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The Wisconsin Department of Revenue has made updates to a tax release with changes on the sales and use tax treatment of “buy one, get one free” promotions. Effective September 1, 2011, a retailer that provides a taxable product free of charge in conjunction with the purchase of another taxable product may purchase the product that is to be provided free of charge without tax, for resale. A product is considered to be provided free of charge with the purchase of another product if the customer does not have to pay an additional amount to receive the second product. The sales and use tax treatment of the second product is determined by the invoice or sales receipt provided to the customer. The second product is considered free of charge if the invoice or receipt shows the price for the second product along with the discount amount that reduces the price of the second product to zero. If the invoice or receipt shows that the customer is charged for the second product, and the charge is not discounted or adjusted to zero, the product is not considered to be provided free of charge. (Tax Release, Wisconsin Department of Revenue, December 8, 2011)

(05/21/2012)

The Wisconsin Department of Revenue (DOR) has expanded the Treasury Offset Program (TOP) and State Reciprocal Program (SRP) to allow offsets of all refunds administered by the DOR against federal debts. The TOP allows federal and state governments to exchange debtor information to offset individual income refunds for debts owed to the federal or state government. The SRP expands the reciprocal matching and offset program to allow offsets of any debts owed to the federal or state government against payments received from the federal or state government. The DOR plans to eventually expand the program further to also offset state vendor payments against federal debts. The IRS has expanded the program to allow offsets of federal vendor payments and non-salary payments against all state tax debts excluding social security and disability payments. The DOR will be able to enter into agreements with debtors to withhold a percentage or set dollar amount of each federal payment.

Fees are charged by both agencies and may be passed on to the taxpayer for which the refund was intercepted to satisfy the debt. The DOR will not reduce the Wisconsin debt offset by an income tax refund but will for all other types of intercepted refunds. The DOR charges a $25 fee for both income and other refund intercepts that are sent to the federal government, and those fees are passed on to the debtor. Debts may be referred to TOP and SRP 60 days after appeal rights have expired. DOR began mailing notices in December to businesses explaining that their debt would be referred to the federal government for payment interception. Individual income tax debtors will not receive a separate notice to warn them of potential federal payment interception because they have already been sent a TOP warning. In the case of an intercepted refund, the debtor will receive a notice with contact information for the agency that is holding the debt. (News for Tax Professionals, Wisconsin Department of Revenue, December 28, 2011)

(01/17/2012)

The Wisconsin Supreme Court has upheld the Court of Appeals’ determination that sales of tickets to classical, pop, and youth concerts are taxable because they are considered to be primarily entertainment in nature, not educational. Although the court recognized that learning was a component of attending the concerts and that the orchestra’s mission statement and certain activities were directed at educating the public in order to develop a greater appreciation for music, the court ultimately determined that most attendees viewed the event as a form of entertainment, which was highlighted in the orchestra’s promotional materials. Further, the orchestra’s optional pre and post-concert lectures and written materials about the music performed at certain concerts did not transform the performances into primarily educational events. (Milwaukee Symphony Orchestra, Inc. v. Wisconsin Department of Revenue, Wisconsin Supreme Court, No. 2008AP1684, May 5, 2010)

(05/27/2010)

Sales of food and food ingredients by hospitals, sanatoriums, nursing homes, retirement homes, community-based residential facilities, or day care centers licensed are exempt from sales and use taxes, regardless of whether the food and food ingredients are served at the facility. “Mobile meals on wheels” sold to the elderly and handicapped will continue to be exempt from tax. It was noted that this exemption does not apply to soft drinks and alcoholic beverages. Prior to October 1, 2009, the exemption applied only to meals, food, food products, and beverages that were sold by a hospital, sanatorium, nursing homes, retirement home, community-based residential facility, or day care center, and served at the facility. (Sales of Food and Food Ingredients by Hospitals and Other Facilities, Wisconsin Department of Revenue, January 19, 2010)

(03/01/2010)

Effective October 1, 2009, candy, soft drinks, dietary supplements, and prepared foods, and disposable products that are transferred with such items are exempt from sales tax only if furnished for no consideration by a restaurant to the restaurant's employee during the employee's work hours. A restaurant’s sales of such items are subject to tax. Prior to October 1, 2009, certain food, food products, and beverages and disposable products that were transferred with such items were exempt from sales tax if the items were provided by a restaurant to the restaurant’s employees during the employee’s work hours, regardless of whether the restaurant sold the items to the employee or furnished the items to the employee for no consideration. (Sales To Restaurant Employees, Wisconsin Department of Revenue, January 19, 2010)

(02/25/2010)

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