Pub 235 - Advertising, How Do Wisconsin Sales and Use Taxes Affect Your Operations?

State of Wisconsin

Department of Revenue

Advertising

Companies

How Do Wisconsin Sales and Use Taxes

Affect Your Operations?

Publication 235 (N.4/12)

Printed on

Recycled Paper

Important Rate Changes!

BEGINNING JANUARY 1, 2024:

o Milwaukee County sales and use tax rate increases

from 0.5% to 0.9%

o City of Milwaukee imposes a new 2% sales and use tax

o See Fact Sheet 2414 Milwaukee Sales and Use Taxes

See the Sales Tax Rate Chart for a complete list of county

sales and use tax rates and their effective dates

Table of Contents

Page

I. INTRODUCTION................................................................................................................................1

II. OBTAINING A SELLER'S PERMIT AND FILING RETURNS ...................................................1

A. Who Must Obtain a Seller's Permit ..................................................................................................1

B. When Should You Apply For a Seller's Permit? ..............................................................................1

C. Obtaining a Seller's Permit and Filing Returns ................................................................................1

III. WHAT IS TAXABLE? ........................................................................................................................1

I V. WHERE A SALE TAKES PLACE - "SOURCING RULES" .........................................................2

V. SALES BY ADVERTISING COMPANIES ......................................................................................3

A. Taxable Sales ...................................................................................................................................3

B. Nontaxable Sales ..............................................................................................................................3

VI. SPECIFIC PRODUCTS AND THEIR EXEMPTIONS ...................................................................4

A. Preliminary Artwork and Finished Artwork ....................................................................................4

1. Preliminary Artwork ..................................................................................................................4

2. Finished Artwork .......................................................................................................................5

3. Examples of Preliminary Artwork and Finished Artwork .........................................................5

4. Exemptions ................................................................................................................................6

B. Printed Materials ..............................................................................................................................8

1. Exemption for Newspapers, Periodicals, Shoppers Guides, and Controlled Circulation

Publications ................................................................................................................................9

2. Exemption for Printed Advertising Materials ..........................................................................11

3. Exemption for Raw Materials Used in Printed Materials ........................................................12

4. Exemption for Catalogs and their Mailing Envelopes .............................................................13

5. New Exemption for Advertising and Promotional Direct Mail (will become effective on

July 1, 2013).............................................................................................................................14

C. Advertising Signs ...........................................................................................................................15

D. Design Services, Including Web Site Design .................................................................................16

E. E-Mail Blasts and Text Marketing, Management of Social Media Web Sites, and E-Newsletters17

1. E-Mail Blasts and Text Marketing ...........................................................................................17

2. Managing Social Media Web Sites ..........................................................................................17

3. E-Newsletters ...........................................................................................................................18

4. Charges That Are Separate and Optional.................................................................................18

5. When Does a Sale of E-Blasts, Text Marketing, and E-Newsletters Take Place in

Wisconsin? ...............................................................................................................................19

F. Radio and Television Commercials ...............................................................................................19

VII. PURCHASES BY AN ADVERTISING COMPANY ......................................................................23

A. Purchases of Items Used By an Advertising Company .................................................................23

B. Don't Forget Use Tax! ....................................................................................................................23

C. Purchases of Items Which Are Sold to Customers ........................................................................23

VIII. WHERE A SALE TAKES PLACE - DIRECT MAIL ....................................................................23

IX. DO YOU HAVE QUESTIONS OR NEED ASSISTANCE? ...........................................................27

X. BUSINESS DEVELOPMENT ASSISTANCE – WISCONSIN ECONOMIC

DEVELOPMENT CORPORATION ...............................................................................................27

Advertising Companies

I. INTRODUCTION

This publication explains how Wisconsin state

sales and use taxes affect advertising companies.

Sales and purchases by advertising companies that

are subject to the 5% state sales or use tax may also

be subject to the (1) 0.5% county sales or use tax,

(2) 0.1% baseball stadium sales or use tax,

(3) 0.5% football stadium sales or use tax, and

(4) local exposition taxes. Additional information

about these taxes is contained in the following:

(1) County tax: Publication 201, Wisconsin Sales

and Use Tax Information, Section XVIII.

(2) Baseball stadium tax: Publication 201, Wiscon-

sin Sales and Use Tax Information,

Section XVIII. Applies to sales and purchases

made in Milwaukee, Ozaukee, Racine, Wash-

ington, and Waukesha counties.

(3) Football stadium tax: Publication 201, Wiscon-

sin Sales and Use Tax Information,

Section XVIII. Applies to sales and purchases

made in Brown County.

(4) Local exposition taxes: Publication 410, Local

Exposition Taxes. These taxes apply to sales

and purchases of certain lodging, food and bev-

erages, and car rentals in municipalities located

wholly or partially within Milwaukee County.

CAUTION

• The information in this publication reflects the

positions of the Wisconsin Department of

Revenue of laws enacted by the Wisconsin

Legislature and in effect as of April 1, 2012.

Laws enacted and in effect after that date, new

administrative rules, and court decisions may

change the interpretations in this publication.

• The examples and lists of taxable and nontax-

able sales are not all-inclusive. They merely

set forth common examples.

II. OBTAINING A SELLER'S PERMIT

AND FILING RETURNS

A. Who Must Obtain a Seller's Permit

Every individual, partnership, corporation, or other

organization making taxable sales in Wisconsin,

regardless of whether its sales are mercantile in

nature, is required to have a seller’s permit. See

Part III. for “What is Taxable?”

B. When Should You Apply For a Seller's

Permit?

Apply for a seller’s permit at least three weeks be-

fore you open your business. If you buy an existing

business, the seller’s permit cannot be transferred

to you. You must apply for a new permit. If you

applied for a seller’s permit before you opened

your business but did not receive the permit at the

time of opening the business, you are allowed to

make retail sales. However, you are liable for the

sales and use taxes and for keeping proper records

from the date of opening the business.

C. Obtaining a Seller's Permit and Filing

Returns

See Part III. of Publication 201, Wisconsin Sales

and Use Tax Information, for information about

how to obtain a seller's permit.

Information about filing sales and use tax returns is

also provided in Publication 201, Wisconsin Sales

and Use Tax Information, Part VIII.

III. WHAT IS TAXABLE?

Sales, licenses, leases, and rentals of the following

products are subject to the Wisconsin sales tax:

1. Tangible personal property.

“Tangible personal property” means personal

property that can be seen, weighed, measured,

felt, or touched, or that is in any other manner

perceptible to the senses, and includes electricity,

Publication 235

gas, steam, water, and prewritten computer soft-

ware, regardless of how it is delivered to the

purchaser.

Examples of tangible personal prop-

erty sold by advertising companies are as

follows (list is not all-inclusive):

• Books

• DVDs

• Brochures

• Flyers

• Business Cards

• Photographs

• Calendars

• Promotional Giveaways

• Catalogs

• Signs

• CDs

• Tapes

• Coupons

• Trade Show Booths

2. Coins or stamps of the United States that are

sold, licensed, leased, rented, or traded as col-

lector’s items above their face value.

3. Leased tangible personal property that is af-

fixed to real property, if the lessor has the right

to remove the leased property upon breach or

termination of the lease agreement, unless the

lessor of the leased property is also the lessor of

the real property to which the leased property is

affixed.

4. Specified digital goods, additional digital

goods, and digital codes. These digital goods

are characterized by the fact that they are trans-

ferred electronically to the purchaser (i.e.,

accessed or obtained by the purchaser by means

other than tangible storage media).

“Specified digital goods” means “digital audio

works,” “digital audiovisual works,” and “digi-

tal books.” “Additional digital goods” means

greeting cards, finished artwork, periodicals,

video or electronic games, and newspapers or

other news or information products. See Publi-

cation 240 for a description of the products that

are included.

Certain services which are sold, licensed, per-

formed, or furnished at retail in Wisconsin are also

subject to Wisconsin sales and use tax.

Examples of taxable services sold by advertising

companies are as follows (list is not all-inclusive):

• Photographic services

• Printing services (e.g., client provides paper to

be printed or imprinted upon)

• Fabricating services (e.g., client provides hats

to be embroidered)

• Sending e-mail advertisements (e.g., e-mail

blasts)

For a complete list of taxable services, see

Part X.B. of Publication 201.

IV. WHERE A SALE TAKES PLACE -

"SOURCING RULES"

In order to determine where a sale takes place for

Wisconsin sales and use tax purposes (where a sale

is “sourced”), a specific hierarchy is used. The hi-

erarchy is referred to as the “General Sourcing

Rules.” The “General Sourcing Rules” should be

used to determine the location of a sale and are ex-

plained in detail in Part III.C. of Publication 201.

Exceptions: One exception to the General Sourc-

ing Rules is for direct mail, which is explained in

Part VIII. of this publication. Other exceptions, in-

cluding where to find additional information, are:

• Leases, licenses, and rentals - Information

about how to determine the location

where these transactions take place (i.e., where

lease, license, or rental payments are

“sourced”) is provided in Part XIII.D. of Publi-

cation 201.

• Telecommunications services - Please refer to

sec. Tax 11.66, Wis. Adm. Code, “Telecom-

munication and telecommunications message

services,” for information explaining where

these services take place (i.e., where these ser-

vices are “sourced”).

• Retail florists - Information about how to de-

termine where sales by retail florists take place

(i.e., where these sales are “sourced”) is pro-

vided in Part VII.E. of Publication 201.

Advertising Companies

V. SALES BY ADVERTISING

COMPANIES

An advertising company will often make both tax-

able and nontaxable sales to its customers. The

general tax treatment of some typical sales is listed

below. Some products, as well as exemptions that

may apply to those products, are explained in more

detail in Part VI.

A. Taxable Sales

The following sales are subject to Wisconsin sales

or use tax, unless an exemption applies:

• Finished artwork.

See Part VI.A., " Preliminary Artwork and Fin-

ished Artwork."

•

Preliminary artwork that all or any part of re-

sults in the production of finished artwork or

other tangible personal property or items, prop-

erty, or goods listed in Part III.2. to 4., by the

advertising agency.

See Part VI.A., "Preliminary Artwork and Fin-

ished Artwork."

• Signs, circulars, business cards, stationary

showcards, banners, posters, bulletins, bro-

chures, commercials, tapes, or other items of

tangible personal property or items, property,

or goods listed in Part III.2. to 4.

See Part VI.B., "Printed Materials."

• Photographic services.

• Photostats.

• Producing, fabricating, processing, printing, or

imprinting tangible personal property or items,

property, or goods listed in Part III.2. to 4., for

clients for a consideration, even though the cli-

ent may furnish the materials used in

producing, fabricating, processing, printing, or

imprinting the property, items, or goods.

Note: The tax does not apply to printing or im-

printing services that result in exempt "printed

advertising materials" or exempt "catalogs and

their mailing envelopes," as explained in Part VII.

See Part VI.B.2, "Exemption for Printed Advertis-

ing Materials," and Part VI.B.4., "Exemption for

Catalogs and their Mailing Envelopes."

B. Nontaxable Sales

Charges for the following are not subject to Wis-

consin sales or use tax:

• Preliminary artwork that does not result in the

production of finished artwork or other tangible

personal property or items, property, or goods

listed in Part III.2. to 4., by the advertising

agency.

See Part VI.A., "Finished and Preliminary Art-

work."

• Writing original manuscripts or news releases.

• Writing copy to be used in media advertising.

• Consultation, market research, and compiling

statistical or other information.

• Recommendations for advertising themes or

merchandising plans.

• Obtaining media space and time.

• Printed advertising material transported outside

Wisconsin by the purchaser for use solely out-

side Wisconsin.

See Part VI.B.2, "Exemption for Printed Ad-

vertising Materials."

• Advertising catalogs and the envelopes in

which the catalogs are mailed.

See Part VI.B.4., "Exemption for Catalogs and

their Mailing Envelopes."

• Printing or imprinting services that result in

printed advertising materials, catalogs, or the

envelopes in which they are mailed in.

See Part VI.B.2, "Exemption for Printed Ad-

vertising Materials," and Part VI.B.4.,

"Exemption for Catalogs and their Mailing En-

velopes."

Publication 235

• Products that will be resold by the purchaser.

• Tangible personal property and items listed in

Part III.2. used exclusively and directly by a

manufacturer in manufacturing an article of

tangible personal property or item or property

listed in Part III.2. or 3., that is destined for sale

if it:

1. Becomes an ingredient or component part

of the article of tangible personal property

or item or property listed in Part III.2. or 3.,

destined for sale; or

2. Is consumed or destroyed or loses its identi-

ty in manufacturing the article of tangible

personal property or item or property listed

in Part III.2. or 3., in any form destined for

sale.

Note: A digital good also qualifies for this ex-

emption if it would be exempt if sold in a

tangible form. A digital good cannot, however,

be manufactured.

• Tangible personal property or services that are

used exclusively and directly by a manufacturer

in manufacturing shoppers guides, newspapers,

or periodicals if it:

1. Becomes an ingredient or component of the

shoppers guides, newspapers, or periodi-

cals; or

2. Is consumed or loses its identity in the

manufacture of shoppers guides, newspa-

pers, or periodicals.

This exemption applies regardless of whether

the shoppers guides, newspapers, or periodicals

are sold or given away, but does not apply to

advertising supplements that are not newspa-

pers.

Note: A digital good also qualifies for this ex-

emption if it would be exempt if sold in a

tangible form. A digital good cannot, however,

be manufactured.

• Packaging and shipping materials if used to

transfer merchandise to customers, such as:

• Bags

• Drums

• Boxes

• Labels

• Cans

• Sacks

•

Containers

• Packaging and shipping materials for use in

packing, packaging, or shipping meat or meat

products, regardless of whether these items are

used to transfer merchandise to customers, such

as:

• Bags

• Labels

• Boxes

• Meat casing

• Cans

• Sacks

• Containers

• Tape

•

Drums

•

Wrapping Paper

• Raw materials processed, fabricated, or manu-

factured into, attached to, or incorporated into

printed materials that are transported and used

solely outside Wisconsin.

VI. SPECIFIC PRODUCTS AND THEIR

EXEMPTIONS

A. Preliminary Artwork and Finished Artwork

Graphic designers and other advertising companies

often create preliminary artwork and finished art-

work for their customers. Preliminary artwork and

finished artwork may or may not result in the pro-

duction of another product.

1. Preliminary Artwork

Charges for preliminary artwork are considered

a part of the sales price of finished artwork if

all or any of the preliminary artwork results in

the production of finished artwork or other tan-

gible personal property or items, property, or

goods listed in Part III.2. to 4., by the advertis-

ing agency. Therefore, if the sale of the

finished artwork or other product is taxable, the

charge for the preliminary artwork is also taxa-

ble.

Advertising Companies

If the preliminary artwork does not result in the

production of finished artwork or other tangible

personal property or items, property, or goods

listed in Part III.2. to 4., the charge for the pre-

liminary artwork is not subject to Wisconsin

sales or use taxes. The charge is for design ser-

vices, which are not among the services that are

subject to tax in Wisconsin.

“Preliminary artwork” means artwork pre-

pared solely for presenting an idea to a client

or prospective client. Preliminary artwork in-

cludes roughs, visualizations, sketches,

layouts, and comprehensives.

2. Finished Artwork

The sale of finished artwork is taxable, unless

an exemption applies. A list of common ex-

emptions is provided in Part VI.A.4. Finished

artwork is tangible personal property, unless it

is transferred electronically. Finished artwork

that is transferred electronically is an additional

digital good. Sales of both tangible personal

property and additional digital goods are sub-

ject to Wisconsin sales and use taxes, unless an

exemption applies.

When an advertising company sells both the

finished artwork and the printed material (e.g.,

flyers, catalogs, brochures, business cards), the

advertising company’s charge for the finished

artwork becomes a part of its sales price of the

printed material.

“Finished artwork” means the final artwork

used for actual reproduction by photome-

chanical or other processes or for display

purposes, but does not include web site or

home page designs. Finished artwork also

includes drawings, paintings, designs, pho-

tographs, lettering, paste−ups, mechanicals,

assemblies, charts, graphs, and illustrative

materials, regardless of whether such items

are reproduced.

3. Examples of Preliminary Artwork and Fin-

ished Artwork

Example of Taxable Finished Artwork Trans-

ferred to Buyer in a Tangible Format:

Department Store contracts with Advertising

Company to produce finished artwork. The fin-

ished artwork will be used by Department Store

to print flyers, which Department Store will

print in its in-house print shop. Department

Store will then mail the flyers to its customers

located in Wisconsin. Advertising Company

provides Department Store with a disk contain-

ing the finished artwork. Advertising Company

is selling Department Store tangible personal

property which is subject to Wisconsin sales

tax.

Example of Taxable Finished Artwork Trans-

ferred to Buyer in a Digital Format: Same as

example, above, except that Advertising Com-

pany sends Department Store an e-mail

containing the finished artwork. Advertising

Company is selling Department Store an addi-

tional digital good which is subject to

Wisconsin sales tax.

Example of Taxable Finished Artwork Sold as

Flyers: Candy Store contracts with Advertising

Agency to have 10,000 advertising flyers pro-

duced. Advertising Agency prepares

preliminary artwork. Candy Store decides on

one theme and the finished artwork is pro-

duced. Advertising Agency has the flyers

printed and delivered to Candy Store. Candy

Store mails the flyers to its Wisconsin custom-

ers.

The entire charge to Candy Store by Advertis-

ing Agency for the flyers, which includes

preliminary artwork, finished artwork, and the

flyers, is subject to sales or use tax.

Example of Nontaxable Preliminary Artwork:

Car Dealer contracts with Advertising Agency

for an ongoing advertising campaign. Advertis-

ing Agency submits several suggestions, in the

Publication 235

form of preliminary artwork, for an upcoming

advertising campaign. These ideas are all re-

jected by Car Dealer. The charge by the

Advertising Agency for preliminary artwork

not chosen for further development is not sub-

ject to tax, because the preliminary artwork was

not developed into finished artwork.

Example of Taxable Preliminary Artwork:

Golf Course contracts with Advertising Agency

for an ongoing advertising campaign. Advertis-

ing Agency submits several suggestions, in the

form of preliminary artwork, for an upcoming

advertising campaign. Four of the ideas are re-

jected by Golf Course, but one idea is

developed into finished artwork. The charge by

Advertising Agency for the finished artwork,

which includes the charge for the preliminary

artwork, is subject to sales or use tax.

Example of Nontaxable Finished Artwork

Sold With Exempt Containers: Advertising

Agency produces finished artwork to be used

on Clothing Company’s shipping boxes. The

boxes are used by Clothing Company to ship its

products to its customers. Advertising Agency

delivers the finished artwork to a printer who

uses the finished artwork to print and produce

the boxes for Advertising Agency. Advertising

Agency then sells the boxes to Clothing Com-

pany.

The entire charge by Advertising Agency to

Clothing Company for the finished artwork and

boxes is exempt from Wisconsin sales and use

taxes because the boxes are used by Clothing

Company in packing, packaging, or shipping

merchandise to customers. Clothing Company

should provide Advertising Agency with a fully

completed exemption certificate claiming the

container exemption.

4. Exemptions

The following is a list of some exemptions that

could apply to sales of finished artwork in ei-

ther a tangible or digital formal (list is not all-

inclusive):

a. Consumed in the Manufacture of Tangible

Personal Property that is Destined for Sale

Tangible personal property (e.g., finished art-

work transferred to the purchaser on a CD) or

an item listed in Part III.2. that is used exclu-

sively and directly by a manufacturer in the

manufacture of tangible personal property des-

tined for sale is exempt from tax. If the

purchaser of the finished artwork provides the

finished artwork to a printer, and the printer

provides the paper used in printing and sells

the printed material, this exemption applies.

The finished artwork is consumed or destroyed

in the manufacture of printed material that is

destined for sale from the printer to its custom-

er. The exemption also applies to finished

artwork in a digital format. (Section 77.54(2)

and (50), Wis. Stats. (2009-10))

Note: Tangible personal property that is con-

sumed in the creation of a digital good does not

qualify for this exemption. A digital good can-

not be "manufactured."

Example 1: Horse Farm contracts with Adver-

tising Agency, located in Wisconsin, to

produce an advertising flyer. Advertising

Agency prepares preliminary artwork. Horse

Farm decides on one theme and the finished

artwork is prepared. Horse Farm takes the fin-

ished artwork to a Wisconsin printer and has

10,000 flyers printed. The printer provides the

paper used to print the flyers. The flyers are

mailed by the printer to addresses in Wiscon-

sin.

The charge to Horse Farm by Advertising

Agency for the preliminary artwork and fin-

ished artwork is exempt from Wisconsin sales

and use taxes because the finished artwork is

consumed in the production of flyers which are

sold by the printer to Horse Farm.

Advertising Companies

Example 2: Assume the same facts as Exam-

ple 1, except that Horse Farm provides the

paper to the printer, in addition to the finished

artwork.

The charge to Horse Farm by Advertising

Agency for the preliminary artwork and fin-

ished artwork is subject to Wisconsin sales tax.

The printer is selling a printing service, and not

tangible personal property or an item or proper-

ty listed in Part III.2. to 3., to Horse Farm. The

destined for sale requirement is not met and ex-

emption from tax does not apply.

b. Raw Materials Used in Printed Materials

That Are Transported Outside Wisconsin

Raw materials used in the manufacture of

printed materials that are transported and used

solely outside Wisconsin are exempt. This ex-

emption applies to the sale of finished artwork

if all or some of the printed material manufac-

tured using that finished artwork is transported

outside Wisconsin for use solely outside Wis-

consin, and the purchaser does either of the

following:

1. Provides the finished artwork to a printer,

and the printer does not provide the pa-

per used in printing (i.e., the purchaser

provides the printer with the paper to be

used in the printing), or

2. Uses the finished artwork in its in-house

print shop.

The finished artwork is a raw material that is

consumed in the manufacture of printed mate-

rials and the exemption applies if the above

conditions are met, regardless of whether the

finished art is in a tangible or digital format.

(Section 77.54(43) and (50), Wis. Stats. (2009-

10))

Note: If the printer provides the paper, see

Part VI.A.4.a., for a possible exemption.

Example: Bakery, located in Wisconsin, pub-

lishes flyers it gives away to potential

customers. Bakery purchases paper from a

company who delivers it to a Wisconsin printer

that prints the flyers for Bakery. Bakery also

purchases finished artwork from Advertising

Company that will be used by the printer to

print the flyers. Eighty percent (80%) of the

flyers are transported and used solely outside

Wisconsin, while the other twenty percent

(20%) of the flyers remain in Wisconsin. The

finished artwork purchased by Bakery is ex-

empt from Wisconsin sales and use taxes, since

all or part of the printed material is transported

and used solely outside Wisconsin. Eighty per-

cent (80%) of the paper purchased by Bakery

for the flyers is also exempt from Wisconsin

sales or use tax, since eighty percent (80%) of

the flyers are transported and used solely out-

side Wisconsin.

c. Consumed in the Manufacture of Newspa-

pers, Periodicals, and Shoppers Guides

Tangible personal property (e.g., finished art-

work provided on a CD) and taxable services

that are used exclusively and directly by a

manufacturer in the manufacture of newspa-

pers, periodicals, or shoppers guides (except

advertising supplements that are not newspa-

pers), whether or not the newspapers,

periodicals, or shoppers guides are transferred

without charge to the recipient. The finished

artwork is consumed or destroyed in the manu-

facture of the newspapers, periodicals, or

shoppers guides. The exemption also applies

to finished artwork in a digital format.

(Section 77.54(2m) and (50), Wis. Stats. (2009-

10))

Example: Company J contracts with an adver-

tising agency to produce an advertisement to be

published in a shoppers guide. The advertising

agency produces preliminary artwork (e.g.,

layouts, "roughs") for approval by Company J.

Upon Company J's approval of the preliminary

artwork, the finished artwork for the shoppers

Publication 235

guide advertisement is produced. The prelimi-

nary artwork and finished artwork charges are

billed to Company J. Company J deals directly

with the shoppers guide publisher to run the

advertisement in a shoppers guide. The adver-

tising agency bills Company J $1,000 for

preliminary artwork and $3,000 for finished

artwork.

The total $4,000 charge is exempt from Wis-

consin sales and use taxes because all of the

following are true:

• The preliminary artwork results in finished

artwork; and

• The finished artwork is used exclusively

and directly by a manufacturer in the manu-

facture of a shoppers guide; and

• The finished artwork is consumed or loses

its identity in the manufacture of a shoppers

guide.

B. Printed Materials

An advertising company’s sales of printed materi-

als are subject to Wisconsin sales or use tax, unless

an exemption applies. Examples are (list is not all-

inclusive):

• Signs (See Part VI.C., "Advertising

Signs")

• Circulars

• Business Cards

• Stationary Showcards

• Banners

• Posters

• Bulletins

• Advertising and Promotional Direct

Mail

• Brochures

• Letterhead

• Coupons and Coupon Books

• Newspaper Inserts (See Part VI.B.1.,

"Exemption for Newspapers, Periodi-

cals, Shoppers Guides, and Controlled

Circulation Publications")

The sales price that is subject to Wisconsin sales or

use tax includes the entire amount that the advertis-

ing company charges for the printed materials,

including charges for preliminary and finished art-

work, photographic services, printing services, and

any other costs of the printed materials that are

passed along to the customer, even if such costs are

separately stated on the advertising company’s in-

voice to its customer.

Example 1: Restaurant contracts with Advertising

Agency to have 10,000 advertising flyers pro-

duced. Advertising Agency prepares preliminary

artwork. Restaurant decides on one theme and the

finished artwork is produced. The advertising

agency has the flyers printed and delivered to Res-

taurant. Restaurant mails the flyers to its Wisconsin

customers.

The entire charge to Restaurant by Advertising

Agency for the flyers, which includes charges for

preliminary artwork, finished artwork, and the fly-

ers, is subject to tax.

Example 2: Assume the same facts as Example 1,

except that Restaurant mails 90% of the flyers to

customers outside Wisconsin and 10% to custom-

ers in Wisconsin.

Ten percent of the total charge to Restaurant by

Advertising Agency for the flyers, including the

charges for preliminary artwork, finished artwork,

and flyers, is subject to tax.

Exception for Mailing Services: If the advertising

company is also responsible for providing mailing

services (e.g., the advertising company hires a

printer to print brochures and mail the brochures to

potential customers that are identified on a mailing

list), the advertising company’s purchase or sale of

the mailing services are not taxable if the charges

are stated separately on invoices and in its account-

ing records.

“Mailing services” includes services rendered in

preparing material for mailing, including address-

ing, enclosing, sealing, metering, affixing stamps,

Advertising Companies

sorting, tying, and sacking in compliance with

postal rules and regulations. Charges for envelopes

are taxable, but not separately stated charges for

postage in the sale of pre-stamped envelopes.

If the mailing services are not stated separately on

the invoice and in the accounting records, the

charge for the mailing services is included in the

advertising company’s sales price of the printed

materials to its customer.

Exemptions that may apply to an advertising com-

pany's sales of printed materials are listed in 1.

through 5., below.

1. Exemption for Newspapers, Periodicals,

Shoppers Guides, and Controlled Circula-

tion Publications

An exemption is provided for the sale of news-

papers, certain periodicals, shoppers guides,

and controlled circulation publications.

a. Newspapers

Sales of newspapers are exempt from tax. An

advertising supplement that is distributed as a

component part of one of the newspaper's pub-

lications only qualifies for this exemption if

one of the following apply:

1. The advertising supplement is printed by

the newspaper, or

2. The advertising supplement is printed by a

newspaper or commercial printer and sold

to a newspaper for inclusion in that news-

paper.

Also exempt from tax are tangible personal

property and taxable services that are used ex-

clusively and directly by a manufacturer in the

manufacture of newspapers and that become an

ingredient or component of the newspaper or

are consumed or lose their identity in the manu-

facture of a newspaper.

"Newspaper" is defined as "... those publica-

tions which are commonly understood to be

newspapers and which are printed and distrib-

uted periodically at daily, weekly or other short

intervals for the dissemination of current news

and information of a general character and of a

general interest to the public. In addition, any

publication which qualifies as a newspaper un-

der s. 985.03 (1) is a newspaper. 'Newspaper'

also includes advertising supplements if they

are printed by a newspaper and distributed as a

component part of one of that newspaper's pub-

lications or if they are printed by a newspaper

or a commercial printer and sold to a newspa-

per for inclusion in publications of that

newspaper. A 'newspaper' does not include

handbills, circulars, flyers, or the like, advertis-

ing supplements not described in this

subsection which are distributed with a news-

paper, nor any publication which is issued to

supply information on certain subjects of inter-

est to particular groups, unless such publication

otherwise qualifies as a newspaper within this

subsection. In this subsection, advertising is not

considered news of a general character and of a

general interest."

Example 1: Furniture Store contracts with

Newspaper for an advertising supplement in

Newspaper's Sunday newspaper. For $10,000,

Newspaper will print the supplement, insert the

supplement in the newspaper, and distribute the

supplement with the newspaper. Newspaper's

charge of $10,000 to Furniture Store is not sub-

ject to Wisconsin sales or use tax.

Example 2: Same as Example 1, except that

Newspaper hires Printer to print the advertising

supplement for $2,000. Printer's charge of

$2,000 to Newspaper is not subject to Wiscon-

sin sales or use tax. Newspaper's charge of

$10,000 to Furniture Store is not subject to

Wisconsin sales or use tax.

Example 3: Same as Example 1, except that

Furniture Store hires Printer to print the adver-

tising supplement for $2,000. Printer's charge

Publication 235

of $2,000 to Furniture Store is subject to Wis-

consin sales or use tax. The advertising

supplement is not an exempt newspaper, since

it was not printed by Newspaper nor was it

printed by a newspaper or commercial printer

and sold to Newspaper for inclusion in that

newspaper.

b. Periodicals

Certain periodicals that are sold by subscription

are exempt from sales and use taxes. Periodi-

cals sold "off the rack" or over the counter are

subject to tax.

Also exempt from tax is tangible personal

property and taxable services that are used ex-

clusively and directly by a manufacturer in the

manufacture of periodicals and that become an

ingredient or component of the periodical or are

consumed or lose their identity in the manufac-

ture of the periodical.

The exemption for periodicals is limited to pub-

lications which are sold by subscription and

which are regularly issued at average intervals

not exceeding three months, each issue of

which contains news or information written by

different authors which is of general interest to

the public, or to some particular organization or

group of persons. Each issue must bear a rela-

tionship to prior or subsequent issues in respect

to continuity of literary character or similarity

of subject matter, and there must be some con-

nection between the different issues of the

series in the nature of the articles appearing in

them.

To qualify for the exemption, the publication

must qualify for the "periodicals rate" under

U.S. Postal laws and regulations or as a con-

trolled circulation publication. Exception:

Periodicals issued by an educational association

or corporation sales to which are exempt under

sec. 77.54 (9a) (f), Wis. Stats., need only be is-

sued at average intervals not exceeding

six months.

The newspaper and periodical exemption does

not apply to books complete in themselves,

even those issued at stated intervals; paperback

books, a new one of which may be issued once

a month or at some other interval; or so−called

“one−shot” magazines that have no literary or

subject matter connection or continuity be-

tween prior or subsequent issues. The

exemption also does not apply to catalogs, pro-

grams, scorecards, handbills, maps, real estate

brokers’ listings, price or order books, corpo-

rate reports to stockholders, house organs, or to

advertising materials which become a compo-

nent part of a periodical.

Example: Books sold by the Book of the

Month Club or similar organizations do not

qualify for the newspaper and periodical ex-

emption.

c. Shoppers Guides

Sales of shoppers guides that distribute no less

than 48 issues in a 12-month period are exempt

from tax.

Also exempt from tax are tangible personal

property and taxable services that are used ex-

clusively and directly by a manufacturer in the

manufacture of shoppers guides and that be-

come an ingredient or component of the

shoppers guides or are consumed or lose their

identity in the manufacture of a shoppers guide.

For purposes of these exemptions, a "shoppers

guide" is “a community publication delivered,

or attempted to be delivered, to most of the

households in its coverage area without a re-

quired subscription fee, which advertises a

broad range of products and services offered by

several types of businesses and individuals.”

d. Controlled Circulation Publications

Sales of controlled circulation publications are

exempt from tax when sold to commercial pub-

lishers for distribution without charge or

mainly without charge.

Advertising Companies

The exemption for tangible personal property

and taxable services that are used exclusively

and directly by a manufacturer in the manufac-

ture of newspapers, periodicals, and shoppers

guides and that become an ingredient or com-

ponent of the newspapers, periodicals, and

shoppers guides or are consumed or lose their

identity in the manufacture of a newspaper, pe-

riodical, and shoppers guide does not apply to

controlled circulation publications. Note: An-

other exemption may apply, such as the

exemption for manufacturing consumables de-

scribed in Part VI.A.4.a.

For purposes of the exemption for sales of con-

trolled circulation publications, a "controlled

circulation publication" is “a publication that

has at least 24 pages, is issued at regular inter-

vals not exceeding 3 months, that devotes not

more than 75% of its pages to advertising and

that is not conducted as an auxiliary to, and es-

sentially for the advancement of, the main

business or calling of the person that owns and

controls it.”

Example 1: Publisher puts out a monthly 30-

page publication that promotes healthy eating.

Seventy percent of the publication consists of

articles of interest to persons who are interested

in eating and preparing healthy foods. The oth-

er 30% of the publication consists of

advertisements that Publisher sells to various

businesses in health-related businesses. Pub-

lisher is only in the business of publishing, and

this publication is not conducted as an auxiliary

to or for the advancement of Publisher. Pub-

lisher hires Printer to print the publication,

which it then gives away. Printer provides the

paper that is uses in the publication. Publisher's

purchase of the publication from Printer is ex-

empt from tax, since the publication qualifies

as a controlled circulation publication.

Example 2: Same as Example 1, except that

Publisher purchases the paper from Paper Sup-

plier, who delivers the paper to Printer to print

the publication. Publisher's purchases of the

paper from Paper Supplier and the printing ser-

vices from Printer are subject to tax. There is

no exemption for tangible personal property

(i.e., the paper) or services (i.e., the printing

services) that result in a controlled circulation

publication.

Example 3: A taxpayer publishes a quarterly

publication which it mails to current and pro-

spective customers. The publication contains

articles of interest to customers which contain

endorsement of the taxpayer’s business and

products. The publication also contains adver-

tising of the taxpayer’s products as well as

products of other vendors. This publication is

conducted essentially for the advancement of

the taxpayer’s business and does not qualify as

a controlled circulation publication.

2. Exemption for Printed Advertising Materi-

als

Printed advertising materials may be purchased

from Wisconsin or out-of-state suppliers with-

out tax when the materials are purchased and

stored for the purpose of subsequently trans-

porting them outside Wisconsin by the

purchaser for use thereafter solely outside Wis-

consin. This exemption does not apply to

catalogs. See Part VI.B.4., "Exemption for Cat-

alogs and their Mailing Envelopes."

Note: Printing services are not taxable if the

printing services result in printed advertising

materials that are stored for the purpose of sub-

sequently transporting them outside Wisconsin

by the purchaser for use thereafter solely out-

side Wisconsin.

This exemption does not apply to printed ad-

vertising materials that remain in Wisconsin or

are returned to Wisconsin.

In order to qualify for this exemption, all three

of the following criteria must be met:

Criteria 1: The item must be “printed

material;”

Publication 235

Criteria 2: The item must be designed to

advertise and promote a product or busi-

ness; and

Criteria 3: The item must be transported

outside of Wisconsin by the purchaser

for use thereafter solely outside Wiscon-

sin.

a. The item must be "printed material."

Printed material is on paper or similar stock.

Examples of items that qualify as printed

materials (but not necessarily printed adver-

tising materials) include:

• Paper

• Laminated paper

• Charge cards

• Business cards

• Envelopes

Examples of items that do not qualify as

printed materials include:

• 3-dimensional items such as key

chains, mugs, golf balls, etc.

• Display racks, even if made of

cardboard

• Matchbooks

• Binders (e.g., 3-ring binders)

b. The item must be designed to advertise and

promote a product or business. Advertising

materials are designed to advertise a busi-

ness or the product or service of a business.

"Advertising" includes calling the attention

of the public to a product or business and

proclaiming the qualities or advantages of a

product or business so as to increase sales.

To advertise a product or service which is

for sale to the public, it is necessary to draw

the potential consumer’s attention to it by

presenting its good qualities and benefits,

creating a desire to possess it. Examples of

items that qualify as advertising materials

include:

• Sales posters

• Advertising sell sheets

• Sales brochures

• Coupons

Examples of items that generally do not

qualify as advertising materials include:

• Charge cards

• Gift certificates

• Invoices

• Parts lists

• Price sheets

c. The item must be transported outside of

Wisconsin by the purchaser for use there-

after solely outside Wisconsin. The item

must be transported outside Wisconsin by

the purchaser or by a mailing company hired

by the purchaser. If the item comes back to

Wisconsin (e.g., order form, reply enve-

lope), it is not for use solely outside

Wisconsin and is not exempt.

3. Exemption for Raw Materials Used in Print-

ed Materials

Wisconsin sales and use tax is not imposed on

raw materials if all of the following conditions

are met:

• Must be raw materials, that are

• Used for the processing, fabricating, or

manufacturing of, or the attaching to or

incorporating into printed materials,

that are

• Transported and used solely outside

Wisconsin.

There is no requirement that the item must be

transported outside Wisconsin by the purchaser.

Example: Insurance Company purchases paper

and ink from Supplier, who is located in Illi-

nois. Supplier ships the paper and ink to

Insurance Company at Insurance Company's

Advertising Companies

location in Wisconsin. Supplier did not collect

Wisconsin sales tax on its sale to Insurance

Company, because Supplier is not engaged in

business in Wisconsin. Insurance Company in-

corporates the paper and ink into training

manuals that are printed by Insurance Compa-

ny. Insurance Company ships the training

manuals to another state for use solely in that

other state. Insurance Company’s purchase of

the paper and ink is exempt from Wisconsin

sales or use tax.

4. Exemption for Catalogs and their Mailing

Envelopes

Catalogs, and the envelopes in which the cata-

logs are mailed, that are designed to advertise

and promote the sale of merchandise or to ad-

vertise the services of individual business firms

are exempt from Wisconsin sales and use taxes.

This exemption includes catalogs that are

mailed to addresses in and outside of Wiscon-

sin.

For purposes of this exemption, “catalog”

means a printed and bound, stitched, sewed, or

stapled book containing a list and description of

property or services for sale, regardless of

whether a price is specified.

A "book" is a set of written, printed, or blank

pages fastened along one side and encased be-

tween protective covers.

Examples:

• A brochure that is folded, but not

bound, stitched, sewed, or stapled does

not qualify for exemption, since the

brochure is not a catalog.

• A multiple-page description of property

for sale that is stapled in the corner

qualifies for exemption as a catalog if it

has a front and back cover and at least

two sheets are enclosed between the

front and back covers.

• A cover letter or insert that is mailed

with or inserted in a catalog, but does

not become a part of the catalog, does

not qualify for exemption, unless the

cover letter or insert is a catalog in it-

self.

• An envelope that is used to mail both an

exempt catalog and other items that are

not catalogs qualifies for exemption.

The exemption does not require that the

envelope be used exclusively to mail an

exempt catalog.

• A coupon book that has a front and

back cover, descriptions of products

sold, and coupons for such products.

The pages are made of 2½" x 9" pages

that are folded in the middle and fas-

tened together with one staple to create

a coupon book that is 2½" x 4½" when

finished. The coupon book qualifies for

exemption as a catalog.

Printing services that result in exempt catalogs

and their mailing envelopes are also not taxa-

ble. Therefore, if the consumer furnishes the

material (e.g., paper) and hires a printer to print

exempt catalogs, the service of printing the ex-

empt catalogs is not taxable.

Paper or other property that is used in exempt

catalogs and their mailing envelopes, however,

does not qualify for the catalog exemption (i.e.,

paper by itself does not meet the definition of

"catalog"). Some other exemptions that may

apply to the purchase of paper used in catalogs

are:

• Paper used in the manufacture of cata-

logs that are sold to customers is

exempt from Wisconsin sales and use

taxes. (Section 77.54(2), Wis. Stats.

(2009-10)) Paper used in the manufac-

ture of catalogs that are given away

(rather than sold) does not qualify for

this exemption, since the exemption re-

quires that the tangible personal

Publication 235

property manufactured (i.e., catalogs)

be destined for sale.

• Paper used in the manufacture of shop-

pers guides, newspapers, and

periodicals is exempt from Wisconsin

sales and use taxes, regardless of

whether such shoppers guides, newspa-

pers, and periodicals are sold or given

away. (Section 77.54(2m), Wis. Stats.

(2009-10))

• Paper used in the manufacture of cata-

logs that are transported and used solely

outside Wisconsin is exempt from Wis-

consin sales and use taxes.

(Section 77.54(43), Wis. Stats. (2009-

10)) Paper used in the manufacture of

catalogs that are not transported and

used solely outside Wisconsin does not

qualify for this exemption.

5. New Exemption for Advertising and Promo-

tional Direct Mail (will become effective on

July 1, 2013)

Effective July 1, 2013, an exemption will apply

to the sales price from the sales of and the stor-

age, use, or other consumption of advertising

and promotional direct mail. This exemption

will include advertising and promotional direct

mail sent to Wisconsin addresses, as well as

addresses outside of Wisconsin. Note: Prior to

July 1, 2013, Wisconsin sales of advertising

and promotional direct mail are taxable, except

for sales of catalogs and their mailing enve-

lopes.

“Advertising and promotional direct mail”

means “direct mail” that has the primary pur-

pose of attracting public attention to a product,

person, business, or organization or to attempt

to sell, popularize, or secure financial support

for a product, person, business, or organization.

“Direct mail” means printed material that is de-

livered or distributed by the U.S. Postal Service

or other delivery service to a mass audience or

to addressees on a mailing list provided by or at

the direction of the purchaser of the printed ma-

terial, if the cost of the printed material or any

tangible personal property or items, property,

or goods listed in Part III.2. to 4. included with

the printed material is not billed directly to the

recipients of the printed material.

“Direct mail” includes any tangible personal

property, or items, property, or goods listed in

Part III.2. to 4., provided directly or indirectly

by the purchaser of the printed material to the

seller of the printed material for inclusion in

any package containing the printed material,

including billing invoices, return envelopes,

and additional marketing materials.

“Direct mail” does not include multiple items

of printed material delivered to a single ad-

dress.

Example 1: Printer is hired to produce 1,000

copies of a form letter, each personalized with

customer information. Printer shrink-wraps the

pallet and ships the letter to a third-party mail-

ing service hired by the purchaser. The

purchaser hires the mailing service provider to

fold the letters, insert them into envelopes, and

mail them. The printed material is not “direct

mail” because the seller/printer is not deliver-

ing or distributing the printed material to a

mass audience or to addressees on a mailing list

at the direction of the purchaser.

Example 2: Same as Example 1, except that

Printer folds the letters, inserts them into the

envelopes, and mails them. The printed materi-

al is “direct mail.”

Example 3: Printer is hired to produce 100,000

advertising flyers. Printer ships 1,000 copies of

the flyer to each of the purchaser’s 100 stores

located in various states. The purchaser will

make these flyers available to their customers

as they enter the store. The flyers shipped to the

purchaser’s stores are not “direct mail,” be-

cause multiple items of the same printed

Advertising Companies

material are delivered or shipped to a single

address and because the printed materials are

delivered to and billed to the recipient (pur-

chaser).

Example 4: Printer is hired to produce 100,000

copies of an advertising brochure. Printer ships

the brochures to the purchaser’s headquarters.

The purchaser then repackages the brochures

into 1,000 packages, each containing 100 bro-

chures, and mails each package to the

individual members of its sales force. The fly-

ers are not “direct mail” when shipped from the

printer to the purchaser or when shipped from

the purchaser to its sales force, because they are

multiple items of the same printed material de-

livered to a single address.

C. Advertising Signs

Sales of advertising signs, except for their under-

ground concrete foundations, are subject to tax,

unless an exemption applies. The repair or other

service to advertising signs is also taxable. The fol-

lowing examples illustrate the tax treatment of

various signs:

Example 1 - Billboard Sign

Example 2 - Building Sign

Example 3 - Leased Sign

Example 4 - Advertising Services

Example 5 - Advertising Video with Optional Dis-

play Device

Example 6 - Advertising Video with Mandatory

Display Device

Example 1 - Billboard Sign: Sign Company sells,

installs, and repairs advertising signs consisting of

a billboard, steel supports, and a concrete founda-

tion. On its billings, Sign Company separately

states the amount billed for the concrete founda-

tions. Sign Company’s sales of the billboard signs,

including installation, are subject to sales tax, ex-

cept for the amounts allocated to the concrete

foundations. Sign Company's repair of such bill-

board signs is also taxable. Sign Company may

purchase materials for the billboard and steel sup-

ports without tax for resale. Sign Company’s pur-

chase of concrete for the foundation is subject to

sales or use tax.

Note: The amount charged for the concrete

foundation is not taxable, whether or not it is

separately stated on the billing. If it is not sepa-

rately stated on the billing, Sign Company may

allocate a reasonable portion of its sales price

to the sale and installation of the concrete

foundation.

Example 2 - Building Sign: Sign Company sells,

installs, and repairs advertising signs that are at-

tached to buildings. Sign Company’s receipts from

its sales of signs are subject to sales tax. Sign

Company may purchase the signs, and related re-

pair parts that are transferred to its customer,

without tax for resale.

Example 3 - Leased Sign: Car Dealership leases a

sign from Sign Company on which the dealership

displays various advertising messages. Car Dealer-

ship has possession and control of the sign. Sign

Company’s lease receipts are subject to sales tax.

Example 4 - Advertising Services: Same as Exam-

ple 3, except that Car Dealership does not have

possession or control of the sign. Sign Company’s

charges are for displaying the message. Sign Com-

pany’s receipts from the service of displaying a

message are not subject to sales tax.

Example 5 - Advertising Video with Optional Dis-

play Device: Sign Company is in the business of

providing electronic signs and advertisements.

Customer will rent space from an airport in its ter-

minal where it can advertise its product. Sign

Company creates a video advertisement for Cus-

tomer and, for a separate and optional monthly fee,

Sign Company also rents a display device to Cus-

tomer. The airport's charge to Customer for the

space in its terminal is not taxable. Sign Company's

charges to Customer for the video advertisement is

a taxable sale of a specified digital good and Sign

Company's rental charge for the display device is a

taxable rental of tangible personal property. Sign

Publication 235

Company may purchase the display device without

tax for resale if its only use of the display device is

to rent it in the regular course of its business activi-

ties.

Example 6 - Advertising Video with Mandatory

Display Device: Same as Example 5, except that

Sign Company's charge for the display device is

not separate and optional. In order to receive the

advertising video, Customer must pay a monthly

fee for the display device (i.e., Customer cannot

purchase or rent the advertising video without pay-

ing the monthly fee for the display device). Sign

Company's monthly charge for the display device

is part of Sign Company's taxable sales price of its

sale or lease of the advertising video. Sign Compa-

ny is the consumer of the display device that it

provides for the mandatory fee with the purchase

or rental of the advertising video and is liable for

Wisconsin sales or use tax on its purchase of the

display device.

D. Design Services, Including Web Site Design

This section will help you to identify which prod-

ucts sold by a graphic designer are taxable. Also

see Part VI.A., "Finished and Preliminary Art-

work."

Web site design is not among the services subject

to Wisconsin sales tax if the service is not primari-

ly a photographic service. Whether the completed

web site design is transferred to the customer elec-

tronically (i.e., accessed or obtained by the

customer by means other than tangible storage me-

dia) or transferred using a tangible storage medium

(e.g., CD), the charge for the web site design work

is not subject to tax. If the charge is primarily for

photographic services, however, the charges are

subject to Wisconsin sales or use tax.

Note: Charges for web hosting, domain names, da-

ta storage, and data processing are not subject to

Wisconsin sales or use taxes. Additional infor-

mation about the tax treatment of computer

services can be found in one of the Department of

Revenue’s Common Questions, titled Computer –

Hardware, Software, Services.

Although web site design services are generally not

taxable, some of the charges relating to the creation

of a web site may be taxable. For example, the cre-

ation of an online video, graphic (such as a logo or

an animated graphic), or an online banner are sub-

ject to tax.

Therefore, if the charge for the web site design in-

cludes an online logo, banner or ad, or online

video, the charge for such taxable products is sub-

ject to tax if the charge is separate and optional

from the charge for the web site design.

The following examples illustrate when a charge is

“separate and optional”:

Example 1: Designer designs web sites. Hotel con-

tracts with Designer A to design a web site for a

fee of $2,000. Upon receiving the web site design,

Hotel may (1) hire Designer to design a personal-

ized online video for the web site for an additional

fee; (2) hire another designer to design a personal-

ized online video for the web site (or design the

personalized online video itself); or (3) choose to

not include a personalized online video. Regard-

less of which option Hotel chooses, Designer will

be paid the $2,000 for its web site design services.

Designer’s charges for the web site design are not

subject to Wisconsin sales tax. If Hotel hires De-

signer to create a personalized online video,

Designer’s charge for the personalized online vid-

eo is subject to tax.

Example 2: Designer designs web sites. Bowling

Alley contracts with Designer to design a web site

for a fee of $2,000. The charge for the web site de-

sign may include a personalized online video, if

requested by Bowling Alley. Bowling Alley may

choose to have a personalized online video in its

design or not. Regardless of whether Bowling Al-

ley chooses to include the personalized online

video or not, Designer will be paid the $2,000 for

its web site design services. No part of Designer’s

Advertising Companies

charge to Bowling Alley for the web site design is

subject to Wisconsin sales tax.

E. E-Mail Blasts and Text Marketing,

Management of Social Media Web Sites, and

E-Newsletters

All or a part of an advertising company's charge for

sending e-mail blasts and text marketing, manage-

ment of social media web sites, and sending e-

newsletters may be taxable, depending on the

products provided in each specific situation. Each

of these products may provide the customer with

any combination of graphic design services, digital

goods, and telecommunications message services.

1. E-Mail Blasts and Text Marketing

The service of sending advertising e-mail blasts

and text messages is generally subject to Wis-

consin sales or use taxes as a

telecommunications message service. An e-

mail blast is the sending of an advertising mes-

sage to an electronic mailing list of e-mail

addresses. Text marketing is the sending of an

advertising text message to a list of cellular tel-

ephone numbers.

Although some service providers may provide

nontaxable services in conjunction with the

sending of e-mail and text messages (e.g., ser-

vices related to account maintenance, such as

address management), the primary purpose of

the services provided may be to distribute e-

mail and text messages to the customer’s sub-

scriber list. In those cases, if there is a single

charge for the taxable and nontaxable services,

the charge is subject to tax. If there is not a sin-

gle charge for the taxable and nontaxable

services, see Part VI.E.4. "Charges That Are

Separate and Optional."

A customer may also hire an advertising com-

pany to create an e-mail advertisement that is

finished artwork and then send it to an e-mail

distribution list. The advertising company's sale

and distribution of the e-mail advertisement is

the sale of an additional digital good. See Pub-

lication 240, Digital Goods, for additional

information about digital goods. Note: Charges

for only copy and layout are not taxable.

Both the sale of the additional digital good and

the sale of a telecommunications messaging

service are subject to Wisconsin sales tax to the

extent that the sales takes place in Wisconsin.

See Part VI.E.5. "When Does a Sale of E-

Blasts, Text Marketing, and E-Newsletters

Take Place in Wisconsin?"

2. Managing Social Media Web Sites

Charges for web site management are not sub-

ject to sales or use taxes. The sale of specified

digital goods, however, is subject to tax. If the

web site management service includes charges

for the separate and optional sale of specified

digital goods (e.g., digital banners, digital vide-

os), the tax only applies to the separate and

optional taxable products purchased. See

“Charges for Services that are Separate and Op-

tional,” in Part VI.E.4.

If the sale includes specified digital goods or

additional digital goods (taxable) and nontaxa-

ble web site management services sold for one

nonitemized price that does not vary depending

on the products that the customer chooses, the

entire sales price may be taxable as a "bundled

transaction." The sale is a "bundled transaction"

if both of the following apply:

a) The seller's purchase price of the taxable

products (specified digital goods and addi-

tional digital goods) is more than 10% of

the seller's total purchase price.

b) The seller's sales price of the taxable prod-

ucts (specified digital goods and additional

digital goods) is more than 10% of the

seller's total sales price.

Exception: If the specified digital goods or ad-

ditional digital goods are essential to the use of

the web site management services and the true

Publication 235

object of the transaction is to receive the web

site management service, it is not a "bundled

transaction."

• If the transaction is a "bundled transaction,"

the entire sales price is taxable, unless at the

retailer's option, the retailer can identify by

reasonable and verifiable standards from

the retailer's books and records that are kept

in the ordinary course of its business for

other purposes, including purposes unrelat-

ed to taxes, the portion of the price that is

attributable to products or services that are

not subject to the tax. If the retailer chooses

this option, the portion of the sales price

that relates to nontaxable products is not

taxable.

• If the transaction is not a "bundled transac-

tion," and the true objective of the

transaction is to provide the nontaxable web

site management services, no part of the

charge is taxable. The retailer is, however,

required to pay sales or use tax on its pur-

chase of the specified or additional digital

goods, if applicable.

• For a detailed explanation of "bundled

transactions, see Part X.C. in Publica-

tion 201, Wisconsin Sales and Use Tax

Information.

3. E-Newsletters

E-newsletters (i.e., electronic newsletters)

generally contain news and other information

that is of interest to a specified group of busi-

nesses or individuals and are sent to a list of e-

mail addresses.

The advertising company's sale and distribution

of e-newsletters are taxable to the extent that

the sale occurs in Wisconsin. Additional digital

goods include news or other information prod-

ucts. See Part VI.E.5. "When Does a Sale of E-

Blasts, Text Marketing, and E-Newsletters

Take Place in Wisconsin?"

See Publication 240, Digital Goods, for addi-

tional information.

4. Charges That Are Separate and Optional

If a seller makes sales of both taxable and non-

taxable products to its customers, the tax

treatment of each product is determined inde-

pendently if the products are sold separately

and optional from each other.

Charges for nontaxable services are not subject

to Wisconsin sales or use taxes if the nontaxa-

ble services are separate and optional from the

taxable services. A charge is separate and op-

tional if the purchaser is not required to

purchase one service in order to receive the

other and the price is less if only one of such

services is purchased.

Example: Customer may buy any or all of the

following three services from Advertising

Company without any obligation to obtain the

other services from Advertising Company:

1. E-Mail Blasts - Advertising Company will

send monthly e-mail blasts for $500 per

month (taxable telecommunications mes-

saging services).

2. Database Management - Advertising

Company will store a customer database on

its server and will perform data processing

services to the database (e.g., address

changes, subscriber deletions) for $200 per

month (nontaxable, since data storage and

data processing are not taxable services).

3. List Management - Advertising Company

will send confirmation e-mail messages to

persons subscribing and unsubscribing from

the e-mail list for $400 per month (taxable

telecommunications messaging services).

Each of the charges for the services in 1. – 3.

are listed separately on the invoice that Adver-

tising Company gives Customer.

Customer may cancel one or two of the ser-

vices and still receive the other one or two

Advertising Companies

services from Advertising Company for the

same price. Advertising Company may hire an-

other party to do one or more of the services or

may choose to have its own employees do one

or more of the services. Advertising Company

will only charge Customer for such services

that it chooses to receive.

Services 1. and 3. are subject to tax, while Ser-

vice 2. is not. Note: If Customer was required

to purchase one or more of the services from

Advertising Company in order to receive one or

more of the other services OR Advertising

Company did not reduce its charge to Customer

for services that Customer performed itself or

hired another party to perform, the sale of the

services are not separate and optional sales.

5. When Does a Sale of E-Blasts, Text Market-

ing, and E-Newsletters Take Place in

Wisconsin?

Since the customer will not receive the e-mail

blasts, text marketing, and e-newsletters at the

seller's business location, the sale takes place at

the locations where the e-mail messages, text

messages, and e-newsletters are sent to and are

taxable to the extent that they are sent to loca-

tions in Wisconsin. An allocation should be

made between the e-mail messages, text mes-

sages, and e-newsletters sent to Wisconsin

locations (taxable to Wisconsin) and those sent

to locations outside Wisconsin (not taxable to

Wisconsin).

If the advertising company is not able to deter-

mine the physical location where the e-mail

messages, text messages, and e-newsletters are

being sent, the sale takes place at the purchas-

er's address as indicated by the advertising

company's business records, if the records are

maintained in the ordinary course of the adver-

tising company's business and if using that

address to establish the location of the sale is

not in bad faith.

For detailed information about "Where a Sale

Takes Place," see Part IV.

F. Radio and Television Commercials

An advertising company may be hired to produce a

radio or television commercial. A master tape may

be produced and copies or "dubs" of the master

tape are then sent to the radio and television sta-

tions. The advertising company may be hired to do

all or some of these production functions. The ra-

dio and television stations will generally be paid to

air the commercial by the advertising company's

customer.

Sales of tapes or other items of tangible personal

property; or items, property, or goods in Part III.2.

to 4.; are subject to tax, unless an exemption ap-

plies. For example, the sale of a master tape alone

is subject to tax, unless the master tape is con-

sumed in the manufacture of tangible personal

property that is destined for sale, or some other ex-

emption applies.

However, when an advertising concept does not

result in a final product, the charge for creating the

concept is not taxable. The creation of the concept

only is preliminary artwork.

Also, see Part VII.A. "Preliminary and Finished

Artwork."

Example 1: Real Estate Company contracts with

Advertising Agency to produce a radio commer-

cial. Advertising Agency produces a demonstration

tape (demo) which contains several different jin-

gles which could be used in the commercial. Real

Estate Company selects one of the jingles, and the

commercial is produced.

The charge by Advertising Agency for the demo is

subject to tax. The demo is preliminary artwork.

Since finished artwork was produced from the pre-

liminary artwork, the charge is subject to tax,

unless an exemption applies to the sale of the fin-

ished artwork.

Publication 235

Example 2: Construction Company contracts with

Advertising Agency to create a jingle for a com-

mercial that will be produced by Construction

Company's employees and e-mailed to certain ra-

dio stations. Advertising Agency produces a

demonstration tape (demo) which contains several

different jingles which could be used in the com-

mercial. Construction Company does not select any

of the jingles for its commercial. Since the prelimi-

nary artwork (i.e., the demo tape containing the

jingles) did not result in any finished artwork, the

charge by the advertising company is not subject to

tax.

Example 3: Same as Example 2, except that Con-

struction Company chose a jingle for its

commercial. Advertising Agency prepared a tape

containing the chosen jingle for Construction

Company's employees to use in their production of

the radio commercial. Advertising agency's charge

to Construction Company for finished artwork is

subject to tax. Construction Company may not

provide Advertising Agency with an exemption

certificate claiming the manufacturing exemption,

since the tape will not be consumed in the manu-

facture of tangible personal property that is

destined for sale.

When an advertising company is hired to produce a

radio or television commercial for its customer and

to send or transmit the commercial to radio or tele-

vision stations designated by its customer, the

advertising company's entire charge to its customer

is subject to tax. The entire charge is taxable, even

if the advertising company separately lists any of

the charges on its invoice to the customer, such as

the charge for the master tape or the advertising

company's charges for reimbursement of its ex-

penses or subcontractors' fees. The entire charge is

taxable, regardless of whether the advertising com-

pany transfers the commercial copies or "dubs" to

the radio and/or television stations on a tangible

medium (e.g., tape) or an electronic medium (e.g.,

an Internet web site, e-mail, through an electronic

transmission company).

Although the entire charge is taxable, the Wiscon-

sin tax only applies to the extent that the copies or

"dubs" were sent to locations in Wisconsin. Note:

An exemption exists for the sale of motion picture

film or tape, and motion pictures or radio or televi-

sion programs for listening, viewing, or broadcast,

and advertising materials related to them, sold to

motion picture theater or radio or television station.

A radio or television station does not, however,

generally purchase a commercial. Rather, the radio

or television station's customer provides the radio

or television station with the commercial when the

customer purchases advertising air time from the

radio or television station.

Example 1: Department Store decides to have a

television advertising campaign and contracts with

Advertising Agency. Advertising Agency produces

a master tape. The master tape remains at Advertis-

ing Agency's studio, and ten copies or "dubs" are

produced by Advertising Agency. One dub is given

to Department Store in Wisconsin, and the other

nine dubs are mailed by the advertising agency di-

rectly to various Wisconsin television stations. The

air time is arranged by Department Store. Advertis-

ing Agency charges Department Store X a total of

$100,000.

The entire charge by Advertising Agency for the

production of the master tape and dubs (i.e.,

$100,000) is subject to Wisconsin tax.

Example 2: Same as Example 1, except that four

dubs are mailed by to Advertising Agency to tele-

vision stations outside Wisconsin.

Sixty percent of the entire charge by Advertising

Agency for the production of the master tape and

dubs is subject to Wisconsin tax ($100,000 x 60%

= $60,000). The remaining 40% is not subject to

Wisconsin tax because that portion of the sale took

place outside Wisconsin ($100,000 x 40% =

$40,000).

Example 3: Same as Example 1, except that Ad-

vertising Agency's contract with Department Store

states that it will pay Advertising Agency $70,000

Advertising Companies

plus expenses for the master tape that results in the

dubs and $1,000 for each of the dubs. Advertising

Agency provides Department Store with an invoice

which separately lists each of the following:

Master tape $70,000

Expenses 20,000

Dubs ($1,000 x 10 dubs) 10,000

Total Due $100,000

The entire charge by Advertising Agency for the

production of the master tape and dubs (i.e.,

$100,000) is subject to tax. The tax treatment does

not change due to the fact that the items are sepa-

rately stated on Advertising Agency's invoice to its

customer.

An advertising company may purchase finished

artwork (e.g., photo, video) without tax if the ad-

vertising company consumes that finished artwork

in its creation of a master tape that it will sell to its

customer. The advertising company is, however,

liable for sales or use tax on its purchase of photog-

raphy or videography services used in its creation

of the master tape. The exemption for property

consumed in manufacturing does not extend to ser-

vices such as photographic services.

Example 1: Advertising Agency is creating a mas-

ter tape, which it will sell to its customer.

Advertising Agency purchases a stock video which

will be incorporated into the master tape. Advertis-

ing Agency may purchase the video without tax,

since it will be consumed in the manufacture of the

master tape.

Example 2: Advertising Agency is creating a mas-

ter tape, which it will sell to its customer.

Advertising Agency hires a videographer to shoot a

video on Advertising Company's hard drive. Ad-

vertising Company will incorporate the video into

the master tape. Advertising Agency is liable for

sales or use tax on its purchase of the photographic

services used in its manufacture of the master tape.

Example 3: Advertising Agency is creating a mas-

ter tape, which it will sell to its customer.

Advertising Agency hires a videographer to shoot a

video. The videographer shoots the video and gives

Advertising Agency a tape containing the video.

The videotape will be incorporated into the master

tape. Advertising Agency may purchase the vide-

otape without tax, since it will be consumed in the

manufacture of the master tape.

The advertising company may hire a third party to

produce a master tape and the advertising company

may then duplicate the master tape and send the

dubs to a radio or television station. The Wisconsin

sales and use tax treatment of the advertising com-

pany's purchase of the master tape depends on

whether the advertising company will be sending

the dubs in a tangible format (e.g., a tape) or a digi-

tal format (e.g., transmitted electronically).

• If the dubs are transferred to the radio or televi-

sion station in a tangible format, the advertising

company may purchase the master tape without

tax, since it will be consumed in the manufac-

ture of tangible personal property that is

destined for sale (i.e., the dubs in a tangible

format).

• If the dubs are transferred to the radio or televi-

sion station in a digital format, the advertising

company's purchase of the master tape is sub-

ject to tax. Since a digital good cannot be

manufactured, the manufacturing consumables

exemption does not apply.

Note: The advertising company's sale of the dubs

is subject to tax, regardless of whether the dubs are

transferred in a tangible or digital format. If a third-

party transmitter is hired by the advertising compa-

ny, the purchase of the electronic transmission of

the dubs is also taxable to the extent that the elec-

tronic dubs are transmitted to locations in

Wisconsin.

Publication 235

Example of the Production of a Television Commercial

Facts:

• Advertising Company is hired by Customer to provide 15 television stations in Wisconsin with a

commercial for the contracted amount of $50,000.

• Advertising Company hires Producer to create the master tape for $20,000

plus its expenses for

subcontracting a company to provide Producer with a videotape. The contract states that Adver-

tising Company is required to provide Producer with an audiotape. Both the videotape and the

audiotape will be consumed in the manufacture of the master tape that Producer sells to Adver-

tising Company.

• Producer hires Videographer to shoot a videotape and provide Producer with a videotape in Wis-

consin for $5,000.

• Advertising Company hires Company B to create an audiotape. Advertising Company will pay

Company B $1,500 for the audiotape. Company B will send the finished audiotape to Producer,

at the direction of Advertising Company.

• Producer will create two master tapes (one for duplication and one that it will retain). Produc-

er will consume the video and audiotapes in its manufacture of a master tape of a commercial.

• Transmitter is hired by Advertising Company for $5,000 to send electronic transmissions of the

commercial to 15 television stations hired by Advertising Company's customer. The television

stations are all located in Wisconsin.

• Producer will send the master tape to Transmitter, at the direction of Advertising Company.

Tax Treatment:

Advertising Company’s sale of the electronically transmitted commercials to Customer is subject to

Wisconsin sales tax. Sales of the television commercials are sales of digital audiovisual works, which

are taxable.

Advertising Company’s purchase of the master tape from Producer is subject to Wisconsin sales or use

tax, including Producer's charge to Advertising for reimbursement of the videotape. The charge for the

reimbursement of the videotape is a part of Producer’s sales price of its sale of the master tape (as op-

posed to a sale of the videotape and a separate sale of the videography services). Producer may,

however, purchase the videotape from Videographer without tax, since Producer will be consuming the

tape in its manufacture of the master tape that it sells to Advertising Company.

Advertising Company’s purchase of the audiotape from Company B is exempt from tax, since it will be

consumed in the manufacture of tangible personal property (i.e., the master tape) destined for sale. Ad-

vertising Company should provide Company B with a fully completed exemption certificate

(Form S-211 or Form S-211-SST) claiming the exemption for property consumed in manufacturing.

Advertising Company's purchase of the service of electronically transmitting the commercials to the 15

television stations in Wisconsin is subject to tax, since Transmitter is providing telecommunications

messaging services to addresses in Wisconsin.

Advertising Companies

VII. PURCHASES BY AN

ADVERTISING COMPANY

A. Purchases of Items Used By an Advertising

Company

Items purchased and used by an advertising com-

pany in its business are taxable. Examples of

taxable items used by an advertising company are

as follows (this list is not all-inclusive):

• Computer hardware and prewritten com-

puter software

• Furniture

• Office supplies

• Cameras

• Wall art for the office

• Promotional items that will be given to pro-

spective customers (e.g., keychains)

• Certain digital goods (See Part III.C.)

B. Don't Forget Use Tax!

An advertising company is liable for Wisconsin use

tax if it purchases taxable property, items, goods,

or services that it uses and the seller does not

charge Wisconsin sales or use tax to the advertising

company.

Two common situations are:

a. Buying items (e.g., computers, office supplies)

from an out-of-state seller that does not charge

Wisconsin sales tax, and

b. Buying items without tax by providing an ex-

emption certificate indicating resale to the

seller and then using the item, rather than re-

selling it (e.g., paper purchased for brochures,

but used by advertising company in printing in-

voices).

C. Purchases of Items Which Are Sold to

Customers

Tangible personal property and items, property, or

goods listed in Part III.2. to 4., and taxable ser-

vices, purchased by an advertising company that it

will not use, but will sell to its customers, may be

purchased without tax for resale. Sales tax is col-

lected by the advertising company when the

tangible personal property, item, property, or good,

or taxable service is sold to its customers.

Examples of items that may be purchased by an

advertising company without tax if they are pur-

chased to sell to others are (this list is not all-

inclusive):

• Printed materials

• Promotional items (not including those giv-

en away by the advertising company)

• Calendars

• Books

• Photographs

VIII. WHERE A SALE TAKES PLACE -

DIRECT MAIL

There are special provisions in the law for deter-

mining where the sale of “direct mail” takes place.

"Direct mail" means printed material that is deliv-

ered or distributed by the U.S. Postal Service or

other delivery service to a mass audience or to ad-

dressees on a mailing list provided by or at the

direction of the purchaser of the printed material, if

the cost of the printed material or any tangible per-

sonal property; or items, property, or goods

described in Part III.2. to 4.; included with the

printed material is not billed directly to the recipi-

ents of the printed material.

“Direct mail” includes any tangible personal prop-

erty; or items, property or goods described in

Part III.2. to 4.; provided directly or indirectly by

the purchaser of the printed material to the seller of

the printed material for inclusion in any package

containing the printed material, including billing

invoices, return envelopes, and additional market-

ing materials.

“Direct mail” does not include multiple items of

printed material delivered to a single address.

Publication 235

Note: Sales of catalogs and their mailing envelopes

that are designed to advertise and promote the sale

of merchandise or to advertise the services of indi-

vidual business firms are exempt from tax. An

exemption also applies to printing or imprinting

services that result in such catalogs and their mail-

ing envelopes. “Catalog” means a printed and

bound, stitched, sewed, or stapled book containing

a list and description of property or services for

sale, regardless of whether a price is specified.

Printed materials that are not bound, stitched,

sewed, or stapled, cannot meet the definition of

“catalog.” For example, an advertising pamphlet

that is printed on a single sheet of paper and simply

folded one or more times, without being bound,

stitched, sewed or stapled, does not meet the defi-

nition of “catalog,” and the exemption does not

apply.

The sales price of direct mail does not include sep-

arately stated delivery charges. For purposes of the

sale of direct mail, “separately stated delivery

charges” means charges by a seller to prepare and

deliver the direct mail to a location designated by

the purchaser of the direct mail, including charges

for transportation, shipping, postage, handling,

crating, and packing, that are separately stated on

the invoice, bill of sale, or similar document that

the seller gives to the purchaser.

1. Sales from October 1, 2009 through May 26,

2010

Parts a. through c., below, give the location of a

sale of direct mail. Part d., below, provides the

location of a sale of services (e.g., the customer

provides the paper and a printer provides the

printing and mailing services).

a. Purchaser does not provide a direct pay

permit, exemption certificate claiming

direct mail, or certain other information.

The sale of direct mail takes place at the lo-

cation from which the direct mail is shipped

if the purchaser does not provide the seller

one of the following:

• A direct pay permit,

• An exemption certificate (Form S-211

or Form S-211-SST) claiming direct

mail, or

• Other information that indicates the ap-

propriate taxing jurisdiction to which

the direct mail is delivered to the ulti-

mate recipients.

If the seller ships the direct mail from Wis-

consin, the seller’s entire charge for the

direct mail is subject to tax, excluding sepa-

rately stated delivery charges.

If the seller ships the direct mail from a loca-

tion outside of Wisconsin, the purchaser is

liable for the use tax on its purchase price of di-

rect mail, excluding any separately stated

delivery charges, that relate to direct mail

shipped to addresses in Wisconsin. No credit

for taxes paid to another state is allowed as a

credit against the Wisconsin use tax due.

b. Purchaser provides direct pay permit or

exemption certificate claiming direct

mail. If the purchaser provides an exemp-

tion certificate claiming direct mail or a

direct pay permit to the seller, the purchaser

shall pay or remit, as appropriate, to the de-

partment the use tax on all purchases for

which the tax is due. The seller is relieved

from liability for collecting sales tax. Wis-

consin tax is due for charges by the seller,

excluding any separately stated delivery

charges, that relate to direct mail shipped to

addresses in Wisconsin.

c. Purchaser provides delivery information.

If the purchaser provides delivery infor-

mation indicating the jurisdictions to which

the direct mail is to be delivered to the re-

cipients, the sale takes place in those

jurisdictions. The seller must collect and

remit the tax according to the delivery in-

formation provided by the purchaser and, in

the absence of bad faith, the seller is re-

Advertising Companies

lieved of any further obligation to collect

tax on the sale of direct mail based on in-

formation provided by the purchaser.

Wisconsin tax is based on charges by the

seller for the direct mail, but excluding any

separately stated delivery charges, that re-

late to direct mail shipped to addresses in

Wisconsin.

d. Charges for taxable services. The seller’s

charges for taxable services that result in

the production of direct mail (e.g., printing

services when the customer provides the

paper) are subject to Wisconsin tax to the

extent the direct mail is shipped to address-

es in Wisconsin. The portion of the charges

for services relating to direct mail that is

shipped to addresses outside of Wisconsin

is not subject to Wisconsin sales tax. Note:

For the period of October 1, 2009 through

May 26, 2010, the location of the sale of a

taxable service relating to direct mail is de-

termined under the General Sourcing Rules.

See Part VII.C.

2. Sales occurring on and after May 27, 2010

Effective May 27, 2010, the law was amended

to adopt definitions of “advertising and promo-

tional direct mail” and “other direct mail.”

“Advertising and promotional direct mail”

means direct mail that has the primary purpose

of attracting public attention to a product, per-

son, business, or organization or to attempt to

sell, popularize, or secure financial support for

a product, person, business, or organization.

“Other direct mail” means any direct mail that

is not advertising and promotional direct mail,

regardless of whether advertising and promo-

tional direct mail is included in the same

mailing. “Other direct mail” includes all of the

following:

• Transactional direct mail that contains per-

sonal information specific to the addressee,

including invoices, bills, account state-

ments, and payroll advices.

• Any legally required mailings, including

privacy notices, tax reports, and stockholder

reports.

• Other nonpromotional direct mail, includ-

ing newsletters and informational pieces,

that is delivered to existing or former

shareholders, customers, employees, or

agents.

“Other direct mail” does not include printed

materials that result from developing billing in-

formation or providing any data processing

service that is more than incidental to produc-

ing the other direct mail.

a. Charges for advertising and promotional

direct mail or services that are an inte-

gral part of the production and

distribution of advertising and promo-

tional direct mail

1. Purchaser does not provide a direct

pay permit, exemption certificate

claiming direct mail, or certain other

information. The sale of advertising

and promotional direct mail, or services

that are an integral part of the produc-

tion and distribution of advertising and

promotional direct mail, takes place at

the location from which the advertising

and promotional direct mail is shipped

if the purchaser does not provide to the

seller one of the following:

• A direct pay permit,

• An exemption certificate

(Form S-211 or Form S-211-SST)

claiming direct mail, or

• Other information that indicates the

appropriate taxing jurisdiction to

which the advertising and promo-

tional direct mail is delivered to the

ultimate recipients.

Publication 235

If the seller ships the advertising and

promotional direct mail from Wiscon-

sin, the entire charge for the advertising

and promotional direct mail, or a ser-

vice that is an integral part of the

production and distribution of advertis-

ing and promotional direct mail, is

subject to tax, excluding any separately

stated delivery charges.

If the seller ships the advertising and

promotional direct mail from a location

outside of Wisconsin, the purchaser is

liable for use tax on its purchase price

(excluding any separately stated deliv-

ery charges) of the advertising and

promotional direct mail, or a service

that is an integral part of the production

and distribution of advertising and pro-

motional direct mail, if the advertising

and promotional direct mail is delivered

to addresses in Wisconsin. No credit for

taxes paid to another state is allowed as

a credit against the Wisconsin use tax

due.

2. Purchaser provides direct pay permit

or exemption certificate claiming di-

rect mail. If the purchaser provides an

exemption certificate claiming direct

mail or a direct pay permit to the seller,

the purchaser must pay or remit, as ap-

propriate, to the department the use tax

on all purchases of advertising and

promotional direct mail or services that

are an integral part of the production

and distribution of advertising and pro-

motional direct mail delivered to

Wisconsin, excluding any separately

stated delivery charges. The tax is cal-

culated at the rate imposed by the

jurisdiction(s) where the advertising and

promotional direct mail is delivered to

the recipients.

3. Purchaser provides delivery infor-

mation. If the purchaser provides

delivery information indicating the ju-

risdictions to which the advertising and

promotional direct mail is to be deliv-

ered to the recipients, the seller must

collect and remit the tax according to

the delivery information provided by

the purchaser on all sales of advertising

and promotional direct mail or services

that are an integral part of the produc-

tion and distribution of advertising and

promotional direct mail delivered to

Wisconsin, excluding any separately

stated delivery charges. The tax is cal-

culated at the rate imposed by the

jurisdiction(s) where the advertising and

promotional direct mail is delivered to

the recipients.

4. Bundled transactions. If a transaction

is a bundled transaction that includes

advertising and promotional direct mail,

a.1. to 3., above, only apply if the pri-

mary purpose of the transaction is the

sale of products or services that meet

the definition of advertising and promo-

tional direct mail.

b. Charges for other direct mail or services

that are an integral part of the produc-

tion and distribution of other direct mail

1. Purchaser does not provide a direct

pay permit, exemption certificate

claiming direct mail, or certain other

information. The sale of other direct

mail or services that are an integral part

of the production and distribution of

other direct mail takes place at the pur-

chaser's address as indicated by the

seller's business records, if using that

address to establish the location of the

sale is not in bad faith. If that address is

a Wisconsin address, Wisconsin tax is

due on the entire charge by the Wiscon-

sin seller for the other direct mail or the

Advertising Companies

services that are an integral part of the

production and distribution of the other

direct mail, but excluding any separate-

ly stated delivery charges.

2. Purchaser provides direct pay permit

or exemption certificate claiming di-

rect mail. If the purchaser provides an

exemption certificate claiming direct

mail or a direct pay permit to the seller,

the purchaser must pay or remit, as ap-

propriate, to the department the use tax

(excluding any separately stated deliv-

ery charges) on all purchases of other

direct mail or services that are an inte-

gral part of the production and

distribution of other direct mail if the

advertising and promotional direct mail

is delivered to addresses in Wisconsin.

The tax is calculated at the rate imposed

by the jurisdiction(s) where the other di-

rect mail is delivered to the recipients.

c. Single mailing including both advertising

and promotional direct mail and other

direct mail. If advertising and promotional

direct mail and other direct mail are includ-

ed in a single mailing, the location of the

sale of that mailing is determined in same

manner as a sale of other direct mail.

Information about how to determine if a purchaser

has provided the seller with delivery information

indicating the tax jurisdictions can be found in the

article on the department's web site titled

"Collecting Sales or Use Tax on Advertising and

Promotional Direct Mail." Examples are provided

in the article.

Note: Effective July 1, 2013, the sale of advertis-

ing and promotional direct mail will be exempt

from Wisconsin sales and use taxes. See

Part VI.B.5.

IX. DO YOU HAVE QUESTIONS OR

NEED ASSISTANCE?

If you are unable to find an answer to your ques-

tion about sales and use taxes, e-mail, write, or call

the department.

Visit our web site . . . www.revenue.wi.gov

E-Mail DORSalesBusinessTaxandWithhold-

[email protected]

Write . . . Wisconsin Department of Revenue

P.O. Box 8949, Mail Stop 5-77

Madison, WI 53708-8949

Telephone . . . (608) 266-2776

Fax . . . (608) 267-1030

You may also contact any of the Department of

Revenue offices. Please see the department’s web

site for a listing of offices and their current hours.

X. BUSINESS DEVELOPMENT

ASSISTANCE – WISCONSIN

ECONOMIC DEVELOPMENT

CORPORATION

If you have questions about what other permits may

be needed for your business, or need assistance in

obtaining a permit, check the Wisconsin Economic

Development Corporation's web site for information

about Permits and Licensing.