How Is Use Tax Computed On Items Previously Purchased Using an Exemption Certificate?
NOTE: This article replaces the article titled "How Is Use Tax Computed On Items Previously Purchased Using an Exemption Certificate?" dated May 27, 2010.
It is not uncommon for a purchaser to buy an item without tax (e.g., purchasing an item without tax for resale by presenting the vendor with a fully completed exemption certificate) and then later use that item in a taxable manner. When a taxable use is made of such an item, use tax is owed based on the original purchase price of the item. (Section 77.57, Wis. Stats. (2011-12))
Example: Computer Store buys and sells computers. A laptop computer was purchased without tax for resale in 2013 for $550. In 2014, Computer Store took the laptop out of inventory and gave it away as a promotional item (i.e., taxable use). The fair market value of the laptop at the time that the first taxable use occurred was $300. Company's use tax liability is based on its purchase price of $550.
July 7, 2014
Updates were made to the code or formatting on this page as of September 15, 2014. This date does not reflect the effective date or any other date relating to the content of this page.