The Wisconsin Tax Appeals Commission (the Commission) reversed a Wisconsin Department of Revenue assessment regarding whether a taxpayer’s purchase of fuel and electricity used to power air makeup units in the taxpayer’s metal finishing plants was exempt from Wisconsin sales and use tax. The Commission’s decision hinged upon whether or not the air makeup units were part of a “waste treatment facility.” To ventilate its plants, the taxpayer used a series of air makeup units to draw air in from outside to replace exhausted contaminated air and keep a balanced air supply for the rest of its exhaust ventilation and air treatment systems.
Wisconsin Statute §70.11(21) provides that “All property purchased or constructed as a waste treatment facility” is exempt. The Commission determined that because the air makeup units were an integral part of a larger system used to remove harmful air contaminants from the plants and did not cause a physical or chemical change to the contaminants as they were expelled, the air makeup units were indeed components of a “waste treatment facility.” Therefore, fuel and electricity used to operate the air makeup units in the taxpayer’s plants was exempt from Wisconsin sales tax. (PMFC Holding, LLC v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, No. 16-S-079, January 29, 2018, ¶402-234)