Pub 240 Digital Goods - How do WI Sales & Use Taxes Apply to Sales & Purchases of Digital Goods? -- November 2021

Digital Goods

How Do Wisconsin Sales and Use Taxes Apply to Sales

and Purchases of Digital Goods?

Publication 240 (11/21)

Important Rate Changes!

BEGINNING JANUARY 1, 2024:

o Milwaukee County sales and use tax rate increases

from 0.5% to 0.9%

o City of Milwaukee imposes a new 2% sales and use tax

o See Fact Sheet 2414 Milwaukee Sales and Use Taxes

See the Sales Tax Rate Chart for a complete list of county

sales and use tax rates and their effective dates

TABLE OF CONTENTS

Page

1. INTRODUCTION ............................................................................................................................................. 4

A. General ................................................................................................................................................................ 4

B. What is Taxable? .................................................................................................................................................. 5

C. Use tax. ................................................................................................................................................................ 5

D. Who Must Obtain a Seller's Permit?.................................................................................................................... 5

E. Who Must Obtain A Use Tax Registration Certificate? ........................................................................................ 5

F. How to Obtain a Seller's Permit or Use Tax Registration Certificate? ................................................................. 5

G. Filing Tax Returns and Payment of Tax................................................................................................................. 6

2. WHAT ARE DIGITAL GOODS? ........................................................................................................................... 7

3. IMPOSITION OF SALES AND USE TAXES ON DIGITAL GOODS............................................................................. 8

A. Statutory Language - Sales Tax ............................................................................................................................ 8

B. Statutory Language - Use Tax .............................................................................................................................. 8

4. WHEN DOES A SALE OF A DIGITAL GOOD OCCUR? ........................................................................................... 9

5. SOURCING SALES AND PURCHASES OF DIGITAL GOODS ................................................................................... 9

A. Statutory Language .............................................................................................................................................. 9

B. Determination of Where the Sale of a Digital Good Takes Place ...................................................................... 10

C. Determination of Where the Lease, Rental, or License of a Digital Good Takes Place ...................................... 11

6. DIGITAL AUDIO WORKS ................................................................................................................................ 12

A. Statutory Language ............................................................................................................................................ 12

B. What is a Digital Audio Work? ........................................................................................................................... 12

C. What is Not a Digital Audio Work? .................................................................................................................... 12

7. DIGITAL AUDIOVISUAL WORKS ..................................................................................................................... 12

A. Statutory Language ............................................................................................................................................ 12

B. What is a Digital Audiovisual Work? .................................................................................................................. 12

C. What is Not a Digital Audiovisual Work? ........................................................................................................... 13

8. DIGITAL BOOKS ............................................................................................................................................ 13

A. Statutory Language ............................................................................................................................................ 13

B. What is a Digital Book? ...................................................................................................................................... 13

C. What is Not a Digital Book? ............................................................................................................................... 14

9. ADDITIONAL DIGITAL GOODS ....................................................................................................................... 14

A. Statutory Language ............................................................................................................................................ 14

B. What Are Additional Digital Goods? .................................................................................................................. 16

10. DIGITAL CODES ............................................................................................................................................. 17

A. Statutory Language ............................................................................................................................................ 17

B. What is a Digital Code? ...................................................................................................................................... 17

C. What is Not a Digital Code? ............................................................................................................................... 18

D. Sales and Use Tax Treatment of Digital Codes ................................................................................................... 18

11. DIGITAL GOODS NOT SUBJECT TO SALES AND USE TAXES ............................................................................... 18

12. BUNDLED TRANSACTIONS ............................................................................................................................ 19

TABLE OF CONTENTS (CONTINUED)

Page

13. EXEMPTIONS FOR DIGITAL GOODS ............................................................................................................... 20

A. Statutory Language ............................................................................................................................................ 20

B. Scope of Exemption ........................................................................................................................................... 20

C. Examples of the Exemptions For Tangible Personal Property That May Apply to Digital Goods ...................... 20

D. Exemption for Digital Goods When "Tangible Form" of Digital Good Not Subject to Tax ................................. 24

14. IF YOU HAVE QUESTIONS OR NEED ASSISTANCE ............................................................................................ 24

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IMPORTANT CHANGES

Additional Digital Goods. See Part 9.

• Clarifies that "other news or information products" are products that disseminate news or information.

• Revises the examples to clarify that charges for access to an online database or website of information that

allows the user to perform searches of the database and view and/or download the information is a taxable

sale of a news or information product.

Digital goods not subject to sales and use tax. See Part 11.

• Removes examples that contradict the guidance in Part 9.

• Clarifies that a sale may not be taxable even though a digital good is transferred to the customer, such as a

webinar transferred incidental to the sale of a nontaxable educational service.

Bundled transactions. Updated the list of taxable products included in the Example, consistent with changes to "other

news or information products" described above. See Part 12.

Remote sellers. Collection requirements began October 1, 2018. See Part 1.E.

Marketplace providers and sellers. Provisions effective January 1, 2020. See Part 1.E.

Baseball stadium district tax ended on March 31, 2020. Effective April 1, 2020, the 0.1% baseball stadium tax no longer

applies to sales and purchases made in Milwaukee, Ozaukee, Racine, Washington, or Waukesha County. See the Sales

Tax Rate Chart.

Several counties adopt the county tax. See the Sales Tax Rate Chart.

1. INTRODUCTION

A. General

This publication provides information regarding digital goods. As used in this publication, "digital goods" refers

to products that are transferred electronically but does not include prewritten computer software. Prewritten

computer software is tangible personal property regardless of the manner in which it is transferred to the

purchaser.

Wisconsin sales and use taxes apply to the sales of and the storage, use, or other consumption in Wisconsin of

"specified digital goods," "additional digital goods," and "digital codes."

Publication 235, Advertising Companies – How Do Wisconsin Sales and Use Taxes Affect Your Operations?

provides additional sales and use tax information on digital goods.

Sales and purchases of digital goods which are subject to the 5% state sales or use tax may also be subject to

the (a) 0.5% county sales or use tax and (b) 0.5% premier resort area tax (1.25% for the City of Wisconsin Dells

and the Village of Lake Delton). Additional information about these taxes is contained in the following:

(1) Sales Tax Rate Chart – Chart lists the total state and county sales and use tax rate for each county.

(2) Publication 403, Premier Resort Area Tax. Applies to certain retailers making taxable sales of tangible

personal property, certain items, digital goods, and taxable services in the cities of Bayfield, Eagle River,

Rhinelander, Wisconsin Dells and the villages of Lake Delton, Sister Bay, Stockholm, and Ephraim (effective

1/1/2022).

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B. What is Taxable?

Sales, licenses, leases, and rentals of tangible personal property, certain coins and stamps, certain leased

property affixed to realty, certain digital goods, and certain services are subject to the 5% Wisconsin state sales

tax.

For further information about these taxable products and services, see Publication 201, Wisconsin Sales and Use

Tax Information.

C. Use Tax

The 5% Wisconsin use tax is imposed on the storage, use, or other consumption in Wisconsin of taxable products

and services, if no Wisconsin sales or use tax has been previously paid.

The use tax is based on the buyer's purchase price of the taxable product or service.

D. Who Must Obtain a Seller's Permit?

Every individual, partnership, corporation, or other organization making taxable sales in Wisconsin is required

to have a seller's permit, unless all sales licenses, leases, or rentals by the seller are exempt from sales or use

tax.

E. Who Must Obtain A Use Tax Registration Certificate?

An out-of-state seller that has no physical presence or activities in Wisconsin other than making sales into

Wisconsin is a remote seller. Effective October 1, 2018, remote sellers are required to register for a use tax

registration certificate if it has gross sales into Wisconsin that exceed $100,000 or 200 or more transactions into

Wisconsin in the previous or current year.

The annual gross sales amount includes both taxable and nontaxable sales into Wisconsin. In addition, the

annual amount includes sales into Wisconsin by the remote seller on behalf of other sellers and sales made by

another seller on the remote seller's behalf.

Effective February 20, 2021, the 200-transaction threshold was eliminated, and remote sellers use a calendar

year to determine if they are required to register for a use tax registration certificate. As a result, remote sellers

that have more than $100,000 in annual gross sales in Wisconsin in either the previous or current calendar year

are required to collect and remit sales or use tax on taxable sales in Wisconsin. See the Remote Sellers Common

Questions for additional information.

F. How to Obtain a Seller's Permit or Use Tax Registration Certificate

A retailer may apply for a seller's permit or use tax registration certificate using one of the following methods:

• Use the Department of Revenue's Online Business Tax Registration process to submit the application

electronically.

• Register through the Streamlined Sales Tax Governing Board's website.

• Complete Form BTR-101, Application for Business Tax Registration, and mail it to the Department of

Revenue. Keep a copy of the completed application for your records.

Note: It is important that you fill in all the requested information on the online application, on

Form BTR-101, or on the application on the Streamlined Sales Tax Governing Board's website.

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G. Filing Tax Returns and Payment of Tax

(1) How often must a return be filed?

If you have a seller's permit, use tax registration certificate, or consumer use tax registration certificate, you

must file a return for each "reporting period," even if no tax is due for that period. Your "reporting period"

will be either monthly, quarterly, or annually. For example, if your reporting period is monthly, you must

file a return for each month of the year, regardless of whether any tax is due for the month.

Generally, your reporting period will be quarterly unless DOR notifies you in writing that your returns must

be filed monthly or annually.

Wisconsin sales and use tax returns must be filed using one of the electronic filing methods listed in Part 1.F.

A seller that is unable to file electronically may request a waiver from DOR. A waiver will be granted if the

requirement to file electronically causes an undue hardship. An example of an undue hardship is the onset

of a disabling illness or injury.

Your request for a waiver must be in writing. The request should indicate the business name, tax account

number, and the reason why your sales and use tax returns cannot be electronically filed. Requests can be

emailed, faxed or mailed to:

Email: [email protected]

Fax: (608) 267-1030

Mail: Wisconsin Department of Revenue

Mandate Waiver Request

P.O. Box 8949

Madison, WI 53708-8949

Additional information about electronic filing and funds transfer is available online or you may contact the

department by mail or email at DORBusinessTax@wisconsin.gov or by telephone at (608) 266-2776.

If you have been granted a waiver, a return will be mailed to you shortly before the end of each reporting

period. If you do not receive your return within 15 days after the end of the reporting period, call DOR at

(608) 266-2776.

(2) Electronic filing and payment options available for sales and use tax return filing

(a) My Tax Account

My Tax Account is a free, secure, online application that allows you to file and pay your sales and use

taxes electronically. It performs the necessary computations of tax based on information that you enter

and allows you to make your tax payment via electronic funds transfer, credit card, or paper check. My

Tax Account also allows you to:

• View business tax filing and payment history and identify any tax periods that need attention.

• Change your address, obtain an extension to file a return, or inactivate your account.

• File a buyer's claim for refund of sales tax paid to a seller in error.

• Appeal adjustment notices.

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To use My Tax Account, you must obtain a logon ID and password from DOR. Go to the My Tax Account

Common Questions on DOR's website for more information, including how to obtain your logon ID and

password.

(b) Sales TeleFile

You can file your Wisconsin sales and use tax return with any touch-tone telephone. This program

accepts four payment types: Direct withdrawal from your checking or savings account (only available

during the call in which you file your return); credit card, check, or money order. To use TeleFile, obtain

a Sales TeleFile Worksheet and Payment Voucher from DOR's website. When you have completed the

worksheet, call (608) 261-5340 (Madison number) or (414) 227-3895 (Milwaukee number) to actually

file your return.

This program is a service for taxpayers using approved private vendors' software or who have the

technical expertise to create a file in XML format. e-file transmission places return data into a file format

that can be directly processed into DOR system. Using secure transmission over the Internet you can

submit a payment at the same time that you file your return using ACH debit or ACH credit. You will

receive an email acknowledgement to confirm receipt of a successful file transmission. Information

about file transmission can be found on DOR's website.

If you have questions about electronic filing or payments, contact the department by writing to

Wisconsin Department of Revenue, Electronic Funds Transfer Assistance, Mail Stop 3-80, PO Box 8902,

Madison, WI 53708-8902; calling (608) 266-2776; or emailing at DORBusinessTax@wisconsin.gov.

2. WHAT ARE DIGITAL GOODS?

A "digital good" can be any product that is transferred electronically to the purchaser, other than prewritten

computer software. "Transferred electronically" means accessed or obtained by the purchaser by means other than

tangible storage media.

Digital goods include versions of products that have historically been produced and transferred as articles of tangible

personal property and are now produced and transferred electronically. A certain digital good may also be available

for transfer as an article of tangible personal property. However, it is not necessary for a product transferred

electronically to have a tangible counterpart in order to be a digital good.

Example: Recorded music has been produced and sold in the form of vinyl LPs, cassette tapes, and CDs. More

recently, recorded music has been produced and sold as a digitally-encoded file which is transferred electronically

to the purchaser. Recorded music transferred electronically is a digital good.

A digital good can be a transmission of sound, images, or any combination thereof, such as a live radio or television

broadcast, regardless of whether the transmission is an analog signal or a digital signal.

A digital good can be previously recorded sounds or images such as music, movies, or video or electronic games that

are transferred electronically to customers by retailers of such products.

A digital good can be a newsletter, magazine, newspaper, or report that is transferred electronically to the

purchaser.

It is not necessary for the purchaser of the digital good to record the digital good on tangible storage media for the

product to be considered a digital good.

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Example 1: A retailer sells a movie and "streams" the movie to the purchaser using the Internet. The purchaser

watches the movie as it is being "streamed" without having the right to record the movie. The retailer is selling a

digital good.

Example 2: A retailer sells a movie and uploads the movie to the purchaser using the Internet. The purchaser has

the right to and does record the movie on a hard drive. The purchaser has the right to watch the movie as many

times as he wishes by playing the recorded movie file. The retailer is selling a "digital good."

"Transferred Electronically"

A digital good is characterized by the fact that it is transferred electronically to the purchaser. Section 77.51(21q),

Wis. Stats., provides that:

" 'Transferred electronically' " means accessed or obtained by the purchaser by means other than tangible storage

media."

Typical means of transferring a digital good electronically to a purchaser include uploading the digital good using

the Internet, streaming the digital good over the Internet, and emailing the digital good to the purchaser.

A digital good is transferred electronically regardless of whether the purchaser is allowed to make or retain a copy

of the digital good.

Caution: "Transferred electronically" is a term that applies to digital goods. "Delivered electronically" is a term that

applies to prewritten computer software. Prewritten computer software delivered electronically is tangible personal

property and not a digital good for purposes of Wisconsin's sales and use tax laws.

3. IMPOSITION OF SALES AND USE TAXES ON DIGITAL GOODS

A. Statutory Language – Sales Tax

Section 77.52(1)(d), Wis. Stats., provides the following:

"A tax is imposed on all retailers at the rate of 5 percent of the sales price from the sale, lease, license, or rental

of specified digital goods and additional digital goods at retail for the right to use the specified digital goods or

additional digital goods on a permanent or less than permanent basis and regardless of whether the purchaser

is required to make continued payments for such right."

"Specified digital goods" is defined by sec. 77.51(17x), Wis. Stats.:

"Specified digital goods" means digital audio works, digital audiovisual works, and digital books. For purposes

of this subchapter, the sale of or the storage, use, or other consumption of a digital code is treated the same as

the sale of or the storage, use, or other consumption of any specified digital goods for which the digital code

relates."

For the statutory definition of "additional digital goods," see Part 9.

B. Statutory Language – Use Tax

Section 77.53(1), Wis. Stats., provides, in part, the following:

"…[A]n excise tax is levied and imposed…on the storage, use, or other consumption of goods in this state under

s. 77.52 (1) (d) purchased from any retailer, if the purchaser has the right to use the goods on a permanent or

less than permanent basis and regardless of whether the purchaser is required to make continued payments for

such right, at the rate of 5 percent of the purchase price of the goods; and on the storage, use or other

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consumption of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d)

manufactured, processed or otherwise altered, in or outside this state, by the person who stores, uses or

consumes it, from material purchased from any retailer, at the rate of 5% of the purchase price of that material."

4. WHEN DOES A SALE OF A DIGITAL GOOD OCCUR?

Section 77.585(8)(b), Wis. Stats., provides the following:

(1) "Except as provided in subd. 2., a sale or purchase involving a digital good under s. 77.52 (1) (d) is completed at

the time when possession is transferred by the seller or the seller's agent to the purchaser or the purchaser's

agent or when the digital good is first used, whichever comes first.

(2) A sale or purchase of a product transferred electronically, including a digital good under s. 77.52 (1) (d), that is

sold by subscription, is completed at the time when the payment for the subscription is due to the seller. For

purposes of this subdivision, 'subscription' means an agreement with a seller that grants the consumer the right

to obtain products transferred electronically from within one or more product categories having the same tax

treatment, in a fixed quantity or for a fixed period of time, or both."

Note: The examples below illustrate the application of sec. 77.585(8)(b), Wis. Stats., to the sale of digital codes.

Digital codes are discussed in Part 10.

Example 1: On September 28, 2020, Customer placed an order for a digital good with Retailer. The contract for sale

is NOT in writing. Retailer mailed the digital code, on a plastic card, to Customer. Customer received the digital code

on September 30, 2020, at their mailbox located in Wisconsin. The sale of the digital code occurs on September 30,

2020, the date Retailer's agent (the U.S. Postal Service) transferred possession of the digital code to Customer.

Example 2: Customer places an order with Retailer for a gift subscription for digital audio works on October 10,

2020. The subscription is in the name of a recipient provided by Customer. Retailer is to notify the recipient of the

gift subscription during the week before Christmas Day 2020. The subscription agreement provides that Retailer will

bill Customer for the subscription in January 2021. Retailer's sale of the subscription occurs in January 2021, when

it bills Customer for the subscription as provided by the terms of the subscription agreement.

5. SOURCING SALES AND PURCHASES OF DIGITAL GOODS

A. Statutory Language

Section 77.522(1)(a)1., Wis. Stats., provides the following:

" 'Receive' means taking possession of tangible personal property or items or property under s. 77.52 (1) (b) or

(c); making first use of services; or taking possession or making first use of digital goods under s. 77.52 (1) (d),

whichever comes first. 'Receive' does not include a shipping company taking possession of tangible personal

property or items or property under s. 77.52 (1) (b) or (c) on a purchaser's behalf."

Section 77.522(1)(b), Wis. Stats., provides the following:

"Except as provided in par. (c) and subs. (3), (4), and (5), the location of a sale is determined as follows:

(1) If a purchaser receives the product at a seller's business location, the sale is sourced to that business

location.

(2) If a purchaser does not receive the product at a seller's business location, the sale is sourced to the location

where the purchaser, or the purchaser's designated donee, receives the product, including the location

indicated by the instructions known to the seller for delivery to the purchaser or the purchaser's designated

donee.

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(3) If the location of a sale of a product cannot be determined under subds. 1. and 2., the sale is sourced to the

purchaser's address as indicated by the seller's business records, if the records are maintained in the

ordinary course of the seller's business and if using that address to establish the location of a sale is not in

bad faith.

(4) If the location of a sale of a product cannot be determined under subds. 1. to 3., the sale is sourced to the

purchaser's address as obtained during the consummation of the sale, including the address indicated on

the purchaser's payment instrument, if no other address is available and if using that address is not in bad

faith.

(5) If the location of a sale of a product cannot be determined under subds. 1. to 4., including the circumstance

in which the seller has insufficient information to determine the locations under subds. 1. to 4., the location

of the sale is determined as follows:

(a) If the item sold is tangible personal property or an item or property under s. 77.52 (1) (b) or (c), the sale

is sourced to the location from which the tangible personal property or item or property under s. 77.52

(1) (b) or (c) is shipped.

(b) If the item sold is a digital good or computer software delivered electronically, the sale is sourced to the

location from which the digital good or computer software was first available for transmission by the

seller, not including any location that merely provided the digital transfer of the product sold.

Section 77.522(3)(a), Wis. Stats., provides the following:

"Except as provided in pars. (b) and (c), with regard to the first or only payment on the lease or rental, the lease

or rental of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) is sourced

to the location determined under sub. (1) (b). Subsequent periodic payments on the lease or rental are sourced

to the property's, item's, or good's primary location as indicated by an address for the property, item, or good

that is provided by the lessee and that is available to the lessor in records that the lessor maintains in the

ordinary course of the lessor's business, if the use of such an address does not constitute bad faith. The location

of a lease or rental as determined under this paragraph shall not be altered by any intermittent use of the

property, item, or good at different locations."

Section 77.522(3)(d), Wis. Stats., provides that:

"A license of tangible personal property or items or property under s. 77.52(1)(b), (c), or (d), shall be treated as

a lease or rental of tangible personal property under this subsection."

B. Determination of Where the Sale of a Digital Good Takes Place

The following hierarchy is used to source the sale (but not a lease, rental, or license) of a digital good to a

location:

(1) If the purchaser takes possession or makes first use of the digital good at the seller's place of business, the

sale is sourced to (i.e., takes place at) that location.

Example 1: Customer purchases three songs at Retailer's store. While at the store, Retailer electronically

transfers the songs to Customer's device. The sale is sourced to Retailer's store location (sec. 77.522(1)(b)1.,

Wis. Stats.).

(2) If 1. does not apply, the sale is sourced to (i.e., takes place at) the location where the purchaser, or the

purchaser's designated donee, takes possession or makes first use of the digital good, including the location

indicated by the instructions known to the seller for delivery to the purchaser or the purchaser's designated

donee.

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Example 2: Company has several business locations in Wisconsin and Minnesota. Company purchases a

subscription from Retailer. The subscription allows employees of Company, using a computer, monitor, and

Internet access, to go to Retailer's website, enter a username and password, and select and view training

videos covering a variety of topics for a period of one-year. The subscription is a sale of a digital audiovisual

work. Company provides Retailer with written information indicating that Company will make first use of

the product at a location in Wisconsin. The sale is sourced to Wisconsin, as the location indicated by the

instructions known to the seller for delivery to the purchaser or the purchaser's designated donee is a

location in Wisconsin (sec. 77.522(1)(b)2., Wis. Stats.).

(3) If 1. or 2. do not apply, the sale is sourced to (i.e., takes place at) the purchaser's address as indicated by

the seller's business records, if the records are maintained in the ordinary course of the seller's business

and if using that address to establish the location of a sale is not in bad faith.

Example 3: Customer, a resident of Wisconsin, visits Retailer's website. Customer purchases a movie, which

Retailer electronically transfers to Customer's device. At the time of the transfer, Retailer does not know

where Customer's device is located, but Retailer does have Customer's address that it maintains in its

records in the ordinary course of its business. The sale is sourced to Customer's address (sec. 77.522(1)(b)3.,

Wis. Stats.).

(4) If 1., 2., or 3. do not apply, the sale is sourced to (i.e., takes place at) the purchaser's address as obtained

during the consummation of the sale, including the address indicated on the purchaser's payment

instrument, if no other address is available and if using that address is not in bad faith.

Example 4: Customer, a resident of Wisconsin, visits Retailer's website. Customer purchases a movie using

a credit card. Retailer then electronically transfers the movie to Customer's device. At the time of the sale,

Retailer does not know where Customer will take possession or make first use of the movie. Retailer does

not have an address for Customer in the records it maintains in the ordinary course of its business. Prior to

completing the sale, Retailer requires its customers to provide their name, address, an email address, and

phone number. Retailer sources the sale to the address furnished by Customer (sec. 77.522(1)(b)4., Wis.

Stats.).

(5) If the location of a sale of the digital good cannot be determined under 1., 2., 3., or 4., including the

circumstance in which the seller has insufficient information to determine the location under 1., 2., 3., or

4., the sale is sourced to (i.e., takes place at) the location from which the digital good was first available for

transmission by the seller, not including any location from which the digital good was merely transferred

electronically.

C. Determination of Where the Lease, Rental, or License of a Digital Good Takes Place

The following is used to source the lease, rental, or license of a digital good:

(1) With regard to the first or only payment on the lease, rental, or license of the digital good, the lease, rental,

or license is sourced to the location as determined under Part 5.B.

(2) Subsequent periodic payments on the lease, rental, or license are sourced to the digital good's primary

location as indicated by an address for the digital good that is provided by the lessee or licensee and that is

available to the lessor or licensor in records that the lessor or licensor maintains in the ordinary course of

the lessor's or licensor's business, if the use of such an address does not constitute bad faith. The location

of a lease, rental, or license as determined under this paragraph shall not be altered by any intermittent use

of the digital good at different locations.

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6. DIGITAL AUDIO WORKS

A. Statutory Language

Section 77.51(3pa), Wis. Stats., provides that:

" 'Digital audio works' means works that result from the fixation of a series of musical, spoken, or other sounds

that are transferred electronically, including prerecorded or live music, prerecorded or live readings of books or

other written materials, prerecorded or live speeches, ringtones, or other sound recordings but not including

audio greeting cards sent by electronic mail."

B. What is a Digital Audio Work?

Examples of digital audio works include:

• Recorded or live songs

• Recorded or live readings of books or other written materials

• Recorded or live speeches or lectures

• Ringtones (digitized sound files that are downloaded onto a device and that may be used to alert the

customer regarding a communication, but not including ringback tones or other digital audio files that are

not stored on the purchaser's communication device)

• Background music furnished to business, industry, and others from a central studio over telephone circuits

or by FM radio

C. What is Not a Digital Audio Work?

• Works that contain visual elements in addition to sound (see "digital audiovisual works" in Part 7.)

• Audio greeting cards transferred electronically (see note below)

• Recorded music, audio books, or recorded speeches or lectures that are transferred using a tangible

medium such as tape or CD

• Ringback tones and other digital audio files which are not stored on the purchaser's communication device

Note: While audio greeting cards transferred electronically are not "digital audio works," they are "additional

digital goods." See Part 9. for additional information.

7. DIGITAL AUDIOVISUAL WORKS

A. Statutory Language

Section 77.51(3p), Wis. Stats., provides that:

" 'Digital audiovisual works' means a series of related images that, when shown in succession, impart an

impression of motion, along with accompanying sounds, if any, and that are transferred electronically. 'Digital

audiovisual works' includes motion pictures, musical videos, news and entertainment programs, and live events,

but does not include video greeting cards or video or electronic games."

B. What is a Digital Audiovisual Work?

Examples of digital audiovisual works include:

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• Movies

• Motion pictures

• Musical videos

• News and entertainment programs

• Live or recorded events, such as professional football games or stock car races

• Prerecorded webinars that are not provided incidentally with educational services (see article titled "Sales

and Use Tax Treatment of Education Products, Goods, and Services" for additional information)

C. What is Not a Digital Audiovisual Work?

• Video greeting cards (see note below)

• Video or electronic games (see note below)

• Movies, music videos, news and entertainment programs, or video or electronic games transferred other

than electronically, such as on a tape or CD

Note: While video greeting cards and video or electronic games transferred electronically are not "digital

audiovisual works," such items are "additional digital goods." See Part 9. for additional information.

8. DIGITAL BOOKS

A. Statutory Language

Section 77.51(3pb), Wis. Stats., provides that:

" 'Digital books' means works that are generally recognized in the ordinary and usual sense as books and are

transferred electronically. 'Digital books' includes any literary work, other than a digital audio work or digital

audiovisual work, that is expressed in words, numbers, or other verbal or numerical symbols or indicia, if the

literary work is generally recognized in the ordinary and usual sense as a book, work of fiction or nonfiction, or

a short story, but does not include newspapers or other news or information products, periodicals, chat room

discussions, or blogs."

B. What is a Digital Book?

A digital book is broadly defined to include any literary work (other than a digital audio work or digital

audiovisual work) that meets all of the following:

• Is expressed in words, numbers, or other verbal or numerical symbols or indicia,

• Is generally recognized in the ordinary and usual sense as a book, work of fiction or nonfiction, or a short

story, and

• Is transferred electronically.

Examples of digital books include:

• Novels and autobiographies

• Encyclopedias, dictionaries, and repair manuals

• Phone directories, business directories, zip code directories

• Educational textbooks

• Cookbooks

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C. What is Not a Digital Book?

(1) Newspapers or other news or information products transferred electronically are not "digital books."

Examples of "Newspapers or other news or information products" include:

• Newspapers, as defined in Part 9.A.

• A website maintained by or for a local television station which posts current news, weather and sports

information for viewing by the person accessing the website

Note (1): "Newspapers or other news or information products," while not subject to tax as a "digital book," may

be subject to tax as an "additional digital good." See Part 9 for additional information.

Note (2): Newspapers are exempt from sales and use taxes, regardless of whether they are transferred

electronically or in paper form.

(2) "Periodicals" are not digital books. The statutes do not define the term "periodical." A "periodical,"

according to The American Heritage Dictionary of the English Language, Fifth Edition (2020), is: "A

publication issued at regular intervals of more than one day."

Examples of periodicals transferred electronically and that are not "digital books" include:

• Magazines issued weekly, monthly or at some other regular interval of more than on one day

• Scientific journals

• Trade publications

• Newspapers issued at regular intervals other than daily

Note: A "periodical," while not subject to tax as a digital book, may be subject to tax as an "additional digital

good." See Part 9 for additional information.

(3) Chat room discussions are not digital books.

Example: A person, using a computer and Internet access, reaches a website which hosts a "chat room."

The person enters a log-in name and password. The person is now able to see various postings by other

users, as well as being able to post their own comments to the chat room. The electronic transfer of this

information to and/or from the person, is not the electronic transfer of a "digital book."

(4) Blogs are not digital books. The term "blog" is a contraction of the term "web log." The term typically refers

to a

website with regular entries of commentary, descriptions of events, or other material such as graphics

or video.

Example: A person, using a computer and Internet access, accesses a website which hosts a blog. The person

is able to see the contents of the web log. The electronic transfer of this information is not the transfer of a

"digital book."

Note: A "blog," while not subject to tax as a digital book, may be subject to tax as an "additional digital good."

See Part 9 for additional information.

9. ADDITIONAL DIGITAL GOODS

A. Statutory Language

Section 77.51(1a), Wis. Stats., provides the following:

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"(a) 'Additional digital goods' means all of the following, if transferred electronically:

1. Greeting cards.

2. Finished artwork.

3. Periodicals.

4. Video or electronic games.

5. Newspapers or other news or information products.

(b) For purposes of this subchapter, the sale, license, lease, or rental of or the storage, use, or other consumption

of a digital code is treated the same as the sale of or the storage, use, or other consumption of any additional

digital goods for which the digital code relates."

Section 77.51(3rm), Wis. Stats., provides that:

" 'Finished artwork' means the final art used for actual reproduction by photomechanical or other processes or

for display purposes but does not include Website or home page designs. 'Finished artwork' includes all of the

following items regardless of whether such items are reproduced:

(a) Drawings.

(b) Paintings.

(d) Photographs.

(e) Lettering.

(f) Paste-ups.

(g) Mechanicals.

(h) Assemblies.

(i) Charts.

(j) Graphs.

(k) Illustrative materials." (Emphasis added)

Section 77.51(8), Wis. Stats., defines "newspaper" as follows:

" 'Newspaper' means those publications which are commonly understood to be newspapers and which are

printed and distributed periodically at daily, weekly or other short intervals for the dissemination of current

news and information of a general character and of a general interest to the public. In addition, any publication

which qualifies as a newspaper under s. 985.03 (1) is a newspaper. 'Newspaper' also includes advertising

supplements if they are printed by a newspaper and distributed as a component part of one of that newspaper's

publications or if they are printed by a newspaper or a commercial printer and sold to a newspaper for inclusion

in publications of that newspaper. A 'newspaper' does not include handbills, circulars, flyers, or the like,

advertising supplements not described in this subsection which are distributed with a newspaper, nor any

publication which is issued to supply information on certain subjects of interest to particular groups, unless such

publication otherwise qualifies as a newspaper within this subsection. In this subsection, advertising is not

considered news of a general character and of a general interest."

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B. What Are Additional Digital Goods?

Additional digital goods are those items specifically enumerated by statute (see Part 9.A.), transferred

electronically, and are not a digital audio work, a digital audiovisual work, or a digital book.

The following are examples of specific products transferred electronically that are additional digital goods:

(1) Electronic greeting cards

Example: For a fee, Individual obtains access to a website that allows Individual to select a card (e.g., a

birthday card, anniversary card, get well card), write a message for the card, and have a notification message

sent to an email address provided by Individual. The website sends an email message to the email address

and provides a link in the message. When the recipient opens the email message, the recipient is informed

that Individual has sent them a card, and the card may be viewed by clicking on the link provided. Upon

clicking on the link, the card and message is transferred electronically to the recipient for viewing. The

charges by the website are subject to Wisconsin sales or use taxes as receipts from the sale of an additional

digital good.

(2) Finished artwork

Example: Advertising Agency is hired by Department Store to design a promotional brochure. Upon

approval of the brochure design, Advertising Agency electronically transfers the brochure design to

Department Store. Department Store uses the design to print the brochures in Department Store's in-house

printing plant. Department Store provides the brochure free of charge to potential customers. Advertising

Agency's sale of the brochure design is the sale of finished artwork and is subject to Wisconsin sales and use

taxes as a sale of an additional digital good.

(3) Periodicals

Example: Company offers its customers the ability to purchase a single issue of various magazines that are

downloaded to the customer's electronic reading device. Customer purchases a single issue of a weekly

magazine, and it is transferred electronically to Customer's device. Company's charges are subject to

Wisconsin sales and use taxes as receipts from the sale of an additional digital good.

Note: Charges for certain subscriptions to magazines transferred electronically are exempt from Wisconsin

sales and use taxes. See Part 13.C.(7).

(4) Video or electronic games

Example: Retailer sells video games. When a customer purchases the game, Retailer transfers the game

electronically to the customer. Retailer charges for the video game are subject to Wisconsin sales and use

taxes as receipts from the sale of an additional digital good.

(5) Newspapers or other news or information products

(a) Newspapers

Example: Newspaper sells a print edition of its newspaper. It also sells versions of its newspaper that

are transferred electronically to the customer. One version provides the customer only all of the articles

in the paper version of the newspaper transferred electronically to the customer's device once a day.

The other version is an exact replica of the newspaper (e.g., a PDF version) with only all of the news and

advertising as it appears in the print edition and is transferred electronically to the customer's device

once a day. Both products transferred electronically are additional digital goods that are newspapers.

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Charges for newspapers, whether sold as tangible personal property or as an additional digital good,

are exempt from Wisconsin sales and use taxes.

(b) Other news or information products

"Other news or information products" refers to products that disseminate news or information.

"News" is defined in The American Heritage Dictionary of the English Language, Fifth Edition (2020), as:

"Information about recent events or happenings, especially as reported by newspapers, websites, radio,

television, and other forms of media" and includes "A presentation of such information, as in a

newspaper or on a newscast."

"Information" means a collection of facts or data.

Examples of "other news or information products" that are taxable as additional digital goods when

transferred electronically include, but are not limited to:

• Access to an online database or website of current or historical information that allows the user to

view and/or download the information. Examples include:

 Listing of job opportunities

 Construction plans and construction plan information

 Price or valuation information

 Personal information, such as address, age, or phone numbers

• Information alerts sent by email

• Newsletters transferred electronically

• Online news services

• Instructional guides

10. DIGITAL CODES

A. Statutory Language

"Digital Code" is defined by sec. 77.51(3pc), Wis. Stats., to mean:

"[A] code that provides the person who holds the code a right to obtain an additional digital good, a digital

audiovisual work, digital audio work, or digital book and that may be obtained by any means, including tangible

forms and electronic mail, regardless of whether the code is designated as song code, video code, or book code.

'Digital code' includes codes used to access or obtain any specified digital goods, or any additional digital goods

that have been previously purchased, and promotion cards or codes that are purchased by a retailer or other

business entity for use by the retailer's or entity's customers. 'Digital code' does not include the following:

(a) A code that represents any redeemable card, gift card, or gift certificate that entitles the holder of such card

or certificate to select any specified digital goods or additional digital goods at the cash value indicated by

the card or certificate.

(b) Digital cash that represents a monetary value that a customer may use to pay for a future purchase."

B. What is a Digital Code?

A digital code is a code:

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• that may be obtained by any means including tangible forms and electronic mail, regardless of whether the

code is designated as song code, video code, or book code, and

• allows the person who holds the code the right to obtain any one or more additional digital goods, digital

audiovisual works, digital audio works, or digital books.

Example: Customer purchases a "code" from Retailer. Retailer mails the "code" to Customer on a plastic card.

The code allows the holder of the card to go online, select five movies from a predetermined list of movies, and

download the movies (i.e., digital audiovisual works) from Retailer's website. There is no cash value associated

with the card. The "code" is a "digital code" because the code provides Customer the right to obtain digital

audiovisual works.

C. What is Not a Digital Code?

"Digital code" does not include:

• A code that represents a gift card or gift certificate that allows the holder of the code to select any digital

goods at the cash value indicated by the card or certificate.

• A code that is in the nature of or represents cash and that may be used to pay for a future purchase.

• A code that is redeemable for property, items, goods or services other than specified digital goods or

additional digital goods.

Example: Customer purchases a "code" from Retailer. Retailer emails the "code" to an email address provided

by Customer. The value of the "code" is $50.00. The recipient of the "code" may go online and download various

digital audio works and digital audiovisual works from Retailer's website. Using the "code," the recipient may

use the cash value to pay for the purchases. If the value of the code is exceeded, the recipient may use a credit

card to pay for the remaining balance due on the purchase. The "code" is not a "digital code" because the code

is in the nature of or represents cash that may be used to pay for future purchases. However, Wisconsin sales

or use taxes will apply to the sale or purchase of any digital good which is made using the value of the "code."

Example: Customer purchases a "code" from Retailer C on a plastic card for $25.00. The card is good for 100

points to be used for purchases at Retailer D's website. The code allows the holder of the card to log into the

holder's account with Retailer D and add the 100 points to his or her account. That person may then use the

points to purchase and download various electronic games (i.e., additional digital goods) from Retailer D. The

"code" is not a "digital code" because the code is in the nature of or represents cash that may be used to pay

for future purchases. Retailer C's charges for the "code" are not subject to tax.

D. Sales and Use Tax Treatment of Digital Codes

The sale of and the storage, use, or other consumption of a digital code is treated in the same manner as the

sale of or the storage, use or other consumption of the digital goods to which the digital code relates.

A retailer making a sale of a digital code that is redeemable for particular digital goods is treated as having made

a sale of the digital goods at the time the digital code is sold to the purchaser.

11. DIGITAL GOODS NOT SUBJECT TO SALES AND USE TAXES

Not every sale of a digital good (i.e., a product transferred electronically) is subject to the sales tax imposed by

sec. 77.52(1)(d), Wis. Stats.

• Wisconsin sales tax is only imposed on "specified digital goods," "additional digital goods," and "digital

codes" relating to such digital goods (See Part 3.A.).

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• Exemptions can apply to the sale or purchase of digital goods. For example, specified digital goods or

additional digital goods are exempt from tax if the sale of such goods in tangible form is exempt from tax

(See Part 13).

• A sale may not be taxable even though a digital good is transferred to the customer. For example, the sale

of a live webinar (i.e., specified digital good) is a nontaxable educational service and the webinar is

considered incidental to (and not a separate taxable sale from) the sale of the nontaxable educational

service.

12. BUNDLED TRANSACTIONS

A "bundled transaction" is the retail sale of two or more products, not including real property and services to real

property, if the products are distinct and identifiable and sold for one nonitemized price.

"Products" includes

tangible personal property; items, property, and goods as described in sec. 77.52(1)(b), (c), and (d), Wis. Stats.; and

services.

Certain exceptions apply. These exceptions are listed in sec. Tax 11.985, Wis. Adm. Code. "Bundled transactions,"

along with definitions of "distinct and identifiable product" and "one non-itemized price."

The entire sales price of a bundled transaction is subject to Wisconsin sales or use tax, except as follows:

Retailer may identify the nontaxable portion of sales price: When a retailer is able to identify (by reasonable and

verifiable standards from the retailer's books and records that are kept in the ordinary course of its business) the

portion of the sales price that is attributable to products that are not subject to the tax, the retailer may choose to

tax only the portion attributable to the taxable products. Exception: This option does not apply to a bundled

transaction that contains food and food ingredients, drugs, durable medical equipment, mobility-enhancing

equipment, prosthetic devices, or medical supplies.

Example: For a single monthly subscription fee of $300, Company provides the following information and services

relating to commodities in a given industry:

1. Access to real-time prices on Company's website

2. Ability to view live feeds of different commodities exchanges

3. Ability to receive text messages on prices from different commodities exchanges

4. Ability to set price alerts related to changes in prices in the different commodities exchanges

5. Access to daily commentaries from trading floors of the exchanges

6. Access to database containing historical information for research purposes

7. Access to archived news articles

8. Access to online prewritten computer software that performs calculations based on subscriber input (interest,

gains, losses, payments)*

9. Access to live webinars on commodity trading

The use of the software is a nontaxable data processing service as described in Common Questions: Sales and Use

Tax Treatment Computer - Hardware, Software, Services, Question 4.B.

The taxable products in this example are items 1 - 7 (the real-time prices, the live feeds, the text messages, the price

alerts, daily commentaries, access to database of historical information, and access to archived news articles). The

nontaxable products are items 8 and 9 (the ability to use the software and access to live webinars on commodity

trading).

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The portion of the purchase price or sales price of items 1 - 7 is more than 10% of the $300 subscription fee for all

the items listed above.

Note: If the retailer can identify, by reasonable and verifiable standards from the retailer's books and records, that

portion of the sales price that is attributable to the products that are not subject to tax, the retailer is only required

to charge Wisconsin sales tax on the taxable products.

Additional information on bundled transactions is available in the tax release titled "Bundled Transactions" which

was published on pages 26-40 of Wisconsin Tax Bulletin 201 (April 2018), Part 8.C. in Publication 201, Wisconsin

Sales and Use Tax Information, and in sec. Tax 11.985, Wis. Adm. Code.

13. EXEMPTIONS FOR DIGITAL GOODS

A. Statutory Language

Under sec. 77.54(50), Wis. Stats., a sales and use tax exemption is provided for:

"The sales price from the sale of and the storage, use or the consumption of specified digital goods or additional

digital goods if the sale of and the storage, use or other consumption of such goods sold in a tangible form is

exempt from, or not subject to, taxation under this subchapter."

B. Scope of Exemption

The sale of and the storage, use or other consumption of any specified digital good or additional digital good is

exempt from sales and use taxes if the digital good sold in a tangible form would qualify for exemption from

sales and use taxes or is not subject to sales and use taxes.

Example: An entity exempt from Wisconsin sales and use taxes on its purchases of tangible personal property

and taxable services under sec. 77.54(9a)(a), Wis. Stats., purchases finished art from a vendor for $500. The

vendor transfers the finished art electronically to the entity. If the finished art had been transferred to it in a

tangible form, the entity could have purchased the artwork without tax under sec. 77.54(9a)(a), Wis. Stats. Thus,

the sale of the finished artwork as an additional digital good is exempt from sales and use taxes under

sec. 77.54(50), Wis. Stats.

C. Examples of the Exemptions for Tangible Personal Property That May Apply to Digital Goods

The following exemptions from sales and use taxes for sales and purchases of tangible personal property may

apply in the case of the sale or purchase of a digital good.

(1) Federal preemption

Section 77.54(1), Wis. Stats., provides an exemption from sales and use taxes for:

"The sales price from the sale of and the storage, use or other consumption in this state of tangible personal

property, and items and property and goods under s. 77.52 (1) (b) and (c), and services the sales price from

the sale of which, or the storage, use or other consumption of which, this state is prohibited from taxing

under the constitution or laws of the United States or under the constitution of this state."

Example: A U.S. Government agency sells a map which it transfers electronically to Customer B, at a location

in Wisconsin. The sale of the map is a sale of a digital good. However, the sale of the digital good is exempt

under sec. 77.54(50), Wis. Stats. Had the map been transferred to Customer B in a tangible form, the sale

would have been exempt under sec. 77.54(1), Wis. Stats.

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(2) "Consumed in manufacturing" exemption

Section 77.54(2), Wis. Stats., provides an exemption from sale and use taxes for:

"The sales price from the sales of and the storage, use, or other consumption of tangible personal property

or item under s. 77.52 (1) (b) that is 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) 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) 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)

destined for sale, except as provided in sub. (30) (a) 6."

Example: Company purchases finished artwork, which constitutes an additional digital good, from

Advertising Agency. The finished artwork is transferred electronically by Advertising Agency to Printer.

Company contracts with Printer to purchase 10,000 pamphlets using the finished artwork. Printer is to

furnish the paper and ink used to print the pamphlets. Company's purchase of the additional digital good

(the finished artwork) is exempt from Wisconsin sales and use taxes under sec. 77.54(50), Wis. Stats. The

additional digital good is used exclusively and directly by Printer in manufacturing tangible personal

property and is consumed, destroyed, or loses its identity in the manufacture of tangible personal property

(the pamphlets) destined for sale by Printer to Company. Had the finished artwork been purchased in a

tangible form and used in the same manner described above, the purchase of the finished artwork would

have been exempt under sec. 77.54(2), Wis. Stats.

(3) "Consumed in manufacturing" exemption – newspapers, shopper's guides, and periodicals

Section 77.54(2m), Wis. Stats., provides an exemption from sale and use taxes for:

"The sales price from the sales of and the storage, use, or other consumption of tangible personal property

or services that are used exclusively and directly by a manufacturer in manufacturing shoppers guides,

newspapers, or periodicals and that become an ingredient or component of shoppers guides, newspapers,

or periodicals or that are consumed or lose their identity in the manufacture of shoppers guides,

newspapers, or periodicals, whether or not the shoppers guides, newspapers, or periodicals are transferred

without charge to the recipient. In this subsection, "shoppers guides," "newspapers," and "periodicals" have

the meanings under sub. (15). The exemption under this subdivision does not apply to advertising

supplements that are not newspapers."

Example: Newspaper publishes a shopper's guide, which is distributed weekly, free of charge. Newspaper

purchases finished artwork, which constitutes an additional digital good, from Business. The finished

artwork is incorporated by Newspaper into one of the weekly editions of its shopper's guide. Newspaper's

purchase of the additional digital good (the finished artwork) is exempt from Wisconsin sales and use taxes

under sec. 77.54(50), Wis. Stats. The additional digital good is used exclusively and directly in manufacturing

tangible personal property and is consumed, destroyed, or loses its identity in the manufacture of a

shopper's guide. Had the finished artwork been purchased in a tangible form and used in the manner

described above, the purchase of the finished artwork would have been exempt under sec. 77.54(2m), Wis.

Stats.

(4) Farming exemptions

Section 77.54(3)(a), Wis. Stats., provides an exemption for:

"The sales price from the sales of and the storage, use, or other consumption of tractors and machines,

including accessories, attachments, and parts, lubricants, nonpowered equipment, and other tangible

personal property, or items or property under s. 77.52 (1) (b) or (c), that are used exclusively and

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directly, or are consumed or lose their identities, in the business of farming, including dairy farming,

agriculture, horticulture, floriculture, silviculture, and custom farming services, but excluding automobiles,

trucks, and other motor vehicles for highway use; excluding personal property that is attached to, fastened

to, connected to, or built into real property or that becomes an addition to, component of, or capital

improvement of real property; and excluding tangible personal property, or items or property under s. 77.52

(1) (b) or (c), used or consumed in the erection of buildings or in the alteration, repair, or improvement of

real property, regardless of any contribution that that personal property, or items or property under s. 77.52

(1) (b) or (c), makes to the production process in that building or real property and regardless of the extent

to which that personal property, or items or property under s. 77.52 (1) (b) or (c), functions as a machine,

except as provided in par. (c)."

Example: Individual is engaged in the business of farming in Wisconsin. Using a computer and Internet

access, Individual orders a repair manual for a tractor from a vendor engaged in business in Wisconsin. The

tractor is used by Individual exclusively in his farming business. The vendor transfers the repair manual

electronically to Individual. Provided Individual uses the specified digital good (the repair manual) solely

(i.e., 100%) in the business of farming, Individual may purchase the specified digital good (the repair manual)

without tax under sec. 77.54(50), Wis. Stats. Had the repair manual been transferred to Individual in a

tangible form, the purchase would have qualified for exemption under sec. 77.54(3)(a), Wis. Stats., as other

tangible personal property consumed in the business of farming.

(5) Sales by elementary or secondary schools

Section 77.54(4), Wis. Stats., provides an exemption for:

"The sales price from the sale of tangible personal property and items and property under s. 77.52 (1) (b)

and (c) and the storage, use or other consumption in this state of tangible personal property and items and

property under s. 77.52 (1) (b) and (c), which is the subject of any such sale, by any elementary school or

secondary school, exempted as such from payment of income or franchise tax under ch. 71, whether public

or private."

Example: A public high school in Wisconsin holds a fund-raising event. Persons attending the event may

purchase a "digital code" which allows the person to go to a specified website and download a copy of the

high school's spring band concert. The high school's sale of the digital code is treated the same as sale of

the digital audio work the digital code may be redeemed for, pursuant to sec. 77.51(17x), Wis. Stats. The

high school's sale of and the purchaser's storage, use or other consumption in Wisconsin of the digital code

is exempt from Wisconsin sales and use taxes under sec. 77.54(50), Wis. Stats. Had the copy of the band

concert been transferred by the high school to the purchaser in a tangible form, it would have been exempt

from Wisconsin sales and use taxes under sec. 77.54(4), Wis. Stats.

(6) Certain transactions relating to aircraft, motor vehicles, and truck bodies

Section 77.54(5)(a), Wis. Stats., provides an exemption for:

"Aircraft, including accessories, attachments, fuel and parts therefor, sold to persons using such aircraft as

certified or licensed carriers of persons or property in interstate or foreign commerce under authority of

the laws of the United States or any foreign government, or sold to any foreign government for use by such

government outside this state and aircraft, motor vehicles or truck bodies sold to persons who are not

residents of this state and who will not use such aircraft, motor vehicles or trucks for which the truck bodies

were made in this state otherwise than in the removal of such aircraft, motor vehicles or trucks from this

state.

Example: Airline purchases a flight manual, which is transferred electronically by the retailer, to Airline, for

one of its passenger aircraft. Airline assigns the manual to that aircraft. Airline's purchase of the manual is

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exempt from tax under sec. 77.54(50), Wis. Stats. Had the manual been transferred to Airline in a tangible

form, the purchase of the manual would have been exempt under sec. 77.54(5)(a), Wis. Stats.

(7) Newspapers, periodicals, controlled circulation publications, and shopper's guides

Section 77.54(15), Wis. Stats., provides an exemption for:

"The sales price from the sale of and the storage, use or other consumption of all newspapers, of periodicals

sold by subscription and regularly issued at average intervals not exceeding 3 months, or issued at average

intervals not exceeding 6 months by an educational association or corporation sales to which are exempt

under sub. (9a) (f), of controlled circulation publications sold to commercial publishers for distribution

without charge or mainly without charge or regularly distributed by or on behalf of publishers without

charge or mainly without charge to the recipient and of shoppers guides which distribute no less than 48

issues in a 12-month period. In this subsection, "shoppers guide" means a community publication delivered,

or attempted to be delivered, to most of the households in its coverage area without a required subscription

fee, which advertises a broad range of products and services offered by several types of businesses and

individuals. In this subsection, "controlled circulation publication" means a publication that has at least 24

pages, is issued at regular intervals not exceeding 3 months, that devotes not more than 75% of its pages to

advertising and that is not conducted as an auxiliary to, and essentially for the advancement of, the main

business or calling of the person that owns and controls it."

Example: Publisher's publication meets the definition of a "periodical." The periodical is regularly issued on

a quarterly basis. Publisher makes the periodical available for sale by subscription as well as for sale by single

copy. In addition, Publisher offers the purchaser the option of having the periodical delivered electronically

or having a paper copy mailed to them.

(1) Individual visits Publisher's website and purchases the current issue of the periodical. Publisher

transfers the periodical electronically to Individual. Using the sourcing rules under sec. 77.522, Wis.

Stats., Publisher determines that the sale of the additional good (a periodical transferred electronically),

is sourced to a location in Wisconsin. The exemption under sec. 77.54(15), Wis. Stats., does not apply

to the sale of the periodical to Individual, because the periodical is not sold by subscription. Publisher is

liable for Wisconsin sales tax on its sale of the additional digital good (the periodical) to Individual.

(2) Individual visits Publisher's website and purchases a one-year subscription (4 issues, issued quarterly)

of the periodical, to be transferred electronically. Using the sourcing rules under sec. 77.522, Wis. Stats.,

Publisher determines that the sale of the subscription of the additional digital good (the periodical

issues to be transferred electronically) is sourced to Wisconsin. The sale of this subscription is exempt

from Wisconsin sales and use taxes under sec. 77.54(50), Wis. Stats. Had the sale of the subscription of

the periodical been for issues to be delivered to Individual in a tangible format, the sale would have

been exempt under sec. 77.54(15), Wis. Stats.

(8) Volunteer fire departments – fire trucks and fire fighting equipment

Section 77.54(16), Wis. Stats., provides an exemption for:

"The sales price from the sale of and the storage, use or other consumption of fire trucks and fire fighting

equipment, including accessories, attachments, parts and supplies therefor, sold to volunteer fire

departments."

Example: A Wisconsin township contracts with a volunteer fire department to provide fire and emergency

services. The fire department has GPS devices on its fire trucks and emergency vehicles to aid in responding

to a fire or other call. The volunteer fire department purchases an updated map for its GPS device. The map

is downloaded by the fire department using the Internet, and then installed on its GPS devices.

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The volunteer fire department's purchase of the updated map is exempt from Wisconsin sales and use taxes

under sec. 77.54(50), Wis. Stats. Had the purchase of the map been in a tangible format (e.g., on a CD), it

would have been exempt from sales and use taxes under sec. 77.54(16), Wis. Stats., as an accessory for a

fire truck sold to a volunteer fire department.

(9) Sales by American Legion baseball teams

Section 77.54(35), Wis. Stats., provides an exemption, for:

"The sales price from the sales of tangible personal property, or items or property under s. 77.52 (1) (b) or

(c), tickets, or admissions by any baseball team affiliated with the Wisconsin Department of American Legion

baseball."

Example: A baseball team affiliated with the Wisconsin Department of American Legion baseball sells

photographs of the team and photographs and videos of games the team has played in. The photographs

and videos are available online and transferred electronically to the purchaser. The baseball team's charge

to the customer purchasing the photographs or videos is exempt under sec. 77.54(50), Wis. Stats. Had the

photographs or videos been transferred by the baseball team using a tangible medium, the sale would have

been exempt under sec. 77.54(35), Wis. Stats.

D. Exemption for Digital Goods When "Tangible Form" of Digital Good Not Subject to Tax

Sales of specified or additional digital goods may qualify for exemption under sec. 77.54(50), Wis. Stats., when

the sale, in a tangible form, is not subject to tax. Examples include:

• Viewing a live educational seminar via webcast

• Participating in a business seminar via live webinar

14. IF YOU HAVE QUESTIONS OR NEED ASSISTANCE

If you have a question about sales and use taxes, you may contact DOR as follows:

Visit our website . . . revenue.wi.gov

Email. . . DORSalesandU[email protected]

Write . . . Mail Stop 5-77

Wisconsin Department of Revenue

P.O. Box 8949

Madison, WI 53708-8949

Telephone. . . (608) 266-2776

Fax. . . (608) 267-1030

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Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of

November 30, 2021: ch. 77, Wis. Stats. and ch. Tax 11, Wis. Adm. Code.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the

interpretations in this document. Guidance issued prior to this date, that is contrary to the information in

this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.