State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission





152 W. Wisconsin Avenue, Suite 634

Milwaukee, WI 53202,




P.O. Box 8907

Madison, WI 53708,


DOCKET NO. 02-S-12



This case comes before the Commission on stipulated facts and exhibits. Attorney Edward David, of Milwaukee, Wisconsin, represents petitioner ("Plaza"). Attorney Robert C. Stellick, Jr., represents respondent ("Department"). Each party filed a brief.

Having considered the entire record and the briefs of the parties, the Commission finds, concludes, and orders as follows:


The Commission bases its Findings of Fact on the parties' stipulated facts, making non-substantive format and reorganization changes and deleting references to exhibits.

1. Plaza is a Wisconsin corporation with its principal place of business at 152 W. Wisconsin Avenue, Suite 634, Milwaukee, Wisconsin.

2. Plaza is engaged in the publication of printed advertising materials for Wisconsin businesses. The primary focus of Plaza's business during calendar years 1996 through 1999 ("audit period")(1) was the production of tourism-related publications. In producing tourism-related publications, Plaza sells ads to entities in the greater Milwaukee County and southeastern Wisconsin areas. Plaza collects advertising revenue for these ads, and it assumes responsibility for the graphic design and printing of the final product. The ads are designed by outside graphic artists. Printing is done by outside, third party printers. The tourism-related publications are distributed free of charge in and out of Wisconsin.

3. Plaza applied for a sales tax permit on April 18, 1990 and received one. Plaza filed at least one sales and use tax return, reporting sales tax liability for the period April through June 1991. However, beginning with at least 1993, Plaza prepared and timely filed sales and use tax returns reporting no sales or use tax liability. In response to an inquiry from the Department in 1997, Plaza informed the Department that it would have no future tax liability. The Department inactivated Plaza's account effective December 1997.

4. Plaza produced various publications on behalf of the Greater Milwaukee Convention and Visitor's Bureau ("GMCVB"), including the Milwaukee Official Visitor's Guide and the 1994 Greater Milwaukee Meeting Planner's Guide. These guides are representative of the publications produced by Plaza.

5. Under a July 17, 1996(2) Agreement, GMCVB paid no fees to Plaza for Plaza's production of publications on behalf of GMCVB. This Agreement is representative of the agreements between GMCVB and Plaza during the audit period. Plaza received compensation directly from the businesses that purchased advertising in the publications. At all times, the publications were distributed free of charge by GMCVB.

6. For 1998 and 1999, Plaza filed no sales and use tax returns with the Department.

7. The Department has not assessed any measure of sales tax based on Plaza's sales.

8. For the audit period, Plaza purchased tangible personal property and taxable goods and services from sellers in Wisconsin, without paying sales or use tax, in the following amounts:

1996 - $113,793.92

1997 - $140,611.76

1998 - $251,117.87

1999 - $181,190.19

9. These purchases were made without the sellers charging Plaza sales tax, with one exception: by invoice dated May 6, 1996, Times Printing Co., Inc. ("Times"), of Random Lake, Wisconsin, invoiced Plaza for an April 4, 1996 order for $86,075.21 plus $4,820.21 sales tax.

10. By fax dated May 29, 1996, Times sent Plaza a letter which stated: "SORRY FOR THE INCONVENIENCE BUT IT IS WORTH $4,800 TO YOU. WHEN COMPLETED, DATED BEFORE APRIL 30, 1996 THEN SIGN AND FAX BACK." Faxed along with the letter was a partially completed exemption certificate which stated as the reason for claiming the exemption: "Our publications are always given away free. Never sold."

11. On May 29, 1996, Paul Albano, Plaza's president, signed and returned the exemption certificate (dated March 15, 1996) to Times, which then provided a credit of $4,820.21 to Plaza by memo dated May 30, 1996.

12. Plaza made purchases from Times in the following amounts (prior to the 3.5% adjustment by the Department):

1996 - $ 94,257.74

1997 - $109,444.27

1998 - $238,051.58

1999 - $174,132.85

13. For the audit period, the following represents the percentage (including the 3.5% adjustment the Department allowed) and dollar amount of shipments of printed advertising material produced by Times shipped outside Wisconsin by Times, Plaza, and the entities(3) for which Plaza produced the publications:

1996 - 46.10% or $ 4,452.82

1997 - 46.30% or $ 50,672.70

1998 - 46.45% or $110,574.96

1999 - 46.20% or $ 80,449.38

14. Plaza asserts that Times bears responsibility for the tax assessed to Plaza, but agrees that the GMCVB publications that remained in Wisconsin are subject to tax.


15. Under date of September 19, 2000, the Department issued an assessment to Plaza for $61,133.97, which included tax, interest, late filing fees, negligence penalty, and 18% delinquent interest which only applied to 1998 and 1999. Plaza filed a timely petition for redetermination with the Department, which was granted in part and denied in part. Plaza then filed a timely appeal to the Commission.


Did the Department properly impose (1) tax on publications printed by Times shipped outside Wisconsin by GMCVB for the audit period, (2) the 25% negligence penalty for the audit period, and (3) 18% delinquent interest for 1998 and 1999 only?


1. The publications printed by Times for GMCVB, at Plaza's direction, and shipped outside of Wisconsin are exempt from the sales and use tax pursuant to Wis. Stat. § 77.54(25).

2. The publications printed by Times for GMCVB and, at Plaza's direction, shipped to Wisconsin locations are subject to use tax pursuant to Wis. Stat. § 77.53(1).

3. The 25% negligence penalty for the entire audit period and the 18% delinquent interest for tax years 1998 and 1999 were properly imposed on the use tax assessed on Plaza's printed materials kept in Wisconsin, but not on printed materials transported outside Wisconsin.


The only specific facts in the stipulation relate to Plaza's relationships with GMCVB and Times. This decision, therefore, is limited to those transactions and relationships unless otherwise stated.

The salient stipulated facts are summarized as follows: Plaza, a Milwaukee corporation, was engaged in the publication of printed advertising materials for Wisconsin businesses. A major client was GMCVB. Plaza was not paid by GMCVB, but kept the revenues it generated by selling advertising in these publications.

Plaza solicited and sold advertising, arranged for the ads to be designed by outside graphic artists, and secured printing of the publications. A major printer for Plaza was Times. The finished products were delivered by a contract carrier, at Plaza's direction, to locations both in and outside Wisconsin. In each of the four years involved, Times shipped about 46% of the publications outside Wisconsin. GMCVB gave away and did not sell the publications printed by Times.

In its business operations, Plaza purchased taxable tangible personal property and taxable services, but paid no sales tax to the sellers. Plaza held a seller's permit until December 1997, when it notified the Department that it would have no tax liability and the Department inactivated the permit. While holding the permit, Plaza filed sales and use tax returns showing no tax liability. Subsequent to December 1997, it filed no sales and use tax returns.

In May 1996, Times sent Plaza a partially completed, continuous tax exemption certificate. Its reason for claiming a tax exemption was "Our publications are always given away free. Never sold." Plaza's president signed and dated the exemption certificate, sent it to Times, and thereafter Plaza paid no sales tax to Times.

A. The § 77.54(25) Exemption.

There is no statutory sales and use tax exemption for the purchase of printed materials which are given away free and not sold. The cost of those printed materials is subject to the sales tax. See Wisconsin Department of Revenue v. Milwaukee Brewers Baseball Club, 111 Wis. 2d 571, 576-581 (1983) (use tax applies to items purchased by the Milwaukee Brewers and given for free to persons who attend their baseball games).

A sales and use tax exemption is provided by § 77.54(25), however, for printed advertising materials which are "purchased and stored for the purpose of subsequently transporting [them] outside the state by the purchaser for use . . . solely outside the state." The printed materials that Plaza purchased from Times for use by GMCVB outside Wisconsin are covered by this exemption. The printed materials delivered to GMCVB for use in Wisconsin are not exempt.(4)

The Department contends that this exemption does not apply because the printed materials were not transported outside the state "by the purchaser." Plaza counters this by citing the Agreement between GMCVB and Plaza, which provides that the printed material shall be "forwarded no later than 7 business days after publication by common carrier, at [Plaza's] expense, to two (2) locations designated by [GMCVB]. Risk of loss shall be borne by" Plaza.(5) This clarifies that Plaza, by an agent, transported the materials out of Wisconsin in compliance with the required transportation "by the purchaser" in § 77.54(25).

The Department also contends that § 77.54(25) requires the printed materials to be "purchased and stored for the purpose of subsequently transporting [them] outside the state. . . ." The Department asserts that the stipulated facts do not provide that the printed materials were "stored" and that this voids the exemption.

The Department is correct that the stipulation does not provide whether the printed materials involved here were "stored." Neither does the statute provide a time period during which printed materials must be "stored." The Commission believes it practical and reasonable to consider the printed materials "stored" from the time of completion of the printing process to the time Plaza's agent (a common carrier) delivers the published materials outside Wisconsin, a period not to exceed 7 business days as provided in the Plaza/GMCVB Agreement. Therefore, the printed materials were stored in Wisconsin.

Plaza has brought itself within the terms of the exemption found in § 77.54(25) and, thus, is not liable for use tax on the value of printed advertising materials shipped out of state set forth in Finding No. 13.

B. The Exemption Certificate

The Department states that the exemption certificate was defective. Times prepared it, sent it to Plaza, and it then was sent to Times by Plaza. A proper exemption certificate relieves the seller (Times) from collecting sales tax from the purchaser (Plaza). Wis. Stat. § 77.52(13).

This exemption certificate was properly prepared except for one provision. Wis. Stat. § 77.52(14)(b). The defect was in stating an improper exemption. The reason for the exemption was stated as "Our publications are always given away free. Never sold." There is no such sales or use tax exemption. Section 77.54(25) or language in that statute should have been provided instead.

The improperly completed exemption certificate does not void the exemption in § 77.54(25). It merely imposes on Times the burden of proving that the sales which were made with reliance on the exemption certificate are not subject to the sales or use tax. Wis. Stat. §§ 77.52(13) and (14).

Plaza asserts that since the exemption certificate was improper and tax is due, the Department should look to Times for the tax because Times prepared the improper document. However, the Commission has held that, when purchases not covered by an exemption certificate were made and no sales tax was collected because the seller erroneously believed the purchases were exempt, the assessment of use tax to the purchaser was proper.(6) Here, the Department properly assessed the tax to Plaza.

In addition, when an exemption certificate is defective on its face, and a seller (Times) accepts it and is subsequently required to pay the tax, the seller may recover the tax from the purchaser (Plaza) who furnished the certificate. Wis. Stat. § 77.58(8). If Times paid the tax, it could collect it from Plaza, resulting in the same conclusion as the assessment of Plaza.

C. The 25% Negligence Penalty and the 18% Delinquent Interest

25% Negligence Penalty

The 25% negligence penalty is imposed when, due to neglect, an incorrect sales and use tax return (or no return) is filed. A person upon whom the penalty is imposed has the burden of proving that the error or errors were "due to good cause and not due to neglect." Wis. Stat. § 77.60(3).

Plaza asserts that it was not negligent in preparing the exemption certificate, leading to an incorrect or no tax return being filed, but, rather, that Times was negligent in preparing and accepting the exemption certificate. "Even if [Plaza] signed and submitted an invalid exemption certificate, the burden was on Times . . . to continue charging sales tax," Plaza states. Petitioner's Brief, p. 13.

The duty of filing correct and complete sales/use tax returns and preparing proper exemption certificates relating to reporting the correct amount of tax rests on Plaza. Plaza's assertions that Times completed the improper exemption certificate, that Times and not Plaza was responsible to comply with the law, and that Plaza relied on Times to know the law are not persuasive. The duty of complying with the law may not be delegated.

The Commission has not in the past accepted the "it's someone else's fault" defense as "good cause and not due to neglect" (§ 77.60(3)), and rejects it again. See Parkview Sand & Gravel, Inc. v. Dep't of Revenue, Wis. Tax Rptr. (CCH) ¶ 400-431 (WTAC 1999), aff'd Wis. Tax Rptr. (CCH) ¶ 400-495 (Dane Co. Cir. Ct. 2000); and Wimmer Construction, Inc. v. Dep't of Revenue, 1998 Wisc. Tax LEXIS 36 (WTAC 1998) and cases cited therein.

The duty of compliance with the sales/use tax laws rests upon Plaza. If the duty is delegated, the duty is still with the taxpayer. Nothing in the record demonstrates that Plaza expended any effort to comply with these laws. Plaza has not demonstrated that its noncompliance with the laws was "due to good cause and not due to neglect" under § 77.60(3). Therefore, the Department's imposition of the negligence penalty on the properly imposed tax was correct.

18% Delinquent Interest

Under Wis. Stat. § 77.60(2), delinquent sales/use taxes "shall bear interest at the rate of 1.5% per month until paid. The taxes . . . become delinquent if not paid . . . [in] the case of no return filed . . ., by the due date of the return." Wis. Stat. § 77.60(2)(intro) and (b).

Plaza argues against the 18% delinquent interest rate on the same bases as its arguments against the 25% negligence penalty. It asserts that the interest imposition is erroneous because Plaza's non-filing was "due to good cause and not due to neglect." § 77.60(3). However, this standard does not apply to the delinquent interest, which does not contain the language provided by Plaza to avoid the interest imposition. See § 77.60(2).

The Department has followed the clear and unambiguous language of the delinquent interest statute. In Aqua Finance, Inc. v. Dep't of Revenue, Wis. Tax Rptr. (CCH) ¶ 400-197 (WTAC 1996), the Commission concluded that the Department properly followed the language of § 77.60(2). We reach the same conclusion that the delinquent interest was properly imposed here.


That respondent's action on petitioner's petition for redetermination is modified to remove from the measure of tax the amount for printed materials shipped out of state as set forth in Finding No. 13 and, as modified, is affirmed.

Dated at Madison, Wisconsin, this 31st day of January, 2003.



Don M. Millis, Commission Chairperson


Thomas M. Boykoff, Commissioner

Richard F. Raemisch, Commissioner


On February 4, 2003, Attorney Edward David, on behalf of petitioner, filed a letter which pointed out a typographical error in the January 31, 2003 Decision and Order of the Commission.

On February 5, 2003, Attorney Robert C. Stellick, Jr., filed a letter which stated that respondent had no objection to correcting the typographical error, but also pointed out several additional errors he felt should be corrected.

Upon re-reading its January 31, 2003 Decision and Order, the Commission makes the following corrections and


1. Page 4: Under Finding of Fact 13., delete "$4,452.82" and substitute "$43,452.82."

2. Page 5: Under ISSUES, (1), delete "by GMCVB"; under CONCLUSIONS OF LAW, 1., delete "for GMCVB"; and under CONCLUSIONS OF LAW, 2., delete "for GMCVB and".

3. Page 6: In OPINION, third paragraph, delete the fourth sentence.

4. Page 7: Under "A. The § 77.54(25) Exemption.", in Footnote 4, delete "Stipulated Fact 12" and substitute "Finding of Fact 13"; in third full paragraph, second sentence, delete "Plaza counters this by citing" and substitute "However," and delete ", which".

Dated at Madison, Wisconsin, this 14th day of February, 2003.


Don M. Millis, Commission Chairperson


March 17, 2003 Petition for rehearing denied pursuant to s. 227.49(3)

April 22, 2003 Appealed to Dane County Circuit Court (03CV1128)

1 The facts took place during this period unless otherwise stated.

2 The introduction to the contract states that it was made on July 17, 1996. However, it was signed by the parties on August 6, 1996.

3 These entities are not identified in the record.

4 Stipulated Fact 12 states that Times printed materials which were shipped out of state by "Times, Plaza, and the entities for which Plaza produced the publications. . . ." However, no facts regarding "entities" besides GMCVB are provided. If there are such entities and Plaza has advertising materials printed for them and shipped outside Wisconsin solely for use there, the § 77.54(25) exemption would apply.

5 Exhibit 5, paragraph 9.

6 Stanley A. Anderson, Inc. v. Dep't of Revenue, 11 WTAC 211, Wis. Tax Rptr. (CCH) ¶ 201-945 (WTAC 1981), aff'd Wis. Tax Rptr (CCH). ¶ 202-085 (Dane Co. Cir. Ct. 1982, dismissed by Wis. Ct. of Appeals (1983)).