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

Examples of Containers and Packaging and Shipping Materials Which Do Not Qualify for Exemption

Examples of items which do not qualify for this exemption include:

    • Shopping carts, baskets, and similar items

    • Wrapping equipment, such as paper holders, tape dispensers, staplers, and string holders

    • Counter display cards used for advertis- ing and display purposes

    • Computer-produced gummed label mail- ing lists used to address envelopes. However, labels for envelopes used to transfer merchandise to customers are exempt

    • Containers or other packaging and ship- ping materials used for storage or to transfer merchandise owned by the same person from one location to another (Note: Containers and other packaging and shipping materials used to transfer meat and meat products are exempt even if used for transferring meat and meat products owned by the same person from one location to another.)

    • Advertising matter used in Wisconsin in connection with the sale of merchandise, except catalogs used to advertise and promote the sale of merchandise

  • 3.

    Deposits on Returnable Containers Grocers have a choice of whether or not to charge Wisconsin sales tax on deposits for returnable containers. The “net” amount of tax charged and remitted to the Department of Revenue will be the same under either method of reporting. Grocer Charges Wisconsin Sales Tax on Deposits: If a grocer chooses to charge cus- tomers sales tax on deposits of returnable containers, then the grocer must also refund

the sales tax charged on the deposit when the deposit is refunded to the customer.

Grocers using this method must include on line 1 of their sales and use tax return, the selling price of the item, the deposit on the container, and the sales tax charged. The grocer may claim a deduction on its sales and use tax return for the sales tax included on line 1.

When the deposit is returned to the custom- er, the grocer must refund the amount of the deposit plus the sales tax charged on the de- posit. The grocer may claim a deduction on its sales and use tax return which covers the date the refund is given to the customer, for the amount of the deposit refunded to the customer.

Grocer Does Not Charge Wisconsin Sales Tax on Deposits: If a grocer chooses not to charge Wisconsin sales tax on deposits, then the grocer should not refund any sales tax to the customer when the deposit is refunded.

Grocers using this method must include on line 1 of their sales and use tax return, the selling price of the item, the deposit on the container and the sales tax charged. The grocer may claim a deduction on its sales and use tax return for the sales tax and de- posits included on line 1.

When the deposit is returned to the custom- er, the grocer should refund only the deposit (no sales tax) to the customer. The grocer must not claim a deduction on its sales and use tax return for the deposit returned to the customer because the grocer did not previ- ously report the deposit as a taxable sale.

Note: If no Wisconsin sales tax is charged on deposits and the deposits are not refund- ed to customers (i.e., customer does not return container), the grocer is liable for Wisconsin sales tax on the deposit at the time the deposits are recognized as income for income tax purposes if the container is used to transfer property in a taxable sale.

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