State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





Office of City Attorney

800 City Hall

200 E. Wells Street

Milwaukee, WI 53202-3551




P.O. Box 8933

Madison, WI 53708-8933


DOCKET NO. 98-S-102





This matter is before us on the parties' cross-motions for summary judgment, pursuant to Wis. Stat. § 802.08. An earlier summary judgment motion by respondent was denied on January 20, 1999. Both parties have filed affidavits and briefs. Assistant City Attorney Linda U. Burke represents the petitioner. Chief Counsel John R. Evans represents the respondent. Having considered the entire record, including the affidavits submitted by the parties in conjunction with the respondent's earlier summary judgment motion, the Commission hereby finds, rules, and orders as follows, awarding summary judgment to the City of Milwaukee:


1. During the period under review, 1993 through 1996,(1) the petitioner ("City") hired contractors to implement its enforcement towing program by removing illegally parked and abandoned vehicles from city streets. The amount billed to the City for these towing services averaged about $35 per tow and was exempt from the sales tax under Wis. Stat. § 77.54(9a)(b).

2. City ordinance 101-25 provided in relevant part as follows:

Whenever any police officer finds a vehicle standing upon any highway in violation of [parking ordinances], the officer is authorized to remove the vehicle to either private or public parking or storage premises. The removal may be performed by or under the direction of an officer or a towing contractor under contract with the city. The charges for removal and storage under this section shall be $135 per vehicle.... [T]he vehicle may be released from storage upon payment of all charges.

[Emphasis supplied.] The $135 charge was developed to recoup a portion of the expenses of the City's enforcement towing program and to deter future scofflaws. The City's gross receipts from this charge are the subject of this appeal.

3. Respondent ("Department") issued a sales/use tax field audit assessment against the City on September 3, 1997, in the amount of $255,621.64, primarily for "sales of towing services on which tax was not charged and a valid exemption certificate was not maintained."

4. The City's petition to the Department for redetermination of the towing services assessment was denied, and the City then timely appealed to this commission.

5. The $135 fee was in addition to any illegal parking citation the vehicle owner may have received. If a court dismissed the citation or it was otherwise excused, the $135 fee was refunded.


77.51 Definitions. ...

* * *

(4)(a) "Gross receipts" means the total amount of the sale, lease or rental price, as the case may be, from sales at retail of tangible personal property, or taxable services, valued in money, whether received in money or otherwise, without any deduction on account of the following:

1. The cost of the property sold;

2. The cost of the material used, labor or service cost, interest paid, losses or any other expense;

3. The cost of transportation of the property prior to its sale to the purchaser;

* * *

(c) "Gross receipts" includes:

1. All receipts, cash, credits and property....

(13) "Retailer" includes:

(a) Every seller who makes any sale of tangible personal property or taxable service.

* * *

(14) "Sale" include[s] the transfer of the ownership of, title to, possession of, or enjoyment of tangible personal property or services for use or consumption.

* * *

77.52 Imposition of retail sales tax.

* * *

(2) For the privilege of selling, performing or furnishing the services described under par. (a) at retail in this state to consumers or users, a tax is imposed upon all persons selling, performing or furnishing the services at the rate of 5% of the gross receipts from the sale, performance or furnishing of the services.

(a) The tax imposed herein applies to the following types of services:

* * *

10. ... [T]he repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection and maintenance of all items of tangible personal property....

77.54 General exemptions. There are exempted from the taxes imposed by this subchapter:

* * *

(9a) The gross receipts from sales to, and the storage by, use by or other consumption of tangible personal property and taxable services by:

* * *

(b) Any county, city, village, town or school district in this state.

* * *


1. No material facts are in dispute, and this matter is therefore appropriate for summary judgment under Wis. Stat. § 802.08.

2. The disputed receipts were not from towing services provided by the City of Milwaukee and are, therefore, not taxable within the meaning of Wis. Stat. § 77.52(2)(a)10.


The respondent assessed the City for sales tax on gross receipts from sales of towing services, pursuant to § 77.52(2)(a)10. This statute imposes the sales tax on persons selling, performing or furnishing various specified services, including the "towing of tangible personal property." The only issue before us is whether the disputed gross receipts were derived from such towing "services" provided by the City.

We conclude that the only towing services involved were provided to the City by its contractors, and that the disputed receipts were not from towing services sold, performed or furnished by the City at retail to consumers as required by § 77.52(2). The City had the vehicles towed for its own benefit, not for the benefit of or as a "service" to the vehicle owners who, in addition to receiving a parking citation,(2) were further penalized by having to pay to recover their vehicles.

This conclusion is supported by § 77.51(14), which defines "sale" as including the "enjoyment" of "services for use or consumption.". The Department maintains that we need not consider the "enjoyment" aspect of a "service" because the Legislature has determined that the towing of vehicles is taxable, period. We disagree. The statute specifies certain "services" that are taxed, including "towing." It does not specify "towing" per se as subject to the tax. Only those receipts from towing services enjoyed by use or consumption are subject to the tax. Unless it's a service, it's not taxable.

But the Department argues that there is an "enjoyment" because the vehicle owner has the benefit of having the automobile "removed from its illegal status and returned to a status in compliance with law."(3) Again we disagree. The towing was a service to the City, not to the vehicle owners from whom the disputed receipts were extracted. Indeed, each hapless owner was no doubt considerably inconvenienced by having to bail out the towed vehicle to the tune of $135, probably at a location much less convenient than where the vehicle was illegally parked. Only the Department could view this as a taxable retail "service," much less "enjoyed" by or a "benefit" to the vehicle owner.

In reality, both the vehicle removal and the $135 charge amounted to additional penalties for having parked the vehicle in a tow-away zone where the City would remove it. The $135 charge is more akin to a non-taxable fine(4) than a sale. This is borne out by the fact that the $135 charge was developed to cover a good deal more than the "towing" fee it paid the contractor, including other expenses related to enforcement of illegal parking and an unspecified component to deter future scofflaws.

Nor are these receipts at all similar to the landscaping receipts we found taxable in City of Madison v. WDOR, Wis. Tax Rep. (CCH) ¶ 400-100 (WTAC 1995), cited in respondent's brief. Those landscaping receipts were from special assessments deemed by the special assessment statute to have benefited the property assessed. No such statutory language exists declaring the towing here a benefit to the vehicle owner, and for an obvious reason: it wasn't. Simply put, no retail sales occurred here. The towing was a penalty to the vehicle owner, not a taxable service. In City of Madison the landscaping was a service, not a penalty.

We therefore conclude from the record that the disputed receipts were not from retail towing services provided by the City within the meaning of Wis. Stat. § 77.52(2)(a)10.


1. The Department's motion for summary judgment is denied.

2. The City is awarded summary judgment, pursuant to Wis. Stat. § 802.08, reversing the Department's action on the City's petition for redetermination with respect to the disputed receipts.

Dated at Madison, Wisconsin, this 28th day of February, 2000.


Mark E. Musolf, Chairperson

Don M. Millis, Commissioner

Thomas M. Boykoff, Commissioner


March 28, 2000 Appealed to Dane County Circuit Court (00CV0828)

1 All facts pertain to the period under review unless otherwise stated.

2 Some towed vehicles received no parking citation.

3 Department's brief, p. 13.

4 A "fine" is defined as a "pecuniary penalty." Black's Law Dictionary, 569 (5th Ed. 1979). Fines are generally not taxable because they're not sales.