Wis. Admin. Code § Tax 11.41 — Exemption of property and items consumed or destroyed in manufacturing

Tax 11.41(1) (1) General.

Tax 11.41(1)(a) (a) Tangible personal property and 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., that is destined for sale and that becomes an ingredient or component part of the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c) , Stats., destined for sale or is consumed or destroyed or loses its identity in manufacturing the article of tangible personal property or item or property under s. 77.52 (1) (b) or (c) , Stats., destined for sale is exempt from Wisconsin sales or use tax under s. 77.54 (2) , Stats., except as provided in s. 77.54 (30) (a) 6. , Stats.

Tax 11.41(1)(b) (b) Manufacturing is defined in s. 77.51 (7h) , Stats., to mean 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 11.41(2) (2) Property and items exempt.

Tax 11.41(2)(a) (a) The following property and items are within the exemption provided by s. 77.54 (2) , Stats., if the property or item is used exclusively and directly by a manufacturer in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., destined for sale and is consumed, destroyed, or loses its identity in manufacturing the property or item that is destined for sale:

Tax 11.41(2)(a)1. 1. Acids.

Tax 11.41(2)(a)2. 2. Bleaching agents.

Tax 11.41(2)(a)3. 3. Chemicals.

Tax 11.41(2)(a)4. 4. Cleaning compounds and solvents for maintaining exempt manufacturing machinery whether used while the machinery is operating or while the machinery is idle.

Tax 11.41(2)(a)5. 5. Cutting and lubricating oils.

Tax 11.41(2)(a)6. 6. Filtering clay.

Tax 11.41(2)(a)7. 7. Fluxing material.

Tax 11.41(2)(a)8. 8. Foundry sand.

Tax 11.41(2)(a)9. 9. Greases.

Tax 11.41(2)(a)10. 10. Lapping and grinding compounds.

Tax 11.41(2)(a)11. 11. Purification agents.

Tax 11.41(2)(a)12. 12. Sandpaper.

Tax 11.41(2)(a)13. 13. Shielding gases.

Tax 11.41(2)(a)14. 14. Wood used to smoke products.

Tax 11.41(2)(a)15. 15. Gloves and other wearing apparel, including hair nets, beard nets and facemasks used by employees working on the production line to prevent contamination of the product while it is being manufactured.

Tax 11.41(2)(b) (b) Tangible personal property and items under s. 77.52 (1) (b) , Stats., used exclusively and directly by a manufacturer and which become an ingredient or component part of tangible personal property or an item or property under s. 77.52 (1) (b) or (c) , Stats., destined for sale as tangible personal property or an item or property under s. 77.52 (1) (b) or (c) , Stats., is exempt from Wisconsin sales or use tax.

Tax 11.41(3) (3) Property and items not exempt.

Tax 11.41(3)(a) (a) An exemption under sub. (1) (a) is not allowed for property or items consumed or destroyed or losing their identity in manufacturing if any of the following apply:

Tax 11.41(3)(a)1. 1. The activity is not manufacturing or is not within the scope of manufacturing.

Tax 11.41(3)(a)2. 2. The property or item manufactured is not destined for sale as tangible personal property or an item or property under s. 77.52 (1) (b) or (c) , Stats.

Tax 11.41(3)(a)3. 3. The property or item is not used exclusively and directly by a manufacturer in manufacturing.

Tax 11.41(3)(b) (b) The following property and items are not within the exemption provided by s. 77.54 (2) , Stats., although the property or item may be exempt under s. 77.54 (6) (am) 1. , Stats., if the property or item is a machine or specific processing equipment, or a part for that machine or equipment, used exclusively and directly in manufacturing, as described in s. Tax 11.40 :

Tax 11.41(3)(b)1. 1. Machine drills and auger bits.

Tax 11.41(3)(b)2. 2. Milling cutters.

Tax 11.41(3)(b)3. 3. Grinding wheels.

Tax 11.41(3)(b)4. 4. Chucks, jigs, and dies.

Tax 11.41(3)(b)5. 5. Saw blades.

Tax 11.41(3)(b)6. 6. Machine tool holders.

Tax 11.41(3)(b)7. 7. Hand tools, including files, wrenches, hammers, saws, screwdrivers, planes, punches, chisels, and spray guns.

Tax 11.41(3)(b)8. 8. Wearing apparel for the comfort or welfare of the employee or for the protection of the employee’s clothing, such as helmets, hard hats, work gloves, aprons, coveralls, pants, coats, and fur-lined boots and jackets.

Tax 11.41(3)(b)9. 9. Chemicals and cleaning agents used to clean the room where manufacturing takes place, including walls, ceilings, floors, drains, windows, and doors, even if the cleaning is required in order to meet sanitation standards required by state and federal regulatory agencies.

Tax 11.41(4) (4) Fuel and electricity.

Tax 11.41(4)(a) (a) Fuel and electricity are specifically excluded from the exemption provided by s. 77.54 (2) , Stats. However, an exemption is provided in s. 77.54 (30) (a) 6. , Stats., for fuel and electricity consumed in manufacturing tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., in this state. Consistent with s. 77.51 (7h) , Stats., “fuel and electricity consumed in manufacturing” means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process and does not include fuel and electricity consumed in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, storing raw materials or finished units of tangible personal property or items or property under s. 77.52 (1) (b) or (c) , Stats., research and product development, delivery to or from the plant, repairing or maintaining plant facilities, or shipping, advertising, distribution, sales, or administrative department activities.

Tax 11.41(4)(b) (b) Fuel includes:

Tax 11.41(4)(b)1. 1. Oxygen used to enrich the fuel mixture in an industrial furnace, or oxygen and acetylene used in a welding process.

Tax 11.41(4)(b)2. 2. Coal or coke used by a foundry, except the portion of the coke which actually becomes an ingredient or component part of any grey-iron produced.

Tax 11.41(4)(b)3. 3. Gasoline, fuel oil, kerosene, natural gas, liquid propane gas, also called LPG, or other natural or synthetic liquids used as fuel.