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Publication 220

  • Rentals and sales of DVDs, video tapes, video games, video cassette recorders (VCRs), DVD players, video game ma- chines, and related accessories.

  • Charges for video club membership cards, which entitle the member to re- duced rental rates and related privileges. Example - A video department in a gro- cery store rents two DVDs for $2 each and a DVD player for $10 to a customer. In addition, for a $10 fee, the customer becomes enrolled in the grocery store’s video club. The $10 fee entitles the cus- tomer to reduced price DVD rentals for the next 12 months. The entire $24 the video department charges the customer is subject to Wisconsin sales tax.

  • Late fees, and other service charges relat- ed to the sale or rental of video tapes, DVDs, VCRs, etc. Note: Rewinding fees for video tapes are not taxable.

Example - A video department charges a $2 per video per day late fee for videos returned late and a $1 per video rewind fee for customers who fail to rewind the video tapes prior to returning them to the grocery store. Customer returns two vid- eo tapes two days late and fails to rewind the video tapes. The video department charges Customer an $8 late fee and a $2 rewind fee. The $8 late fee is subject to Wisconsin sales tax. The $2 rewind fee is not subject to Wisconsin sales tax.

2. Purchases by Video Departments

Property Rented - Purchases of video tapes and games, video cassette recorders (VCRs), video game machines, DVDs, DVD players, lubricants, and repair parts and services for VCRs, DVD players, and video game ma- chines used solely for rental purposes are not subject to Wisconsin sales or use tax. Items used solely for rental purposes and the repairs of those items may be purchased

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without Wisconsin sales and use tax as pur- chases for resale. The video department must provide the supplier with a properly completed exemption certificate claiming resale to purchase these items without pay- ing Wisconsin sales or use tax.

Example - Video Department has a VCR which is used solely for rental purposes. Video Department pays a repair compa- ny $100 to repair the VCR. The VCR repair service is not subject to Wisconsin sales and use tax because it is a purchase for resale. Video Department must pro- vide the repair company with an exemption certificate claiming resale to purchase the repair service without Wis- consin sales and use tax.

Property, Items, and Goods Used in Video Department - Purchases of any of the items described in Part I.D. 1. to 4. on page 7 used in the video department (e.g., television sets, VCRs, DVD players, shelving, etc.) are sub- ject to Wisconsin sales or use tax.

Example: Video Department uses a tele- vision and DVD player to play DVDs in the store. The television and DVD player are not rented out to customers. Video Department owes Wisconsin sales or use tax on the purchase price of the DVD player and television.

Property, Items, and Goods Both Rented and Used Personally - If videos, DVDs, DVD players and VCRs are purchased by a video department and are used part of the time in the business and rented out part of the time, the purchases of the videos, DVDs, DVD players, and VCRs are subject to Wis- consin sales and use tax. The video department’s rental receipts for the videos, DVDs, DVD players, and VCRs are also subject to Wisconsin sales tax.

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