking a motor vehicle are subject to Wisconsin sales or use tax. Parking includes the temporary
storage of a motor vehicle that is available for immediate use.
Example 1: Company repairs Individualโs motor vehicle. Individual is unable to pick up the vehicle for a week.
Company charges Individual $30 for โstoringโ his motor vehicle until it can be picked up. Because the motor ve-
hicle is available for immediate use upon repair of the motor vehicle, the $30 charge by Company is considered a
charge for parking and is subject to Wisconsin sales tax.
Example 2: Company tows Individualโs motor vehicle to its repair shop. The vehicle is damaged and cannot be
driven. Company charges Individual $20 for โstoringโ the vehicle until Individualโs insurance company can esti-
mate the cost of the damage and approve repairs. Because the motor vehicle is not available for immediate use,
the $20 charge by Company is not considered a charge for parking and is not subject to Wisconsin sales tax.
VII. SALES OF SERVICES NOT SUBJECT TO TAX
A. Repairs, Etc. of Exempt Tangible Personal Property
The repair, service, alteration, fitting, cleaning, towing, painting, coating, inspection, and maintenance performed
on a motor vehicle is not subject to Wisconsin sales or use tax provided the motor vehicle, if sold at the time of
the repair, service, etc., would have been exempt from tax.
Exception: The repair, service, alteration, fitting, cleaning, towing, painting, coating, inspection, and maintenance
performed on a motor vehicle or truck body that was exempt from Wisconsin sales or use tax because the item
was purchased by a nonresident, where the only use in Wisconsin is the removal from Wisconsin, is subject to
Wisconsin sales or use tax.
Example 1: Motor Vehicle Dealer takes several of the motor vehicles it holds for resale to a car wash to be
cleaned. The charge by the car wash is not subject to Wisconsin sales or use tax because at the time the motor ve-
hicles are washed, they would be exempt from tax (resale). Motor Vehicle Dealer should provide the car wash
with a properly completed exemption certificate claiming resale.
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Example 2: Motor Vehicle Dealer repairs a truck for a common carrier who uses the vehicle exclusively in com-
mon carriage for hire. The charge by Motor Vehicle Dealer for repairing the truck is not subject to Wisconsin sales
or use tax because at the time of the repair, the truck, if sold, would have been exempt from Wisconsin sales or
use tax.
Example 3: Service Station repairs the motor vehicle of a nonresident of Wisconsin. The charge by Service Sta-
tion for repairing the motor vehicle is subject to Wisconsin sales or use tax.
B. Limousine Service
Limousine service, which includes the use of a limousine with a driver, is a transportation service that is not sub-
ject to Wisconsin sales or use tax.
Example: Corporation provides a limousine with driver to the general public. Corporation charges the customer
either $40 per hour or a flat fee for a given destination (e.g., $115 for a trip from Milwaukee to OโHare Airport in
Chicago). The $40 charge per hour and the $115 flat fee are not subject to Wisconsin sales or use tax.
Caution: Although not subject to Wisconsin sales or use tax, charges for limousine service may be subject to the
Wisconsin limousine fee. For more information, see Part XI.D.
VIII. PURCHASES
A. Parts and Supplies
1. General
Persons engaged in motor vehicle repair, including body shops, may purchase for resale without tax, tangible
personal property which is physically transferred to the customerโs vehicle and which leaves the repair facility
with the repaired vehicle. Such property includes paints, paint hardeners, plastic fillers, welding rods, and mo-
tor vehicle parts.
Purchases of tangible personal property not physically transferred to a customer or attached to a customerโs
motor vehicle are subject to tax. Such property includes tools, equipment, and supplies used or consumed in
performing motor vehicle repair service. Examples of 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 trans-
ferred to the customerโs motor vehicle.
The purchaser is subject to use tax on any items acquired without tax with an exemption certificate claiming
resale which are used in a taxable manner. Therefore, parts purchased without tax for resale which are in-
stalled on service vehicles (e.g., parts trucks, etc.) are subject to use tax.
Note: Parts installed on a vehicle used solely for rental are not subject to Wisconsin sales or use tax because
the rental vehicle is property for resale.
2. Separately Stated Supply Charges
All businesses have certain overhead costs and expenses, including various supplies they consume in conduct-
ing their business, such as electricity, heating fuel, cleaning supplies, etc. The business is the consumer of all
such supplies and must pay sales or use tax on these supplies even if these costs are passed on to the customer.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
29
Example: A body shop on its invoice to a customer includes an item called โsupplies chargeโ which is in-
tended to cover the body shopโs overhead costs. Even though the โsupplies chargeโ to the customer may be
subject to sales or use tax, the supplies are not resold to the customer and may not be purchased by the body
shop without payment of sales or use tax as property for resale.
3. Goodwill Work
A retailer who provides free parts or services or both to a customer under an implied warranty in order to
maintain good customer relations, although not required to do so under a sales agreement, maintenance
agreement, express warranty, or insurance policy, may purchase the parts without Wisconsin sales or use tax
as property for resale.
Example 1: Customer, a resident of Wisconsin, purchased a motor vehicle from a Wisconsin dealership. The
dealership charged Wisconsin sales tax on the sale of the motor vehicle. Customer brought the motor vehicle
to the dealership for repairs that were not covered under any express warranty. While performing the repairs, a
part is damaged. The dealership, as a matter of goodwill under an implied warranty, provides the part free of
charge to Customer. The dealership may purchase the part provided free to Customer without Wisconsin sales
or use tax as property for resale.
Example 2: Company, a used motor vehicle dealership, sold a used motor vehicle to Individual. The used
motor vehicle display label contained the terms โAs Is โ No Warranty.โ Company and Individual did not ne-
gotiate a warranty (express or implied) with the sale of the used motor vehicle. At a later date, Individual finds
a defect in the motor vehicle he purchased and returns the motor vehicle to Company for repair. Company re-
pairs the motor vehicle without charge in order to maintain good customer relations with Individual.
Company may not purchase the parts used to repair Individualโs motor vehicle without Wisconsin sales or use
tax as property for resale since the parts were not sold or supplied under a warranty or service contract (ex-
press or implied).
B. Dealerโs Use of Motor Vehicles
A motor vehicle dealer is entitled to purchase motor vehicles for resale, lease, or rental without payment of the
sales tax. The dealer may use the motor vehicle for retention, demonstration, or display without becoming liable
for the sales tax or use tax. However, if the motor vehicle is used for โpurposes in addition to retention, demon-
stration, or display,โ the dealer becomes liable for the payment of use tax. โPurposes other than demonstration or
displayโ includes business use as well as personal use. It includes such use as running errands for parts and sup-
plies, salesperson transportation, and owner, partner, or officer transportation.
The amount subject to use tax on motor vehicles purchased and used by a dealer for any purpose, in addition to
retention, demonstration, or display, is as follows:
1. Motor vehicles held for sale and assigned to (a) specific dealer employees subject to withholding of federal
income taxes on wages or (b) owners who actively participate in the daily operation of the dealership
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The amount subject to use tax per month per plate (regular or dealer) is as follows for the periods listed:
1/1/17 - 12/31/17 $ 154
1/1/16 - 12/31/16 $ 152
1/1/15 - 12/31/15 $ 152
1/1/14 โ 12/31/14 $ 149
1/1/13 โ 12/31/13 $ 146
1/1/12 - 12/31/12 $ 144
1/1/11 โ 12/31/11 $ 139
The department annually adjusts the amount subject to tax 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 deter-
mined by the U.S. Department of Labor, for the 12 months ending on June 30 of the year before the change.
Examples of motor vehicles subject to use tax based on an amount per plate per month include (this list is not
all-inclusive):
โข Automobiles assigned to salespersons who use the automobiles for personal travel (e.g., travel to and
from home)
โข Automobiles assigned to the controller or other employees subject to withholding for federal income tax
purposes who use the automobiles for personal travel (e.g., travel to and from home)
โข Automobiles assigned to sole proprietors, partners, shareholders, LLC members, or other owners of a
dealership who actively participate in the daily operation of the dealership and use the automobiles for
personal travel (e.g., travel to and from home)
โActively participateโ means the person performs services for the dealership, including selling, account-
ing, managing, and consulting, for more than 500 hours in a taxable year for which the person receives
compensation. โActively participateโ does not include services performed only in the capacity of an in-
vestor, 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 investorโs own use,
or monitoring the finances or operations of the activity in a nonmanagerial capacity.
Note: Motor vehicles not subject to use tax (i.e., there is no sales tax due on a dealer plate affixed to the
vehicle) include the following:
โข Motor vehicles used only as demonstrators for customers
โข Motor vehicles that are driven to and from auctions and that are held only for sale
โข Motor vehicles provided by a dealer to customers without charge for use while their motor vehicle is
being serviced or repaired by the dealer
Example: A motor vehicle dealer holds a dealer plate that it uses only on motor vehicles it drives to auc-
tion to sell. Use tax is not due.
2. Motor vehicles held for sale and not assigned to specific dealer employees subject to withholding for fed-
eral income tax purposes on wages or certain dealership owners
The amount subject to tax is the โlease valueโ of the motor vehicle for the period the motor vehicle is
used by the dealer for any purpose, in addition to retention, demonstration, or display. The โlease valueโ is
computed using the IRS Lease Value Table contained in IRS Reg. ยง 1.61-21(d)(2).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
31
See Appendix J for a copy of the IRS Lease Value Table in effect as of May 1, 2017.
Examples of motor vehicles subject to use tax based on amounts from the IRS Lease Value Table include
(this list is not all-inclusive):
โข Motor vehicles used to transport customers (e.g., courtesy shuttle)
โข Motor vehicles assigned to owners of a dealership who do not actively participate in the daily opera-
tion of the dealership. See Part VIII.B.1. for a definition of โactively participateโ
โข Motor vehicles used by spouses or family members of the dealer who are not (a) dealer employees
subject to withholding for federal income tax purposes or (b) owners who actively participate in the
daily operation of the dealership
โข Motor vehicles assigned to officers and directors of the dealer who are not subject to withholding for
federal income tax purposes
โข Motor vehicles provided by a dealer to municipalities and nonprofit organizations who use them for
community service projects (e.g., DARE)
โข Motor vehicles provided to athletic coaches, celebrities, and other dignitaries without charge for their
use
If the motor vehicle is used for a purpose, in addition to retention, demonstration, or display, for a period
of less than one calendar month, the lease value may be prorated to reflect the period it was used during
the calendar month.
Example: Dealer removes a new vehicle from inventory on February 1, 2013, that it will use as a courte-
sy shuttle for customers. The purchase price of the vehicle to the dealer was $12,000. Using the federal
lease value tables, Dealer computes a monthly lease value of $300 ($3,600 annual lease value รท 12
months). At the end of the business day on February 15, Dealer returns the vehicle to inventory for sale.
Dealer owes Wisconsin use tax on the vehicle of $8.05 ($300 monthly lease value x 15/28 (or $161) x
5%).
3. Motor vehicles not held for sale which are properly capitalized for income or franchise tax purposes
The amount subject to use tax is the sales price of the motor vehicle to the dealer.
Examples of motor vehicles subject to use tax based on the sales price to the dealer include (this list is not
all-inclusive):
โข Tow trucks not held for sale
โข Parts trucks not held for sale
โข Motor vehicles not held for sale used to haul other vehicles to and from auctions
โข Snow plows not held for sale
โข Antique vehicles not held for sale (e.g. held for promotional purposes)
โข New motor vehicles purchased by used motor vehicle dealers that may not be held for sale until after
certain Department of Transportation requirements have been met
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C. Mixed Use Vehicles
Some motor vehicle dealerships may use motor vehicles in more than one manner. For example, a motor vehicle
may be used as both a service rental and to pick up parts, mail, etc.
A vehicle used to pick up parts, mail, etc., that is held for sale is required to be licensed in the dealerโs name and
the dealer must pay use tax on the lease value, as described in Part VIII.B.2, while used to pick up parts, mail, etc.
A service rental vehicle used exclusively for rental may be purchased by the dealership as property for resale since
the rental of a motor vehicle is considered to be a continuing sale. The dealer reports sales tax on the receipts from
the rental of the motor vehicle.
If a motor vehicle is used both as a service rental and to pick up parts, mail, etc., the lease value, as described in
Part VIII.B.2., for the time the motor vehicle is used to pick up parts, mail, etc., is subject to use tax. Any receipts
from the rental of that same motor vehicle are subject to sales tax. The use tax paid on the lease value of the motor
vehicle may not be used to offset sales tax due on the rental receipts.
Example: Company, a Wisconsin licensed motor vehicle dealer, purchases a vehicle for $12,000 without tax for
resale. Company uses the vehicle for 40% of the month to pick up parts, mail, etc., and 60% of the month as a
service rental. Receipts from the rental of the motor vehicle during the month are $400.
Company will report state sales and use tax relating to this vehicle for the month as follows:
Sales tax on rental receipts
($400 receipts x 5% tax rate) $20
Use tax on lease value
[($3,600 annual lease value รท 12 months)
x 40% taxable use x 5% tax rate] $ 6
Total sales and use tax relating to
vehicle for the month $26
D. Donation of Property
There is an exemption for any of the products described in Part III. that are either (1) purchased without tax for re-
sale and withdrawn from inventory; or (2) purchased without tax claiming an exemption from tax using a valid
exemption certificate; and that is then donated to any of the following entities:
โข The State of Wisconsin or any of its agencies.
โข Any federally recognized American Indian tribe or band in Wisconsin.
โข The University of Wisconsin Hospitals and Clinics Authority.
โข The Wisconsin Aerospace Authority.
โข The Wisconsin Economic Development Corporation.
โข The Fox River Navigational System Authority.
โข Any unit of Wisconsin government or an agency or instrumentality of one or more units of Wisconsin gov-
ernment. This includes any county, city, village, or public school district, in Wisconsin.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
33
โข A county-city hospital established under sec. 66.0927, Wis. Stats.
โข A sewerage commission organized under sec. 281.43(4), Wis. Stats., or a metropolitan sewerage district orga-
nized under secs. 200.01 to 200.15 or 200.21 to 200.65, Wis. Stats.
โข A joint water authority created under sec. 66.0823, Wis. Stats.
โข A local exposition district, professional baseball park district, professional football stadium district, or local
cultural arts district, under subchs. II, III, IV, and V of ch. 229, Wis. Stats.
โข Any corporation, community chest fund, foundation or association organized and operated exclusively for re-
ligious, charitable, scientific or educational purposes, or for the prevention of cruelty to children or animals,
except hospital service insurance corporations under s. 613.80 (2), no part of the net income of which inures
to the benefit of any private stockholder, shareholder, member or corporation.
โข A cemetery company or corporation described under section 501 (c) (13) of the Internal Revenue Code, if the
tangible personal property or taxable services are used exclusively by the cemetery company or corporation
for the purposes of the company or corporation.
IX. WHEN AND WHERE A SALE OCCURS
A. When a Sale or Lease Occurs
1. A sale or purchase involving transfer of ownership of tangible personal property, certain coins or stamps, or
certain leased property affixed to realty, is completed at the time when possession is transferred by the seller
or the sellerโs agent to the buyer or the buyerโs agent. A common carrier or the U.S. Postal Service is consid-
ered to be the agent of a seller, regardless of any f.o.b. point and regardless of the method by which the freight
is paid.
2. Except when purchased by โsubscription,โ a sale or purchase of certain digital good is completed at the time
when possession is transferred by the seller or the sellerโs agent to the purchaser or the purchaserโs agent or
when the digital good is first used, whichever comes first.
3. A sale or purchase of a digital good sold by โsubscriptionโ is completed at the time when the payment for the
subscription is due to the seller. โSubscriptionโ means an agreement with the seller that grants the consumer
the right to obtain products transferred electronically from within one or more product categories having the
same tax treatment, in a fixed quantity or for a fixed period of time, or both.
B. Where a Sale or Lease Occurs
Note: As used in Parts IX.B.1. to 4., below, the term โproductโ includes the property, items, and goods described
in Part III. and services.
1. A sale (but not a license, lease, or rental) occurs at (i.e., is sourced to) the location determined using the fol-
lowing hierarchy:
a. If a purchaser receives the product at a seller's business location, the sale is sourced to that business loca-
tion.
b. If a purchaser does not receive the product at a seller's business location, the sale is sourced to the loca-
tion where the purchaser, or the purchaser's designated donee, receives the product, including the location
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indicated by the instructions known to the seller for delivery to the purchaser or the purchaser's designat-
ed donee.
c. If the location of a sale of a product cannot be determined under a. and b., the sale is sourced to the pur-
chaser's address as indicated by the seller's business records, if the records are maintained in the ordinary
course of the seller's business and if using that address to establish the location of a sale is not in bad
faith.
d. If the location of a sale of a product cannot be determined under a. to c., the sale is sourced to the pur-
chaser's address as obtained during the consummation of the sale, including the address indicated on the
purchaser's payment instrument, if no other address is available and if using that address is not in bad
faith.
e. If the location of a sale of a product cannot be determined under a. to d., including the circumstance in
which the seller has insufficient information to determine the locations under a. to d., the location of the
sale is determined as follows:
(1) The sale of tangible personal property, certain coins and stamps, or certain leased property affixed to
realty, is sourced to the location from which the property or item is shipped.
(2) If the item sold is a taxable digital good or computer software delivered electronically, the sale is
sourced to the location from which the digital good or computer software was first available for
transmission by the seller, not including any location that merely provided the digital transfer of the
product sold.
(3) If a service is sold, the sale is sourced to the location from which the service was provided.
2. Except as provided in 3. and 4., with regard to the first or only payment on the lease or rental, the lease or
rental of property, items, and goods is sourced to the location determined under Part IX.B.1. Subsequent peri-
odic payments on the lease or rental are sourced to the property's, item's, or good's primary location as
indicated by an address for the property, item, or good that is provided by the lessee and that is available to
the lessor in records that the lessor maintains in the ordinary course of the lessor's business, if the use of such
an address does not constitute bad faith. The location of a lease or rental as determined under this paragraph
shall not be altered by any intermittent use of the property, item, or good at different locations.
3. The lease or rental of motor vehicles, trailers, semitrailers, and aircraft, that are not transportation equipment,
is sourced to the primary location of such motor vehicles, trailers, semitrailers, or aircraft as indicated by an
address for the property that is provided by the lessee and that is available to the lessor in records that the les-
sor maintains in the ordinary course of the lessor's business, if the use of such an address does not constitute
bad faith, except that a lease or rental under this paragraph that requires only one payment is sourced to the
location determined under Part IX.B.1. The location of a lease or rental as determined under this paragraph
shall not be altered by any intermittent use of the property at different locations.
4. The lease or rental of transportation equipment is sourced to the location determined under Part IX.B.1.
"Receive" means taking possession of tangible personal property, certain coins or stamps, certain leased property af-
fixed to realty described in Part III., taking possession or making first use of a taxable digital good, whichever comes
first, or making first use of services. "Receive" does not include a shipping company taking possession of any tangible
personal property, certain coins or stamps, or certain leased property to be affixed to realty described in Part III., on a
purchaser's behalf.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
35
โTransportation equipment" means any of the following:
โข Locomotives and railcars that are used to carry persons or property in interstate commerce.
โข Trucks and truck tractors that have a gross vehicle weight rating of 10,001 pounds or greater, trailers, semitrailers,
and passenger buses, if such vehicles are registered under the International Registration Plan under s. 341.405 and
operated under the authority of a carrier that is authorized by the federal government to carry persons or property
in interstate commerce.
โข Aircraft that are operated by air carriers that are authorized by the federal government or a foreign authority to
carry persons or property in interstate or foreign commerce.
โข Containers that are designed for use on locomotives and railcars, trucks and truck tractors, trailers and semitrail-
ers, passenger buses, and aircraft that are โtransportation equipmentโ and component parts attached to or secured
on such vehicles.
A license of tangible personal property, or items, property or goods shall be treated as a lease or rental of such proper-
ty, items, or goods, as explained in Part IX.B.2. to 4.
Note: Additional special sourcing rules apply to sales of telecommunications services and sales by โretail florists.โ
See secs. Tax 11.66(3) and 11.945(5), Wis. Adm. Code, for additional information.
X. COUNTY AND STADIUM SALES AND USE TAXES
A. Motor Vehicles, Boats, Recreational Vehicles, and Aircraft
In general, sales of property, items, goods, and taxable services that take place at (i.e., are sourced to) a location in
Wisconsin, as explained in Part IX., are subject to county and baseball stadium sales or use taxes if the sale is sourced
to a county that has imposed a county sales and use tax or to a county that is in the baseball stadium district. Any re-
tailer who holds or is required to hold a Wisconsin sellerโs permit or use tax registration certificate is liable for the
applicable county and stadium district sales or use tax in addition to the state sales or use tax.
County and stadium district sales taxes are not imposed on the sale of motor vehicles, boats, recreational vehicles as
defined in sec. 340.01(48r), Wis. Stats., and aircraft, if that property must be registered or titled with the state of Wis-
consin. Rather, the motor vehicle, boat, recreational vehicle as defined in sec. 340.01(48r), Wis. Stats., or aircraft that
must be registered or titled with State of Wisconsin is subject to county and stadium district use taxes, as follows:
โข In the case of a sale (but not a lease or rental), county and stadium district use tax is due based on where the
item is to be customarily kept
โข In the case of a lease or rental requiring periodic payments, county and stadium district use tax is due based
on where the item is to be customarily kept
โข In the case of a lease or rental requiring only one payment (i.e., the lease or rental does not require periodic
payments), and:
o Lessee or renter receives possession of the item prior to March 3, 2016, county and stadium district
use tax is due based on where the item is to be customarily kept
o Lessee or renter receives possession of the item on or after March 3, 2016, county and stadium district
use tax is due based on where the lessee or renter receives possession of the item from the retailer
Example 1: Individual, a resident of Milwaukee County, purchases a new motor vehicle from Dealer, located in Ke-
nosha County. Kenosha County imposes a county sales and use tax, but is not within the baseball stadium district.
Individual takes possession of the vehicle at Dealerโs location in Kenosha County. Individual is required to register
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36
and title the motor vehicle with the State of Wisconsin. Individual will customarily keep the vehicle in Milwaukee
County.
Kenosha County sales tax does not apply to this transaction, even though the sale takes place at (i.e., is sourced to) a
location in Kenosha County, since the item sold is a motor vehicle that is required to be registered or titled with the
State of Wisconsin. Rather, county and stadium district use taxes will apply based on the location in which the motor
vehicle will be customarily kept. Milwaukee County imposes a county use tax, and Milwaukee County is within the
baseball stadium district. Therefore, Dealer must collect and remit the 0.5% Milwaukee County use tax and the 0.1%
baseball stadium district use tax, in addition to the 5.0% Wisconsin state sales tax, relating to its sale of the motor ve-
hicle to Individual.
Example 2: Company, a landscape contractor located in Monroe County and holding a Wisconsin sellerโs permit,
sells one of its used pickup trucks for $10,000 and a used chainsaw for $100, to Individual. Individual is required to
register and title the pickup truck with the State of Wisconsin. Individual receives possession of the truck and chain-
saw in Monroe County. Individual will customarily keep the pickup truck in Chippewa County.
Company is required to collect and remit the 0.5% Monroe County sales tax on its receipts from the sale of the chain
saw to Individual, in addition to the 5.0% Wisconsin state sales tax. Company is required to collect the 0.5% Chippe-
wa County use tax, in addition to the 5.0% Wisconsin state sales tax, relating to its sale of the used pickup truck to
Individual. No Monroe County sales tax applies to the sale of the pickup truck, since this is a sale of a motor vehicle
required to be registered or titled with the State of Wisconsin.
Example 3: Individual, a resident of Fond du Lac County, leases a new motor vehicle from Dealer, located in Mil-
waukee County, prior to March 3, 2016. The lease is for 36 months, and requires only one payment, to be paid at the
inception of the lease. Individual takes possession of the vehicle at Dealerโs location in Milwaukee County. Individu-
al is required to register and title the motor vehicle with the State of Wisconsin. Individual will customarily keep the
vehicle in Fond du Lac County.
The lease of the motor vehicle is a "one-pay" lease (i.e., the lease does not require periodic payments). Since the lease
period began prior to March 3, 2016, county and stadium use tax is due based on the location where the lessee will
customarily keep the motor vehicle. This location is in Fond du Lac County. Dealer is responsible for collecting and
remitting the 0.5% Fond du Lac County use tax due on the amount of the single lease payment.
Example 4: Same facts as Example 3, except that the lease period begins on or after March 3, 2016.
In this case, county and stadium use tax is due based on the location where the lessee receives possession of the motor
vehicle from the retailer. This location is in Milwaukee County. Dealer is responsible for collecting and remitting the
0.5% Milwaukee County use tax and the 0.1% baseball stadium district use tax due on the amount of the single lease
payment.
B. Snowmobiles, Trailers, Semitrailers, All-Terrain Vehicles, Utility-Terrain Vehicles, and Off-Road
Motorcycles
In general, sales of products and taxable services that take place in (i.e., are sourced to) a location in Wisconsin,
as explained in Part IX., are subject to county and/or baseball stadium sales or use taxes if the sale takes place in
(i.e., is sourced to) a county that has imposed a county sales and use tax or in part of the baseball stadium district.
Any retailer who holds or is required to hold a Wisconsin sellerโs permit or use tax registration certificate is liable
for the applicable county and stadium district sales or use tax in addition to the state sales or use tax.
When a sale takes place in a county that has not imposed a county sales and use tax or occurs in a county that is
not part of the baseball stadium district, no county or stadium district sales or use taxes apply, with one exception.
If the property being sold is a snowmobile, trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, or off-
road motorcycle, the purchaser is subject to a county use tax and/or the baseball stadium district use tax, if the
snowmobile, trailer, semi-trailer, all-terrain vehicle, utility-terrain vehicle, or off-road motorcycle will be stored,
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
37
used, or consumed by the purchaser in a county that has imposed a county sales and use tax and/or in the baseball
stadium district.
Caution: Retailers and purchasers need to keep in mind the following in regards to sales of and lease or rental
payments for snowmobiles, trailers, semitrailers, all-terrain vehicles, utility-terrain vehicles, and off-road motor-
cycles for county and stadium tax purposes. The sourcing rules in Part IX., provide:
โข The location of a sale (but not a lease or rental) of a snowmobile, trailer, semitrailer, all-terrain vehicle,
utility-terrain vehicle, or off-road motorcycle is sourced as provided in Part IX.B.1., beginning on
page 33.
โข The location of a lease or rental payment for a snowmobile, all-terrain vehicle, utility-terrain vehicle, and
off-road motorcycle is as provided in Part IX.B.2, on page 34.
โข The location of a lease or rental payment for a trailer or semitrailer depends on whether the trailer or sem-
itrailer is "transportation equipment," as defined on page 35.
o A lease or rental payment for a trailer or semitrailer that is not "transportation equipment" is sourced
as provided in Part IX.B.3., on page 34.
o A lease or rental payment for a trailer or semitrailer that is "transportation equipment" is sourced as
provided in Part IX.B.4., on page 34.
C. Sales By Persons Not Holding and Not Required to Hold a Sellerโs Permit or Use Tax Registration
Certificate
1. In the case of a sale of a motor vehicle, boat, recreational vehicle as defined in sec. 340.01(48r), Wis. Stats.,
or aircraft by a person who does not hold and is not required to hold a Wisconsin sellerโs permit or use tax
registration certificate, no tax will be collected by the seller at the time of sale. Rather, the person purchasing
the motor vehicle, boat, recreational vehicle as defined in sec. 340.01(48r), Wis. Stats., or aircraft must pay
the applicable Wisconsin state, county and stadium use taxes prior to registering or titling the item in Wiscon-
sin. The applicable county and stadium use taxes apply as explained in Part X.A.
2. In the case of a sale of a snowmobile, trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, or off-road
motorcycle by a person who does not hold and is not required to hold a Wisconsin sellerโs permit or use tax
registration certificate, no tax will be collected by the seller at the time of sale. Rather, the person purchasing
the snowmobile, trailer, semitrailer, all-terrain vehicle, utility-terrain vehicle, or off-road motorcycle must pay
the applicable Wisconsin state, county and stadium use taxes prior to registering or titling the item in Wiscon-
sin. The applicable county and stadium use taxes apply as explained in Part X.B.
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38
Listed below are the 64 counties that have adopted the 0.5% county tax as of May 1, 2017, and the effective date
for each countyโs tax.
Counties With County Tax
County
Effective
Date County
Effec-
tive
Date
Adams (01)
1/1/94
Lincoln (35)
4/1/87
Ashland (02)
4/1/88
Marathon (37)
4/1/87
Barron (03)
4/1/86
Marinette (38)
10/1/01
Bayfield (04)
4/1/91
Marquette (39)
4/1/89
Buffalo (06)
4/1/87
Milwaukee (40)
4/1/91
Burnett (07)
4/1/89
Monroe (41)
4/1/90
Chippewa (09)
4/1/91
Oconto (42)
7/1/94
Clark (10)
1/1/09
Oneida (43)
4/1/87
Columbia (11)
4/1/89
Ozaukee (45)
4/1/91
Crawford (12)
4/1/91
Pepin (46)
4/1/91
Dane (13)
4/1/91
Pierce (47)
4/1/88
Dodge (14)
4/1/94
Polk (48)
4/1/88
Door (15)
4/1/88
Portage (49)
4/1/89
Douglas (16)
4/1/91
Price (50)
1/1/93
Dunn (17)
4/1/86
Richland (52)
4/1/89
Eau Claire (18)
1/1/99
Rock (53)
4/1/07
Florence (19)
7/1/06
Rusk (54)
4/1/87
Fond du Lac (20)
4/1/10
St. Croix (55)
4/1/87
Forest (21)
4/1/95
Sauk (56)
4/1/92
Grant (22)
4/1/02
Sawyer (57)
4/1/87
Green (23)
1/1/03
Shawano (58)
4/1/90
Green Lake (24)
7/1/99
Sheboygan (59)
1/1/17
Iowa (25)
4/1/87
Taylor (60)
7/1/99
Iron (26)
4/1/91
Trempealeau (61)
10/1/95
Jackson (27)
4/1/87
Vernon (62)
1/1/97
Jefferson (28)
4/1/91
Vilas (63)
4/1/88
Juneau (29)
4/1/92
Walworth (64)
4/1/87
Kenosha (30)
4/1/91
Washburn (65)
4/1/91
Kewaunee (31)
4/1/17
Washington (66)
1/1/99
LaCrosse (32)
4/1/90
Waupaca (68)
4/1/89
Lafayette (33)
4/1/01
Waushara (69)
4/1/90
Langlade (34)
4/1/88
Wood (71)
1/1/04
XI. OTHER
A. Credit for Tax Paid in Another State
1. Credit allowed
If a motor vehicle is purchased outside Wisconsin, a credit is allowed against the combined Wisconsin state
and local use taxes due for the combined state and local sales or use taxes legally owed and paid to another
state or the District of Columbia. The amount of the credit may not exceed the combined Wisconsin state and
local use taxes due.
Example 1: Individual is a resident of Wisconsin. Individual purchased a motor vehicle in another state for
$10,000 and properly paid state and local sales taxes of $500 to the other state in which the vehicle was pur-
chased. Individual will customarily keep the motor vehicle in Burnett County. Wisconsin state and county
use taxes imposed are $550 ($10,000 X 5.5%). Individual may claim a credit of $500 for state and local sales
taxes paid to another state, leaving a net use tax liability of $50. The $50 liability is allocated as follows:
Wisconsin state use tax of $45.45 ($50 X (.050/.055)), Burnett County use tax of $4.55 ($50 X (.005/.055)).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
39
Example 2: Assume the facts as in Example 1, except that the combined state and local sales tax paid to the
other state is $650. Since the combined state and local sales taxes paid to the other state equals or exceeds
the combined Wisconsin state and local use taxes imposed, the net Wisconsin state and local use taxes due
are $0. The credit allowed for sales or use taxes paid to another state cannot exceed the amount of the Wis-
consin state and local use taxes imposed.
2. Credit not allowed
Credit is not allowed for taxes paid to another country.
B. Refunds Under โLemon Lawโ
The law governing repair, replacement, and refund under a new motor vehicle warranty, commonly called the
โlemon law,โ allows a consumer to return a motor vehicle to its manufacturer for a refund of all or a portion of the
purchase price, if the motor vehicle has certain conditions or defects which remain after a reasonable attempt to
repair the motor vehicle. The โlemon lawโ also allows a consumer to recover the sales tax from the manufacturer
for a contract to purchase entered into on or after April 22, 1986, or to collect a sales tax refund directly from the
Department of Revenue whenever the manufacturer fails to refund the sales tax.
C. Rental Vehicle Fee
1. General
A 5% fee is imposed on the rental of the following vehicles in Wisconsin for a period of 30 days or less by es-
tablishments primarily engaged in the short-term rental of vehicles without drivers:
โข Type 1 automobiles โ Motor vehicles designed and used primarily for carrying persons but which do not
come within the definition of motor bus, motor cycle, moped, or motor bicycle, under sec. 340.01, Wis.
Stats.
โข Recreational vehicle - A vehicle that is designed to be towed upon a highway by a motor vehicle, that is
equipped and used, or intended to be used, primarily for temporary or recreational human habitation, that
has walls of rigid construction, and that does not exceed 45 feet in length.
โข Motor homes โ Motor vehicles designed to be operated upon a highway for use as a temporary or recrea-
tional dwellings and having the same internal characteristics and equipment as a mobile home.
โข Camping trailers โ Vehicles with a collapsible or folding structure designed for human habitation and
towed upon a highway by a motor vehicle.
A rental is in Wisconsin if the lessee takes possession of the motor vehicle from the lessor in Wisconsin.
An โestablishment primarily engaged in the short-term rental of vehicles without driversโ is a business loca-
tion whose primary business is the rental of vehicles for periods of 30 days or less. A locationโs primary
business may be determined by comparing the gross receipts from each activity at a location for the previous
taxable year (e.g., sales, service, rentals, etc.) to the total gross receipts at that location for the previous taxa-
ble year. The activity with the greatest percentage of gross receipts is the primary business.
Example: Company A has two locations. At one location, Company A operates a motor vehicle dealership. At
the other location, Company A operates a rental car business, only renting Type 1 automobiles for periods of
30 days or less. The percentages of total gross receipts for the previous taxable year at the motor vehicle deal-
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40
ership are as follows: Sales (45%), services (35%), rentals of Type 1 automobiles for 30 days or less (10%),
and rentals of vehicles for more than 30 days (10%).
Since the motor vehicle dealership locationโs primary business is sales, it is not an โestablishment engaged
primarily in the short-term rental of vehicles.โ Therefore, taxable receipts from rentals of vehicles for 30 days
or less at that location are not subject to the 5% rental vehicle fee. Taxable receipts from rentals of vehicles at
its rental car business location are subject to the 5% rental vehicle fee.
The amount the lessor is required to collect from the purchaser for the 5% state vehicle rental fee is not in-
cluded as part of the receipts from the rental that are subject to Wisconsin sales and use tax.
Example: Company, located in LaCrosse, rents to Customer an automobile for one week. The rental is $200
plus taxes and fees. The total charge to Customer is as follows:
Rental charge $200.00
Sales Tax (5.5% x $200) $ 11.00
Vehicle rental fee (5% x $200) $ 10.00
Total $221.00
2. Exemptions
The following exemptions apply to the rental vehicle fee:
โข Rerentals
Example: Company A leases an automobile in Wisconsin from Company B for 30 days or less. Compa-
ny A will use the automobile solely to lease to Individual in Wisconsin.
The charge by Company B to Company A for the lease of the automobile is not subject to the 5% rental
vehicle fee because it is for rerental. Company A should provide Company B with a fully completed ex-
emption certificate claiming resale (Form S-211). The charge by Company A to Individual C is subject to
the 5% rental vehicle fee if Company A is an establishment primarily engaged in the short-term rental of
vehicles without drivers.
โข Rentals as a service or repair replacement vehicle
Example: Individual takes his automobile to Company for repair. For a fee of $20 per day, Company
provides Individual with an automobile to use while his automobile is being repaired. Individual picks up
the automobile in Wisconsin and uses it for five days.
The charge by Company to Individual for the use of the automobile is not subject to the 5% rental vehicle
fee. Company should obtain Form RV-207: Certificate of Exemption for Rental Vehicles, from the cus-
tomer.
โข Rentals to the federal government
โข Rentals to organizations under sec. 77.54(9a), Wis. Stats., including any federally recognized American
Indian tribe or band, a Wisconsin state agency, county, city, village, town, public school, or school district
and nonprofit organizations that hold a Certificate of Exempt Status (CES) issued by the Wisconsin De-
partment of Revenue
โข Rentals by any public or private elementary or secondary school exempt from Wisconsin income or fran-
chise taxes, including school districts
Note: Exemptions, other than those listed above, that apply for Wisconsin sales or use tax purposes
(e.g., common or contract carriage) do not apply for the rental vehicle fee.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
41
3. Filing Returns
The rental vehicle fee is reported on Form RV-012: Wisconsin Rental Vehicle Fee Return. Note: Do not report
the rental vehicle fee on a Wisconsin sales and use tax return, Form ST-12.
D. Limousine Fee
1. General
A 5% fee is imposed on the charge for providing a limousine with a driver in Wisconsin.
A limousine with driver is considered provided in Wisconsin if the customer is picked up by the limousine
provider in Wisconsin.
Example 1: Company is hired to pick up a customer at his home in Madison, Wisconsin and take him by lim-
ousine to OโHare International Airport in Chicago. The charge for limousine service from Madison to Chicago
is subject to the 5% limousine fee.
Example 2: Company is hired to pick up a customer at OโHare International Airport in Chicago and take him
by limousine to his home in Madison, Wisconsin. The charge for limousine service from Chicago to Madison
is not subject to the 5% limousine fee.
Example 3: Company is hired by Individual to provide limousine service. The driver will pick up Individual
at her home in Milwaukee, Wisconsin, take her by limousine to a theater performance in Chicago, Illinois, and
after the performance, return her to her home in Wisconsin. The charge for limousine service is subject to the
5% limousine fee.
โLimousineโ means a passenger automobile that has a capacity of 10 or fewer persons, excluding the driver;
that has a minimum of five seats behind the driver; that is operated for hire on an hourly basis under a prear-
ranged contract for the transportation of passengers on public roads and highways along a route under the
control of the person who hires the vehicle and not over a defined regular route.
โLimousineโ does not include taxicabs, hotel or airport shuttles or buses, buses employed solely in transport-
ing school children or teachers, vehicles owned and operated without charge or remuneration by a business
entity for its own purposes, vehicles used in car pools or van pools, public agency vehicles that are not oper-
ated as a commercial venture, vehicles operated as part of the employment transit assistance program under
sec. 106.26, Wis. Stats., ambulances, or any vehicle that is used exclusively in the business of funeral direct-
ing.
Example 1: Company owns a limousine that it provides with a driver at the request of a customer. Rather
than charging a per hour fee, a customer with a known destination is charged a flat fee. The flat fee has been
determined, in part, based on experience of how long the trip will take. Company is considered to be provid-
ing limousine service subject to the 5% fee, even though it does not charge the customer by the hour.
Example 2: Company owns several vehicles which it uses to provide limousine service to customers. For
transporting one person, Company will generally use a luxury sedan, which seats three behind the driver.
The charge for providing the luxury sedan with a driver is not subject to the 5% limousine fee. The luxury se-
dan is not a โlimousineโ because it seats less than five behind the driver.
Example 3: Company provides limousine service to hotel customers who wish to travel from their hotel to
the airport and vice versa. Company does not have a set route it follows nor does it provide this service at set
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42
times per day. Company may provide service to that hotel on three days in one week and may not have anoth-
er customer from that hotel for several weeks.
The limousine with driver provided by Company is not an airport or hotel shuttle because limousine services
are not provided at frequent regular intervals over a set route. Therefore, charges to the hotel or customer for
the limousine with driver are subject to the 5% limousine fee.
2. Exemptions
The following exemptions apply to the limousine fee:
โข Rentals to the federal government
โข Rentals to organizations under sec. 77.54(9a), Wis. Stats., including any federally recognized American
Indian band or tribe, a Wisconsin state agency, county, city, village, town, public school, or school district
and nonprofit organizations that hold a Certificate of Exempt Status (CES) issued by the Wisconsin De-
partment of Revenue. (See List at Part VIII.D.)
โข Rentals by any public or private elementary or secondary school exempt from Wisconsin income or fran-
chise taxes, including school districts
3. Filing Returns
The limousine fee is reported on Form RV-012: Wisconsin Rental Vehicle Fee Return. Note: Do not report the
limousine fee on a Wisconsin sales and use tax return, Form ST-12.
E. Local Exposition District Rental Car Tax
Information on the 3% local exposition district rental car tax is available in Wisconsin Publication 410, Local Ex-
position Taxes.
XII. RECORD KEEPING
A. General Records to Keep
If you are required to file sales and use tax returns or consumer use tax returns, you must keep adequate records of
business transactions to enable you and the Department of Revenue to determine the correct tax due. The required
records include complete and accurate records of beginning and ending inventories, purchases, sales, canceled
checks, receipts, invoices, bills of lading, and all other documents and books of account pertaining to the business.
See sec. Tax 11.92, Wis. Adm. Code, โRecords and record keepingโ for more information.
If you make retail sales and at the same time are engaged in some other nontaxable business, occupation, or pro-
fession, you must keep records to show separately the transactions used in determining the sales and use tax due.
If separate records are not kept, the tax may be imposed upon the total sales from all of your business operations.
B. Records to Keep โ Exempt Sales, Exemption Certificates
If you claim that part or all of your retail sales of taxable products or services are exempt from sales and use tax,
you are required to keep a record of the name and address of the person to whom the exempt sale was made, the
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
43
date of sale, the article sold, the amount of exemption, and the reason that the sale was exempt from tax. This rec-
ord must be signed by the purchaser.
The reason for keeping such records is that the sales and use tax law provides that the sales price from all sales of
products and taxable services is subject to the tax until the contrary is established. The seller has the burden of
proving a sale of a product or taxable service is exempt, unless the seller takes a fully completed exemption certif-
icate (or other information as described in Part XII.B.3.) from the purchaser indicating the product or taxable
service being purchased is for resale or is otherwise exempt.
A seller or lessor who accepts a fully completed exemption certificate from the purchaser within 90 days of the
sale is relieved of any liability for payment of tax upon transactions covered by the certificate.
If a retailer regularly sells the same kind of item to the same customer, a certificate known as a โcontinuous certif-
icate,โ which is good indefinitely, may also be used for future transactions. Although continuous exemption
certificates do not expire and are not required to be renewed at any prescribed interval, such certificates should be
renewed at reasonable intervals in case of a business change, registration number change, or discontinuance of the
specific business claiming the exemption. The seller should periodically review exemption certificates on file to
ascertain that the person claiming the exemption is the person who furnished the certificate.
If a purchaser provides an exemption certificate indicating the product or taxable service purchased will be used
for activities or under circumstances which make the purchase exempt from the sales tax or for resale, and the
product or service is subsequently used by the purchaser in a manner that makes it ineligible for exemption from
tax, the purchaser is liable for payment of the applicable sales or use tax. A purchaser who uses an exemption cer-
tificate in a manner that is prohibited by or inconsistent with Wisconsin law or who provides incorrect
information to a seller relating to an exemption being claimed will also be subject to a penalty of $250 for each
invoice or bill of sale related to the prohibited or inconsistent use to which the incorrect information applies.
Three common reasons that sales of products or taxable services may be exempt are as follows:
1. The purchaser will resell the product or taxable service in the ordinary course of its business.
The seller should obtain a completed Form S-211, Wisconsin Sales and Use Tax Exemption Certificate, or
Form S-211-SST, Streamlined Sales and Use Tax Exemption Certificate, from the purchaser.
2. The use to be made of the product or taxable service purchased is exempt. For example, the purchase of a mo-
tor truck by a common carrier who will use the motor truck exclusively as a common carrier is exempt.
The seller should obtain a completed Form S-211, Wisconsin Sales and Use Tax Exemption Certificate, or
Form S-211-SST, Streamlined Sales and Use Tax Exemption Certificate, from the purchaser.
3. The purchasing organization is an exempt entity, such as a Wisconsin public school, Wisconsin municipality,
or a federal governmental unit. Note: All invoices and billings must be made in the name of the exempt or-
ganization.
โข Sales to a federal or Wisconsin governmental unit, federally recognized American Indian tribe or band in
Wisconsin, Wisconsin municipality, or Wisconsin public school should be supported by one of the fol-
lowing:
a. A purchase order or similar written document identifying the governmental unit, tribe, or band as the
purchaser.
b. Form S-211 or Form S-211-SST.
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44
c. Recording the federal or Wisconsin governmental unitโs or Tribeโs Certificate of Exempt Status
(CES) number on the invoice.
โข Sales to nonprofit organizations organized and operated exclusively for religious, charitable, scientific or
educational purposes, or for the prevention of cruelty to children or should be supported by one of the fol-
lowing:
a. Form S-211 or Form S-211-SST.
b. Recording the organizationโs Certificate of Exempt Status (CES) number on the invoice.
Nonprofit organizations organized and operated exclusively for religious, charitable, scientific or educational pur-
poses, or for the prevention of cruelty to children or animals, may apply on Form S-103 Application for Wisconsin
Sales and Use Tax Certificate of Exempt Status (CES), to the Department of Revenue for a Certificate of Exempt
Status (CES) and, if approved, will be issued a CES number by the department.
Note: See sec. Tax 11.14, Wis. Adm. Code (Appendix H) for a discussion of authorized exemption certificates and
a description of requirements for alternative certificates.
XIII. QUESTIONS OR ADDITIONAL INFORMATION
A. Department of Revenue Assistance
If you are unable to find an answer to your question about sales and use taxes, email, write, or call the department.
Visit our website . . . revenue.wi.gov
Email . . . DORSalesandUse@wisconsin.gov
Write . . . Wisconsin Department of Revenue
PO Box 8946, Mail Stop 5-77
Madison WI 53708-8946
Telephone . . . (608) 266-2776
Fax . . . (608) 267-1030
You may also contact any of the Department of Revenue offices. For a listing of offices and their current hours,
please see the departmentโs website at revenue.wi.gov/Pages/FAQS/ise-address.aspx.
XIV. AVOIDING COMMON ERRORS
1. Indicate the out-of-state address on invoices or Forms e-MV11 of nonresidents purchasing motor vehicles without
Wisconsin sales or use tax who will not use the motor vehicles in Wisconsin except for removal from Wisconsin
(see Part V. F.).
2. Indicate the delivery location on sales invoices or Forms e-MV11 for sales to Native Americans (see Part V. K .).
3. Charge sales tax on warranties, whether charged separately or with the sale of a motor vehicle, if the related motor
vehicle was subject to tax (see Part II.A.3.).
4. Record a nonprofit organizationโs CES number on the invoice or Form e-MV11 for exempt sales to nonprofit or-
ganizations. The motor vehicle must be titled in the nonprofit organizationโs name only (see Part V. D .).
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45
5. Sales to persons who will donate the motor vehicle are taxable, regardless of contest rules, unless the donor is an
exempt entity (see Part IV.D). Sales to persons who will auction the motor vehicle are not subject to tax because
the property is for resale (see Part V. A .)
6. Manufacturerโs rebates and coupons do not reduce taxable receipts regardless of whether the customer applies the
rebate as a reduction to the purchase price of the motor vehicle or receives cash (see Part II.A.6.).
7. Sales of motor vehicles delivered in Wisconsin to corporations incorporated outside Wisconsin are exempt, if im-
mediately removed from Wisconsin (see Part V. F.).
8. Charges to employees for personal use of motor vehicles are taxable (see Part IV.E.).
9. All exempt sales must be supported by exemption certificates except for sales to exempt entities and governmen-
tal units where recording of a CES number on the invoice is sufficient (see Part XII.B.).
10. The deductible portion charged to a customer for services performed under an extended warranty or service con-
tract is taxable (see Part V. W.).
11. Charges for parts and repairs to an insurance company under an insurance plan are taxable (see Part IV.K.).
12. The exemption for common or contract carriers does not apply to motor vehicles registered as automobiles, tow
trucks used for purposes other than or in addition to towing for hire, and trucks used to haul garbage or snow (see
Part V. C .).
13. Salvage companies who pay the amount owed by a motor vehicle dealerโs customer for services performed on a
vehicle in exchange for the vehicleโs title cannot issue an exemption certificate claiming resale to the motor vehi-
cle dealer for purchase of the services performed. The charge by the motor vehicle dealer for the services
performed is subject to Wisconsin sales or use tax.
14. County tax and/or stadium tax is imposed on taxable repairs if the motor vehicle is delivered to the customer in a
taxable county and/or in the baseball stadium district (see Part X.).
15. County tax and/or stadium tax is imposed on sales of motor vehicles customarily kept in a taxable county and/or
the baseball stadium district even if the dealer is not located in a taxable county and/or in the baseball stadium dis-
trict (see Part X.A.).
16. County and/or stadium tax is charged on the lease or rental of a motor vehicle that is (1) transportation equipment
or (2) only requires one payment, if the customer takes possession of the motor vehicle in a taxable county and/or
in the baseball stadium district. See Parts IX.B.3. and 4.
17. County and/or stadium tax is charged on the lease or rental requiring more than one payment, of a motor vehicle
that is not transportation equipment, if the primary location of the motor vehicle, as indicated by an address for
the motor vehicle that is provided by the lessee and that is available to the lessor in records that the lessor keeps in
the ordinary course of the lessorโs business, if the use of such address ins not in bad faith, is in a taxable county
and/or in the baseball stadium district. See Part IX.B.3.
18. The cost of a motor vehicle used for business purposes (e.g., towing, service vehicle, or any motor vehicle proper-
ly capitalized on the balance sheet of the dealership and not held for sale) is subject to use tax (see Part VIII.B.).
19. A trade-in allowance may not be taken for a service vehicle put back in inventory in exchange for another motor
vehicle (see Part II.B.1.e.).
20. Charges to a dealership for washing motor vehicles and demo motor vehicles that will be resold are not taxable
provided the dealership gives the service provider a properly completed exemption certificate claiming resale.
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Charges to a dealership for washing service vehicles and other properly capitalized vehicles are taxable (see
Part VII.).
21. Motor vehicles donated from resale inventory are not taxable if the donation is to an exempt entity (see Part V. D .).
22. Items used in repairing a motor vehicle that are not transferred to the customer (tools, rags, sandpaper, cleaners,
etc.) are taxable (see Part VIII.A.).
23. The cost of parts used in repairing service vehicles and other motor vehicles capitalized on the dealershipโs bal-
ance sheet are subject to tax (see Part VIII.A.).
24. The cost of advertising items given away (brochures, key chains, etc.) are subject to tax.
25. A motor vehicle used to pick up parts, mail, etc., and as a rental vehicle is subject to use tax (see Part VIII.C.).
26. Items purchased from out-of-state vendors where a sales tax has not been charged that are used in a taxable man-
ner are subject to use tax (office supplies, office equipment, etc.) (see Part I.C.).
27. When reporting use tax on your sales and use tax return, keep a separate schedule indicating vendor, invoice
number, item purchased, and purchase price for each item subject to use tax with your copy of the sales and use
tax return filed.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
47
APPENDIX A
Motor Vehicle Lease Dealers โ "Trade-Ins" and "Turn-Ins"
NOTE: This Tax Release was originally published in Wisconsin Tax Bulletin 177 - (October 2012)
Statutes: Sections 77.51(12m)(b)5. and (15b)(b)5. and 77.54(8), Wis. Stats. (2009-10)
Wis. Adm. Code: Section Tax 11.83(2)(a), Wis. Adm. Code (November 2010 Register)
Background: It is common for a person who is purchasing or leasing a new motor vehicle to trade in his or her old
vehicle to a motor vehicle dealer. This tax release explains the sales and use tax treatment of trading in one vehicle for
another. Examples include transactions where vehicles are leased.
Wisconsin law allows a deduction from the sales price of the sale of a motor vehicle for the amount of the trade-in
allowed for another motor vehicle in the same transaction. Section 77.51(12m)(b)5. and (15b)(b)5., Wis. Stats.
(2009-10), provide that โpurchase priceโ and โsales price,โ respectively, do not include the following:
โIn all transactions in which an article of tangible personal property โฆ is traded toward the purchase
of โฆ propertyโฆ the amount of the purchase [sales] price that represents the amount allowed for the โฆ
propertyโฆ tradedโฆ.โ
Section 77.54(8), Wis. Stats. (2009-10), provides an exemption from Wisconsin sales and use taxes for โ[c]harges for
insurance โฆ where such charges are separately set forth upon the invoice given by the seller to the purchaser.โ
Therefore, when a lease agreement includes a separate charge for insurance, the insurance charge is not taxable. GAP
insurance and GAP waiver charges are not taxable.
Trade-Ins
If a motor vehicle is traded in for a motor vehicle of greater value, the amount subject to tax is the difference between
the full purchase price and the amount allowed for the motor vehicle traded in. If the motor vehicle is traded in for a
motor vehicle of lesser value, and there is no other consideration given, the amount subject to tax is zero.
In order to reduce the sales price for a trade-in amount, the trade-in must occur in the same transaction as the purchase
(i.e., the vehicle must be traded-in to the same party that sells the new vehicle).
Lease โTrade-Inโ
A lessee of a motor vehicle may replace his or her motor vehicle by purchasing or leasing another motor vehicle and
"trading in" his or her leased vehicle. If the new dealer/lessor chooses to purchase that motor vehicle, the new
dealer/lessor may purchase the motor vehicle that its customer "trades in" from the lessor of the "traded in" vehicle
using its customer's option to purchase.
When a lessee โtrades-inโ a leased motor vehicle on the purchase or lease of another motor vehicle, there are two
transactions that occur. One is the sale of the leased motor vehicle (with permission of the lessee if the lessee has the
option to purchase or at the discretion of the lessor if the lessee does not have the option to purchase) from the lessor
to the dealer at the purchase option amount price (or the subsequently negotiated price). The other is the sale or lease
of the replacement vehicle to the dealerโs customer. Because there are two transactions, the seller or lessor of the
replacement vehicle may not reduce its taxable sales price by the amount allowed for a โtrade-in.โ
Note: Examples 9 and 19 illustrate how the sales price may be reduced by the amount of positive equity allowed as a
discount.
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Lease โTurn-Inโ
A lease โturn-inโ occurs when the seller or lessor of the replacement vehicle receives the previously leased vehicle
and facilitates the return of the vehicle to the original leasing company by doing the following:
โข Remitting the payoff amount and related tax to the original leasing company on behalf of the customer.
โข Collecting the payoff amount and related tax from the customer on behalf of the original leasing company.
In a lease "turn-in," the seller or lessor is not accepting a trade-in towards the purchase of the replacement vehicle.
Rather, the seller or lessor is merely facilitating the return of the leased vehicle to the original lessor. The seller or
lessor of the replacement vehicle may not reduce its taxable sales price for a "turn-in."
Positive Equity
When total payments made by a lessee or other party throughout the course of the lease are more than the agreed upon
amount, it is considered "positive equity." A lease agreement can result in positive equity if:
โข Insurance settlement is greater than the amount owed by the lessee.
โข Additional payments or pre-payments are made by the lessee.
Negative Equity
When a lessee owes an additional amount to a leasing company at the termination of a lease, it is considered negative
equity. A lease agreement can result in negative equity if:
โข Lease is terminated prior to the end of the lease agreement (e.g., lessee owes a lease termination fee to lessor).
โข Excess mileage.
Examples of Trade-Ins and โTurn-Insโ With Respect to Motor Vehicle Leases
Type of
Transaction
No
Trade-In
Owned
Trade-
In, No
Lien
Owned
Trade-
In, Lien
< Trade-
In Value
Owned
Trade-
In, Lien
> Trade-
In Value
Lease โTurn-Inโ Leased โTrade-Inโ
No
Lease
Equity
Positive
Lease
Equity
Negative
Lease
Equity
No
Lease
Equity
Positive
Lease
Equity
Negative
Lease
Equity
Sale of
Replacement
Vehicle
Example
1
Example
2
Example
3
Example
4
Example
5
Example
6
Example
7
Example
8
Example
9
Example
10
Lease of
Replacement
Vehicle
Example
11
Example
12
Example
13
Example
14
Example
15
Example
16
Example
17
Example
18
Example
19
Example
20
NOTE 1 โ Lease โTurn-Inโ: If Customer A โturns inโ a leased vehicle (Examples 5-7 and 15-17), the examples
assume that Dealer B (or Leasing Company Y) handles the administration of the turn-in with Leasing Company C. If
Customer A pays a โpayoff amountโ to Leasing Company C, the payoff is subject to tax as a lease payment (i.e.,
amount paid to fulfill the lease contract).
NOTE 2 โ Lease โTrade-Inโ: If Customer A โtrades inโ a leased vehicle (Examples 8-10 and 18-20), the examples
assume that Leasing Company C sells the automobile to Dealer B (or Leasing Company Y), rather than to
Customer A. Dealer B (or Leasing Company Y) should provide Leasing Company C with an exemption certificate
claiming resale if Dealer B (or Leasing Company Y) will sell or lease the automobile in its regular course of business.
If Customer A pays a โpayoff amountโ to Leasing Company C, the payoff is subject to tax as a lease payment (i.e.,
amount paid to fulfill the lease contract).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
49
Example 1 โ Sale of automobile with no trade-in
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A does not trade in another vehicle when purchasing the automobile.
โข Dealer Bโs taxable receipts are $20,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B $20,000
Taxable Sales Price $20,000
Example 2 โ Sale of automobile with owned trade-in; no lien on trade-in
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A owns his old automobile and has no lien on the automobile.
โข Customer A pays $12,000 to Dealer B.
โข Dealer Bโs taxable receipts are $12,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: Trade-in ($8,000)
Subtractions: Trade-in ($8,000)
Amount Paid to Dealer B $12,000
Taxable Sales Price $12,000
Example 3 โ Sale of automobile with owned trade-in; lien less than trade-in amount
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A has a lien on his old automobile for $6,000.
โข Customer A pays $18,000 to Dealer B.
โข Dealer Bโs taxable receipts are $12,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lien on trade-in $6,000
Additions: 0
Subtractions: Trade-in ($8,000)
Subtractions: Trade-in ($8,000)
Amount Paid to Dealer B $18,000
Taxable Sales Price $12,000
Example 4 โ Sale of automobile with owned trade-in; lien greater than trade-in amount
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A has a lien on his old automobile for $10,000.
โข Customer A pays $22,000 to Dealer B.
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โข Dealer Bโs taxable receipts are $12,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lien on trade-in $10,000
Additions: 0
Subtractions: Trade-in ($8,000)
Subtractions: Trade-in ($8,000)
Amount Paid to Dealer B $22,000
Taxable Sales Price $12,000
Example 5 โ Sale of automobile with lease โturn-inโ; no lease equity
โข Customer A leases an automobile from Leasing Company C, with an option to return the automobile at the end of
the lease period (i.e., no additional amount is owed by Customer A to Leasing Company C).
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โturns-inโ his old leased automobile to Dealer B, who facilitates the return of the automobile to
Leasing Company C.
โข Customer A pays $20,000 to Dealer B.
โข Dealer Bโs taxable receipts are $20,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B $20,000
Taxable Sales Price $20,000
Example 6 โ Sale of automobile with lease โturn-inโ; positive lease equity
โข Customer A leases an automobile from Leasing Company C, with an option to return the automobile at the end of
the lease period.
โข Customer A has $2,000 positive lease equity at the end of the lease.
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โturns-inโ his old leased automobile to Dealer B, who facilitates the return of the automobile to
Leasing Company C.
โข Leasing Company C pays $2,000 positive equity to Dealer B on behalf of Customer A. At the option of Custom-
er A, Dealer B applies the $2,000 to Customer Aโs purchase of the new automobile.
โข Dealer B reduces the selling price of the new automobile by $2,000 for the positive equity received.
โข Customer A pays $18,000 to Dealer B.
โข Dealer Bโs taxable receipts are $20,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B:
From Customer A $18,000
From Leasing Company C $2,000
Total Amount Paid to Dealer B $20,000
Taxable Sales Price $20,000
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
51
Example 7 โ Sale of automobile with lease โturn-inโ; negative lease equity
โข Customer A leases an automobile from Leasing Company C, with an option to return the automobile at the end of
the lease period.
โข Customer A has $2,000 negative lease equity at the end of the lease.
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โturns-inโ his old leased automobile to Dealer B, who facilitates the return of the automobile to
Leasing Company C.
โข On behalf of Customer A, Dealer B pays Leasing Company C $2,000 in settlement of the lease, plus sales tax on
the $2,000. There is no exemption for Leasing Company C's receipts in settlement of the lease.
โข Dealer B increases the amount collected from Customer A by $2,000, plus tax, to reimburse itself for the negative
equity payment to Leasing Company C.
โข Customer A pays $22,000 (plus tax) to Dealer B.
โข Dealer Bโs taxable receipts from the sale of the automobile are $20,000. Leasing Company C's taxable re-
ceipts are $2,000 from the lease settlement. Dealer B should turn over the sales tax collected from
Customer A on the $2,000 lease settlement to Leasing Company C.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Negative Equity $2,000
Additions: Negative Equity $2,000
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B $22,000
Taxable Sales Price
Dealer B taxable receipts are $20,000.
Leasing Company C's taxable receipts are $2,000.
NOTE: Leasing Company Cโs taxable receipts for the lease settlement are $2,000, regardless of whether Customer A
or Dealer B pays Leasing Company C the $2,000.
Example 8 โ Sale of automobile with lease โtrade-in,โ lease purchase option equal to โtrade-inโ amount result-
ing in no net equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โtrades-inโ his old leased automobile towards his purchase of the new automobile from Dealer B and
receives a โtrade-in allowanceโ of $8,000.
โข Dealer B pays the $8,000 lease payoff to Leasing Company C and provides Leasing Company C with an exemp-
tion certificate claiming resale.
โข Customer A pays $20,000 to Dealer B.
โข Dealer Bโs taxable receipts are $20,000. Dealer Bโs taxable receipts may not be reduced for the โtrade-inโ
since Dealer Bโs sale to Customer A and Leasing Company Cโs sale to Dealer B are separate transactions.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B $20,000
Taxable Sales Price $20,000
NOTE: If Customer A paid the $8,000 to Leasing Company C (instead of to Dealer B), Leasing Company Cโs taxable
receipts would include the $8,000 purchase option. Customer A could use its automobile as a trade-in, which would
reduce Dealer Bโs selling price by $8,000. The net result would be the same. A total of $20,000 would be subject to
tax: the $8,000 paid by Customer A to Leasing Company C and the $12,000 paid by Customer A to Dealer B ($20,000
selling price - $8,000 trade-in allowance).
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Example 9 โ Sale of automobile with lease โtrade-in,โ lease purchase option less than โtrade-inโ amount result-
ing in positive lease equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โtrades-inโ his old leased automobile towards its purchase of the new automobile from Dealer B and
receives a โtrade-in allowanceโ of $10,000.
โข Dealer B pays the $8,000 lease payoff to Leasing Company C and provides Leasing Company C with an exemp-
tion certificate claiming resale.
โข Dealer B, as a discount, reduces the selling price of the new automobile by $2,000 for the difference between the
value of the leased automobile and the lease payoff.
โข Customer A pays $18,000 to Dealer B.
โข Dealer Bโs taxable receipts are $18,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: 0
Additions: 0
Subtractions: Positive Equity ($2,000)
Subtractions: Discount Allowed ($2,000)
Amount Paid to Dealer B $18,000
Taxable Sales Price $18,000
NOTE: If Customer A paid the $8,000 to Leasing Company C (instead of to Dealer B), Leasing Company Cโs taxable
receipts would include the $8,000 purchase option. Customer A could use its automobile as a trade-in, which would
reduce Dealer Bโs selling price by $10,000. The net result would be the same. A total of $18,000 would be subject to
tax: the $8,000 paid by Customer A to Leasing Company C and the $10,000 paid by Customer A to Dealer B ($20,000
selling price - $10,000 trade-in allowance).
Example 10 โ Sale of automobile with lease โtrade-in,โ lease purchase option more than โtrade-inโ amount
resulting in negative lease equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Dealer B sells Customer A an automobile for $20,000.
โข Customer A โtrades-inโ his old leased automobile towards its purchase of the new automobile from Dealer B and
receives a โtrade-in allowanceโ of $6,000.
โข Dealer B pays the $8,000 payoff to Leasing Company C and provides Leasing Company C with an exemption
certificate claiming resale.
โข Dealer B adjusts the amount due from Customer A for the new automobile by $2,000 to account for the negative
equity.
โข Customer A pays $22,000 to Dealer B.
โข Dealer Bโs taxable receipts are $22,000.
Calculation of Amount Paid to Dealer B
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Negative Equity $2,000
Additions: Negative Equity $2,000
Subtractions: 0
Subtractions: 0
Amount Paid to Dealer B $22,000
Taxable Sales Price $22,000
NOTE: If Customer A paid the $8,000 to Leasing Company C in settlement of the lease (instead of to Dealer B),
Leasing Company Cโs taxable receipts would include the $8,000 lease settlement. Customer A could use its
automobile as a trade-in, which would reduce Dealer Bโs selling price by $6,000. The net result would be the same. A
total of $22,000 would be subject to tax: the $8,000 paid by Customer A to Leasing Company C and the $14,000 paid
by Customer A to Dealer B ($20,000 selling price - $6,000 trade-in allowance).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
53
Example 11 โ Lease of automobile with no trade-in
โข Customer A leases an automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A does not trade in another vehicle.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $12,000:
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $14,000 ($20,000 + $6,000 - $12,000).
โ Total amount received by Leasing Company Y is $16,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $14,000 over the term of the lease).
โข The $14,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $388.89
($14,000 รท 36).
โข Leasing Company Y's taxable receipts are $14,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 90.6% ($14,500 taxable sales price รท $16,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,812 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 90.6%
taxable percentage).
Each lease payment: $352.33 ($388.89 payment x 90.6% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $6,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $16,000
Total Taxable Sales Price $14,500
Taxable Percentage:
Total Taxable Sales Price = $14,500 = 90.6%
Total Amount Received $16,000
Payment at Lease Signing:
$2,000 x 90.6% = $1,812
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$388.89 x 90.6% = $352.33
(Monthly Payment) (Taxable %) (Taxable)
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Example 12 โ Lease of automobile with owned trade-in; no lien on trade-in
โข Customer A leases an automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A owns his old automobile and has no lien on the automobile.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $20,000:
๏ง Trade-in allowed: $8,000
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $6,000 ($20,000 + $6,000 - $20,000).
โ Total amount received by Leasing Company Y is $8,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $6,000 over the term of the lease).
โข The $6,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $166.67
($6,000 รท 36).
โข Leasing Company Y's taxable receipts are $6,500. The $1,500 credit insurance is not taxable. Since a portion of
the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 81.3% ($6,500 taxable sales price รท $8,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,626 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 81.3%
taxable percentage).
Each lease payment: $135.50 ($167.67 payment x 81.3% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $6,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Amount Paid to Leasing Co Y $8,000
Total Taxable Sales Price $6,500
Taxable Percentage:
Total Taxable Sales Price = $6,500 = 81.3%
Total Amount Received $8,000
Payment at Lease Signing:
$2,000 x 81.3% = $1,626
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$166.67 x 81.3% = $135.50
(Monthly Payment) (Taxable %) (Taxable)
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
55
Example 13 โ Lease of automobile with owned trade-in; lien less than trade-in amount
โข Customer A leases an automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A has a lien on his old automobile for $6,000.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $12,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
๏ง Lien payoff of automobile traded-in: $6,000
โ Subtractions totaling $20,000:
๏ง Trade-in allowed: $8,000
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $12,000 ($20,000 + $12,000 -
$20,000).
โ Total amount received by Leasing Company Y is $14,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $12,000 over the term of the lease).
โข The $12,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $333.33
($12,000 รท 36).
โข Leasing Company Y's taxable receipts are $6,500. The $1,500 credit insurance and $6,000 lien payoff amount
are not taxable. Since a portion of the nontaxable $1,500 credit insurance and lien payoff are included in the initial
down payment and each lease payment, Leasing Company Y must apply a taxable percentage to each payment to
arrive at the taxable sales price of each payment received. The taxable percentage is 46.4% ($6,500 taxable sales
price รท $14,000 total amount received). The taxable sales price of each payment is determined as follows:
Payment at lease signing: $928 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 46.4%
taxable percentage).
Each lease payment: $154.67 ($333.33 payment x 46.4% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Lien Payoff of Vehicle Traded-in $6,000
Rent Charge $4,000
Total Additions $12,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Amount Paid to Leasing Co Y $14,000
Total Taxable Sales Price $6,500
Taxable Percentage:
Total Taxable Sales Price = $6,500 = 46.4%
Total Amount Received $14,000
Payment at Lease Signing:
$2,000 x 46.4% = $928
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$333.33 x 46.4% = $154.67
(Monthly Payment) (Taxable %) (Taxable)
Publication 202
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Example 14 โ Lease of automobile with owned trade-in; lien more than trade-in amount
โข Customer A leases an automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A trades in his old automobile and receives a trade-in allowance of $8,000.
โข Customer A has a lien on his old automobile for $10,000.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $16,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
๏ง Lien payoff of automobile traded-in: $10,000
โ Subtractions totaling $20,000:
๏ง Trade-in allowed: $8,000
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $16,000 ($20,000 + $16,000 -
$20,000).
โ Total amount received by Leasing Company Y is $18,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $16,000 over the term of the lease).
โข The $16,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $444.44
($16,000 รท 36).
โข Leasing Company Y's taxable receipts are $6,500. The $1,500 credit insurance and the $10,000 lien payoff amount
are not taxable. Since a portion of the nontaxable $1,500 credit insurance and lien payoff are included in the initial down
payment and each lease payment, Leasing Company Y must apply a taxable percentage to each payment to arrive at the
taxable sales price of each payment received. The taxable percentage is 36.1% ($6,500 taxable sales price รท $18,000 total
amount received). The taxable sales price of each payment is determined as follows:
Payment at lease signing: $722 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 36.1%
taxable percentage).
Each lease payment: $160.44 ($444.44 payment x 36.1% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Lien Payoff of Vehicle Traded-in $10,000
Rent Charge $4,000
Total Additions $16,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Subtractions:
Trade-in Allowed $8,000
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Amount Paid to Leasing Co Y $18,000
Total Taxable Sales Price $6,500
Taxable Percentage:
Total Taxable Sales Price = $6,500 = 36.1%
Total Amount Received $18,000
Payment at Lease Signing:
$2,000 x 36.1% = $722
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$444.44 x 36.1% = $160.44
(Monthly Payment) (Taxable %) (Taxable)
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
57
Example 15 โ Lease of automobile with lease โturn-inโ; no lease equity
โข Customer A leases an automobile from leasing Company C, with an option to return the automobile at the end of
the lease period (i.e., no additional amount is owed by Customer A to Leasing Company C).
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A โturns-inโ his old leased automobile to Leasing Company Y, who facilitates the return of the automo-
bile to Leasing Company C.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $12,000:
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $14,000 ($20,000 + $6,000 - $12,000).
โ Total amount received by Leasing Company Y is $16,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $14,000 over the term of the lease).
โข The $14,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $388.89
($14,000 รท 36).
โข Leasing Company Y's taxable receipts are $14,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 90.6% ($14,500 taxable sales price รท $16,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,812 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 90.6%
taxable percentage).
Each lease payment: $352.33 ($388.89 payment x 90.6% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $6,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $16,000
Total Taxable Sales Price $14,500
Taxable Percentage:
Total Taxable Sales Price = $14,500 = 90.6%
Total Amount Received $16,000
Payment at Lease Signing:
$2,000 x 90.6% = $1,812
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$388.89 x 90.6% = $352.33
(Monthly Payment) (Taxable %) (Taxable)
Publication 202
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Example 16 โ Lease of automobile with lease โturn inโ; positive lease equity
โข Customer A leases an automobile from Leasing Company C, with an option to return the automobile at the end of
the lease period.
โข Customer A has $2,000 positive lease equity at the end of the lease.
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A โturns-inโ his old leased automobile to Leasing Company Y, who facilitates the return of the automo-
bile to Leasing Company C.
โข Leasing Company C pays $2,000 positive equity to Leasing Company Y on behalf of Customer A. At the option
of Customer A, Leasing Company Y applies the $2,000 as an adjustment to the capitalized cost reduction compu-
tation.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $14,000:
๏ง Positive equity: $2,000
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid over the term of the lease is $12,000 ($20,000 + $6,000 - $14,000).
โ Total amount received by Leasing Company Y is $16,000 ($2,000 positive equity from Leasing
Company C + $1,000 cash down payment + $1,000 manufacturerโs rebate + $12,000 over the term of the
lease).
โข The $12,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $333.33
($12,000 รท 36).
โข Leasing Company Y's taxable receipts are $14,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 90.6% ($14,500 taxable sales price รท $16,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $3,624 (($2,000 positive equity + $1,000 cash down payment plus $1,000 man-
ufacturerโs rebate) x 90.6% taxable percentage).
Each lease payment: $302.00 ($333.33 payment x 90.6% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $6,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $16,000
Total Taxable Sales Price $14,500
Taxable Percentage:
Total Taxable Sales Price = $14,500 = 90.6%
Total Amount Received $16,000
Payment at Lease Signing:
$4,000 x 90.6% = $3,624
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$333.33 x 90.6% = $302.00
(Monthly Payment) (Taxable %) (Taxable)
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
59
Example 17 โ Lease of automobile with lease โturn-inโ; negative lease equity
โข Customer A leases an automobile from leasing Company C, with an option to return the automobile at the end of
the lease period.
โข Customer A has $2,000 negative lease equity at the end of the lease.
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A โturns-inโ his old leased automobile to Leasing Company Y, who facilitates the return of the automo-
bile to Leasing Company C.
โข On behalf of Customer A, Leasing Company Y pays Leasing Company C the $2,000 amount in settlement of the
lease, plus sales tax on the $2,000. There is no exemption for Leasing Company C's receipts in settlement of the
lease.
โข Leasing Company Y increases the amount that it will collect from Customer A by $2,000, plus tax, to reimburse
itself for the payment to Leasing Company C for the negative equity.
โข Leasing Company Y adjusts the capitalized cost reduction computation of the new automobile by $2,000 to
account for the amount of the negative equity.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $8,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
๏ง Negative equity: $2,000
โ Subtractions totaling $12,000:
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid over the term of the lease is $16,000 ($20,000 + $8,000 - $12,000).
โ Total amount received by Leasing Company Y is $18,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $16,000 over the term of the lease).
โข The $16,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $444.44
($16,000 รท 36).
โข Although Leasing Company Y's taxable receipts are $14,500, it will collect sales tax on $16,500, which in-
cludes the $2,000 reimbursement for its payment to Leasing Company C. The $1,500 credit insurance is not
taxable. Since a portion of the nontaxable $1,500 credit insurance is included in the initial down payment and
each lease payment, Leasing Company Y must apply a taxable percentage to each payment to arrive at the taxable
sales price of each payment received. The taxable percentage that Leasing Company Y will collect tax on is
91.7% ($16,500 taxable sales price รท $18,000 total amount received), and the taxable percentage that Leasing
Company Y will report and remit tax on is 80.56%* (($16,500 taxable sales price - $2,000 reimbursement paid to
Leasing Company C) รท $18,000 total amount received *). Leasing Company C's taxable receipts are $2,000, from
the lease settlement. The taxable sales price of each payment is determined as follows:
Payment at lease signing: The amount received at signing is $2,000 ($1,000 cash down payment + $1,000
manufacturerโs rebate).
โข Leasing Company Y should charge Customer A tax on $1,834 ($2,000 x 91.7% taxable percentage).
โข Leasing Company Y's taxable receipts are $1,611.20 ($2,000 x 80.56%* taxable percentage).
Each lease payment: A total of $16,000 is due over the term of the lease ($18,000 total received by
Leasing Company Y - $2,000 due at signing/capitalized cost reduction).
โข Leasing Company Y should charge Customer A tax on $407.55 of each payment ($444.44 payment x
91.7% taxable percentage).
Publication 202
60
โข Leasing Company Y's taxable receipts of each payment are $358.04 ($444.44 payment x 80.56%*
taxable percentage).
*The difference between the tax collected at 91.7% and the tax collected at 80.56% represents tax on the
$2,000 negative equity that Leasing Company Y paid to Leasing Company C. Leasing Company C's taxable
receipts are $2,000. Leasing Company Y is reimbursed by Customer A for the negative equity and tax that it
paid to Leasing Company C on Customer A's behalf.
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Negative Equity $2,000
Total Additions $8,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Negative Equity $2,000
Total Additions $6,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $18,000
Taxable Amount $16,500
Percentage for Tax Collection by Leasing Company
Y:
Total Taxable Amount = $16,500 = 91.7%
Total Amount Received $18,000
Leasing Company Y should collect tax on 91.7%.
Percentage for Tax Payment by Leasing Co. Y:
Taxable Receipts = $14,500 = 80.56%
Total Amount Received $18,000
Leasing Company Y's taxable percentage is 80.56%.
Leasing Company C's taxable receipts are $2,000.
Payment at Lease Signing:
$2,000 x 91.7% = $1,834
(Cash Down Payment & (Taxable % (Taxable
Manufacturer's Rebate) for Collection) Amount)
Leasing Company Y should collect tax on $1,834.
$2,000 x 80.56% = $1,611.20
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Leasing Company Y's taxable sales price is $1,611.20.
Monthly Lease Payment:
$444.44 x 91.7% = $407.55
(Monthly Payment) (Taxable % (Taxable)
for Collection)
Leasing Company Y should collect tax on $407.55.
$444.44 x 80.56% = $358.04
(Monthly Payment) (Taxable %) (Taxable)
Leasing Company Y's taxable sales price is $358.04.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
61
Example 18 โ Lease of automobile with leased โtrade-inโ; lease purchase option equal to โtrade-inโ amount,
resulting in no net equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A "trades-in" his old leased automobile towards its lease of a new automobile form Leasing Company Y
and receives a "trade-in allowance" of $8,000.
โข Leasing Company Y pays the $8,000 lease payoff to Leasing Company C and provides Leasing Company C with
an exemption certificate claiming resale, since Leasing Company Y will sell or lease Customer Aโs old automo-
bile.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $12,000:
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $14,000 ($20,000 + $6,000 - $12,000).
โ Total amount received by Leasing Company Y is $16,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $14,000 over the term of the lease).
โข The $14,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $388.89
$14,000 รท 36).
โข Leasing Company Y's taxable receipts are $14,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 90.6% ($14,500 taxable sales price รท $16,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,812 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 90.6%
taxable percentage).
Each lease payment: $352.33 ($388.89 payment x 90.6% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $14,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($18,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $16,000
Total Taxable Sales Price $14,500
Taxable Percentage:
Total Taxable Sales Price = $14,500 = 90.6%
Total Amount Received $16,000
Payment at Lease Signing:
$2,000 x 90.6% = $1,812
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$388.89 x 90.6% = $352.33
(Monthly Payment) (Taxable %) (Taxable)
Publication 202
62
NOTE: If Customer A paid the $8,000 to Leasing Company C in settlement of the lease (instead of to Leasing
Company Y), Leasing Company Cโs taxable receipts would include the $8,000 lease settlement. Customer A could use
its automobile as a trade-in, which would reduce Leasing Company Yโs selling price by $8,000. The net result would
be the same. A total of $14,500 would be subject to tax: the $8,000 paid by Customer A to Leasing Company C and
the $6,500 paid by Customer A to Leasing Company Y ($14,500 selling price minus the $8,000 trade-in allowance =
$6,500).
Example 19 โ Lease of automobile with leased โtrade-inโ; lease purchase option less than โtrade-inโ amount,
resulting in positive lease equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A โtrades-inโ his old leased automobile towards its lease of a new automobile from Leasing Company Y
and receives a โtrade-in allowanceโ of $10,000.
โข Leasing Company Y pays the $8,000 lease payoff to Leasing Company C and provides Leasing Company C with
an exemption certificate claiming resale, since Leasing Company Y will sell or lease Customer Aโs old automo-
bile.
โข Leasing Company Y, as a discount, reduces the agreed upon lease value of the new leased automobile by $2,000
for the difference between the value of the old leased automobile and the lease payoff.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $6,000:
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $14,000:
๏ง Positive Equity/Discount Allowed: $2,000
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $12,000 ($20,000 + $6,000 - $14,000).
โ Total amount received by Leasing Company Y is $14,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $12,000 over the term of the lease).
โข The $12,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $333.33
($12,000 รท 36).
โข Leasing Company Y's taxable receipts are $12,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 89.3% ($12,500 taxable sales price รท $14,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,786 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 89.3%
taxable percentage).
Each lease payment: $297.66 ($333.33 payment x 89.3% taxable percentage).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
63
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Total Additions $6,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Total Additions $4,500
Subtractions:
Positive Equity $2,000
Residual Value of Vehicle $10,000
Total Subtractions ($12,000)
Subtractions:
Discount Allowed for Positive Equity $2,000
Residual Value of Vehicle $10,000
Total Subtractions ($12,000)
Amount Paid to Leasing Co Y $14,000
Total Taxable Sales Price $12,500
Taxable Percentage:
Total Taxable Sales Price = $12,500 = 89.3%
Total Amount Received $14,000
Payment at Lease Signing:
$2,000 x 89.3% = $1,786
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$333.33 x 89.3% = $297.66
(Monthly Payment) (Taxable %) (Taxable)
NOTE: If Customer A paid the $8,000 to Leasing Company C (instead of to Leasing Company Y), Leasing
Company Cโs taxable receipts would include the $8,000 purchase option. Customer A could use its automobile as a
trade-in, which would reduce Dealer Bโs selling price by $12,500. The net result would be the same. A total of
$18,000 would be subject to tax: the $8,000 paid by Customer A to Leasing Company C and the $4,500 paid by
Customer A to Leasing Company Y ($14,500 selling price, without discount - $10,000 trade-in allowance).
Example 20 โ Lease of automobile with leased โtrade-inโ; lease purchase option more than โtrade-inโ amount,
resulting in negative equity
โข Customer A leases an automobile from Leasing Company C. The terms of the lease agreement state that Custom-
er A has the option to purchase the automobile for $8,000 at the end of the lease.
โข Customer A leases a new automobile from Leasing Company Y for an agreed upon value of $20,000.
โข Customer A โtrades-inโ his old leased automobile towards its lease of a new automobile from Leasing Company Y
and receives a โtrade-in allowanceโ of $6,000.
โข Leasing Company Y pays the $8,000 lease payoff to Leasing Company C and provides Leasing Company C with
an exemption certificate claiming resale, since Leasing Company Y will sell or lease Customer Aโs old automo-
bile.
โข Leasing Company Y adjusts the amount due from Customer A for the new leased automobile by $2,000 to account
for the negative equity.
โข The monthly lease payments are computed as follows:
โ Agreed upon value of leased automobile: $20,000
โ Additions totaling $8,000:
๏ง Negative Equity: $2,000
๏ง Lease acquisition fee: $500
๏ง Credit insurance: $1,500
๏ง Rent charge: $4,000
โ Subtractions totaling $12,000:
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64
๏ง Cash down payment by Customer A: $1,000
๏ง Manufacturerโs rebate: $1,000
๏ง Residual value: $10,000
โ Total amount to be paid by Customer A over the term of the lease is $16,000 ($20,000 + $8,000 - $12,000).
โ Total amount received by Leasing Company Y is $18,000 ($1,000 cash down payment + $1,000 manufac-
turerโs rebate + $16,000 over the term of the lease).
โข The $16,000 will be paid in equal payments over the 36-month life of the lease. Payments will be $444.44
($16,000 รท 36).
โข Leasing Company Y's taxable receipts are $16,500. The $1,500 credit insurance is not taxable. Since a portion
of the nontaxable $1,500 credit insurance is included in the initial down payment and each lease payment, Leasing
Company Y must apply a taxable percentage to each payment to arrive at the taxable sales price of each payment
received. The taxable percentage is 91.7% ($16,500 taxable amount รท $18,000 total amount received). The
taxable sales price of each payment is determined as follows:
Payment at lease signing: $1,834 (($1,000 cash down payment + $1,000 manufacturerโs rebate) x 91.7%
taxable percentage).
Each lease payment: $407.55 ($444.44 payment x 91.7% taxable percentage).
Total Amount Paid to Leasing Co Y
Calculation of Taxable Sales Price
Sales Price of Replacement Vehicle $20,000
Sales Price of Replacement Vehicle $20,000
Additions: Lease Acquisition Fee $500
Credit Insurance $1,500
Rent Charge $4,000
Negative Equity $2,000
Total Additions $8,000
Additions: Lease Acquisition Fee $500
Rent Charge $4,000
Negative Equity $2,000
Total Additions $6,500
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Subtractions:
Residual Value of Vehicle $10,000
Total Subtractions ($10,000)
Amount Paid to Leasing Co Y $18,000
Total Taxable Sales Price $16,500
Taxable Percentage:
Total Taxable Sales Price = $16,500 = 91.7%
Total Amount Received $18,000
Payment at Lease Signing:
$2,000 x 91.7% = $1,834
(Cash Down Payment & (Taxable (Taxable
Manufacturer's Rebate) %) Amount)
Monthly Lease Payment:
$444.44 x 91.7% = $407.55
(Monthly Payment) (Taxable %) (Taxable)
NOTE: If Customer A paid the $8,000 to Leasing Company C in settlement of the lease (instead of to Leasing Com-
pany Y), Leasing Company Cโs taxable receipts would include the $8,000 lease settlement. Customer A could use its
automobile as a trade-in, which would reduce Leasing Company Yโs selling price by $6,000. The net result would be
the same. A total of $16,500 would be subject to tax: the $8,000 paid by Customer A to Leasing Company C and the
$8,500 paid by Customer A to Leasing Company Y ($14,500 selling price - $6,000 trade-in allowance).
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
65
APPENDIX B
State, County, and Stadium Sales and Use Taxes Due on Items Registered or Titled in Wisconsin
Description of Transaction
Motor vehicle, boat, recrea-
tional vehicle
1
as defined in
sec. 340.01(48r), Wis. Stats.,
and aircraft
Snowmobile, trailer, (other than a rec-
reational vehicle
1
as defined in
sec. 340.01(48r), Wis. Stats.) semitrailer,
all-terrain vehicle, utility-terrain vehicle,
and off-highway motorcycle
โข Sale in a Wisconsin county
with a county tax and the coun-
ty is not part of the baseball
stadium district
โข Buyer brings back to and keeps
at a Wisconsin location outside
of the county where the pur-
chase occurred.
Seller owes 5% state use tax and
any applicable local (i.e., county
and/or stadium) use taxes in ef-
fect for the location where the
item is customarily kept.
Seller owes 5% state tax and 0.5% county
tax for county in which the sale occurred.
No additional county or stadium use tax is
due.
โข Sale in a Wisconsin county
with a county tax that is also
within the baseball stadium dis-
trict.
โข Buyer brings back to and keeps
at a Wisconsin location outside
of the county where the pur-
chase occurred.
Same tax treatment as above.
Seller owes 5% state tax, the 0.5% county
tax for county where sale occurred, and the
0.1% baseball stadium sales tax.
No additional county or stadium use tax is
due.
โข Sale in a Wisconsin county
without a county tax and that is
not part of the baseball stadium
district
โข Buyer brings back to and keeps
at a Wisconsin location outside
of the county where the pur-
chase occurred.
Same tax treatment as above.
Seller owes 5% state tax.
Note: If a buyer stores, uses, or otherwise
consumes the item in a taxable county
and/or the baseball stadium district, the
buyer owes the applicable county and/or
stadium tax for the location where the item
is first stored, used, or otherwise con-
sumed. The seller may choose to collect
this tax for the convenience of the buyer.
โข Sale in Wisconsin county
without a county tax and that is
within the baseball stadium
district.
โข Buyer brings back to and keeps
at a Wisconsin location outside
of the county where the pur-
chase occurred.
Same tax treatment as above.
Seller owes 5% state tax and the baseball
stadium tax based on where sale occurred.
No additional county or stadium use tax is
due.
1
"Recreational vehicle" is defined in sec. 340.01(48r), Wis. Stats., to mean a vehicle that is designed to be towed upon a
highway by a motor vehicle, that is equipped and used, or intended to be used, primarily for temporary or recreational
human habitation, that has walls of rigid construction, and that does not exceed 45 feet in length. Therefore, recreational
campers with rigid walls that do not exceed 45 feet in length, such as travel trailers, fifth-wheel trailers, are considered to
be "recreational vehicles."
Publication 202
66
APPENDIX C
SECTION TAX 11.83 โ MOTOR VEHICLES
Tax 11.83 Motor vehicles. (1) DEFINITIONS. In this sec-
tion:
(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, de-
signed 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 inci-
dentally operated on a public highway, such as a farm tractor,
snowmobile, fork lift truck, or road machinery as defined in
s. 340.01 (52), Stats. "Motor vehicle" does not include a vehi-
cle 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 ei-
ther the buyer or seller of another motor vehicle is not a
trade-in, even if the proceeds from the sale are immedi-
ately 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," un-
less cash or services are received by the dealer.
Examples: 1) Dealer A sells a motor vehicle to Individual B and ac-
cepts 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 B are $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 mo-
tor 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 daugh-
ter-in-law of the transferor or is transferred from an
individual to a corporation which is solely owned by the indi-
vidual; and the motor vehicle has been previously registered
or titled in Wisconsin in the name of the transferor, if re-
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
67
quired to be registered or titled; and the transferor is not en-
gaged in the business of selling motor vehicles.
2. The motor vehicle is sold by a nonprofit organi-
zation 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 ve-
hicle 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 mem-
bers 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 ve-
hicle, or recreational vehicle as defined in s. 340.01 (48r),
Stats., purchased outside Wisconsin by a nonresident of Wis-
consin 90 days or more before bringing the unit into
Wisconsin, in connection with a change of residence to Wis-
consin by the individual, is not subject to the Wisconsin use
tax.
(d) Except as provided in par. (c), nonresidents, includ-
ing 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 de-
scribed in sub. (6).
(5) TEMPORARY USE IN WISCONSIN. Motor vehi-
cles 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 Wiscon-
sin 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 deduct-
ed 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 transpor-
tation 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 de-
partment 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 de-
scribed 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 mo-
tor 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 vehi-
cles 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 Wiscon-
sin use tax.
Publication 202
68
(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 em-
ployee 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 com-
puted 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 pur-
chase, 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 fran-
chise 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 as-
signed 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 addi-
tion to retention, demonstration, or display and are subject to
use tax as provided in par. (b) 1. and 2., unless one of the fol-
lowing 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 as-
signed 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 li-
censed 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 equip-
ment 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 proper-
ty 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 physical-
ly 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
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
69
consumed in performing motor vehicle repair service. Taxa-
ble supplies include sandpaper, masking paper and tape,
buffing pads, paint and lacquer thinner, clean and glaze com-
pound, disc pads, paint remover, paint masks, tack rags, steel
wool, industrial gases, metal conditioner, brushes, lacquer
removing solvent, rubbing compound, wax and grease re-
mover, fluxing materials, disc adhesive, and all other items
not physically transferred to the customer even though a sepa-
rate 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 accesso-
ries, 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 re-
quired to be licensed for highway use and which are used
exclusively and directly in waste reduction or recycling activ-
ities is exempt from sales and use tax.
(14) REFUNDS UNDER LEMON LAW". Sales tax re-
funds 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 con-
verted 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 ex-
empt 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.
Note: 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 handicapped persons to en-
ter, operate or leave a vehicle became effective June 1, 1990, pursuant to
1989 Wis. Act 238; (e) The exemption for motor vehicles donated to ex-
empt 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 handicapped persons became effective October 1, 1991, pur-
suant 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.
History: Cr. Register, December, 1977, No. 264, eff. 1-1-78; am. (7) (a)
and (8), Register, May, 1981, No. 307, eff. 6-1-81; am. (4) (c), Register, Sep-
tember, 1984, No. 345, eff. 10-1-84; am. (7) (a) 1. and 2., Register, February,
1986, No. 362, eff. 3-1-86; emerg. am. (7) (a) 1. and 2., eff. 3-24-86; am. (7)
(a) 1. and 2., Register, October, 1986, No. 370, eff. 11-1-86; cr. (11), Register,
July, 1987, No. 379, eff. 8-1-87; am. (1), (2) (a), (c) and (d), (3) (a) and (4)
(a) and (c), cr. (5), (13) and (14), renum. (5) to be (6), renum. (6) to (11) to be
(7) to (12) and am. (8) (a), (9), (10), and (11) (a), (b) and (c) 1., Register,
June, 1991, No. 426, eff. 7-1-91; am. (2) (a), (c), (d), (3) (a), (4) (a), (b), (6),
(7) (a), (b), (8) (b), (10) and (14), cr. (7) (c), Register, April, 1993, No. 448,
eff. 5-1-93; am. (1), (2), (3) (d), (4) (b), (5), (6), (7) (a), (11) (c) and (12), r.
and recr. (8), Register, February, 1997, No. 494, eff. 3-1-97; renum. (1) and
(8) (b) 2. and 3. to be (1) (b) and (8) (b) 3. and 4. and am. (1) (b), am. (8) (b)
1., (c) 2. and (d), cr. (1) (a), (8) (b) 2., Register, August, 1999, No. 524, eff. 9-
1-99; corrections in (8) (a) and (14) made under s. 13.93 (2m) (b) 7., Stats.,
Register July 2002 No. 559; EmR0924: emerg. am. (1) (a), (b), (2) (title),
(intro.), (b) to (d), (3) (title), (a) to (c), (4) (a) to (c), (5), (6), (7) (title), (a),
(c), (8) (a), (b) (intro.) to 3. (intro.), 4., (c) (intro.), 1., (10), (11) (a), (b), (12)
and (13), cr. (1) (am) and (2) (am), r. (8) (d) and (11) (c), eff. 10-1-09; CR
09-090: am. (1) (a), (b), (2) (title), (intro.), (b) to (d), (3) (title), (a) to (c), (4)
(a) to (c), (5), (6), (7) (title), (a), (c), (8) (a), (b) (intro.) to 3. (intro.), 4., (c)
(intro.), 1., (10), (11) (a), (b), (12) and (13), cr. (1) (am) and (2) (am), r. (8)
(d) and (11) (c) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2)
(title), cr. (2) (e) Register November 2010 No. 659, eff. 12-1-10; correction in
(2) (e) made under s. 13.92 (4) (b) 7., Stats., Register November 2010 No.
659; CR 12-014: renum. (3) (a) to be (3) (a) 1. and am., cr. (3) (a) (intro.), 2.,
am. (11) (a), (b), cr. (15) Register August 2012 No. 680, eff. 9-1-12.
Publication 202
70
APPENDIX D
SECTION TAX 11.16 โ COMMON OR CONTRACT CARRIERS
Tax 11.16 Common or contract carriers. (1) MOTOR
CARRIERS. (a) Exemption. Section 77.54 (5) (b), Stats.,
provides a sales and use tax exemption for motor trucks,
truck tractors, road tractors, buses, trailers, and semitrailers,
and accessories, attachments, parts, supplies, and materials
therefor, sold to common or contract carriers who use such
motor trucks, truck tractors, road tractors, buses, trailers, and
semitrailers exclusively as common or contract carriers, in-
cluding the urban mass transportation of passengers as
defined in s. 71.38, Stats.
(am) Exclusively. As used in s. 77.54 (5) (b), Stats., and
this section, "exclusively" means that the motor trucks, truck
tractors, road tractors, buses, trailers, and semitrailers are
used solely as common or contract carriers to the exclusion of
all other uses, except that the sales and use tax exemption for
this tangible personal property will not be invalidated by an
infrequent and sporadic use other than as a common or con-
tract carrier.
Note: Under department of transportation rules, a licensed carrier
(LC) number is required if a common or contract carrier hauls goods of
others for hire. The sales and use tax exemption in par. (a) applies only if
the common or contract carrier used the vehicle exclusively for hauling
goods of others for hire.
(b) Accessories and attachments. parts, and supplies
for exempt vehicles are exempt from the sales and use tax
under s. 77.54 (5) (b), Stats. This exemption includes the fol-
lowing items if they are assigned to and carried on vehicles
used exclusively as common or contract carriers: dollies, pi-
anoboards, ladders, walkboards, tire chains, fire
extinguishers, flares, bug deflectors, engine block heaters,
defroster fans, auxiliary heaters and cooling units and their
fuel, radios, flag kits including flags and reflectors, and items
designed to be used with a vehicle which protect or secure the
vehicle's load including tape, fitted tarpaulins, tarpaulin
straps, furniture pads and covers, load holding chains, logistic
straps, and shoring beams. This exemption does not include
corrugated boxes, containers, and related materials that are
transferred to customers in conjunction with the selling, per-
forming, or furnishing of a moving service, as provided in
par. (g).
Note: In a decision dated May 19, 1980 in the case of Leicht Trans-
fer & Storage Co., Inc. vs. Wisconsin Department of Revenue the Dane
County Circuit Court reversed the November 23, 1979 decision of the
Wisconsin Tax Appeals Commission and held that van equipment and
supplies that are exempt under s. 77.54 (5) (b), Stats., include furniture
pads, covers, packing supplies, tape, pianoboards, ladders, walkboards,
straps, lining paper and corrugated boxes. The Court also stated that "It
must be kept in mind that it is undisputed that all of the items are as-
signed to and carried on the vans." The Court of Appeals District IV,
affirmed the Circuit Court's decision. Under this interpretation, the only
corrugated boxes and packing materials that qualify for exemption un-
der s. 77.54 (5) (b), Stats., are those that are assigned to and carried on
an exempt van and that are not transferred to a customer.
(c) Repairs. The sale or furnishing of repair, service,
alteration, fitting, cleaning, painting, coating, towing, inspec-
tion, and maintenance to exempt vehicles shall be exempt.
(d) Exceptions. The exemption shall not apply to the
following property used by common or contract carriers:
1. Automobiles as defined in s. 340.01 (4), Stats.,
except an automobile registered as a truck.
2. Self-propelled vehicles for off-highway use,
such as road machinery, fork lifts, and other industrial trucks.
(e) Equipment and supplies. Equipment acquired by a
carrier for the repair, service, or maintenance of its exempt
vehicles is not exempt, including repair tools, welding torch-
es, battery chargers, and grinding discs.
(f) Conversion to private use. If a vehicle purchased
without tax is converted to private use, a use tax or sales tax
pursuant to s. Tax 11.14 (2) (c) is due. The tax is measured by
the sales price of the vehicle to the purchaser.
(g) Packaging materials. The transfer to a customer of
corrugated boxes, containers, and related packing materials in
conjunction with moving or transporting a customer's goods
is incidental to the selling, performing, or furnishing of the
moving or transportation service. The service provider is the
consumer of the property and shall pay tax on its purchase of
the property to be transferred.
(h) Occasional sales. Motor carriers are not required to
register as retailers with the department if the sales price from
their sales of tangible personal property, items, property, and
goods under s. 77.52 (1) (b), (c), and (d), Stats., and taxable
services are $1,000 or less within a calendar year. Persons
who are exempt from registration under this standard shall
pay sales or use tax on all purchases of tangible personal
property, items, property, and goods under s. 77.52 (1) (b),
(c), and (d), Stats., and taxable services not otherwise exempt,
including items that may be resold to customers. Persons who
exceed the standard shall register with the department and
obtain a seller's permit. Persons who register may purchase
tangible personal property, items, property, and goods under
s. 77.52 (1) (b), (c), and (d), Stats., and taxable services for
resale without paying tax by issuing to their supplier a
properly completed exemption certificate claiming resale or
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
71
they may pay the tax to their supplier and, if the property is
resold, claim a credit for the tax paid against any sales tax
due.
Note: Refer to s. Tax 11.002 for description of permit requirements,
how to apply for a permit, and the 15-day time period within which the
department is required to act on permit applications.
Examples: 1) A truck purchased to transport pads and packing ma-
terials to and from moving jobs qualifies for the exemption in par. (a).
2) Cutting down trees, cutting them into logs, and hauling them
to a mill as a private business operation voids the exemption in par. (a),
even though the trucker also hauls logs as a common or contract carrier
for other persons at the same time.
3) Vehicles of a milk or cheese factory that engage in hauling
milk from farms to its plant for processing do not qualify for the exemp-
tion under par. (a).
4) Towing of vehicles to the repair facility of a garage-wrecker
operator is part of a private repair business that is not exempt under
par. (a).
(2) RAILWAY ROLLING STOCK. (a) Section 77.54
(12), Stats., provides a sales and use tax exemption for the
sales price from the sales of and the storage, use, or other
consumption in this state of rail freight or passenger cars,
locomotives, or other rolling stock used in railroad opera-
tions, or accessories, attachments, parts, lubricants, or fuel
therefor.
(b) The exemption for rolling stock includes:
1. The sale or furnishing of repair, service, alteration,
fitting, cleaning, painting, coating, towing, inspection, and
maintenance to exempt rolling stock.
2. Purchases of any equipment that is operated on rail-
road rails, including an industrial firm's switching
locomotives used to switch freight cars on its own property,
except vehicles that may also be used on a highway.
3. Fuel used to heat a caboose or run a compressor
that cools a railway car.
4. A utility's coal cars used to haul coal from mines to
the utility.
(c) The exemption does not apply to:
1. Rails, crossties, and other road building and
maintenance materials. However, sales of crossties to a com-
mon or contract carrier are exempt if they are shipped wholly
or in part by way of the purchasing carrier under a bill of lad-
ing, whether the freight is paid in advance or the shipment is
made freight charges collect, to a point outside Wisconsin if
the property is transported outside Wisconsin for use by the
carrier in the conduct of its business as a carrier. The exemp-
tion will not be invalidated because of interruption of the
shipment for storage, drying, processing, or creosoting of the
crossties in Wisconsin.
2. Bracing materials, rough lumber, and dunnage ma-
terials.
3. Ice to refrigerate a railway car.
(3) COMMERCIAL VESSELS. (a) Section 77.54 (13),
Stats., provides a sales and use tax exemption for the sales
price from the sales of and the storage, use, or other con-
sumption in this state of commercial vessels and barges of
50-ton burden or over primarily engaged in interstate or for-
eign commerce or commercial fishing, and the accessories,
attachments, parts, and fuel therefor.
(b) The exemption for commercial vessels applies to:
1. Vessels and barges primarily engaged in interstate
or foreign commerce or commercial fishing that are docu-
mented under the laws of the United States showing a net
volumetric tonnage of 50 tons or more.
2. Items that become a component part of the exempt
commercial vessel.
3. The sale or furnishing of repair, service, alteration,
fitting, cleaning, painting, coating, towing, inspection, and
maintenance of exempt commercial vessels.
(c) The exemption does not apply to consumable sup-
plies or furnishings that are not attached to the vessel, such as
bedding, linen, table and kitchenware, tables, chairs, lubri-
cants, work clothes, acetylene gas, nets, fishing tackle,
lumber for dry docking, bracing, blocking and dunnage mate-
rials and other materials not incorporated into the vessel.
Note: Section Tax 11.16 interprets ss. 77.54 (5) (b), (7) (a), (12), and
(13), 77.55 (2m), and 77.57, Stats.
Note: The interpretations in s. Tax 11.16 are effective under the
general sales and use tax law on and after September 1, 1969, except: (a)
The sale of packing materials to a service provider became taxable effec-
tive September 1, 1983, pursuant to 1983 Wis. Act 27; (b) The exemption
for certain railroad crossties became effective July 20, 1985, pursuant to
1985 Wis. Act 29; (c) Section 340.01 (61), Stats., which defined "station
wagon" was repealed pursuant to 1999 Wis. Act 80; (d) In Freight Lime
and Sand Hauling, Inc. v. Wisconsin Department of Revenue, Wisconsin
Tax Appeals Commission, November 20, 2002 (CCH 400-646), trucks
hauling property of others for hire were found to qualify for exemption,
even though the property being hauled had no value; (e) Section 77.57,
Stats., was amended to remove the portion of the statute that allowed a
purchaser to use the lesser of the cost or fair market value of an item
that was purchased exempt and whose first taxable use occurred more
than 6 months after it was purchased, pursuant to 2009 Wis. Act 2; and
(f) The change of the term "gross receipts" to "sales price" and the sep-
arate 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
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72
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.
History: Cr. Register, November, 1978, No. 275, eff. 12-1-78; am. (1)
(a) and (d), (3) (b) 1., Register, November, 1981, No. 311, eff. 12-1-81; am.
(3) (b) 1., Register, January, 1983, No. 325, eff. 2-1-83; am. (1) (b), (d) and
(2) (b) 2., r. and recr. (1) (e), cr. (1) (h) and (i), Register, December, 1983, No.
336, eff. 1-1-84; am. (1) (f) and (3) (b) 1., Register, July, 1987, No. 379, eff.
8-1-87; am. (1) (e) and (3) (b) 1., Register, April, 1990, No. 412, eff. 5-1-90;
correction in (1) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, April,
1990, No. 412; am. (1) (a) and (d) and (2) (c) 1., r. (1) (g), renum. (1) (h) to
be (g) and (1) (i) to be (h), Register, June, 1991, No. 426, eff. 7-1-91;
EmR0924: emerg. am. (1) (a), (b), (c), (f), (h), (2) (a), (b) 1. to 3., (3) (a) and
(b) 3., renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. and 2., eff.
10-1-09; CR 09-090: am. (1) (a), (b), (c), (f), (h), (2) (a), (b) 1. to 3., (3) (a)
and (b) 3., renum. (1) (d) to be (1) (d) (intro.) and am., cr. (1) (d) 1. and 2.
Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (1) (a), (am), (b),
(e), (g), (2) (a), (c) 1., 2., (3) (a) Register November 2010 No. 659, eff. 12-1-
10.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
73
APPENDIX E
SECTION TAX 11.27 โ INSURANCE AND WARRANTIES
Tax 11.27 Maintenance contracts, insurance, and
warranties.
(1) DEFINITIONS. In this section
(a) "Computer software maintenance contract" means a
contract that obligates a vendor of computer software to pro-
vide a customer with future updates or upgrades to computer
software, computer software support services, or both.
(b) "Insurance" means a contract or agreement which
promises indemnity against loss or damage resulting from
perils outside of and unrelated to defects in tangible personal
property or items, property, or goods under s. 77.52 (1) (b),
(c), or (d), Stats.
(c) "Warranty" means a contract or agreement which
promises indemnity against defects in tangible personal prop-
erty or items, property, or goods under s. 77.52 (1) (b), (c), or
(d), Stats., sold.
(2) RECEIPTS FROM INSURANCE. The sales price
from the sale of insurance, except contracts under s. 77.52 (2)
(a) 13m., Stats., are not subject to Wisconsin sales or use tax
when separately stated on the invoice provided to the pur-
chaser.
Examples: 1) Company A rents a vehicle to Customer A for $200
which includes insurance. The entire charge of $200 is subject to Wis-
consin sales or use tax because the charge for insurance is not separately
stated.
2) Company A rents a vehicle to Customer B for $200. On the
invoice, Company A shows a charge for vehicle rental of $175 and a
charge for insurance of $25. The charge of $175 is subject to Wisconsin
sales or use tax. The $25 charge for the insurance is not subject to tax
since it is separately stated on the invoice provided to the purchaser.
(3) RECEIPTS FROM MAINTENANCE
CONTRACTS AND WARRANTIES. Section 77.52 (2) (a)
13m., Stats., imposes Wisconsin sales tax on the sale of con-
tracts, including service contracts, maintenance agreements,
computer software maintenance contracts for prewritten
computer software, and warranties, that provide, in whole or
in part, for the future performance of or payment for the re-
pair, service, alteration, fitting, cleaning, painting, coating,
towing, inspection, or maintenance of tangible personal prop-
erty or items, property, or goods under s. 77.52 (1) (b), (c), or
(d), Stats., unless the sale, license, lease, or rental in this state
of the property, items, or goods to which the contract relates
is or was exempt, to the purchaser of the contract, from taxa-
tion under subch. III of ch. 77, Stats.
Examples: 1) Company A sells a machine to Customer C which will
be used exclusively and directly in manufacturing. Customer C purchas-
es an extended warranty with the machine. Customer C provides
Company A with a properly completed exemption certificate. The sale of
the extended warranty is not subject to Wisconsin sales or use tax be-
cause the machine to which it relates is exempt from Wisconsin sales or
use tax.
2) Customer D, a resident of Minnesota, purchases an automo-
bile from a dealership in Wisconsin. Customer D makes no use of the
automobile in Wisconsin other than to drive it to his home in Minnesota.
Customer D purchases an extended warranty with the automobile. The
sale of the extended warranty is not subject to Wisconsin sales or use tax
because the sale of the automobile is exempt from Wisconsin sales or use
tax.
3) Assume the same facts as in Example 2, except that Custom-
er D does not purchase the extended warranty at the time of sale of the
automobile. Instead, six weeks after the sale, Customer D purchases the
extended warranty from the dealer. The sale of the extended warranty is
not subject to Wisconsin sales or use tax because the automobile to
which the sale relates was exempt from Wisconsin sales or use tax.
4) Customer E, a resident of Wisconsin, purchases an appliance
from a store in Wisconsin. Customer E purchases an extended warranty
with the appliance. The sale of the extended warranty is subject to Wis-
consin sales tax because the sale of the appliance is subject to Wisconsin
sales tax.
5) Assume the same facts as in Example 4, except that Custom-
er E does not purchase the extended warranty at the time of sale of the
appliance. Instead, 2 months after the sale, Customer E purchases the
extended warranty from the store. The sale of the extended warranty is
subject to Wisconsin sales tax because the appliance to which the sale
relates was subject to Wisconsin sales tax.
(4) REPAIRS BY RETAILERS UNDER
INSURANCE PLANS. (a) The sales price from charges by a
retailer to a customer or an insurer for taxable repair parts or
taxable services performed under an insurance plan are sub-
ject to Wisconsin sales or use tax.
Examples: 1) Company A sold an appliance to Customer E. Com-
pany A also sold an insurance plan for the appliance to Customer E. The
appliance is later repaired by Company A under the insurance plan.
Company A bills the insurance company for the repair. The charge to the
insurance company is subject to Wisconsin sales or use tax.
2) Company A sold an appliance to Customer F. Company A
also sold an insurance plan for the appliance to Customer F. The appli-
ance is later repaired by Company A under the insurance plan.
Company A bills the customer for the repair. Customer F submits the
bill to the insurance company and receives reimbursement from the
insurance company. The charge to Customer F for the repair is subject
to Wisconsin sales tax.
(b) 1. A retailer who provides parts or performs taxable
repair services to tangible personal property or items, proper-
ty, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under an
insurance plan may purchase the tangible personal property
Publication 202
74
or items, property, or goods under s. 77.52 (1) (b), (c), or (d),
Stats., transferred to the customer as part of the repair without
Wisconsin sales or use tax as property for resale
2. A person who provides tangible personal property
or items, property, or goods under s. 77.52 (1) (b), (c), or (d),
Stats., in repairing real property under an insurance plan is
the consumer of the tangible personal property or items,
property, or goods under s. 77.52 (1) (b), (c), or (d), Stats.,
transferred to a customer as part of the repair to real property
and is subject to Wisconsin sales or use tax on the purchase of
the tangible personal property or items, property, or goods
under s. 77.52 (1) (b), (c), or (d), Stats., transferred.
Note: Refer to s. Tax 11.68 for information about distinguishing
between real and tangible personal property.
(5) REPAIRS BY RETAILERS UNDER
MAINTENANCE CONTRACTS AND WARRANTIES. (a)
The sales price from charges by a retailer to a customer for
taxable repair parts or taxable services performed under a
maintenance contract or warranty and that are not reimbursed
by the seller of the maintenance contract or warranty are sub-
ject to Wisconsin sales or use tax.
Example: Customer A purchased an automobile from a dealership
in Wisconsin. Customer A purchased an extended warranty from the
dealership which was subject to Wisconsin sales or use tax. Customer A
brings the automobile to the dealership for repair under the warranty.
Under the terms of the warranty, Customer A must pay a deductible of
$100. The $100 charge to Customer A is subject to Wisconsin sales or use
tax.
(b) Reimbursement to a retailer from a manufacturer or
other person, whether in the form of money or replacement of
parts used to perform repair services under a warranty is not
subject to Wisconsin sales or use tax.
Example: Customer B purchased a television with an extended
warranty from an appliance store. Customer B has the television re-
paired under the warranty. The appliance store is reimbursed $200 by
the warranty company for the repair of the television. The $200 reim-
bursement is not subject to Wisconsin sales or use tax.
(c) 1. A retailer who provides parts or performs taxable
repair services to tangible personal property or items, proper-
ty, or goods under s. 77.52 (1) (b), (c), or (d), Stats., under a
maintenance contract or warranty may purchase the tangible
personal property or items, property, or goods under s. 77.52
(1) (b), (c), or (d), Stats., transferred to the customer as part
of the repair without Wisconsin sales or use tax as property,
items, or goods for resale.
2. A person who provides tangible personal property
or items or property, under s. 77.52 (1) (b) or (c), Stats., in
repairing real property under a maintenance contract or war-
ranty is the consumer of the tangible personal property or
items or property under s. 77.52 (1) (b) or (c), Stats., trans-
ferred to a customer as part of the repair to real property and
is subject to Wisconsin sales or use tax on the purchase of the
tangible personal property or items or property, under s. 77.52
(1) (b) or (c), Stats., transferred.
Note: Refer to s. Tax 11.68 for information about distinguishing be-
tween real and tangible personal property or items or property under s.
77.52 (1) (b) or (c), Stats.
(6) REPAIRS NOT BY RETAILERS. If a retailer does
not repair tangible personal property or items, property, or
goods under s. 77.52 (1) (b), (c), or (d), Stats., under a
maintenance contract, warranty, or insurance plan, but instead
has another person perform the repairs covered under the
maintenance contract, warranty, or insurance plan, the per-
son's sales price from the sale of the repair to the retailer is
not subject to Wisconsin sales or use tax provided the retailer
gives the person a properly completed exemption certificate.
The charge for repairs by the other person is exempt as a sale
for resale whether or not the original sale of the property,
item, or good to which the maintenance contract, warranty, or
insurance plan relates occurred in Wisconsin. The sales and
use tax treatment of the charge by the retailer to the customer
or plan provider is the same as provided in subs. (4) and (5).
Note: Refer to s. Tax 11.14 for information regarding exemption
certificates.
(7) GOODWILL WORK. A retailer who provides free
parts or services or both to a customer under an implied war-
ranty in order to maintain good customer relations, although
not required to do so under a sales agreement, maintenance
agreement, express warranty, or insurance plan may purchase
the parts without Wisconsin sales or use tax for resale.
Example: Customer Z, a resident of Wisconsin, purchased an au-
tomobile and extended warranty from a Wisconsin dealership. The
dealership charged Wisconsin sales tax on the sale of the automobile and
warranty. Customer Z brought the vehicle to the dealership for repairs
that were covered under the warranty. While performing the repairs, a
part is damaged. The dealership, who is not required by the terms of the
warranty to provide the part, provides the part free of charge to Cus-
tomer Z. The dealership may purchase the part provided free to
Customer Z without Wisconsin sales or use tax as property for resale.
Note: Section Tax 11.27 interprets ss. 77.51 (14) (intro.), (15b),
77.52 (2) (a) 10. and 13m., and 77.54 (8), Stats.
Note: Note: The interpretations in s. Tax 11.27 are effective under
the general sales and use tax law on and after September 1, 1969, except
that (a) the definitions in sub. (1) and the provisions in subs. (4) (b) 2.
and (5) (c) 2. became effective on February 1, 1994; (b) The definition of
computer software maintenance contract became effective October 1,
2009 pursuant to 2009 Wis. Act 2; (c) The specific imposition of tax on
maintenance contracts and extended warranties became effective Octo-
ber 1, 2009 pursuant to 2009 Wis. Act 2; and (d) 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.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
75
History: Cr. Register, November, 1977, No. 263, eff. 12-1-77; am. (1),
(2) (a) and (b), Register, September, 1984, No. 345, eff. 10-1-84; am. (2) (c),
Register, July, 1987, No. 379, eff. 8-1-87; r. and recr. Register, January, 1994,
No. 457, eff. 2-1-94; EmR0924: emerg. am. (title), (2), (4), (5) (title), (a), (c),
(6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r.
and recr. (3), eff. 10-1-09; CR 09-090: am. (title), (2), (4), (5) (title), (a), (c),
(6) and (7), renum. (1) (a) and (b) to be (1) (b) and (c) and am., cr. (1) (a), r.
and recr. (3) Register May 2010 No. 653, eff. 6-1-10.
Publication 202
76
APPENDIX F
SECTION TAX 11.49 โ SERVICE STATIONS AND FUEL OIL DEALERS
Tax 11.49 Service stations and fuel oil dealers.
(1) Taxable sales. Sales by service station operators and
fuel oil dealers subject to the sales tax include the following:
(a) The sale of furnace or heating fuel to customers, oth-
er than for residential or farm use.
(b) The repair, service, alteration, fitting, cleaning, paint-
ing, coating, inspection, and maintenance of motor vehicles,
including the total amount charged for parts and labor and
including motor vehicles and truck bodies owned by nonresi-
dents except as provided in sub. (2).
(c) The towing of motor vehicles, which includes the
hauling of motor vehicles by a tow truck, as defined in
s. 340.01 (67n), Stats.
Examples: 1) The charge to a customer for towing a ve-
hicle to a repair facility is taxable.
2) The charge to a customer by a towing company for
towing the customer's vehicle from a no parking zone is taxa-
ble.
3) The charge to a customer by a towing company for
towing a demolished vehicle to a junkyard is taxable.
4) The charge to a Wisconsin governmental unit by a
towing company for towing is exempt from tax.
5) The charge to a repair facility by a towing company
for towing a vehicle to the facility for repair which will be
passed on to the customer is not taxable provided the repair
facility gives the towing company a properly completed ex-
emption certificate claiming resale. However, the charge for
the towing service to the customer by the repair facility is
taxable.
(d) Retail sales of tangible personal property and items,
property, and goods under s. 77.52 (1) (b), (c), and (d), Stats.,
including motor oil, antifreeze, motor vehicle parts and sup-
plies, tobacco products, candy, and soft drinks by service
stations except as provided in sub. (2).
(e) Charges for car washes, whether automated or not.
(f) Providing parking for motor vehicles. Providing tem-
porary storage of a motor vehicle is considered parking if the
vehicle is ready and available for immediate use.
(2) Exempt sales. Sales by service station operators and
fuel oil dealers not subject to the sales tax include the follow-
ing:
(a) Sales of gasoline, general aviation fuel and special
fuel including diesel and L.P. fuel, which are subject to the
Wisconsin motor vehicle fuel taxes under ch. 78, Stats. The
holder of a Wisconsin special fuel license may issue an ex-
emption certificate to purchase special fuel without sales tax.
On special fuel which a licensee puts into highway motor
vehicles, the licensee is required to pay the special fuel tax. If
motor fuel or special fuel is purchased without tax under
s. 77.54 (11), Stats., because it is subject to the excise tax
imposed under ch. 78, Stats., and then the excise taxes are
later refunded under s. 78.75, Stats., because the buyer does
not use the fuel in operating a motor vehicle upon the public
highways, the fuel is subject to the tax, unless otherwise ex-
empt under s. 77.54 (1), (3), (5), (6) (am) 3., (9a), (12), (13),
(30) (a), Stats., or other exemptions in subch. III of ch. 77,
Stats.
(b) Sales made directly to this state or any agency there-
of, the University of Wisconsin Hospitals and Clinics
Authority, the Wisconsin Aerospace Authority, the Wisconsin
Economic Development Corporation, and the Fox River Nav-
igational System Authority; any county, city, village, town, or
school district in this state; a county-city hospital established
under s. 66.0927, Stats.; a sewerage commission organized
under s. 281.43 (4), Stats., or a metropolitan sewerage district
organized under ss. 200.01 to 200.15 or 200.21 to 200.65,
Stats.; any other unit of government in this state or any agen-
cy or instrumentality of one or more units of government in
this state; any federally recognized American Indian tribe or
band in this state; any joint local water authority created un-
der s. 66.0823, Stats.; any corporation, community chest
fund, foundation, or association organized and operated ex-
clusively for religious, charitable, scientific, or educational
purposes, or for the prevention of cruelty to children or ani-
mals, except hospital service insurance corporations under
s. 613.80 (2), Stats., no part of the net income of which inures
to the benefit of any private stockholder, shareholder, mem-
ber, or corporation; a local exposition district under subch. II
of ch. 229, Stats.; a local cultural arts district under subch. V
of ch. 229, Stats. Sales to a cemetery company or corporation
described under section 501 (c) (13) of the Internal Revenue
Code, are exempt from sales and use tax if the cemetery
company or corporation uses the items exclusively for the
purposes of the company or corporation. Section 77.55 (1),
Stats., provides an exemption for sales to the United States,
its unincorporated agencies and instrumentalities, and any
incorporated agency or instrumentality of the United States
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
77
wholly owned by the United States or by a corporation whol-
ly owned by the United States. Sales to employees of these
entities are not exempt, even though the entity may reimburse
the employee for the expenditure.
(c) Sales of accessories, attachments, parts, supplies, and
highway fuel for common or contract carrier motor trucks,
truck tractors, road tractors, buses, trailers, and semi-trailers
used exclusively in common or contract carriage, including
the urban mass transportation of passengers as defined in
s. 71.38, Stats. This exemption applies to purchases for
school buses operated under contract with a public or private
school to transport students. A station wagon or van which is
not registered as a bus or truck with the division of motor
vehicles in the Wisconsin department of transportation does
not qualify for this exemption.
(d) Sales to farmers of parts and repairs for tractors or
farm machines used exclusively and directly in farming, but
this exemption does not apply if these items are used in motor
vehicles for highway use.
(e) Sales to farmers of fuel used in farming.
(f) Sales of general aviation fuel to persons using air-
craft as certified or licensed carriers of persons or property in
interstate commerce are exempt under s. 77.54 (5) (a), Stats.
(g) Sales of coal, fuel oil, propane, steam, peat, fuel cu-
bes produced from solid waste, wood, and biomass as defined
in s. 196.378 (1) (ar), Stats., used for fuel sold for residential
use. In this paragraph, "residential use" means use in a struc-
ture or portion of a structure which is a person's permanent
residence as defined in s. Tax 11.57 (2) (q) 2. and 3.
(h) Sales of repairs, services, alterations, fitting, clean-
ing, painting, coating, towing, inspection, and maintenance
services to common or contract carrier vehicles exempt under
sub. (2) (c), mobile mixing and processing units and the vehi-
cle or trailer on which they are mounted, and motor vehicles
not required to be licensed for highway use which are exclu-
sively and directly used in conjunction with waste reduction
or recycling activities.
(i) Sales of accessories, attachments, parts, supplies, and
materials for mobile mixing and processing units and the ve-
hicle or trailer on which they are mounted, including highway
fuel for units operated on public highways.
(j) Sales of any residue used for fuel in a business activi-
ty that results from the harvesting of timber or the production
of wood products including slash, sawdust, shavings, edg-
ings, slabs, leaves, wood chips, bark and wood pellets
manufactured primarily from wood or wood residue.
(k) Sales of fuel consumed in manufacturing tangible
personal property, or items or property under s. 77.52 (1) (b)
or (c), Stats., in Wisconsin.
(L) Sales of fuel consumed in operating an industrial
waste treatment facility.
(3) Purchases.
(a) Service station operators who repair motor vehicles
may purchase, without tax, "for resale," repair parts and ma-
terials used in the work which are physically transferred to
their customers. This includes auto parts, chassis lubricants,
wheel greases, car waxes, paints, paint hardeners, plastic
body fillers, and welding rods.
(b) A service station operator's purchases of equipment,
tools, supplies, and other property, items, or goods not physi-
cally transferred to customers as part of the performance of a
taxable service are subject to the sales and use tax. Supplies
such as sandpaper, masking paper, masking tape, buffing
pads, paint and lacquer thinner, clean and glaze compound,
paint remover, tack rags, steel wool, metal conditioner, lac-
quer removing solvent, rubbing compound, wax and grease
remover, fluxing materials, disc adhesives, and other property
or items used or consumed in performing motor vehicle re-
pair service are taxable.
Note: Section Tax 11.49 interprets ss. 77.52 (2) (a) 8m., 9., and 10.
and (2m) (b) and 77.54 (3), (5), (9a), (11), and (30), Stats.
Note: The interpretations in s. Tax 11.49 are effective under the
general sales and use tax law on and after September 1, 1969, except: (a)
Sales of coal, fuel oil, propane, steam and wood used for fuel became
exempt July 1, 1979, pursuant to Chapter 1, Laws of 1979; (b) Sales of
jet fuel to persons who were not certified or licensed carriers were taxa-
ble prior to January 1, 1982; (c) If the excise tax on motor fuel or special
fuel is refunded under s. 78.75, Stats., a tax is payable pursuant to 1985
Wis. Act 29, effective September 1, 1985; (d) The repair of motor vehi-
cles used in waste reduction or recycling processes is exempt pursuant to
1983 Wis. Act 426, effective July 1, 1984; (e) The repair of mobile mixing
and processing units and the vehicle or trailer on which mounted, as well
as parts, accessories, attachments, supplies and materials are exempt
pursuant to 1985 Wis. Act 29, effective July 20, 1985; (f) Peat and solid
waste fuel cubes sold for residential use are exempt pursuant to 1985
Wis. Act 149, effective April 2, 1986; (g) Wood residue sold for fuel use in
a business activity is exempt pursuant to 1987 Wis. Act 27, effective
September 1, 1987; (h) Repair to nonresident vehicles not otherwise
exempt is exempt pursuant to 1987 Wis. Act 27, effective September 1,
1987; (i) The exemption for fuel used in farming, other than in machines,
became effective October 1, 1991, pursuant to 1991 Wis. Act 39; (j) All
towing services became taxable effective May 1, 1993; (k) Fuel consumed
in manufacturing became exempt effective January 1, 2006, pursuant to
2003 Wis. Act 99; (L) Towing by a tow truck as defined in s. 340.01 (67n),
Stats., became taxable effective July 1, 2009, pursuant to 2009 Wis. Act
28; and (m) The change of the term "gross receipts" to "sales price" and
the separate impositions of tax on coins and stamps sold above face val-
ue 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.
Publication 202
78
History: Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (1) (a),
cr. (2) (f), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a) and (e),
Register, June, 1983, No. 330, eff. 7-1-83; am. (2) (a), Register, July, 1987,
No. 379, eff. 8-1-87; correction in (2) (c) made under s. 13.93 (2m) (b) 7.,
Stats., Register, April, 1990, No. 412; am. (1) (b) and (d), (2) (b), (c) and (f)
and (3) (a), cr. (2) (g), (h) and (i), Register, March, 1991, No. 423, eff. 4-1-
91; am. (1) (b) and (2) (d), renum. (1) (c) (intro.) and (2) (e) to (i) to be (1)
(c) and (2) (f) to (j) and am. (1) (c), r. (1) (c) 1. to 3., cr. (1) (f) and (2) (e),
Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (1) (b) to
(e), (2) (a) to (c), (g) to (j) and (3), cr. (2) (k) and (L), eff. 10-1-09; CR 09-
090: am. (1) (b) to (e), (2) (a) to (c), (g) to (j) and (3), cr. (2) (k) and (L)
Register May 2010 No. 653, eff. 6-1-10; CR 12-014: am. (2) (b), (d) Register
August 2012 No. 680, eff. 9-1-12; CR 13-012: am. (2) (b) Register August
2013 No. 692, eff. 9-1-13; CR 14-006: am. (2) (b) Register August 2014 No.
704, eff. 9-1-14; correction in (2) (a) made under s. 13.92 (4) (b) 7., Stats.,
Register August 2014 No. 704.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
79
APPENDIX G
SECTION TAX 11.79 โ LEASES OF HIGHWAY VEHICLES AND EQUIPMENT
Tax 11.79 Leases of highway vehicles and equipment.
(1) GENERAL RULE. The sales price received from the
license, lease, or rental of motor vehicles and mobile equip-
ment used on a highway is subject to the sales and use tax.
Note: See s. Tax 11.32 for additional information ex-
plaining what is included in the "sales price."
(2) DEDUCTIONS FROM SALES PRICE. In deter-
mining a lessor's taxable receipts under sub. (1), the cost of
the following items may be deducted if they meet the condi-
tions in sub. (3):
(a) Motor vehicle fuel.
(b) Vehicle license fees.
(c) Federal highway use taxes.
(d) Public liability insurance furnished by the lessor
solely for the protection of the lessee but not including colli-
sion and comprehensive coverage.
(3) CONDITIONS FOR DEDUCTIONS. (a) The items
listed in sub. (2) may be deducted if:
(1) The charge is reasonable.
(2) The charge is separately stated in the lease agree-
ment, billing, or invoice.
(3) The lessor is willing and able to lease the motor ve-
hicle or mobile equipment without providing the items listed
in sub. (2).
(b) The deduction is limited to the lessor's cost of the
items furnished with the leased equipment.
(4) NONDEDUCTIBLE ITEMS. In determining a les-
sor's taxable sales price under sub. (1), the cost of the
following may not be deducted:
(a) Amounts spent for the lessor's own protection or
for the protection of leased property, including collision or
other insurance protection.
(b) Maintenance or repair charges incurred by the les-
sor.
(c) Interest and other financing costs incurred by the
lessor.
(d) Dispatch service.
(5) MULTISTATE USE. (a) The sales price received
from the license, lease, or rental of motor vehicles and mobile
equipment used on a highway is taxable in Wisconsin if the
license, lease, or rental payments are sourced to Wisconsin
under s. 77.522, Stats., as described in pars. (b) and (c).
(b) A license, lease, or rental of a motor vehicle, trailer,
semitrailer, or aircraft that only requires one payment, is
sourced as follows:
1. If the motor vehicle, trailer, semitrailer, or aircraft
is received by the lessee or licensee at the lessor's or licen-
sor's business location, the payment is sourced to the lessor's
or licensor's business location.
2. If the motor vehicle, trailer, semitrailer, or aircraft
is not received by the lessee or licensee at the lessor's or li-
censor's business location, the payment is sourced to the
location where the lessee or licensee or the lessee's or licen-
see's designated donee receives the product. This would
include the location indicated by instructions known to the
lessor or licensor for delivery to the lessee or licensee or the
lessee's or licensee's designated donee. The delivery may be
made by the lessor or licensor or by a shipping company
hired by the lessee or licensee.
3. If the location cannot be determined under subds. 1.
and 2., the payment is sourced to the lessee's or licensee's
address as indicated by the lessor's or licensor's business rec-
ords, if the records are maintained in the ordinary course of
the lessor's or licensor's business and if using that address to
establish the location of the lease, license, or rental is not in
bad faith.
4. If the location cannot be determined under subd. 1.,
2., or 3., the payment is sourced to the lessee's or licensee's
address as obtained during the consummation of the license,
lease, or rental, including the address indicated on the lessee's
or licensee's payment instrument, if no other address is avail-
able and if using that address to determine the location of the
lease, license, or rental is not in bad faith.
5. If the location cannot be determined under subd. 1.,
2., 3., or 4., the payment is sourced to the location from
which the motor vehicle, trailer, semitrailer, or aircraft was
shipped.
Publication 202
80
(c) Except as provided in par. (b), licenses, leases, and
rentals of motor vehicles, trailers, semitrailers, and aircraft
that are not transportation equipment, as defined in s. 77.522
(1) (a) 2., Stats., are sourced to the primary location of such
property as indicated by an address for the property that is
provided by the lessee or licensee and that is available in the
business records of the lessor or licensor that are maintained
in the ordinary course of the lessor's or licensor's business,
provided the use of such address does not constitute bad faith.
(6) EXEMPT LEASES. The sales price from the li-
cense, lease, or rental of the following property shall be
exempt from sales and use tax provided the lessor receives a
properly completed exemption certificate as described in
s. Tax 11.14:
(a) Highway vehicles, except automobiles, leased to
common or contract carriers who use the vehicles exclusively
in common or contract carriage, including urban mass trans-
portation of passengers as defined in s. 71.38, Stats.
(b) Motor vehicles not licensed for highway use which
are used exclusively and directly in conjunction with waste
reduction or recycling activities described in s. 77.54 (5) (c),
Stats.
(c) Mobile units used for mixing and processing, in-
cluding the motor vehicle or trailer on which the unit is
mounted. Accessories, attachments, parts, supplies, and mate-
rials for the mobile unit, vehicle, and trailer are also exempt.
(d) Leases of highway vehicles and equipment for re-
sale.
Note: Section Tax 11.79 interprets ss. 77.51 (13) (k) and (14) (intro.)
and (j), 77.522, 77.54 (5) (c) and (d) and (26m), and 77.58 (6), Stats.
Note: The interpretations in s. Tax 11.79 are effective under the
general sales and use tax law on and after September 1, 1969, except: (a)
The exemption for vehicles and equipment used in waste reduction or
recycling activities became effective July 1, 1984, pursuant to 1983 Wis.
Act 426; (b) The exemption for mobile mixing units became effective
July 20, 1985, pursuant to 1985 Wis. Act 29; (c) The sourcing provisions
under s. 77.522, Stats., became effective October 1, 2009, pursuant to
2009 Wis. Act 2; and (d) The change of the term "gross receipts" to
"sales price" became effective October 1, 2009, pursuant to 2009 Wis.
Act 2.
History: Cr. Register, January, 1977, No. 253, eff. 2-1-77; cr. (4) (d),
Register, September, 1984, No. 345, eff. 10-1-84; cr. (6), Register, June,
1991, No. 426, eff. 7-1-91; EmR0924: emerg. am. (1), (2) (title), (intro.), (a),
(4) (intro.), (6) (intro.) and (c), renum. (3) to be (3) (a) and (b) and am. (3)
(a) 2., r. and recr. (5), eff. 10-1-09; CR 09-090: am. (1), (2) (title), (intro.),
(a), (4) (intro.), (6) (intro.) and (c), renum. (3) to be (3) (a) and (b) and am.
(3) (a) 2., r. and recr. (5) Register May 2010 No. 653, eff. 6-1-10
.
.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
81
APPENDIX H
SECTION TAX 11.14 โ EXEMPTION CERTIFICATES
Tax 11.14 Exemption certificates.
(1) STATUTES. The sales tax status of exemption cer-
tificates is contained in s. 77.52 (13) to (17), Stats., and the
use tax status of exemption certificates is contained in
s. 77.53 (10) to (13), Stats.
(2) GENERAL.
(a) Exemption certificates are given to sellers or les-
sors by purchasers or lessees to verify that a transaction is
exempt from Wisconsin sales and use taxes. Sellers and les-
sors shall exclude from the taxable sales price those
transactions for which they have accepted a valid exemption
certificate from the purchaser. The following sales and use
tax exemption certificates may be used in Wisconsin:
1. Wisconsin sales and use tax exemption certificate,
form S-211. This is a multipurpose form which may be used
for any Wisconsin sales and use tax exemption provided by
law, except as provided in sub. (14). For direct pay, form S-
211 may be used as the document described in s. Tax 11.13
(5) (a) 2. if all of the required information is included on the
form S-211.
2. Construction contract entered into before the
effective date of county/stadium tax, form S-207CT-1. This is
a certificate which may be used by a contractor to purchase
building materials without a county or stadium tax under the
circumstances described in sub. (13).
3. Streamlined Sales and Use Tax Exemption
Certificate, SSTGB Form F0003 or Streamlined Sales and
Use Tax Exemption Certificate - Wisconsin, Form S-211-
SST. These are multistate forms which may be used to claim
any sales or use tax exemption provided under Wisconsin
law. Since these are multistate exemption certificates,
purchasers should use caution when issuing these certificates,
since they contain various exemptions that are not applicable
in Wisconsin and only apply in other states. Purchasers are
responsible for knowing if they qualify for the exemption
they are claiming in the state in which the exemption is being
claimed. The purchaser will be held liable for any tax,
interest, and penalties that result from the purchaser claiming
an exemption for which they were not eligible.
(b) Use of an exemption certificate designed by the de-
partment is not required by law. A person may use a substitute
exemption certificate if it contains all the essential infor-
mation relating to the transaction and if it is in a form
approved by the department. Paper exemption certificates
must be signed by and bear the name and address of the pur-
chaser, the name and address of the seller, a general
description of the purchaser's business and the reason for the
claimed exemption. An electronic exemption certificate shall
contain the same information as a paper exemption certifi-
cate, except that a signature is not required.
(c) If a purchaser provides an exemption certificate in-
dicating that the property, item, good, or service purchased
will be used for activities or under circumstances which make
the purchase of the property, item, good, or service exempt
from the sales tax or for resale, and the property, item, good,
or service is subsequently used by the purchaser in a manner
that makes the property, item, good, or service ineligible for
exemption from tax, the purchaser is liable for payment of the
applicable sales or use tax.
(3) EFFECT OF OBTAINING CERTIFICATE.
(a) Except as provided in par. (b), a seller is relieved of
liability for the tax if the seller obtains from the purchaser,
prior to the date of the sale or within 90 days after the date of
the sale, a fully completed exemption certificate which indi-
cates that the purchaser will use the property or service in a
manner that is exempt from Wisconsin sales and use tax.
(b) A seller is not relieved of its liability to collect and
remit the applicable Wisconsin sales or use tax on a sale to a
purchaser if any of the following apply:
1. The seller fraudulently fails to collect the sales
or use tax.
2. The seller solicits the purchaser to claim an
unlawful exemption.
3. The seller accepts an exemption certificate
from a purchaser claiming to be an entity that is not
subject to sales and use taxes, if both of the following
apply:
a. The subject of the transaction covered by the
exemption certificate is received by the purchaser at the
seller's Wisconsin location.
b. The exemption certificate clearly and affirma-
tively indicates that the claimed exemption is not
available in Wisconsin.
Note: All retailers should be familiar with the instructions con-
tained in an exemption certificate.
(4) FAILURE TO OBTAIN CERTIFICATE.
(a) A seller who does not obtain an exemption certifi-
cate as provided in sub. (3) (a), shall be relieved from liability
Publication 202
82
for the tax if, no later than 90 days after the sale, the seller
captures and maintains all of the following data elements in
its accounting system, with respect to the transaction upon
which an exemption is being claimed:
1. Name and business address of the purchaser.
2. Purchaser's state tax identification number and
state of issue. If the purchaser does not have a state tax
identification number then the purchaser's federal em-
ployer identification number is needed. If the purchaser
does not have a federal employer identification number
then the purchaser's personal driver's license number
and state of issue is needed.
3. Purchaser's type of business.
4. The reason for the claimed exemption.
(b) If a seller does not obtain an exemption certificate
as provided in sub. (3) (a) or the relevant data elements pro-
vided in par. (a), the seller may, within 120 days after it is
requested by the department to substantiate a claimed exemp-
tion, either obtain, in good faith, a fully completed exemption
certificate from the purchaser; or by some other means pro-
vide proof that the transaction was not subject to Wisconsin
sales or use tax. If a seller cannot prove that a transaction was
exempt by one of these methods, the seller is not relieved
from liability for the tax, interest, or penalties.
1. A seller accepts an exemption certificate as provid-
ed in sub. (4) (b) in good faith if all of the following apply:
a. The exemption claimed was authorized by law
on the date of the transaction in the jurisdiction to which the
transaction is sourced.
b. The exemption could be applicable to the
property, item, good, or service being purchased.
c. The exemption being claimed is reasonable for
the purchaser's type of business.
2. If a seller obtains the information in subd. 1., the
seller is relieved of its liability for the tax unless it is discov-
ered through the audit process that the seller had knowledge
or reason to know at the time the information relating to the
exemption was provided that the information was materially
false or the seller otherwise knowingly participated in an ac-
tivity intended to purposefully evade the tax that is properly
due on the transaction.
(5) CONTINUOUS CERTIFICATES.
(a) Continuous or blanket exemption certificates do not
expire and need not be renewed at any prescribed interval.
However, they should be renewed at reasonable intervals in
case of a business change, registration number change, or
discontinuance of the specific business claiming the exemp-
tion. The seller should periodically review exemption certifi-
cates on file to ascertain that the person claiming the
exemption is the person who furnished the certificate.
(b) If a purchaser provides a continuous or blanket ex-
emption certificate, the purchaser may not issue "this time
only" purchase orders or similar documents cancelling the
continuous or blanket exemption certificate for the one trans-
action only. In addition, the notation "taxable" on a purchase
order is not sufficient to relieve a purchaser of the responsi-
bility for a previously issued continuous or blanket
certificate. The seller is not liable for the tax on transactions
covered by a valid exemption certificate. If a purchaser does
not want a continuous or blanket exemption certificate to
apply, it must notify the seller in writing that it is rescinding a
previously issued continuous or blanket exemption certifi-
cate.
(6) RESALE.
(a) Effect of obtaining exemption certificate claiming
resale.
1. The burden of proving that a sale of property,
items, goods, or services is not at retail is upon the seller un-
less the seller accepts an exemption certificate from the
purchaser as provided in sub. (3) (a) or captures and main-
tains the data elements as required in sub. (4) (a) that indicate
the property, item, good, or service is purchased for resale.
Obtaining the certificate or capturing and maintaining the
data elements that indicate the property, item, good, or ser-
vice is purchased for resale, relieves the seller from liability
for the sales tax and the duty of collecting the use tax.
2. If a purchaser gives an exemption certificate as
provided in sub. (3) (a) or provides the data elements de-
scribed in sub. (4) (a), claiming resale for property, item,
good, or service acquired and then makes any storage or use
of the property, item, good, or service other than retention,
demonstration, or display while holding it for sale, lease, li-
cense, or rental in the regular course of business, the storage
or use is taxable to the purchaser as of the time the property,
item, good, or service is first stored or used. The sales tax
shall be reported and paid by the purchaser with the tax return
for the period in which the property, item, good, or service is
first so stored or used.
(b) Contents of exemption certificates claiming resale.
An exemption certificate claiming resale shall contain the
following information for the seller to be relieved from the
burden of proving the sale of property or services was not a
taxable sale:
1. The name, address, and signature of the purchaser,
except that if the exemption certificate is received electroni-
cally, a signature is not required.
2. A general description of the purchaser's business.
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
83
3. The basis for the claimed exemption including the
seller's permit number of the purchaser, except that:
a. A wholesaler who sells only to other sellers for re-
sale may insert "wholesale only" in the space for a seller's
permit number.
b. A person registered as a seller in another state, who
makes no retail sales in Wisconsin, may insert the name of
the state in which registered and the permit number issued to
the person by that state.
c. A person who makes exempt sales only in the regu-
lar course of business may insert the words "exempt sales
only" in the space for a seller's permit number.
(7) MANUFACTURING EXEMPTION.
(a) A supplier who accepts a fully completed exemp-
tion certificate claiming a manufacturing exemption marked
for "continuous" use may make sales to the manufacturer
without collecting the tax if the nature of the property, items,
or services sold qualifies for one of the exempt uses claimed
by the manufacturer on the form. If an exemption certificate
is a "continuous" form, each purchase order of the manufac-
turer shall refer to it. If an individual order contains both
exempt and non-exempt purchases, the purchaser shall desig-
nate which items are taxable.
(b) If the manufacturer uses "single purchase" certifi-
cates, it may print these as an integral part of its purchase
orders, as long as the essential information on the approved
form is retained.
(8) FARMER'S EXEMPTION. A retailer shall have a
signed exemption certificate for every exempt sale made to a
farmer, except that if the exemption certificate is received
electronically, a signature is not required.
Note: Section Tax 11.12 describes the types of property, items,
goods, and services which may be sold to farmers without tax, and the
use of the exemption certificate to claim farming exemptions.
(9) EXEMPTION FOR FUEL OIL, PROPANE,
COAL, STEAM, AND WOOD FOR FUEL FOR
RESIDENTIAL OR FARM USE. A retailer shall have a
signed exemption certificate if the sale of fuel oil, propane,
coal, steam or wood for residential or farm use is partially
exempt from sales or use tax, except that if the exemption
certificate is received electronically, a signature is not re-
quired. If the sale is 100% exempt, an exemption certificate is
not required.
(10) EXEMPTION FOR ELECTRICITY AND
NATURAL GAS SOLD FOR RESIDENTIAL OR FARM
USE. A retailer of electricity or natural gas shall have a
signed exemption certificate, except that if the exemption
certificate is received electronically, a signature is not re-
quired, for all sales of electricity or natural gas for residential
or farm use which are exempt from sales or use tax unless
any, or all, of the following apply:
(a) 100% of the electricity or natural gas is for exempt
use.
(b) The sale is to an account which is properly classi-
fied as residential or farm pursuant to schedules which are
filed for rate tariff with the Wisconsin public service commis-
sion which are in force at the time of the sale.
(c) The sale is to an account which is properly classi-
fied as residential or farm for classification purposes as
directed by the federal rural electrification administration.
(11) GOVERNMENT SALES AND USE TAX
EXEMPTION.
(a) A retailer of tangible personal property, items,
property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., or
taxable services may accept from a federal or Wisconsin gov-
ernmental unit or any federally recognized American Indian
tribe or band in Wisconsin, an exemption certificate as pro-
vided in sub. (3) (a) or the data elements as required in sub.
(4) (a) as proof that a sale is exempt from sales or use tax.
(b) In lieu of accepting an exemption certificate as
provided in par. (a), a retailer who issues its billing or invoice
in the name of the Wisconsin or federal governmental unit or
any federally recognized American Indian tribe or band in
Wisconsin, may accept either one of the following:
1. A purchase order or similar written document from
the governmental unit or tribe or band, identifying itself as
the purchaser.
2. A verbal indication of the governmental unit's or
tribe's or band's, certificate of exempt status, or CES, number,
which the retailer shall record on the copy of the invoice it
retains.
(12) OTHER EXEMPTIONS. The Wisconsin sales and
use tax exemption certificate, form S-211, and the Stream-
lined Sales and Use Tax Exemption Certificate, SSTGB Form
F0003, may also be used to claim any other sales and use tax
exemption provided by law, including the following:
(a) Containers and other packaging, packing, and ship-
ping materials used to transfer merchandise to customers of
the purchaser.
(b) Tangible personal property and items under s. 77.52
(1) (b), Stats., that are used exclusively and directly by a
manufacturer in manufacturing an article of tangible personal
property or item or property under s. 77.52 (1) (b) or (c),
Stats., that is destined for sale and that becomes an ingredient
or component part of the article of tangible personal property
or item or property under s. 77.52 (1) (b) or (c), Stats., des-
tined for sale or is consumed or destroyed or loses its identity
in manufacturing the article of tangible personal property or
Publication 202
84
item or property under s. 77.52 (1) (b) or (c), Stats., destined
for sale, except as provided in s. 77.54 (30) (a) 6., Stats.
(c) Trailers or accessories, attachments, parts, supplies,
materials, and service on motor trucks, tractors, and trailers
which are used exclusively in common or contract carriage.
(d) Property, items, goods, or services purchased di-
rectly by and used by a religious, charitable, educational,
scientific, or other organization or governmental unit holding
a Certificate of Exempt Status, "CES". Sales to organizations
holding a CES also can be shown to be exempt by a retailer's
recording the certificate number on its bill of sale. A corpora-
tion, community chest fund, foundation, or association
organized and operated exclusively for religious, charitable,
scientific, or educational purposes, or for the prevention of
cruelty to children or animals, which is located out-of-state,
may use the Wisconsin sales and use tax exemption certifi-
cate, form S-211, or the Streamlined Sales and Use Tax
Exemption Certificate, SSTGB Form F0003, to purchase
without tax even though it has not been issued a Wisconsin
CES number.
(e) Railway cars, locomotives and other rolling stock
used in railroad operations, or accessories, attachments, parts,
lubricants, or fuel therefor.
(f) Commercial vessels and barges of 50-ton burden or
over engaged in interstate or foreign commerce or commer-
cial fishing, and accessories, attachments, parts, and fuel
therefor.
(13) CONSTRUCTION CONTRACTS ENTERED
INTO BEFORE THE EFFECTIVE DATE OF A COUNTY
OR STADIUM TAX.
(a) The certificate for a construction contract entered
into before the effective date of a county tax, or a stadium tax
as defined in s. Tax 11.001 (2) (d), form S-207CT-1, is used
by contractors to purchase building materials without the
county or stadium tax. The certificate shall be used by a con-
tractor only if the following 3 conditions are met:
1. The contractor entered into a written contract or
made a formal bid before the effective date of the county or
stadium tax to construct, alter, repair, or improve real estate
for another person.
2. The written contract is for a fixed price that cannot
be changed or the formal written bid cannot be altered or
withdrawn.
3. The building materials purchased on or after the ef-
fective date of the county or stadium tax are affixed and made
a part of real estate in fulfilling the written contract or formal
written bid.
(b) The certificate shall give the descriptive name of
the contract, job site, county or stadium tax effective date,
date of prime contract and bid, date contract was signed,
seller's name, date of performance of the contract, and con-
tractor's name and address and shall be signed by the
contractor, except that if the certificate is received electroni-
cally, a signature is not required.
(14) DIRECT PAY PERMITS. The use of direct pay
permits in Wisconsin is authorized under s. 77.52 (17m),
Stats. A person may apply to the department for a direct pay
permit.
Note: For information on who qualifies for a direct pay permit and
how to use direct pay, refer to s. Tax 11.13.
(15) IMPROPER USE OF CERTIFICATES.
(a) A purchaser who gives an exemption certificate
knowing at the time that the transaction is not exempt may be
guilty of a misdemeanor under s. 77.52 (16), Stats. The pur-
chaser may also be liable for other penalties provided by law
for filing incorrect returns.
(b) A purchaser who uses an exemption certificate in a
manner that is prohibited by or inconsistent with Wisconsin
law or who provides incorrect information to a seller or certi-
fied service provider relating to an exemption being claimed
will also be subject to a penalty of $250 for each invoice or
bill of sale related to the prohibited or inconsistent use to
which the incorrect information applies.
(16) EXEMPTION CERTIFICATE NOT NEEDED
FOR CERTAIN SALES. No exemption certificate is required
for sales of property, items, goods, or services that are ex-
empt from Wisconsin sales and use tax under s. 77.54 (7),
(7m), (8), (10), (11), (14), (15), (17), (20n), (21), (22b), (31),
(32), (35), (36), (37), (42), (44), (45), (46), (51), and (52),
Stats.
Note: Section Tax 11.14 interprets ss. 77.52 (13) to (17), 77.53 (10)
to (13), 77.60 (13), and 77.77 (3), Stats.
Note: The interpretations in s. Tax 11.14 are effective under the
general sales and use tax law on and after September 1, 1969, except: (a)
The exemption for railroad lubricants became effective July 1, 1978,
pursuant to Chapter 418, Laws of 1977; (b) The use of direct pay per-
mits in Wisconsin became effective for taxable years beginning on or
after January 1, 1995, pursuant to 1993 Wis. Act 437; (c) The elimina-
tion of the exemption certificate requirement for sales of certain
consigned commodities became effective December 1, 1997 as it relates
to sales taxes on commodities consigned for resale, pursuant to 1997 Wis.
Act 27, and June 17, 1998 as it relates to sales and use taxes on commod-
ities consigned for sale, pursuant to 1997 Wis. Act 237; (d) The
multipurpose exemption certificate, form S-211, was created in Novem-
ber 1998 to replace various types of exemption certificates; (e) The
removal of the good faith requirement if a fully completed exemption
certificate is obtained by the seller from the purchaser within 90 days of
the date of sale became effective October 1, 2009, pursuant to 2009 Wis.
Act 2; (f) The requirement that a seller is allowed 120 days after the
Department of Revenue requests that they obtain an exemption certifi-
cate or otherwise prove that a transaction is exempt became effective
October 1, 2009, pursuant to 2009 Wis. Act 2; (g) The exemption from
sales and use tax for federally recognized American Indian bands or
tribes in Wisconsin became effective July 1, 2009, pursuant to 2009 Wis.
Act 28; (h) The acceptance of the Streamlined Sales and Use Tax Exemp-
tion Certificate to prove a transaction is exempt became effective
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
85
October 1, 2009, pursuant to 2009 Wis. Act 2; (i) The penalty for prohib-
ited or inconsistent use of an exemption certificate or direct pay permit
became effective October 1, 2009 pursuant to 2009 Wis. Act 2; (j) The
identification of the specific exemptions for which an exemption certifi-
cate is not required became effective October 1, 2009, pursuant to 2009
Wis. Act 2; and (k) 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.
History: History: Cr. Register, November, 1978, No. 275, eff. 12-1-78;
am. (7) (a)., Register, June, 1983, No. 330, eff. 7-1-83; cr. (2) (c) and am.
(10), Register, July, 1987, No. 379, eff. 8-1-87; cr. (2) (a) 5. and 6., (10),
(11) and (14), am. (2) (a), (5) (b), (6) (b) (intro.) and 5., (7) (a) (intro.) and
4. and 5., (8) (a) and (9), renum. (10) and (11) to be (12) and (13) and am.,
Register, March, 1991, No. 423, eff. 4-1-91; am. (2) (c), (3) (b) and (c), (6)
(b) 4., r. and recr. (12), Register, June, 1995, No. 474, eff. 7-1-95; renum.
(12), (13) and (14) to be (13), (14) and (15), am. (2) (a) (intro.), cr. (2) (a) 7.
and (12), Register, October, 1997, No. 502, eff. 11-1-97; am. (1) (c), (3) (a)
and (b), (5) (b), (6) (a) 2., (b), 3., r. and recr. (2) (a) 1. and 2., cr. (6) (b) 4. c.
and (16), r. (2) (a) 3. to 7., (7) (b), (10) (b), (11) (b) and (12) (b) 1., renum.
(7) (a) 1. to 6. to be (12) (a) to (f) and am. (12) (d), renum. (8) to (10) (a) to
be (7) to (9) and am. (7) (a), (8) and (9), renum. (11) (a) 1. to 3. to be (10)
(a) to (c), renum. (12) (a) to be (11) (a) and am., renum. (12) (b) 2. and 3.,
(13), (14) and (15) to be (11) (b) 1. and 2., (13), (14) and (15) and am. (13)
(a), 1. and 3. and (b), Register, August, 1999, No. 524, eff. 9-1-99; CR 02-
128: am. (6) (a) 2., and (13) (a) (intro.) and (b), Register July 2003 No.
571, eff. 8-1-03; EmR0924: emerg. am. (2) (a) (intro.), 1., (b), (c), (5) (a),
(6) (a) 1., 2., (b) 2., (7) (a), (11), (12) (intro.), (b) to (f), (13) (a) 1. and (b),
cr. (2) (a) 3. and (15) (b), r. and recr. (3), (4), (5) (b) and (16), r. (6) (b) 3.
and 5., renum. (6) (b) 4. and (15) to be (6) (b) 3. and (15) (a) and am. (6)
(b) 3. (intro.), eff. 10-1-09; CR 09-090: am. (2) (a) (intro.), 1., (b), (c), (5)
(a), (6) (a) 1., 2., (b) 2., (7) (a), (11), (12) (intro.), (b) to (f), (13) (a) 1. and
(b), cr. (2) (a) 3. and (15) (b), r. and recr. (3), (4), (5) (b) and (16), r. (6) (b)
3. and 5., renum. (6) (b) 4. and (15) to be (6) (b) 3. and (15) (a) and am. (6)
(b) 3. (intro.) Register May 2010 No. 653, eff. 6-1-10; CR 10-094: am. (2)
(c), (3) (a), (4) (b), (5) (a), (6) (a), (7) (a), (9), (12) (a), r. and recr. (4) (c)
Register November 2010 No. 659, eff. 12-1-10; CR 12-014: am. (2) (a) 3.,
(6) (b) 1., (8), (9), (10) (intro.), (13) (b) Register August 2012 No. 680, eff.
9-1-12.
Publication 202
86
APPENDIX I
Page 1 of 2
Sales and Use Tax Information for Motor Vehicle Sales, Leases, and Repairs
87
APPENDIX I
Page 2 of 2
Publication 202
88
APPENDIX J
IRS Annual Lease Value Table
(From IRS Reg. ยง 1.61-21(d)(2) as of May 1, 2017)
Automobile
Fair Market Value
Annual
Lease
Value*
Automobile
Fair Market Value
Annual
Lease Val-
ue*
$0 to 999
$ 600
22,000 to 22,999
$ 6,100
1,000 to 1,999
850
23,000 to 23,999
6,350
2,000 to 2,999
1,100
24,000 to 24,999
6,600
3,000 to 3,999
1,350
25,000 to 25,999
6,850
4,000 to 4,999
1,600
26,000 to 27,999
7,250
5,000 to 5,999
1,850
28,000 to 29,999
7,750
6,000 to 6,999
2,100
30,000 to 31,999
8,250
7,000 to 7,999
2,350
32,000 to 33,999
8,750
8,000 to 8,999
2,600
34,000 to 35,999
9,250
9,000 to 9,999
2,850
36,000 to 37,999
9,750
10,000 to 10,999
3,100
38,000 to 39,999
10,250
11,000 to 11,999
3,350
40,000 to 41,999
10,750
12,000 to 12,999
3,600
42,000 to 43,999
11,250
13,000 to 13,999
3,850
44,000 to 45,999
11,750
14,000 to 14,999
4,100
46,000 to 47,999
12,250
15,000 to 15,999
4,350
48,000 to 49,999
12,750
16,000 to 16,999
4,600
50,000 to 51,999
13,250
17,000 to 17,999
4,850
52,000 to 53,999
13,750
18,000 to 18,999
5,100
54,000 to 55,999
14,250
19,000 to 19,999
5,350
56,000 to 57,999
14,750
20,000 to 20,999
5,600
58,000 to 59,999
15,250
21,000 to 21,999
5,850
For vehicles having a fair market value in excess of $59,999, the annual lease value is equal to (.25 X the fair market
value of the automobile) + 500.
* Annual lease value must be divided by 12 to arrive at monthly lease value.
