Wis. Admin. Code § Tax 11.27 — Maintenance contracts, insurance, and warranties

Tax 11.27(1) (1) Definitions. In this section:

Tax 11.27(1)(a) (a) “Computer software maintenance contract” means a contract that obligates a vendor of computer software to provide a customer with future updates or upgrades to computer software, computer software support services, or both.

Tax 11.27(1)(b) (b) “Insurance” means a contract or agreement which promises indemnity against loss or damage resulting from perils outside of and unrelated to defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats.

Tax 11.27(1)(c) (c) “Warranty” means a contract or agreement which promises indemnity against defects in tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., sold.

Tax 11.27(2) (2) Receipts from insurance. The sales price from the sale of insurance, except contracts under s. 77.52 (2) (a) 13m. , Stats., are not subject to Wisconsin sales or use tax when separately stated on the invoice provided to the purchaser.

Tax 11.27(3) (3) Receipts from maintenance contracts and warranties. Section 77.52 (2) (a) 13m. , Stats., imposes Wisconsin sales tax on the sale of contracts, including service contracts, maintenance agreements, computer software maintenance contracts for prewritten computer software, and warranties, that provide, in whole or in part, for the future performance of or payment for the repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., unless the sale, license, lease, or rental in this state of the property, items, or goods to which the contract relates is or was exempt, to the purchaser of the contract, from taxation under subch. III of ch. 77 , Stats.

Tax 11.27(4) (4) Repairs by retailers under insurance plans.

Tax 11.27(4)(a) (a) The sales price from charges by a retailer to a customer or an insurer for taxable repair parts or taxable services performed under an insurance plan are subject to Wisconsin sales or use tax.

Tax 11.27(4)(b) (b)

Tax 11.27(4)(b)1. 1. A retailer who provides parts or performs taxable repair services to tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., under an insurance plan may purchase the tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., transferred to the customer as part of the repair without Wisconsin sales or use tax as property for resale.

Tax 11.27(4)(b)2. 2. A person who provides tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., in repairing real property under an insurance plan is the consumer of the tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., transferred to a customer as part of the repair to real property and is subject to Wisconsin sales or use tax on the purchase of the tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., transferred.

Tax 11.27(5) (5) Repairs by retailers under maintenance contracts and warranties.

Tax 11.27(5)(a) (a) The sales price from charges by a retailer to a customer for taxable repair parts or taxable services performed under a maintenance contract or warranty and that are not reimbursed by the seller of the maintenance contract or warranty are subject to Wisconsin sales or use tax.

Tax 11.27(5)(b) (b) Reimbursement to a retailer from a manufacturer or other person, whether in the form of money or replacement of parts used to perform repair services under a warranty is not subject to Wisconsin sales or use tax.

Tax 11.27(5)(c) (c)

Tax 11.27(5)(c)1. 1. A retailer who provides parts or performs taxable repair services to tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., under a maintenance contract or warranty may purchase the tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., transferred to the customer as part of the repair without Wisconsin sales or use tax as property, items, or goods for resale.

Tax 11.27(5)(c)2. 2. A person who provides tangible personal property or items or property, under s. 77.52 (1) (b) or (c) , Stats., in repairing real property under a maintenance contract or warranty is the consumer of the tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., transferred to a customer as part of the repair to real property and is subject to Wisconsin sales or use tax on the purchase of the tangible personal property or items or property, under s. 77.52 (1) (b) or (c) , Stats., transferred.

Tax 11.27(6) (6) Repairs not by retailers. If a retailer does not repair tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c) , or (d) , Stats., under a maintenance contract, warranty, or insurance plan, but instead has another person perform the repairs covered under the maintenance contract, warranty, or insurance plan, the person’s sales price from the sale of the repair to the retailer is not subject to Wisconsin sales or use tax provided the retailer gives the person a properly completed exemption certificate. The charge for repairs by the other person is exempt as a sale for resale whether or not the original sale of the property, item, or good to which the maintenance contract, warranty, or insurance plan relates occurred in Wisconsin. The sales and use tax treatment of the charge by the retailer to the customer or plan provider is the same as provided in subs. (4) and (5) .

Tax 11.27(7) (7) Goodwill work. A retailer who provides free parts or services or both to a customer under an implied warranty in order to maintain good customer relations, although not required to do so under a sales agreement, maintenance agreement, express warranty, or insurance plan may purchase the parts without Wisconsin sales or use tax for resale.