Wis. Admin. Code § Tax 11.40 — Exemption of machines and processing equipment

Tax 11.40(1) (1) General.

Tax 11.40(1)(a) (a) Section 77.54 (6) (am) 1. , Stats., exempts the sales price from the sale of and the storage, use or other consumption of machines and specific processing equipment and repair parts or replacements thereof, exclusively and directly used by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., and safety attachments for those machines and equipment. “Exclusively,” as used in s. 77.54 (6) (am) 1. , Stats., and in this section, means that the machines and specific processing equipment and repair parts or replacements thereof are used solely by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., to the exclusion of all other uses, except that the sales and use tax exemption will not be invalidated by an infrequent and sporadic use other than in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats. This exemption is to be strictly construed.

Tax 11.40(1)(b) (b) Section 77.51 (7h) (a) , Stats., provides that manufacturing means the production by machinery of a new article of tangible personal property or item or property under s. 77.52 (1) (b) or (c) , Stats., with a different form, use, and name from existing materials by a process popularly regarded as manufacturing, and that begins with conveying raw materials and supplies from plant inventory to the place where work is performed in the same plant and ends with conveying finished units of tangible personal property or item or property under s. 77.52 (1) (b) or (c) , Stats., to the point of first storage in the same plant.

Tax 11.40(1)(c) (c) In determining whether a particular machine or piece of processing equipment is included in the exemption under s. 77.54 (6) (am) 1. , Stats., ss. 77.51 (7h) and 77.54 (6) (am) 1. , Stats., must be considered together.

Tax 11.40(1)(d) (d) Section 77.54 (5) (d) , Stats., provides an exemption for mobile mixing and processing units and the motor vehicle or trailer on which they are mounted, including accessories, attachments, parts, supplies and materials for those vehicles, trailers and units.

Tax 11.40(1)(e) (e) Section 77.54 (5) (c) and (26m) , Stats., provide exemptions for certain motor vehicles, machinery and equipment used in waste reduction and recycling processes.

Tax 11.40(2) (2) Conditions for exemption and examples. The exemption under sub. (1) (a) shall apply if all the following conditions are met:

Tax 11.40(2)(a) (a) Machines and processing equipment shall be used by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats. The exemption shall not apply to machines and processing equipment used in providing services or in other nonmanufacturing activities.

Tax 11.40(2)(b) (b) Machines and processing equipment shall be used exclusively in manufacturing.

Tax 11.40(2)(c) (c) Machines and processing equipment shall be used directly in manufacturing. The exemption shall not apply if machines and processing equipment are not used directly in the step-by-step processes by which an end product results, even though the machine and equipment are indirectly related to the step-by-step processes. Machine foundations are real property improvements rather than personal property and do not qualify for exemption.

Tax 11.40(3) (3) Other examples of the exemption. Other examples of application of the exemption are as follows:

Tax 11.40(3)(a) (a) Small tools used exclusively and directly in the manufacturing process qualify as “processing equipment.” Small tools include hand tools such as drills, saws, micrometers and hammers. However, if the items are also used for machine repair or general maintenance, they are not exempt.

Tax 11.40(3)(b) (b) The exemption applies if machines and processing equipment are used exclusively and directly by a manufacturer to produce other machines or processing equipment which, in turn, are used by the manufacturer to produce tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats.

Tax 11.40(3)(c) (c) The exemption applies if machines and processing equipment are used exclusively and directly by a manufacturer to produce component parts of tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats.

Tax 11.40(3)(d) (d) The exemption does not apply to machines or processing equipment used in whole or in part by a manufacturer before the manufacturing process has begun or after it has been completed.

Tax 11.40(3)(e) (e) The exemption does not apply to tangible personal property or an item, property, or good under s. 77.52 (1) (b) , (c) , or (d) , Stats., which is not machinery or equipment, but is used in a manufacturing plant.

Tax 11.40(4) (4) Repair of exempt machinery and processing equipment. The sales price from the sale of and the storage, use or other consumption of repair or replacement parts and from repair service for exempt machines and processing equipment is exempt.