Section Tax 2.11 - Credit for sales and use tax paid on fuel and electricity(1) DEFINITIONS. In this section: (a) Fuel and electricity "consumed in manufacturing" means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process. Fuel and electricity are not "consumed in manufacturing" if they are used in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development, receiving, storage, sales, distribution, warehousing, shipping, advertising or administrative department activities. However, fuel and electricity used directly in manufacturing steam which is used by the manufacturer in further manufacturing or in heating a facility, or both, is consumed in manufacturing.(b) "Manufacturing" has the meaning specified in s. 77.51(7h) (a), Stats., by virtue of s. 71.28(3) (a) 1, Stats.(c) "Paid" has the meaning specified in s. 71.22(8), Stats.(d) "Sales and use tax under ch. 77 paid by the corporation" has the meaning specified in s. 71.28(3) (a) 2, Stats.(2) CREDIT ALLOWABLE. (a) Under s. 71.28(3), Stats., a corporation may reduce its income or franchise tax liability for the year by an amount equal to the Wisconsin state and county sales and use taxes it has paid on fuel and electricity consumed in manufacturing personal property within Wisconsin.(b) If separate gas or electric meters are not used to accurately measure the fuel and electricity consumed in manufacturing in Wisconsin, a reasonable allocation is necessary.(c) The credit is allowable for all Wisconsin and Wisconsin county sales and use taxes paid during the taxable year on fuel or electricity destined for manufacturing purposes, regardless of when the fuel or electricity was or is to be consumed. Note: Refer to Streets and Roads Construction Corporation v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-6239, July 28, 1981, and Fort Howard Paper Company v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-8266, November 1, 1983.
(3) CARRY FORWARD OF UNUSED CREDIT. (a) If a corporation is entitled to a sales and use tax credit under s. 71.28(3), Stats., the credit, to the extent not offset by the tax liability of the same year, may be offset against the tax liability of the subsequent year and each succeeding year up to a total of 15 years until the credit has been completely offset. Note: The carry forward of the sales tax credit was increased from 5 to 15 years by 1985 Wis. Act 29, and the 15 year carry forward first applies to credits carried forward from the 1980 taxable year.
(b) The sales tax credit shall first be offset against the income or franchise tax liability computed for the tax year before an unused credit from a prior year may be applied.(4) CREDIT INCLUDABLE IN NET INCOME. Under s. 71.26(2), Stats., the credit computed for sales and use taxes paid on fuel and electricity consumed in manufacturing under s. 71.28(3), Stats., shall be included in net income for the tax year. Except for tax-option corporations, the entire credit computed for the tax year is includable in net income, even though the credit is not entirely used or no income or franchise tax liability exists. Under s. 71.34(1k) (e), Stats., tax-option corporations shall only include in net income the amount of credit computed under s. 71.28(3), Stats., and used to offset the income or franchise tax liability of the current year.Wis. Admin. Code Department of Revenue Tax 2.11
Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (2) (a) r. (1) (d), (2) (b) and (3) (a), renum. (3) (b) and (c) to be (3) (a) and (b), cr. (4), Register, September, 1983, No. 333, eff. 10-1-83; am. (1) (intro.) and (3), renum. (1) (a) to (c) to be (1) (d), (b) and (a) and am., cr. (1) (c), r. and recr. (2) and (4), Register, February, 1990, No. 410, eff. 3-1-90; corrections in (1) (b) and (4) made under s. 13.92(4) (b) 7, Stats., Register April 2010 No. 652. Section Tax 2.11 interpretss. 71.26(2), 71.28(3) and 71.34(1k) (e), Stats.