Wis. Admin. Code Department of Revenue Tax 11.52

Current through October 28, 2024

Section Tax 11.52 - Coin-operated vending machines and amusement devices

(1) SCOPE. This section applies to all sales from coin-operated machines, except those located on army, air force, navy, or marine corps exchanges where the operator leases the machines to those exchanges which acquire title to and sell the merchandise through the machines to authorized purchasers from those exchanges.

(2) DEFINITIONS. In this section:

(a) "Heated" means the food or beverages have been prepared for sale in a heated condition and which are sold at any temperature higher than the air temperature of the room or place where they are sold.

(b) "Operator" has the meaning in s. 77.52(1m), Stats.

(c) "Retailer" for purposes of this section means either of the following:

1. Any person who owns or possesses coin-operated vending machines or amusement devices, who controls the operations of the machines as by stocking or removing the receipts from the machines or devices, who has access to the machines or devices for any purpose connected with the sale of merchandise or services through the machines or devices, and whose compensation is based, in whole or in part, upon receipts from sales made through the machines or devices.

2. A person who is responsible for providing laundry, dry cleaning, photographic, photocopy, or other taxable services through vending machines.

Note: If there is a question of who is the retailer for a single machine or device, a determination regarding who is the retailer liable for tax may be obtained by writing to: Wisconsin Department of Revenue, PO Box 8902, Madison, WI 53708-8902.

(3) SELLER'S PERMITS.

(a) Retailers of tangible personal property, items, property and goods under s. 77.52(1) (b), (c), and (d), Stats., and taxable services sold through coin-operated vending machines or devices dispensing taxable tangible personal property, items, property, or goods under s. 77.52(1) (b), (c), or (d), Stats., or services shall obtain a seller's permit. One permit shall be sufficient for all the machines of each retailer.

Note: Refer to s. Tax 11.002 for a description of permit requirements, how to apply for a permit, and the 15-day time period within which the department is required to act on permit applications.

(b) A notice must be affixed to each coin-operated machine or device showing the retailer's name, address and seller's permit number.

(4) TAXABLE RECEIPTS. Taxable receipts include receipts from:

(a) Coin-operated machines dispensing tangible personal property and items, property, and goods under s. 77.52(1) (b), (c), and (d), Stats., such as:

1. Candy.

2. Chewing gum.

3. Dietary supplements.

4. Heated foods and beverages.

4m. Prepared foods, such as sandwiches prepared by the retailer.

5. Soft drinks.

6. Non-edible items such as:

a. Beauty supplies, such as make-up, hair spray, nail polish, and combs.

b. Cameras, film, and photography supplies.

c. Cigars, cigarettes, other tobaccos products, and lighters.

d. Drugs and other medical supplies, such as aspirin, bandages, and suntan lotion.

e. Hygiene products, such as soap and shampoo.

f. Photocopies.

g. Photographs.

h. Reading materials.

i. Toys and games.

j. Videos.

k. Wearing apparel, such as gloves, hosiery, shoelaces, and sunglasses.

(b) Coin-operated machines which provide a taxable service, such as telephones, car washes, televisions, vacuums, parking meters, shoe shine machines, bowling ball cleaning machines and coin-operated amusement devices such as juke boxes, pinball machines, shuffleboards, pool tables, slot racing, mechanical rides and games, and penny arcades.

(c) Coin-operated machines of non-governmental retailers located on army, navy, or air force installations, hospitals, or other facilities of the United States government.

(5) NONTAXABLE RECEIPTS. Receipts from the following are not taxable:

(a) Laundry, dry cleaning and pressing machines when the service is performed by the customer through the use of self-service machines.

(b) Coin-operated storage lockers, pay toilets, and scales.

(c) Coin-operated hair drying machines.

(d) Hospitals sales from vending machines of food and food ingredients, except soft drinks to patients, staff, or visitors.

(e) Sales from a vending machine of food and food ingredients except, candy, soft drinks, dietary supplements, and prepared foods.

(5m) PRIZES AWARDED THROUGH AMUSEMENT DEVICES.

(a) Tangible personal property sold to a person who provides a taxable service through an amusement device, as defined in s. 77.54(65m) (b), Stats., is exempt from sales and use tax if the property is used exclusively as a prize awarded or transferred through the use of the amusement device.

(b) An amusement device operator shall pay sales or use tax on purchases of tangible personal property that is used to play an amusement device but not awarded as a prize. Examples include tokens used to play the amusement device and paper tickets dispensed from the amusement device and redeemed for prizes.

(6) REPORTING AND RECORD KEEPING.

(a) The receipts from the sale of taxable property, items, goods, or services from vending machines and amusement devices are subject to sales tax. Thus, taxable receipts include, for example, receipts from property, items, goods, and services selling for one, 5, and 10 cents and more. No deduction shall be permitted for the cost of the property, item, good, or service sold, materials used, labor or service cost, or any other expense, including commissions paid to place machines in an establishment.

(b) Sales tax collected from customers may be deducted from the total receipts before computing the tax payable, if customers are notified the prices include sales tax. If customers are not notified that the prices include sales tax, no deduction shall be allowed. The notification of the customer may be made by either:

1. Conspicuously posting the bracket system charts issued by the department.

2. Conspicuously posting a sign that states "Prices Include Sales Tax."

(c) Each retailer shall maintain adequate and complete records including:

1. The location of each machine.

2. The serial number of each machine.

3. Purchases and inventories of all merchandise sold through machines.

4. Receipts from sales of exempt merchandise.

5. Purchase records of all machines and the cost of all supplies of which the retailer is deemed to be the user or consumer.

(7) SALE, LICENSE, LEASE, OR RENTAL OF MACHINES.

(a) Except as provided in pars. (b), (c), (d) and (e), receipts from the sale, lease, rental, or license to use coin-operated machines and attachments, parts and supplies for the machines are subject to the sales tax. Taxable receipts include sales to persons providing a service, such as laundry and dry cleaning service. If the machines, attachments, parts, or supplies are purchased for use in Wisconsin from an unregistered out-of-state supplier, the purchaser shall remit the use tax directly to the department.

(b) Nontaxable receipts include the lease of coin-operated machines by non-governmental retailers to exchanges of the army, air force, navy, or marine corps which acquire title to and sell merchandise through the machines to authorized purchasers from such exchanges.

(c) Machines purchased exclusively for license, lease, or rental to others may be purchased by the lessor without tax if the lessor gives an exemption certificate to the lessor's supplier. If the lessor intends to make any use of the machines other than license, lease, or rental, an exemption certificate claiming resale may not be given. In either event, the lessor's rental receipts are taxable.

(d) Music sold in a tangible or digital form to a person described in s. 77.54(63), Stats., for use in a jukebox is exempt from sales and use tax if the music is used exclusively for the jukebox. When the music is sold with a jukebox, the music is exempt as a separate sale from the jukebox if the sales price of the music is stated separately from the sales price of the jukebox on the invoice or bill of sale the seller gives to the purchaser.

(e)

1. A video or electronic game sold in a tangible or digital form to a person in the business of providing a taxable service through an amusement device, as defined in s. 77.54(65m) (b), Stats., is exempt from sales and use tax if the video or electronic game is used exclusively for the amusement device. For exemption, the sales price of the video or electronic game shall be stated separately from the amusement device on the invoice, bill of sale, or similar document the seller gives to the purchaser.

2. Persons that are not in the business of providing taxable services through amusement devices are required to pay sales or use tax on purchases of video or electronic games used for amusement devices.

3. The operator of any device, machine, or game that is illegal to operate in Wisconsin, is required to pay sales or use tax on the purchase of the video or electronic game that is used for such device, machine, or game.

Examples:

1) Distributor is in the business of providing taxable admission services through amusement devices. Distributor owns an arcade game console that is an amusement device. The arcade game console is placed in a tavern. The tavern owner gives the receipts from customers playing arcade games on the console to Distributor, less a commission. Distributor purchases a software upgrade that is an electronic game played on the console, but does not replace the arcade game console. Distributor's purchase of the software upgrade is exempt.

2) Arcade purchases a pinball machine it used in providing taxable admission services. The invoice to Arcade separately states the purchase price of the pinball machine from the video game component of the pinball machine. Arcade's purchase of the video game that is used in the pinball machine is exempt from tax because it is separately stated on the invoice. Arcade's purchase of the pinball machine is tax- able.

3) Tavern purchases a dart board that is an amusement device. Customers insert $1 to use the dart board. Although Tavern's primary business is selling food and drinks, its business also includes taxable admission services. Tavern's purchase of the dart board is taxable. Tavern's purchase of the dart board's game component is not taxable if separately stated on the invoice.

4) Distributor is in the business of providing taxable admission services through amusement devices. Distributor purchases a video gambling machine that will be placed in a tavern. A commission will be paid to the tavern based on receipts from the video gambling machine. Distributor's invoice for the video gambling machine separately states the purchase price of the video gambling machine from the electronic game that is a component of the video gambling machine. Distributor's purchase of the video gambling machine and the electronic game is taxable, even though the electronic game is separately stated. The video gambling machine is not an amusement device because it is a device, machine, or game that is illegal to operate in Wisconsin. The operation of video gambling machines is in violation of Wisconsin law, as provided in ss. 945.03 and 945.04, Stats.

Note: Section Tax 11.52 interprets ss. 77.51(1fm), (3n), (3t), (13), and (17w), 77.52(1), (1m), (2) (a) 2, 6., 7., 10., and 11., and (2m), and 77.54 (20n), (63), and (65m), Stats.

Wis. Admin. Code Department of Revenue Tax 11.52

Cr. Register, January, 1978, No. 265, eff. 2-1-78; am. (3) (a) 1. and r. (4) (c), Register, December, 1983, No. 336, eff. 1-1-84; am. (1) (intro.), (3) (a) 1., (5) (c) 5. and (6) (a), Register, June, 1991, No. 426, eff. 7-1-91; EmR0924: emerg. r. and recr. eff. 10-1-09; CR 09-090: r. and recr. Register May 2010 No. 653, eff. 6-1-10; correction to numbering of (4) (a) 4m. made under s. 13.92(4) (b) 1, Stats., Register May 2010 No. 653; CR 14-006: am. (5) (a) Register August 2014 No. 704, eff. 9-1-14.

Amended by, CR 19-112: cr. (7) (d) Register June 2020 No. 774, eff. 7-1-20; correction in (7) (d) made under s. 35.17, Stats., Register June 2020 No. 774, eff. 7/1/2020

Amended by, correction in (7) (d) made under s. 35.17, Stats., Register June 2020 No. 774; CR 20-018: cr. (5m), am. (7) (a), cr. (7) (e) Register July 2021 No. 787, eff. 8/1/2021

The interpretations in s. Tax 11.52 are effective under the general sales and use tax law on and after September 1, 1969, except: (a) The definitions of "candy," "dietary supplement," "food and food ingredient," and "soft drink," the exemption for food and food ingredients, the change of the term "gross receipts" to "sales price," and the separate impositions of tax on coins and stamps sold above face value under s. 77.52(1) (b), Stats., certain leased property affixed to real property under s. 77.52(1) (c), Stats., and digital goods under s. 77.52(1) (d), Stats., became effective October 1, 2009, pursuant to 2009 Wis. Act 2; (b) Receipts from all self-service laundry, dry cleaning, pressing, and dyeing machines, including those that are not coin-operated, are not taxable effective October 1, 2013, pursuant to 2013 Wis. Act 20; (c) The exemption for music sold to a jukebox operator for use in jukeboxes in s. 77.54(63), Stats., became effective June 1, 2016, pursuant to 2015 Wis. Act 251; and (d) The exemptions for a video or electronic game sold to an amusement device operator for use in the amusement device and prizes awarded or transferred through the use of the amusement device under s. 77.54(65m) became effective December 1, 2017, pursuant to 2017 Wis. Act 59.