Wis. Admin. Code Department of Revenue Tax 11.57

Current through September 30, 2024

Section Tax 11.57 - Utilities

(1) TAXABLE SALES. Sales of the following tangible personal property, items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., and services provided by utilities are taxable:

(a) Utility services billed to household, industrial, or commercial customers, with any adjustments for discounts taken by customers in the utility's next reporting period.

Example: An early payment discount is adjusted for in the next reporting period.

(b) Excess use charges and minimum or idle service charges.

(c) The gross amounts received for contacts on poles and excess pole height contributions.

(d) Parking space rentals.

(e) Rentals of transformers located on a customer's property.

(f) Labor and materials to install or repair conversion burners.

(g) The rental of water heaters.

(h) Sales of scrap, gravel, or timber sold for removal.

(i) Sales of tools, used equipment, and other tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., to employees or other purchasers.

(j) Pilot relights for furnaces, such as "no heat" calls, or replacing appliance fuses.

(k) Sale of a utility overhead transmission or distribution line in place, if installed under easement or license on land owned by others.

Note: See s. Tax 11.86 for more information.

(l) Charges to builders to put in "temporary services."

(2) NONTAXABLE SALES. The following sales to customers are not subject to the tax:

(a) Connection or reconnection charges for natural gas, electricity, and water.

(b) Utility services delivered to Indians living on an Indian reservation, or services delivered on the reservation to an Indian tribal governing board.

(c) Billings for repairs to persons who damaged utility property.

(d) Services coincidental with house moving.

(e) Pilot relight of yard gas lamp.

(f) Contributions in aid of construction, such as payments by a customer to have a line extended to the customer's property.

(g) The installation charge for a pole sold to a customer, which is installed on land owned by the customer.

(h) "Wheeling" energy for another utility.

(i) Sales of fuel and electricity for use in farming, including agriculture, dairy farming, horticulture, floriculture, silviculture, beekeeping, and custom farming services.

(im) Sales of fuel and electricity consumed in manufacturing tangible personal property, or items or property under s. 77.52(1) (b) or (c), Stats., in Wisconsin.

(j) Labor charged a customer for the installation of a complete furnace or built-in appliance.

(k) Water delivered to customers through mains.

(l) Coal, fuel oil, propane, steam, peat, fuel cubes produced from solid waste and wood used for fuel, sold for residential use.

(m) Biomass, as defined in s. 196.378(1) (ar), Stats., that is used for fuel sold for residential use.

(n) Electricity and natural gas sold during the months of November, December, January, February, March, and April for residential use. For purposes of this exemption, s. 77.54(30) (b), Stats., provides that electricity or natural gas is considered sold at the time of billing. If the billing is by mail, the time of billing is the day on which the billing is mailed. In any event, a qualifying customer shall receive only 6 months of service exempt from taxation during the November through April period.

(o) Low-income assistance fees that are charged under s. 16.957(4) (a) or (5) (a), Stats.

(p) If fuel or electricity is sold to a person partly for an exempt use and partly for a use that is not exempt, no tax shall be collected by the seller on the portion of the sales price of the fuel or electricity that is used for an exempt purpose, as specified on an exemption certificate provided by the purchaser to the seller, as described in par. (q).

(q)

1. Where a building, that contains residential quarters and commercial operations, is heated by one central heating plant, it is necessary to determine the portion of the fuel purchased which qualifies for the "residential use" exemption. The percentage of residential use may be computed by dividing the number of square feet used for residential purposes, excluding common areas, by the total area heated, excluding common areas. If this does not produce a reasonable result, any other reasonable method of estimating may be used. The resulting percentage should be rounded to the nearest 10%.

2. In this subsection, " residential use" means use in a structure or portion of a structure that is a person's permanent principal residence. Use in a residence includes heating or cooling the premises, heating water, operating fans or other motors, providing lighting, and other ordinary uses by the purchaser in a residence. Residential use includes use in single-family homes, duplexes, townhouses, condominiums, mobile homes, rooming houses, apartment houses, nursing homes, and farm houses, if the structure is used as a person's permanent principal residence. Residential use includes use in apartment houses, nursing homes, and farm houses even though they are on a commercial or rural meter.

3. "Non-residential use" is use other than "residential use" as defined in subd. 2., and includes any use in the conduct of a trade, business or profession, whether the trade, business or profession is carried on by the owner of the premises or some other person. It includes use in secondary residences, motor homes not used as a permanent principal residence, travel trailers, other recreational vehicles, and transient accommodations. "Transient accommodations" include hotels, motels, inns, travel homes, tourist houses, summer cottages, apartment hotels, or resort lodges or cabins, and any accommodation which is rented for a continuous period of less than one month.

Examples:

1) A person owns a home in Wisconsin where he resides for 7 month search year and a cottage, also in Wisconsin, where he resides for 5 months each year. The home is his principal residence and the cottage is his secondary residence.

2) A person is a resident of Florida and has a home in Florida. The person also retains a home in Wisconsin. The person's Florida home is her principal residence and her Wisconsin home is her secondary residence.

4. A "continuous" certification designation is provided on the exemption certificate, form S-211, and, if claimed, the form remains in effect until replaced or revoked. A new certificate shall be filed if there is a change in the percentage of exempt use.

(r)

1. Service provided by an electric cooperative to another electric cooperative, or by a telecommunications utility to another telecommunications utility, for disaster relief work performed during a disaster period.

2. In this paragraph:

a. "Disaster period" has the meaning given in s. 77.54(68) (b)2, Stats.

b. "Disaster relief work" has the meaning given in s. 77.54(68) (b)3, Stats.

c. "Electric cooperative" has the meaning given in s. 76.48(1g) (c), Stats.

d. "State of emergency" has the meaning given in s. 77.54(68) (b)4m, Stats.

e. "Telecommunications utility" has the meaning given in s. 196.01(10), Stats.

3. The exemption in this paragraph does not apply to materials and supplies used in performing exempt disaster relief services.

(3) TAXABLE PURCHASES.

(a) Persons engaged in the business of providing electrical or gas utility service are consumers of the tangible personal property, items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., and taxable services used in providing the utility services. The tax applies to the sales of the property, items, goods, or services to them, except where a specific exemption applies, such as the exemptions shown in sub. (4).

(b) The purchase, license, lease, or rental of the following property, items, goods, and services by a utility are subject to the tax:

1. Transformers, substation equipment, and other tangible personal property and items and property under s. 77.52(1) (b) and (c), Stats., used to construct, improve, or repair a transmission or distribution line.

2. A contractor's charges for the construction, improvement, or repair of an overhead utility transmission or distribution line installed under easement or license on land owned by others.

Note: See s. Tax 11.86 for more information.

3. Charges for coating pipe or creosoting poles.

4. Charges for X-ray testing of welding joints in the construction of overhead utility facilities.

5. Gas or electricity purchased for resale but used by a utility, but not gas used as a fuel in producing electricity or steam.

6. Charges for aerial photographs and maps.

(4) NONTAXABLE PURCHASES. The following purchases, licenses, leases, or rentals by utilities are not subject to the tax:

(a) Fuel converted to electrical energy, gas or steam by utilities, as provided under s. 77.54(6) (am)3, Stats.

(b) A steam generator or other machines and equipment exclusively and directly used in manufacturing electricity or steam. The manufacturing process begins when the coal starts moving by conveyor directly to the boiler bunker, and it ends at the generator bus duct. An overhead crane used for the installation and repair of a turbine, and a fuel storage tank are not directly used in manufacturing.

(c) Any residue used as a fuel in a business activity that results from the harvesting of timber or the production of wood products, including slash, sawdust, shavings, edgings, slabs, leaves, wood chips, bark and wood pellets manufactured primarily from wood or wood residue.

(d) Charges for X-ray testing of welding joints in the pipe as part of the construction of underground utility pipelines.

(5) WASTE TREATMENT FACILITIES. The sales price from the sales of and the storage, use or other consumption of tangible personal property and items and property under s. 77.52(1) (b) and (c), Stats., which becomes a component part of an industrial waste treatment facility that is exempt or that would be exempt under s. 70.11(21), Stats., if the property or items were taxable under ch. 70, Stats., is exempt from sales and use tax.

(6) TRANSFER OF TRANSMISSION FACILITIES. Excluded from the definition of "sale," for sales and use tax purposes, is the transfer of transmission facilities, as defined in s. 196.485(1) (h), Stats., to a transmission company, as defined in s. 196.485(1) (ge), Stats., after the organizational start-up date, as defined in s. 196.485(1) (dv), Stats., of such company in exchange for securities, as defined in s. 196.485(1) (fe), Stats.

Note: Section Tax 11.57 interprets ss. 77.51(14g) (fm), 77.52(1) and (2) (a) 10., and 77.54 (3), (6) (am) 1. and 3., (17), (26m), (30), (44), and (68), Stats.

Wis. Admin. Code Department of Revenue Tax 11.57

Cr. Register, January, 1979, No. 277, eff. 2-1-79; cr. (2) (L), Register, January, 1983, No. 325, eff. 2-1-83; am. (2) (a) and (4) (a), Register, June, 1983, No. 330, eff. 7-1-83; cr. (4) (c), Register, April, 1990, No. 412, eff. 5-1-90; am. (2) (e) 1., Register, June, 1990, No. 414, eff. 7-1-90; am. (1) (a), (i), (j) and (k), (2) (f), (g), (i) and (L) 7. and 8., (3) (a) and (b) 1., 2. and 4. and (4) (a), cr. (4) (d) and (5), Register, June, 1991, No. 426, eff. 7-1-91; am. (2) (i), Register, April, 1993, No. 448, eff. 5-1-93; EmR0924: emerg. am. (title), (1) (intro.), (a), (h), (i), (2) (intro.), (a), (i), (3) (a), (b) (intro.), 1., 2., (4) (intro.), (d) and (5), cr. (2) (im), (m) to (q) and (6), r. and recr. (2) (L) and (4) (c), eff. 10-1-09; CR 09-090: am. (title), (1) (intro.), (a), (h), (i), (2) (intro.), (a), (i), (3) (a), (b) (intro.), 1., 2., (4) (intro.), (d) and (5), cr. (2) (im), (m) to (q) and (6), r. and recr. (2) (L) and (4) (c) Register May 2010 No. 653, eff. 6-1-10; correction in (4) (a) made under s. 13.92(4) (b) 7, Stats., Register August 2014 No. 704.

Amended by, CR 20-018: am. (2) (i), cr. (2) (r) Register July 2021 No. 787, eff. 8/1/2021

The interpretations in s. Tax 11.57 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The exemption for sales of coal, fuel oil, propane, steam and wood became effective July 1, 1979, pursuant to Chapter 1, Laws of 1979; (b) The six-month exemption for electricity and gas became effective November 1, 1979, pursuant to Chapter 1, Laws of 1979; (c) The exemption for fuel converted to electrical energy, gas or steam by utilities became effective October 1, 1981, pursuant to Chapter 20, Laws of 1981; (d) The exemption for peat and fuel cubes produced from solid waste became effective April 2, 1986, pursuant to 1985 Wis. Act 149; (e) The exemption for wood residue became effective September 1, 1987, pursuant to 1987 Wis. Act 27; (f) The exemption for component parts of an industrial waste treatment facility became effective July 1, 1989, pursuant to 1983 Wis. Act 426, later clarified effective May 17, 1988, pursuant to 1987 Wis. Act 399; (g) The sale of gas or other fuel used to heat farm buildings, including greenhouses, that are not exempt machinery under s. Tax 11.12b ecame taxable July 1, 1991; (h) All fuel used in farming became exempt October 1, 1991, pursuant to 1991 Wis. Act 39; (i) The exemption for electricity sold for use in farming became effective May 1, 2000, pursuant to 1999 Wis. Act 9; (j) The exclusion from the definition of sale for certain sales of transmission facilities became effective October 29, 1999, pursuant to 1999 Wis. Act 9; (k) The exemption for fuel and electricity consumed in manufacturing became exempt January 1, 2006, pursuant to 2003 Wis. Act 99; (L) The exemption for certain low-income assistance fees became effective July 1, 2007, pursuant to 2005 Wis. Act 141; (m) The exemption for biomass sold for residential use became effective December 1, 2007, pursuant to 2007 Wis. Act 20; (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; (o) The exemption for services performed during a disaster period became effective January 1, 2017, pursuant to 2017 Wis. Act 290; and (p) The exemption for fuel and electricity used in "beekeeping" became effective December 1, 2017, pursuant to 2017 Wis. Act 59.