1. (1) Sales of fabricating, processing, and printing services. The producing, fabricating, processing, printing, or imprinting of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., for a consideration for consumers who furnish directly or indirectly the materials used in the producing, fabricating, processing, printing or imprinting is subject to Wisconsin sales or use tax unless:

   1. (a) The printing or imprinting is done on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d), Stats., that results in printed materials that are exempt under s. 77.54 (25), Stats., or catalogs and their mailing envelopes that are exempt under s. 77.54 (25m), Stats.

      Example: Printer ABC prints an advertising flyer for Company DEF. Company DEF furnishes the paper and the ink. Company DEF will send the flyer to its customers outside Wisconsin. The charge by Printer ABC for printing the advertising flyer is not subject to Wisconsin sales tax provided Company DEF provides Printer ABC with a properly completed exemption certificate.

   2. (b) An exemption under s. 77.54 or 77.55, Stats., applies.

      Examples: 1) Company GHI is in the business of cleaning used oil. A Wisconsin municipality contracts with Company GHI to have all used oil it collects from residents cleaned by Company GHI. The charge by Company GHI to the municipality for cleaning the oil is not subject to Wisconsin sales or use tax because sales to Wisconsin municipalities are exempt from Wisconsin sales tax under s. 77.54 (9a), Stats.

      2) The charge by a feed mill to grind a farmer’s corn that the farmer will use as feed is not subject to Wisconsin sales or use tax because the sale of feed to a farmer is not subject to Wisconsin sales or use tax under s. 77.54 (3m), Stats. The farmer must provide the feed mill with a properly completed exemption certificate.

      3) The charge by a cooperative to age a cigar manufacturer’s tobacco is not subject to Wisconsin sales or use tax because a sale of tobacco to a cigar manufacturer is not subject to Wisconsin sales or use tax under s. 77.54 (2), Stats. The cigar manufacturer must provide the cooperative with a properly completed exemption certificate.

   3. (c) The producing, fabricating or processing is for resale.

      Example: Company JKL is in the business of custom making cabinets. A customer orders a cabinet from Company JKL. Due to time constraints, Company JKL is unable to make the cabinet. Therefore, Company JKL contracts with Company MNO to make the cabinet from materials provided by Company JKL. Company MNO is not subject to Wisconsin sales or use tax on the charge to Company JKL for making the cabinet if Company JKL provides Company MNO with a properly completed exemption certificate claiming resale.

2. (2) Examples of fabricating and processing services. Fabricating and processing services, where materials are furnished directly or indirectly by the customer, that are subject to Wisconsin sales or use tax include, except as provided in sub. (1) (a) to (c):

   1. (a) Application of coating to pipe.
   2. (b) Assembling kits to produce a completed product.
   3. (c) Bending glass tubing into neon signs.
   4. (d) Bookbinding.
   5. (e) Caterer’s preparation of food.
   6. (f) Cleaning used oil.
   7. (g) Cutting lumber to specifications and producing cabinets, counter tops or other items from lumber for customers, often called “millending.”
   8. (h) Cutting or crushing stones, gravel or other construction materials.
   9. (i) Drying, planing or ripping lumber.
   10. (j) Dyeing or fireproofing fabric.
   11. (k) Fabricating steel which may involve cutting the steel to length and size, bending and drilling holes in the steel to specifications of a particular construction job.
   12. (L) Firing of ceramics or china.
   13. (m) Heat treating or plating.
   14. (n) Laminating identification cards.
   15. (o) Making a fur coat from pelts, gloves or a jacket from a hide.
   16. (p) Making curtains, drapes, slip covers or other household furnishings.
   17. (q) Production of a sound recording or motion picture.
   18. (r) Retreading tires.
   19. (s) Tailoring a suit.
   20. (t) Threading pipe or welding pipe.

3. (3) Purchases by fabricators or processors. Persons providing fabricating, processing and printing services, including those services listed in sub. (2), may qualify as manufacturers. If the service provider qualifies as a manufacturer as provided in s. 77.51 (7h) (a), Stats., the following items may be purchased by the service provider without Wisconsin sales or use tax:

   1. (a) Machinery and equipment used exclusively and directly in manufacturing.

      Example: Company PQR is in the business of heat treating metal for steel manufacturers. Company PQR uses its machinery and equipment only in providing this heat treating to steel manufacturers. Company PQR is performing a manufacturing process in acting as a submanufacturer. Since the machinery and equipment is used exclusively and directly in manufacturing, it may be purchased without Wisconsin sales or use tax provided Company PQR gives its supplier a properly completed exemption certificate.

   2. (b) Tangible personal property or items under s. 77.52 (1) (b), Stats., that are used exclusively and directly by a manufacturer in manufacturing an article of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., destined for sale and which becomes an ingredient or component part of the property or item destined for sale or is consumed or destroyed or loses its identity in the manufacture of tangible personal property or item or property under s. 77.52 (1) (b) or (c), Stats., in any form destined for sale, except for fuel and electricity as provided in s. 77.54 (30) (a) 6., Stats.

      Example: Company VWX is an electroplater. Company STU is a manufacturer of car bumpers. Company STU hires Company VWX to electroplate the bumpers. Company VWX may purchase the caustic soda, boric acid, etc., that is consumed or destroyed in the electroplating without Wisconsin sales or use tax when acting as a submanufacturer. These items are consumed or destroyed in the manufacture of tangible personal property, bumpers, destined for sale.

      Note: Section Tax 11.38 interprets ss. 77.51 (14) (f) and (h), 77.52 (2) (a) 10. and 11., 77.54 and 77.55, Stats.

      Note: For information regarding what is manufacturing and exemptions for machinery and equipment and other items used in manufacturing, refer to ss. Tax 11.39, 11.40 and 11.41.

      Note: The interpretations in s. Tax 11.38 are effective under the general sales and use tax law on and after September 1, 1969 except that (a) The exemption for catalogs and the envelopes in which they are mailed became effective April 1, 2009 pursuant to 2007 Wis. Act 20; and (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.

History

History: Cr. Register, October, 1976, No. 250, eff. 11-1-76; r. and recr. Register, June, 1993, No. 450, eff. 7-1-93; EmR0924: emerg. am. (title), (1) (title), (intro.), (a), (2) (e) and (3) (b), eff. 10-1-09; CR 09-090: am. (title), (1) (title), (intro.), (a), (2) (e) and (3) (b) Register May 2010 No. 653, eff. 6-1-10; correction in (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653; correction in (2) made under s. 35.17, Stats., Register April 2019 No. 760.