Wisconsin – Fuel and Electricity Exemptions

SALT Report 1991 – The Wisconsin Department of Revenue’s December 2012 sales and use tax report discusses the exemption requirements for fuel and electricity used in manufacturing and qualified research.  Generally, fuel and electricity consumed in any of the following business activities is exempt from Wisconsin sales and use taxes:

  • Qualified research by a person primarily engaged in manufacturing or biotechnology in Wisconsin, or
  • Raising animals when more than 50% of all of the animals raised by the purchaser are sold to biotechnology businesses, public or private institutions of higher education, and governmental agencies for exclusive and direct use by any such entity in qualified research or manufacturing

To claim the exemption, the purchaser must determine the percent of fuel and electricity purchased that is consumed for exempt purposes and provide an exemption certificate, either Form S-211 or Form S-211-SST, to the supplier of the fuel or electricity.

When determining the percentage of fuel and/or electricity that qualifies for the exemption, keep in mind the following requirements.

The fuel and electricity must be used to operate machines and equipment that are used directly in the manufacturing process. Fuel and electricity are not considered consumed in manufacturing if they are used to provide heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development, receiving, storage, sales, distribution, warehousing, shipping, advertising, or administrative department activities.  However, fuel and electricity used directly to manufacture steam that will be used in further manufacturing or to heat a facility, or both, are considered consumed in manufacturing.

Fuel and electricity used to operate machines and equipment for direct use in qualified research are eligible for the exemption.  Fuel and electricity is not considered to be used exclusively and directly in qualified research if it is used to provide building heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development not involved in qualified research, receiving, storage, sales, distribution, warehousing, shipping, advertising, or administrative activities.

To qualify for the exemption for raising animals, the fuel and electricity must be used to operate machines and equipment used directly to raise the animals. Fuel and electricity do not qualify if they are used to provide building heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development, receiving, storage, sales, distribution, warehousing, shipping, advertising, or administrative activities.

If the purchaser does not pay tax on its purchases of fuel or electricity and uses it in a taxable manner, the purchaser will owe use tax on that purchase.  If the purchaser pays sales or use tax on fuel and/or electricity that is used in an exempt manner, the purchaser may claim a refund of sales or use taxes from the seller.  However, under certain circumstances, the purchaser may file a claim for refund with the Department of Revenue.

For Further Information:

Wisconsin Department of Revenue – Sales and Use Tax Report Number 4-12