Section 11.13. Direct pay.

 

(1)   Definitions. In this section:

(a) "Continuous" use of a direct pay permit means that the purchase without tax applies to the purchase being made from the retailer and subsequent purchases from that retailer and is considered a part of each order given to the retailer.

(b) "Single purchase" use of a direct pay permit means that the purchase without tax applies only to the purchase being made from a retailer for which the direct pay permit is given.

(2)   General.

(a) The holder of a direct pay permit may purchase tangible personal property, items, property, and goods under s. 77.52 (1) (b) , (c) , and (d) , Stats., and taxable services, except those in sub. (6) (a) and (b) , from a retailer without paying Wisconsin sales or use tax to the retailer.

(b) The direct pay permit holder shall report Wisconsin use tax on the purchase price of tangible personal property, items, property, and goods under s. 77.52 (1) (b) , (c) , and (d) , Stats., and taxable services purchased from a retailer without tax using a direct pay permit if the property, item, good, or service is subject to Wisconsin sales or use tax. The tax shall be reported on the direct pay permit holder's Wisconsin sales tax return for the period in which the taxable storage, use, or consumption first occurs in Wisconsin.

(3)   Issuance.

(a) The department shall issue a direct pay permit to those applicants who meet the qualifications set forth in s. 77.52 (17m) (b) , Stats.

(b) Persons who wish to obtain a direct pay permit shall apply to the department using form S-101, "Application for Direct Pay Permit."

(c) A direct pay permit shall be effective for purchases made beginning on the first day of the applicant's taxable year, for Wisconsin franchise or income tax purposes, after the permit is issued.

(4)   Revocation or cancellation.

(a) A direct pay permit issued by the department may be used indefinitely until it is revoked by the department or cancelled by the holder.

(b) A permit may be cancelled by the holder by mailing the permit to the department for cancellation. A letter shall be enclosed with the permit, indicating the holder's intention to cancel the permit.

(c) The cancellation of a direct pay permit shall become effective immediately following the last day of the holder's taxable year in which the permit is received by the department.

(5)   Using direct pay.

(a) Documentation. A direct pay permit holder shall provide one of the following to a retailer when purchasing without paying tax to the retailer using a direct pay permit:

1. A copy of its direct pay permit. The direct pay permit holder shall also provide to the retailer a written statement as to whether the direct pay permit is for a single purchase or is continuous.

2. A form S-211, "Wisconsin Sales and Use Tax Exemption Certificate," or other written document, either of which contains all of the following:

a. The name and address of the direct pay permit holder.

b. A statement that the direct pay permit holder is purchasing without Wisconsin sales or use tax using a direct pay permit.

c. The direct pay permit holder's direct pay permit number.

d. The effective date of the direct pay permit.

e. A statement as to whether the use of the direct pay permit is for a single purchase or is continuous.

f. The signature of the direct pay permit holder.

(b) Continuous use.

1. If a direct pay permit holder indicates in writing to a retailer that the use of the direct pay permit is continuous, that purchase and all subsequent purchases from the retailer, except those in sub. (6) (a) and (b) , shall be made without paying Wisconsin sales or use tax to the retailer using the direct pay permit, unless the continuous use is voided by the direct pay permit holder. The direct pay permit holder may void the continuous use of its direct pay permit by furnishing the retailer a letter indicating that continuous use no longer applies.

2. If the use of a direct pay permit is continuous, it is necessary for the direct pay permit holder to provide the documentation in par. (a) to a retailer only at the time the direct pay permit holder begins making purchases without paying tax to that retailer using the direct pay permit, rather than at the time of each purchase.

3. While the use of a direct pay permit is continuous, all purchases from a retailer, except those in sub. (6) (a) and (b) , shall be made using the direct pay permit even though an exemption certificate requiring different documentation may apply.

(c) Single purchase. If a direct pay permit holder uses its direct pay permit for a single purchase, any subsequent purchase by the direct pay permit holder from that retailer is subject to Wisconsin sales or use tax unless the direct pay permit holder provides the information in par. (a) for that purchase or that purchase is otherwise exempt from tax.

(d) Retailer records. The retailer shall keep the information provided by the direct pay permit holder under par. (a) on file as authorization for the direct pay permit holder to make purchases without paying tax to the retailer.

(6)   Services and property not eligible for direct pay.

(a) Services. A direct pay permit holder shall pay Wisconsin sales or use tax to a retailer on the retailer's sales of services to the direct pay permit holder under the following Wisconsin statutes:

1. Section 77.52 (2) (a) 1. , Stats., relating to furnishing rooms or lodging.

2. Section 77.52 (2) (a) 2. , Stats., relating to admissions to amusement, athletic, entertainment, or recreational events, devices, or facilities.

3. Section 77.52 (2) (a) 5. and 5m. , Stats., relating to internet access services; prepaid calling services and intrastate, interstate, and international telecommunications services, except interstate 800 services; ancillary services, and telecommunications message services.

4. Section 77.52 (2) (a) 9. , Stats., relating to parking.

5. Section 77.52 (2) (a) 12. , Stats., relating to cable television system services.

6. Section 77.52 (2) (a) 20. , Stats., relating to landscaping services.

(b) Property. A direct pay permit holder shall pay Wisconsin sales or use tax to a retailer on the retailer's sale, lease, license, or rental to the direct pay permit holder of the following tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats.:

1. Tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., transferred to a purchaser in connection with the sale of landscaping services subject to tax under s. 77.52 (2) (a) 20. , Stats.

2. Motor vehicles, boats, snowmobiles, recreational vehicles as defined in s. 340.01 (48r) , Stats., trailers, semitrailers, all-terrain vehicles, or aircraft.

3. Candy as defined in s. 77.51 (1fm) , Stats., soft drinks as defined in s. 77.51 (17w) , Stats., dietary supplements as defined in s. 77.51 (3n) , Stats., prepared foods as defined in s. 77.51 (10m) , Stats., and alcoholic beverages as defined in s. 77.51 (1b) , Stats.

(c) Exemptions. Although not eligible to be purchased without paying Wisconsin sales or use tax to a retailer using a direct pay permit, the taxable services and tangible personal property, and items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., described in pars. (a) and (b) may be purchased without Wisconsin sales or use tax if a resale, farming, manufacturing, or other exemption applies. Documentation is required to purchase without tax, as provided in s. Tax 11.14 .

(d) Penalty for prohibited or incorrect use. A person who uses a direct pay permit in a manner that is prohibited by or inconsistent with the Wisconsin sales and use tax laws or who provides incorrect information to a seller or certified service provider related to their direct pay permit shall be subject to a penalty of $250 for each invoice or bill of sale related to the prohibited or inconsistent use of their direct pay permit as provided in s. 77.60 (13) , Stats.

(7)   Retailer's liability — permit revoked or cancelled. A retailer is not liable for sales or use tax on the sales price from the sale of tangible personal property, items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., or taxable services, except those described in sub. (6) (a) and (b) , to a person who has provided the retailer with the appropriate information under sub. (5) (a) , until the earlier of the following:

(a) The date the retailer is notified by the direct pay permit holder or the department that the holder's direct pay permit has been revoked by the department. A direct pay permit is considered revoked on the date the holder receives the department's notice of revocation.

(b) The last day of the direct pay permit holder's taxable year in which the retailer is notified by the holder or the department that the holder's direct pay permit is being cancelled by the holder as provided in sub. (4) (b) .

History: Cr. Register, June, 1995, No. 474 , eff. 7-1-95; CR 02-128 : am. (1) (a), (3) (b), (5) (a) 2. (intro.) and (b) 3., Register July 2003 No. 571 , eff. 8-1-03; EmR0924 : emerg. am. (2) (a), (b), (6) (b) (intro.), 1., 2., (c), and (7) (intro.), cr. (6) (a) 3m., r. and recr. (6) (b) 3., r. (6) (b) 4., eff. 10-1-09; CR 09-090 : am. (2) (a), (b), (6) (b) (intro.), 1., 2., (c), and (7) (intro.), cr. (6) (a) 3m. and (d), r. and recr. (6) (b) 3., r. (6) (b) 4. Register May 2010 No. 653 , eff. 6-1-10; CR 10-094 : am. (6) (a) 2., 3., (b) (intro.), 2., 3., (c), r. (6) (a) 3m. Register November 2010 No. 659 , eff. 12-1-10.

Note

Purchase price, for purposes of this paragraph, has the meaning specified in s. 77.51 (12m) , Stats. Microsoft Windows NT 6.1.7601 Service Pack 1 Form S-101 is available by writing to Wisconsin Department of Revenue, Mail Stop 5-77, PO Box 8902, Madison WI 53708-8902; calling [phone]; or downloading it from the department's web site, www.revenue.wi.gov . Microsoft Windows NT 6.1.7601 Service Pack 1 Example: A person's taxable year begins July 1 for Wisconsin franchise or income tax purposes. The person files an application for a direct pay permit with the department on January 1, 2009. The person is issued a direct pay permit which is effective for purchases made on or after July 1, 2009. Microsoft Windows NT 6.1.7601 Service Pack 1 The permit to be cancelled and letter should be mailed to Wisconsin Department of Revenue, Mail Stop 5-77, PO Box 8902, Madison WI 53708-8902. Microsoft Windows NT 6.1.7601 Service Pack 1 Example: On October 1, 2009, Company A begins using its direct pay permit when purchasing tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., from Company B. Company A provides a written statement to Company B that the use of its direct pay permit will be continuous. All purchases of tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., or taxable services, except those described in sub. (6) (a) and (b), by Company A from Company B on or after October 1, 2009, while continuous use is in effect, must be made without paying sales or use tax to the retailer using the direct pay permit. While continuous use of a direct pay permit is in effect, no other exemption certificate may be used. Microsoft Windows NT 6.1.7601 Service Pack 1 Section Tax 11.13 interprets ss. 77.52 (17m) and 77.60 (13) , Stats. Microsoft Windows NT 6.1.7601 Service Pack 1 Note: The change of the term "gross receipts" to "sales price," 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., and the penalty for prohibited or inconsistent use of a direct pay permit became effective October 1, 2009, pursuant to 2009 Wis. Act 2 . Microsoft Windows NT 6.1.7601 Service Pack 1