Grocers - How Do Wisconsin Sales and Use Taxes Affect Your Operations?
sales or use tax. The sale of the donut is not subject to Wisconsin sales or use tax since it does not meet the definition of prepared food provided in Part II.D. on pages 10 through 14, because (1) it is not sold heated, (2) Bakery’s customary practice is not to physically give or hand utensils to its cus- tomers who purchase the donut sold to be eaten at the bakery, (3) plates, bowls, glass- es, or cups are not necessary for the customer to receive the donut; and (4) Bak- ery’s sales of prepared food, as determined in Part II.D.4.(b) on pages 13 to 14, are 75% or less of all of its sales of food and food in- gredients.
Example 6 - Donut and Carton of Milk - Prepared Food: Bakery sells one donut (single serving) for $0.75 and a carton of milk (single serving) for $.50 to Customer “to go.” Bakery’s sales of prepared food, as determined in Part II.D.4.(b) on pages 13 to 14, are more than 75% of all of its sales of food and food ingredients. Bakery’s custom- ary practice when it sells donuts and cartons of milk “to go” is to sell the donuts and milk to its customers without physically giving or handing them napkins or other utensils. However, napkins and other utensils are made available to customers. Plates, bowls, glasses, or cups are not necessary for the customer to receive the donut or milk. The sale of the donut as well as the sale of the carton of milk are subject to tax as sales of prepared food because (a) Bakery’s sales of prepared foods, as determined in Part II.D.4.(b) on pages 13 to 14, are more than 75% of all of its sales of food and food
ingredients and (b) Bakery makes available to its customers.
2. Purchases by Bakeries
Machinery and Equipment - Bakeries are considered to be manufacturers for Wiscon- sin sales and use tax purposes and, therefore, may purchase certain machinery and equip- ment without Wisconsin sales and use tax. The machinery and equipment must be used
exclusively and directly in the manufactur- ing process to qualify for the exemption from Wisconsin sales and use tax. For such exempt items, the bakery should provide the
supplier Use Tax
with either the
isconsin Sales and
Exemption Certificate (Form S-211)
the appropriate emption.
Example - Purchases of Equipment Used in Manufacturing Process: Bak- ery purchases a mixer which will be used exclusively and directly in manu- facturing donuts. Bakery must provide the supplier with an exemption certifi- cate (Form S-211) or another exemption certificate claiming the appropriate manufacturing-related exemption to pur- chase the mixer without Wisconsin sales and use tax.
The manufacturing process of a bakery be- gins with the removal of the ingredients from storage and generally ends with the removal of the baked products from the pans or receptacles. However, the manufacturing process also includes the packaging of the baked goods in bags, boxes, etc., if the baked goods have not been stored or dis- played prior to packaging them.
Example 1 - Packaging Not Part of
Manufacturing ery manufactures
Process: donuts. Once
donuts are manufactured, they are placed in a display case where custom- ers choose which donuts they would like to purchase. As the donuts are selected, they are placed in a box. The packaging of the donuts, as described above, is not part of the manufacturing process. As a result, the machinery and equipment used to package the donuts does not qualify for the manufacturing exemp- tion. However, the packaging materials themselves (e.g., boxes, bags) are ex- empt from Wisconsin sales and use tax