BAC Review of WI Petition for Membership (WI Responses Inserted)
As of: April 6, 2009
A. Certificate of Compliance (Review of Version: Revised January 2008)
Section
301
Findings
Section 77.65(4) cited, but that provision does
not reflect Wisconsin law for compliance
purposes (that provision does not allow the
Wisconsin DOR to join the SSUTA if the
SSUTA does not have those requirements).
Sections 77.65(6)(c) and 77.65(7) specifically
state that Wisconsin’s tax law controls and not
the provisions of the SSUTA.
Sections 77.76(1) and (2) give the Wisconsin
DOR the authority for state level
administration – is (or does it already have) a
rule in place to state it has exclusive
jurisdiction?
Is there a potential problem with motor
vehicles, airplanes, snow mobile - tax for those
items can also be administered by Dept. of
Transportation and Dept. of Natural Resources
(see § 77.76(1))?
Recommendation
Notes:
Cites to sec.
77.65(4) should
be removed
Response: The cite can be removed. It was put
in there to show DOR has the authority to enter
into the Agreement.
Response: 77.76(2) provides that “…no county
or special district may intervene in any matter
related to the levy, enforcement and collection
of the taxes under this subchapter.” No county
or special district has been involved in any
audits, appeals, etc. relating to the imposition of
this tax since the date the taxes were first
enacted.
Recommend
amending sec.
77.76(1) to use
“exclusive”
instead of “full”
power
Response: DOT and DNR are not involved in
any enforcement or audit activities. They only
administer with respect to when a person
registers/titles an item with them and either
confirms they paid the tax or collects the tax
due. Typically, DOT/DNR would collect the tax
when the purchaser buys the item from a nondealer, the non-dealer did not collect the tax and
the purchaser is registering/titling the item in
Wisconsin. Any questionable situations are
routed to DOR for review, audit and
enforcement activity.
Need to consult
with DOR staff
Distribution of the local taxes appear to be
covered under § 77.76.
For county audits, § 77.59(2m) is unclear and
could allow counties to audit – is Wisconsin
DOR going to prescribed a rule to limit audits
to DOR (or to other SSUTA member states)?
Does § 77.76(2) really limit local governments
from auditing – provision only appears to
cover administrative review of the DOR’s
determinations?
Moot if change is
made to sec.
77.61(1) (see
above)
Response: Change is not needed to statute.
DOR is not going to allow counties to audit, etc.
1
Substantial
Compliance
Medium Risk
Per WI DOR
comments
changed to Low
Risk
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
302
Findings
Central registration system not yet complete
Identical tax base, reference to tax on tangible
personal property in § 77.52(1)(a) is not the
same as in § 77.71(1), (2), (3) and (4). §
77.52(1)(a) contains “including accessories,
components, attachments, parts, supplies and
materials”. Should this be corrected?
Recommendation
As of: April 6, 2009
Notes:
Set follow-up to
verify completed
Per Craig Johnson, DOR is currently working
with a vendor that has assisted other states with
the central registration system. (It will be ready
by July 1.)
Response: The phrase “including accessories…”
means that these things are included in the
definition of TPP. These same types of things
would also be subject to the county tax because
they are TPP. In addition, sec. 77.79 provides
that the provisions of subch. III (county tax) that
are consistent with subch. V. (county/stadium
tax) also apply to the taxes under subch. V.
Need to consult
with DOR staff
2
Substantial
Compliance
Medium Risk
Per WI DOR
comments, retain
Medium Risk
because a tribunal
could note
difference and
apply tax
differently
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
303
Findings
Ability to pull registration information is a
Wisconsin DOR technology issue.
§ 73.03(50)(b) only allows Wisconsin DOR to
waive the fee – it does not say a person does
not have to register (and will a rule be put in
place stating the fee is waived).
Recommendation
As of: April 6, 2009
Notes:
Need to consult
with DOR staff
Response: DOR Technology people are getting
this system ready. We have also had
discussions with David Thompson and Gary
Centilvre to make sure our system will be
configured correctly. We are anticipating that
this system will be ready around July 1, 2009.
Substantial
Compliance
Low Risk
Per WI DOR
comments, retain
Low Risk
Response: The fees will be waived for any
volunteer seller that registers through the
Streamlined Central Registration System if they
do not have a legal obligation to register. We
can put this in an Admin. Rule as well.
Need to consult
with DOR staff
Response: This will be prescribed on the forms.
For not requiring a signature, has the
Wisconsin DOR prescribed anything under §
77.51(17r)?
Agent under § 77.524(1)(ag) is probably okay,
but it should be modified to allow persons to
represent sellers as provided for in the
Agreement.
304
Relief for state tax changes should be in the
law, or at a minimum in a regulation – even if
the state presently has a law requiring 30
notice before there is a change to the tax rate
Need to consult
with DOR staff
Response: Our language is actually broader than
that required by the SSUTA in that they can
represent sellers before the SSTP states without
limitation. The agent can clearly register the
seller per 73.03(50)(d).
Need to consult
with DOR staff
Recommend law
change
Response: SSUTA requires 30 days notice and
providing relief if they do not provide 30 days
notice. Since our law (77.61(18)) requires 30
days notice, this is a moot issue.
3
Medium Risk
Per WI DOR
comments,
changed to Yes
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
305
306
307
Findings
Art. XIII, Sec. 7 addresses counties with an
area of less than 900 square miles not being
divided, but that provision does not appear to
restrict the creation of new sales/use tax taxing
districts
No problem with seller and CSP relief from
certain tax liability
Rates and Boundaries database not yet
complete
Recommendation
As of: April 6, 2009
Notes:
Recommend law
change
Response: Although this has never happened in
the past and we do not believe this will ever
happen, the worst case scenario is that if it does
happen the seller, CSP and purchaser would be
relieved of their liability as provided in sec.
77.59(9n).
Set follow-up to
verify completed
Per Craig Johnson, DOR has obtained a draft
from vendor of rates and boundaries using 9
digit postal zipcodes which should accurately
reflect local tax jurisdictions. DOR also plans
to post a rate lookup feature on its Website.
Substantial
Compliance
Medium Risk
Per WI DOR
comments
changed to Low
Risk
Yes
Low Risk
Response: The rate and boundary database has
been finalized. The files have been provided to
David Thompson, Charles Collins and Brian
Ertmer.
308
No problems with state and local tax rates
Yes
4
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
310
Findings
Recommendation
As of: April 6, 2009
Notes:
No problems found with general sourcing
provision in § 77.522(1)(b)(1) to (5).
Leasing provision in § 77.522(3) contains the
intermittent use exception but does not provide
the example of intermittent use: “such as
business property that accompanies employees
on business trips and service calls.”
Response: The use of “business property that
accompanies employees on business trips and
service calls” is just one example of
“intermittent use” and it was not felt that this
was needed in the statute. It is anticipated a
provision will be included in the Administrative
Rules for leasing to cover this example as well
as other examples of intermittent use.
Need to consult
with DOR staff
Substantial
Compliance
Medium Risk
Per WI DOR
comments, retain
Medium Risk
because
preservation of
lease under
former law should
be done
legislatively
No problems w/transportation equipment
definition.
Concern with new definition of “lease” under
§ 77.51(7) – need to verify new lease provision
only applies prospectively (leases entered into
under former law stay leases notwithstanding
new definition of “lease”)
310.1
311
Alternative sourcing provision is not
applicable
“Receive” excluding a shipping company
under § 77.522(1)(a)(1) does not apply to
services or digital goods (I don’t think this is
an issue).
Response: If an item meets the existing
definition of “lease” that definition would
continue to apply until such time as the “lease”
is modified, renewed or extended, at which time
the new definition of “lease” would apply.
Information will be included in the Admin.
Rules giving some examples. In addition, sec.
77.58(6) specifically provides that leases shall
be reported in accordance with the rules
prescribed by DOR. See also 77.54(18), Wis.
Stats.
Need to consult
with DOR staff –
suggest law
change or rule to
clarify new
definition only
applied
prospectively
N/A
Need to consult
with DOR staff
and determine if
this is an issue
Response: BAC indicated they are OK with this.
Low Risk
Per WI DOR
comments,
changed to Yes
5
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
313
Findings
Concern with whether DOR will allow
SSUTA exemption certificate for direct mail
or only its prescribed exemption form
Recommendation
As of: April 6, 2009
Notes:
DOR needs to
accept SSUTA
form
Response: DOR will accept either. Language
was changed to “exemption certificate claiming
direct mail” since that is the language that is
being used in all of the “direct mail” proposals.
Information will also be included in the Admin.
rules explaining this.
Substantial
Compliance
Medium Risk
Per WI DOR
comments
changed to Low
Risk
Yes
314
No problems found with telecom sourcing rule
315
No problems found with telecom sourcing
definitions
Still pending review
Yes
No problems found with administration of
exemptions – Wisconsin repealed provision
not allowing drop shipper to accept resale cert.
Yes
316
317
Pending Review
6
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
318
Findings
Need clarification on resort area tax – is DOR
stating it is a separate tax from its sales tax (it
does not appear to have a use tax) and that tax
should not be part of the sales tax return
Recommendation
Need to consult
with DOR staff
and determine if
this is an issue
As of: April 6, 2009
Notes:
Response: The premier resort area tax is
separate from sales tax, does not have a use tax
and is not identified as one of the taxes covered
by the SSUTA as indicated in our Membership
Petition. However, DOR will pursue a change
to provide a hold harmless provision for
“delivery” transactions until a database is
available from DOR.
Premier resorts are political subdivisions where
at least 40% of the equalized assessed value of
the taxable property in a political subdivision is
used by tourism-related retailers and where the
governing body of the political subdivision has
voted to be a premier resort area. There are
currently four such political subdivisions in the
state created between 1997 and 2006. The 1/2
percent premier resort tax must be used for
tourism infrastructure within the premier resort
area. Relevant statistics are as follows:
-Total state sales tax registrants = 175,000
-Total premier resort registrants = 600
-Total state sales tax returns FY 08 = 958,100
-Total premier resort returns FY 08 = 2800
(0.3% of state returns)
-Total state sales taxes collected FY 08 = $4.3
billion
-Total premier resort taxes collected FY 08 =
$2,744,000
Provision to file an annual tax return for tax
under $1,000 annually not found (does a
regulation already cover this?)
Need to consult
with DOR staff
and determine if
this is an issue
Response: DOR has the authority in 77.58(5) to
require returns on other than a quarterly basis.
This could be on an annual basis, monthly basis,
etc. We are not going to expect retailers to file
7additional returns in the month the retailer has
collected $1,000 or more of tax.
Substantial
Compliance
Medium Risk
Per WI DOR
comments, retain
Medium Risk
because annual
tax return filing
needs to be in the
law (or a
regulation)
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
Findings
319
Does DOR have a rule stating it will accept
payment by ACH credit or debit?
320
No problems found with bad debt provisions
321
No problems found with confidentiality and
privacy protections
Wisconsin does not have sales tax holidays
322
323
Part 1 - Cap/threshold for manufactured or
mobile homes is permitted by Section 323 C of
the Agreement.
Part 2 - However the exemption threshold that
currently exists for Internet Broadband
Equipment is limited to Dept. of Commerce
threshold or cap amounts and is not permitted.
Part B - Statutory reference contains open
parenthesis – technical change needed
Recommendation
As of: April 6, 2009
Notes:
Need to consult
with DOR staff
and determine if
this is an issue
Substantial
Compliance
Low Risk
Response: The FAQs on our website contain the
information relating to both ACH Debit and
ACH Credit. Here is the link:
Per WI DOR
http://www.revenue.wi.gov/faqs/pcs/eft.html#eft comments,
5 In addition, information on ACH Debit and
changed to Yes
Credit is contained in Admin. Rule 1.12.
Yes
Yes
N/A
Need to decide
whether this
satisfies the
agreement.
s. 77.54(48)(a) Wis. Stats was converted from
and exemption to a return deduction under s.
77.585(9)(a) Wis. Stats.
This work around avoids retailer collection
burdens and allows purchaser a way to recover
tax in same period it is paid Response: This is
allowed per Section 323 A.2. since it places no
additional burden on the retailer.
Wisconsin has
converted a
capped exemption
to a return
deduction by the
purchaser
No additional sections were omitted or intended
per Craig Johnson
Response: Will remove open parenthesis on
Cert. of Compliance.
Legislative
change - delete
open parenthesis
8
Low Risk
Per WI DOR
comments,
changed to Yes
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
324
Findings
“As appropriate” used for calculation of the
tax on a per item or on an invoice basis under
§ 77.61(3m), is DOR going to do a rule to
clarify “as appropriate” is up to the seller and
not DOR?
In addition, that provision states that the
rounding formula is used to collect the tax but
the last sentence states a seller using this
rounding provision is not relieved from
liability of the tax under the subchapter.
Recommendation
As of: April 6, 2009
Notes:
Need to decide
whether this
satisfies the
agreement.
Response: Admin. Rule will contain examples
showing how to calculate the tax, depending on
which option the taxpayer chooses to use.
Response: If a seller collects tax on an item by
item basis and then when filing their return the
tax they actually collected is less than the tax
computed to be due by multiplying their total
taxable sales times the applicable rate, the
retailer still owes the amount computed by
multiplying their total taxable sales times the
applicable rate. Likewise, if the seller collects
tax on an item by item basis and then when
filing their return the tax they actually collected
is more than the tax computed to be due by
multiplying their total taxable sales times the
applicable rate, the retailer only owes the
amount computed by multiplying their total
taxable sales times the applicable rate.
Need to consult
with DOR staff
and decide
whether this
satisfies the
agreement.
Substantial
Compliance
Medium Risk
Per WI DOR
comments, retain
Medium Risk
because option to
collect the tax
needs to be the
sellers and “tax
due” to WI should
be based on
rounding under
this section
325
No problems found with refund provisions
Yes
326
No problems found with direct pay permits
Yes
9
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
327
Findings
Digital code language in § 77.51(3pc) does not
match Sec. 332 of the Agreement.
Recommendation
As of: April 6, 2009
Notes:
Need to decide
whether this
satisfies the
agreement
Response: Our definition takes into account the
definition contained in the SSUTA as well as
the requirements and restrictions contained in
the SSTGB Rule 332.1.G.2 through 5.
Direct mail definition in § 77.51(3pd) is more
expansive in defining packaging.
Need to decide
whether this
satisfies the
agreement
Response: Our definition takes into account
both the definition contained in the SSUTA and
CRIC Interpretation 2006-12.
Concern with “prepared food” definition under
§ 77.51(10m)(a) – more expansive than
Agreement.
Need to decide
whether this
satisfies the
agreement
Tangible personal property definition is in the
bill twice, first version contains “regardless
how it is delivered to the purchaser” language,
§ 77.51(20) – looks like subsequent provision
repeals the first? There is also an issue with
the effective date of the change – is it
10/1/2009 or 1/1/2010?
Need to consult
with DOR and
decide whether
this satisfies the
agreement
New definition of “lease”, addressed above in
Sec. 310 of SSUTA, need to verify new lease
provision only applies prospectively (leases
entered into under former law stay leases
notwithstanding new definition of “lease”)
Wisconsin “lease or rental” definition excludes
D.
Need to consult
with DOR and
decide whether
this satisfies the
agreement
“Sales price” – question with whether or not it
conforms to the SSUTA and concern that
“purchase price” not the same.
Need to consult
with DOR and
decide whether
this satisfies the
agreement
Response: Our definition takes into account
both the definition contained in the SSUTA and
CRIC Interpretations 2006-04 and 2006-11.
Response: Section 332 of Wisconsin Act 2
applies from March 6, 2009 through September
30, 2009. Section 333 repeals the first version
and applies from October 1, 2009 and forward.
Not sure where they are getting the 1/1/2010
date from.
Response: If an item meets the existing
definition of “lease” that definition would
continue to apply until such time as the “lease”
is modified, renewed or extended, at which time
the new definition of “lease” would apply.
Information can be added to the Admin. Rules
giving some examples. 77.58(6) specifically
provides that leases shall be reported in
accordance with the rules prescribed by DOR..
See also sec. 77.54(18), Wis. Stats.
Response: The difference between the WI
definition and the SSUTA is because of certain
drafting requirements (i.e., references to
77.52(1)(b)(c) and (d)), and also because of
special exceptions relating to motor vehicles,
10modular home and manufactured homes
allowed per sec. 302 and 323 of the SSUTA.
Substantial
Compliance
Medium Risk
Per WI DOR
comments, retain
Medium Risk
because sale price
and purchase
price need to be
the same –
regulation may
work to address
special exceptions
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
328
Findings
Part C - State has noted specified digital
products in the taxability matrix, however
additional digital products are not included in
the matrix
Additional Digital Products – should this
category be included? i.e., taxability of
greeting cards, finished artwork, periodicals,
video and electronic games
As of: April 6, 2009
Recommendation
Notes:
Determine
whether
agreement
requires additional
digital goods to be
in the matrix or is
it acceptable to
include in a
supplemental
matrix
Craig Johnson did not feel it was a requirement
to include additional digital goods in the
taxability matrix
Decide whether
this category
should be added
to the matrix
Response: Section 328 does not require that
these items be included in the taxability matrix.
They could, however, be added or included in
the optional supplemental taxability matrix.
Substantial
Compliance
Low Risk
Per WI DOR
comments,
changed to Yes
Per Craig Johnson, other states appear to include
additional taxable categories in a supplemental
matrix.
Key consideration is that in the future, any new
digital product or service must be specifically
enumerated as taxable or nontaxable.
329
No problems found with effective date of tax
rate changes for services
Yes
330
No problems found with bundled transaction
language
No problems found with relief provisions
Yes
331
Yes
11
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
332
Findings
Digital code language in § 77.51(3pc) does not
match Sec. 332 of the Agreement
Division (H), tangible form of product is
exempt, then digital form is also exempt under
s.77.54(50) Wis. Stats.
333
Clarification is needed on whether product
transferred electronically is part of tangible
personal property definition - there are two §
77.51(20) provisions in the bill
There is also an issue with the effective date of
the change – is it 10/1/2009 or 1/1/2010?
401
No problem with seller participation
402
Has DOR “prescribed” the manner a person
can register for amnesty?
Recommendation
Need to decide
whether this
satisfies the
agreement
Review any
changes that WI
may make to
individual
exemptions to
cover digital vs.
tangible
application
Need to consult
with DOR and
decide whether
this satisfies the
agreement
Need to consult
with DOR
Need to consult
with DOR
As of: April 6, 2009
Notes:
Response: (Same as response to 327 question)
Our definition takes into account the definition
contained in the SSUTA as well as the
requirements and restrictions contained in the
SSTGB Rule 332.1.G.2 through 5.
Substantial
Compliance
Low Risk
Per WI DOR
comments,
changed to Yes
Craig Johnson indicated that the blanket
exemption was created to cover the requirement
of 332H of the Agreement
Response: Section 332 of Wisconsin Act 2
applies from March 6, 2009 through September
30, 2009. Section 333 repeals the first version
and applies from October 1, 2009 and forward.
77.51(20) that is compliant with the SSUTA is
effective 10/01/2009.
Response: Documents and rules not prepared
but will require to register pursuant to the
SSUTA (i.e., through Central Registration
System, etc.)
Medium Risk
Per WI DOR
comments,
changed to Low
Risk – does
1/1/2010 date on
compliance
certificate need
removed?
Yes
Low Risk
12 month versus “365 days” terminology
12 months versus 365 days is a drafting
convention issue.
403
No problems found with method of remittance
Yes
12
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
404
No problems found with agent registration
Substantial
Compliance
Yes
501
No problem with certification
Yes
502
Is a regulation needed to implement this
authority under sec. 77.65(3)
601
602
603
604
Findings
Recommendation
As of: April 6, 2009
Need to consult
with DOR
Notes:
Response: 73.03(61)(b) provides that DOR will
certify CSPs and CASs. A “certification rule” is
not required.
No problems found with Model 1 monetary
allowance
No problems found with Model 2 monetary
allowance
No problems found with monetary allowance
for others
Additional monetary allowance for SSUTA
sec. 310.1 sales
Low Risk
Per WI DOR
comments,
changed to Yes
Yes
Yes
Yes
N/A
Drugs
Cannot conclude on taxability, unless “sold to”
or “sold by” is known. Also exemptions exist
for use on farm livestock
Break matrix
down to additional
granularity if
permitted
Insulin
Medical
Oxygen
OTC
Drugs
Medical
Equip.
Same as above
Same as above
Same as above
Same as above
Response: There are use-based and entity-based
exemptions that could apply. Like other things,
many times you are not going to know the
proper tax treatment unless you know either
who the seller is or who the purchaser is. This
is a result of the way the taxability matrix is
drafted. To correct this, the taxability matrix
will need to be revised by the SSTGB.
Response: Same as above.
Response: Same as above.
Same as above
Same as above
Response: Same as above.
Admin. Code reference used for exempt sales
if paid by Medicare or Medicaid
Add reference to
statute: s.77.54(1)
Craig Johnson agreed that this would be an
appropriate statutory reference to add.
13
BAC Review of WI Petition for Membership (WI Responses Inserted)
Section
Findings
Recommendation
As of: April 6, 2009
Notes:
Wis. Stats. i.e,.
state is prohibited
from taxing under
constitution or
laws of the U.S.
14
Substantial
Compliance