Sales and Use Tax Exemption For Vegetable Oil or Animal Fat Converted to Motor Vehicle Fuel Effective September 1, 2011

Sales of motor vehicle fuel are generally exempt from Wisconsin sales and use tax because the motor vehicle fuel is subject to the Wisconsin motor vehicle fuel excise tax. However, if the motor vehicle fuel is not subject to the Wisconsin motor vehicle fuel excise tax, the motor vehicle fuel would generally be subject to Wisconsin sales or use tax.

Effective September 1, 2011, an exemption from Wisconsin sales and use tax was created for sales of vegetable oil or animal fat that is converted by an individual into the first 1,000 gallons of motor vehicle fuel used by that individual in his or her personal motor vehicle, even if that fuel is exempt from the Wisconsin motor vehicle fuel excise tax. The exemption from Wisconsin sales and use tax does not apply to vegetable oil or animal fat that is converted into motor vehicle fuel by a person other than an individual.

Example 1 – Individual A purchases 100 gallons of used vegetable oil from Restaurant B on or after September 1, 2011. Individual A does not sell any renewable fuel during the year. Individual A converts the used vegetable oil into motor vehicle fuel that he will use in his personal motor vehicle. Individual A's purchase of this used vegetable oil is not subject to Wisconsin sales or use tax. Individual A should provide Restaurant B with a fully completed exemption certificate (Form S-211 or Form S-211-SST) claiming this exemption.

Example 2 – Company X purchases 500 gallons of used vegetable oil from Company Y on or after September 1, 2011. Company X does not sell any renewable fuel during the year. Instead, Company X converts the used vegetable oil into motor vehicle fuel that Company X will use in its company-owned vehicles. The exemption from Wisconsin sales and use tax for vegetable oil and animal fat converted into motor vehicle fuel does not apply since that exemption is limited to motor vehicle fuel that is used by an individual in the individual's personal motor vehicle. Company X is not an individual and therefore does not qualify for this exemption. However, an exemption from Wisconsin sales and use tax may still be claimed by Company X for the vegetable oil and animal fat converted to motor vehicle fuel if Company X pays the Wisconsin motor vehicle fuel excise tax due on the vegetable oil used as motor vehicle fuel.

Example 3 – Individual B is a sole proprietor and operates Company D located in Wisconsin. Individual B purchases 200 gallons of used vegetable oil from Restaurant C on or after September 1, 2011. Individual B does not sell any renewable fuel during the year. Individual B converts the used vegetable oil into motor vehicle fuel that he will use in his personal motor vehicle. Individual B's personal motor vehicle is used for both personal and business purposes. Since the motor vehicle is Individual B's personal motor vehicle and even though it is used partly for a business purpose, the entire charge for the vegetable oil purchased is exempt from Wisconsin sales or use tax.

Last updated March 23, 2012