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Grocers - How Do Wisconsin Sales and Use Taxes Affect Your Operations?

Example 1 - Purchases of Food and Food Ingredients for Manufactured Items - No Exemption Certificate Needed: Bakery purchases flour and eggs which will be used to make cakes. Since flour and eggs are exempt food or food ingredients for human consump- tion, Bakery may purchase these items without Wisconsin sales and use tax. Bakery is not required to provide the supplier of the flour and eggs with an exemption certificate.

Example 2 - Purchases of Food and Food Ingredients for Manufactured Items - Exemption Certificate Is Need- ed: Bakery purchases candy which will be used to make cakes the bakery will sell. Since candy is not an exempt food or food ingredient for human consump- tion, Bakery may only purchase these items without Wisconsin sales and use tax if Bakery provides the supplier of the candy with a fully completed exemption certificate.

Containers and Packaging Materials: A bakery’s purchases of containers and other packaging materials which are used to trans- fer bakery goods to customers are not subject to Wisconsin sales and use tax. The containers may or may not be returnable. To claim this exemption, the bakery must pro-

vide the supplier with either the Sales and Use Tax Exemption (Form S-211), or another fully

isconsin Certificate completed

exemption certificate ate exemption.

claiming

the

appropri-

Examples of items which qualify for this ex- emption when used to transfer the baked goods to customers include:

  • Boxes or cartons used to package donuts

  • Bags used to package bread

  • Dividers used to separate food sections

within a container

  • Paper used to line containers

  • Tape and rubber bands used to keep con- tainers closed

  • Disposable cups used to transfer bever- ages sold to customers

Examples of items which do not qualify for the exemption for containers and packaging and shipping materials include:

  • Wrapping equipment such as tape dis- pensers, paper holders, and staplers (assuming these items are not used di- rectly and exclusively in the manufacturing process as discussed pre- viously)

  • Price tags

  • Bakery delivery carts used to deliver bakery goods to customers if the bakery delivery carts are not physically trans- ferred to customers

Other Items Being Resold: If the item be- ing purchased does not qualify as a food or food ingredient for human consumption (e.g., non-food cake decorations), but is be- ing resold by the bakery, the bakery must provide the supplier with an exemption cer- tificate claiming resale to purchase these types of items without Wisconsin sales and use tax. See Part III.A.1. on pages 16 and 17 (Taxable Food and Food Ingredients and Beverages) for additional information on these types of purchases.

Example - Purchases of Cake Decora- tions for Resale: Bakery purchases non- food cake decorations from Supplier which will be resold to Bakery’s cus- tomers as a part of a cake. Bakery must provide Supplier with an exemption cer- tificate claiming resale to purchase the decorations without Wisconsin sales and use tax.

Items Not Being Resold: If a bakery pur- chases reusable items, other than containers used to transfer merchandise to customers, which are not being resold to and kept by

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