(3) MOTELS LEASED TO OPERATORS. (a) The owner of a motel often leases the complete unit, including real and personal property, to a second party who operates the motel. If the lease does not indicate the amount of the lease receipts derived from the tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., as opposed to the realty and intangible property, the taxable receipts shall be determined by multiplying the total lease receipts of each reporting period by the ratio of the lessor's purchase price of the tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., to the lessor's total gross investment in all real and personal property being leased to that operator, except as provided in par. (c). This ratio shall apply as long as the lease agreement between the lessor and lessee remains unchanged. However, the original ratio and any change in the ratio resulting from changes in the lease, due to additions to or removal of real or personal property leased, are subject to review by the department for reasonableness.(b) The numerator of the ratio in par. (a) is the purchase price of the tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., purchased by the lessor, except as provided in par. (c). This includes furniture, furnishings, equipment, or trade fixtures in an office, kitchen, restaurant, lounge, rooms, patio, and other indoor and outdoor areas; beds, bedding, linen, and towels; vending machines; and maintenance equipment. Example: If the lessor's purchase price of the tangible personal property anditems, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., is $100,000, and the lessor's gross investment is $500,000 for all real and personal property, items, and goods, taxable lease receipts shall be determined by applying a ratio of 20%($100,000 ÷ $500,000) to the gross lease receipts for each sales tax reporting period.
(c) For purposes of par. (a), if the lessor of the property under s. 77.52(1) (c), Stats., is also the lessor of the real property to which the property under s. 77.52(1) (c), Stats., is affixed, the numerator of the ratio described in par. (a), does not include the lessor's gross investment in such property, but the lessor is liable for the sales or use tax on its purchases of such property. Note: Section Tax 11.48 interprets ss. 77.51(13) (fm) and (n), 77.52(1), (2) (a) 1, 2., 5., and 9., (2m), and (21), and 77.54 (36), Stats.
The interpretations in s. Tax 11.48 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The provisions of sub. (1) (c) 1. are effective on or after August 9, 1989, pursuant to 1989 Wis. Act 31; (b) 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; (c) The clarification that a service provider who transfers tangible personal property, or items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., incidentally with a taxable service is the consumer of such property, items, or goods became effective July 2, 2013, pursuant to 2013 Wis. Act 20; (d) Clarification that a lodging provider is the consumer of telecommunication, internet, and cable TV services became effective June 23, 2017, pursuant to 2017 Wis. Act 17; and (e) Internet access services became nontaxable effective July 1, 2020, pursuant to 2017 Wis. Act 59.