State Bar of Wisconsin Return to Wisconsin Tax Appeals Commission








12323 W. Fairview Avenue

Milwaukee, WI 53226




P.O. Box 8907

Madison, WI 53708


DOCKET NO. 99-S-171

DOCKET NO. 99-S-172



This case was heard in Wausau, Wisconsin, from September 12 to 14, 2000. Petitioners All City Communication Company, Inc. ("All City"), and Waukesha Tower Associates ("Waukesha Tower") are represented by Attorney John R. Austin of Reinhart, Boerner, Van Dueren, Norris & Rieselbach, S.C., Milwaukee, Wisconsin. Respondent Wisconsin Department of Revenue ("Department") was represented by Attorney Robert G. Pultz and is currently represented by Attorney Robert C. Stellick, Jr.

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


Jurisdictional Facts

1. Under date of January 6, 1997, the Department issued an assessment to All City for sales and use tax and interest totaling $61,501.83 for tax years 1992 through 1995.

2. Under date of March 4, 1997, All City filed a petition for redetermination with the Department.

3. Under date of September 1, 1999, the Department granted in part and denied in part the petition, asserting that $27,361.09 is due, whereupon All City filed a timely appeal with the Commission.

4. Under date of September 18, 1997, the Department issued an assessment to Waukesha Tower for sales and use tax, interest, and late fee totaling $104,773.91 covering tax years 1986 through 1995.

5. Under date of October 28, 1997, Waukesha Tower filed a petition for redetermination with the Department.

6. Under date of September 1, 1999, the Department denied the petition, whereupon Waukesha Tower filed a timely appeal with the Commission.

Waukesha Tower Facts

7. Waukesha Tower, a partnership, built and owns a guy wired commercial communication tower 480 feet tall ("the tower"), as well as one of two adjacent equipment buildings, on Beeheim Road in the Town of Waukesha, Waukesha County, Wisconsin ("Beeheim Road property" or "property"). The other building was constructed and owned by a business called Nextel, which sublet some of the property from Waukesha Tower. This real estate was chosen because it is higher than real estate surrounding it, and the high elevation of a tower is desirable to perform its function. Also, the real estate's soil composition would support the planned tower. The property was, and is, surrounded by farmland and is approximately 12 to 14 acres in area.

8. The Beeheim Road property upon which the tower and equipment buildings were located was owned by trusts created under the will of Harold T. Illing ("Illing Trusts"), with the trustees being Robert H. (son) and Sina (widow) Illing. This property and its surrounding property was farmland prior to being leased to Waukesha Tower.

9. Under date of December 2, 1985, the Illing Trusts leased the Beeheim Road property to Waukesha Tower for 10 years (from January 1, 1986 to December 31, 1995) under a document captioned "Ground Lease". The Ground Lease provided that the "Improvements and personal property" on the land are the sole property of Waukesha Tower, which may remove them when the lease expires. The lease also grants the right of first refusal to Waukesha Tower. That is, if the Illing Trusts received an offer to purchase all or a portion of the lease real estate during the 10-year lease period, Waukesha Tower may purchase the property at the same price and terms as in the offer.

10. Under date of February 28, 1992, in an addendum to the Ground Lease, the lease term was extended by one year to December 31, 1996. Also in that addendum, the Illing Trusts granted Waukesha Tower an option to purchase the Beeheim Road property for $100,000. The option was required to be exercised between January 1 and September 30, 1996.(1)

11. To construct and erect its tower, Waukesha Tower obtained approval from several governmental units. These included the Town of Waukesha; the Wisconsin Department of Industry, Labor and Human Relations; the Federal Communications Commission; and the Federal Aviation Administration.

12. The tower was specifically designed for the Beeheim Road property. Segments of the tower were constructed off premises, then brought to the property and assembled there.

13. At the Beeheim Road property, concrete anchor points were poured to support the tower, the approximately 30 anchoring guy wires (cables), and the two adjacent buildings housing equipment. The tower components were assembled, and the guy wires were attached. Guy wires hold up the tower and keep it vertical. The assembly conformed with established engineering specifications, and an engineer for the tower manufacturer certified that the specifications were met. The top of the tower was illuminated to alert aircraft of its presence, as required by the Federal Aviation Administration.

14. The two buildings adjacent to the tower are secured and house electronic equipment which provide, in part, electricity to light the buildings, to power the equipment, and to maintain the proper climate in the buildings. Electricity is also provided to cables which are strung onto the tower to power the transmission equipment on the tower, for which a monthly rental fee is paid to the tower's owner. Telephone lines are also in the buildings.

15. A chain link fence surrounds the tower and related buildings. A sign on the fence reads "DANGER; HIGH VOLTAGE; DO NOT ENTER."

16. The tower could be taken down either by toppling it in place or by dismantling it piece by piece. The metal could be sold to a salvage company, cut up for scrap, and hauled away. The tower might also be reassembled at another site. There is a market for the sale and purchase of used towers.

All City Facts

17. All City is a corporation in which several partners of Waukesha Tower are stockholders.

18. All City was primarily in the paging business. All City paid rental fees to owners of towers, including Waukesha Tower, to place its reception and transmission equipment on approximately 35 to 40 towers and on three buildings in Wisconsin. The rental fees also authorized All City to place other equipment in related, adjacent equipment buildings. All City then rented the use of its installed equipment to its customers so they could transmit their signals. All City also used the equipment itself for its paging business. Besides the Waukesha Tower facility, the Department's assessment applied to 11 sites which were located on rented land.

19. As an example of leasing tower space, in a document captioned "Lease Agreement" and dated October 1, 1988, Waukesha Tower leased All City, for five years, a position at approximately the 480 foot level of the Beeheim Road tower and space in a related equipment building for All City to install, operate, and maintain its 2-way radio equipment. All City agreed to pay $1,085.50 monthly under the agreement.


77.51 Definitions. Except where the context requires otherwise, the definitions given in this section govern the construction of terms in this subchapter.

* * *

(14) "Sale", "sale, lease or rental", "retail sale", "sale at retail", or equivalent terms include any one or all of the following: the transfer of the ownership of, title to, possession of, or enjoyment of tangible personal property or services for use or consumption but not for resale as tangible personal property or services and includes:

* * *

(i) Sales of building materials, supplies and equipment to owners, contractors, subcontractors or builders for the erection of buildings or structures or the alteration, repair or improvement of real property. Such transactions are deemed retail sales in whatsoever quantity sold.

77.52 Imposition of retail sales tax.

(1) For the privilege of selling, leasing or renting tangible personal property, including accessories, components, attachments, parts, supplies and materials, at retail a tax is imposed upon all retailers at the rate of 5% of the gross receipts from the sale, lease or rental of tangible personal property, including accessories, components, attachments, parts, supplies and materials, sold, leased or rented at retail in this state.

77.53 Imposition of use tax.

(1) . . . an excise tax is levied and imposed on the use or consumption in this state . . . of tangible personal property . . . purchased from any retailer, at the rate of 5% of the sales price of that . . . [property].


1. The gross receipts which Waukesha Tower received for the use of the tower and equipment building were subject to the sales tax because they constituted payments for the lease of tangible personal property.

2. The rental fees which All City paid to owners of towers, including Waukesha Tower, and to other owners of rooftop equipment to place its communication equipment on rented property constituted rentals of tangible personal property which are subject to Wisconsin's sales tax.


Waukesha Tower

Section 77.52(1) of the statutes imposes the sales tax on "the privilege of selling, leasing or renting tangible personal property, including accessories, components, attachments, parts, supplies and materials . . . ."

We must first determine whether Waukesha Tower's placement of its communication tower and equipment building on leased land constituted a real property improvement or whether it remained tangible personal property. We conclude that the tower and equipment building remained tangible personal property.

Unquestionably, when the tower and its related equipment building were affixed, Waukesha Tower did not own the underlying land. It merely rented it. Therefore, the tower remained tangible personal property, not a real estate improvement.

Several cases decided by the Wisconsin Supreme Court support the position that a tenant's tangible personal property affixed to rented land is presumed to retain its character as tangible personal property.

In State ex rel. Hansen S. Co. v. Bodden, 166 Wis. 219 (1917), Hansen Storage Co. ("Hansen") had a 5-year lease on real estate and built a warehouse on the property. The lease was silent on whether Hansen may remove the warehouse when the lease expired. The Supreme Court ruled that Hansen may remove the warehouse. The Court concluded that a building affixed to rented real property for a fixed term retains its character as personal property. Although this is not a tax case, the Court's conclusion that the structure affixed to leased land remains tangible personal property is precedent in the case currently before the Commission.

Shields v. Hansen, 201 Wis. 349 (1930) was an action to enjoin Mr. Hansen from removing an oil station building, oil tanks, and other equipment from property he leased from Mr. Shields. Mr. Hansen operated his business on the land for about 4 years under an oral agreement and then under a 3-year written lease agreement. The Court held that the intention of the parties at the time of the attachment was important. Because the lease did not provide otherwise, this personal property affixed to leased land remained personalty and could be removed. The Court again recognized that a building, tanks, and related equipment remained personal property when affixed to rented realty. This is also parallel to the case now before the Commission.

Waukesha Tower relies for its legal position on Dept. of Revenue v. Smith Harvestore Products, 72 Wis. 2d 60 (1976). The precise question in the case was ". . . whether the [Harvestore] dealers [were] engaged in the construction of real property structures or improvements. In other words, is the Harvestore, when assembled on farm property, a fixture and therefore part of the realty?" 72 Wis. 2d at 67.

To determine whether particular articles are personal property or fixtures, the Supreme Court stated a 3-part test (72 Wis. 2d at 67-68; footnote omitted):

. . . Whether articles of personal property are fixtures, i.e., real estate, is determined in this state, if not generally, by the following rules or tests: (1) Actual physical annexation to the real estate; (2) application or adaptation to the use or purpose to which the realty is devoted; and (3) an intention on the part of the person making the annexation to make a permanent accession to the freehold.

The Court analyzed each element of the 3-part test and concluded that the dealer-to-customer transaction was exempt from the sales tax.

Waukesha Tower carefully discusses each element as it pertains to its tower, and concludes that the tower and equipment building became real property improvements. We disagree. In Harvestore, the Harvestore was affixed to real property owned by the purchaser/farmer. By contrast, Waukesha Tower erected its tower on rented real property. The Supreme Court considers this difference in Harvestore as follows: (72 Wis. 2d at 73; footnote omitted; emphasis added):

This court has pointed out the fallacy of carrying over fixtures cases in one classification to another classification, where the status and relations of the parties are different. . . . Where a tenant installs fixtures, there is a presumption that they are temporary and that [the tenant] intends to remove them at the end of the lease period.

In this case, the presumption is supported by lease terms which provided that Waukesha Tower owned the tower and related equipment building, and it had the right to remove them.

To overcome the presumption, Waukesha Tower's executives testified that it was always their intent to affix the tower to the land for all the decades of the tower's useful life. At best, the lease is ambiguous as to Waukesha Tower's intent. When the lease was signed, it contained provisions indicating that the tower's annexation in the instant case was not permanent and that the lessors' intent might not have been realized, including a relatively short 10-year lease period; an option to purchase, rather than a purchase provision, after 10 years; and a provision that, at the lease's expiration, the tower and equipment building belong to and may be removed by Waukesha Tower.

All City

Because the tower is tangible personal property, we conclude that the monthly rental fees All City paid for the placement of its communications equipment on the tower and in the equipment building are subject to sales tax. Sales tax is also applicable to rental fees All City paid to owners of other towers and equipment buildings which are located on rented property covered by the audit in the instant case.

No specific evidence is in the record as to which other towers All City may have paid monthly rentals fees on for the placement of its communications equipment. All City has not met its burden of proof to overcome the presumption of correctness of these amounts in the Department's assessment. Woller v. Dept. of Taxation, 35 Wis. 2d 227 (1967). For that reason, the Department's assessment of sales tax on those rental fees is sustained.

All City contends that its fees to place its communications equipment on towers located on leased land were not to rent tangible personal property (i.e., locations on towers). Instead, it argues, they were "access fees" paid for the right of access to its installed equipment so that it can operate its business at tower sites at leased locations. To support this contention, All City states that the agreements were titled "Site Access Agreement," "Antenna Site License" or "Lease Agreement."

The agreements allow All City to place its communications equipment on towers located on leased land for a fixed period for a monthly fee. They authorize All City to install, operate, and maintain its equipment. The agreements are, in actuality, for the lease of locations on a tower (i.e., tangible personal property), and not merely for access to the equipment. The record does not show how these agreements are different from any leases of tangible personal property, other than semantically.



That respondent's actions on petitioners' petitions for redetermination are affirmed.

Dated at Madison, Wisconsin, this 6th day of August, 2001.



Don M. Millis, Acting Chairperson


Thomas M. Boykoff, Commissioner


August 31, 2001 Appealed to Dane County Circuit Court(01CV2337)

1 In January 1996, after the period under review in this case, the option was exercised, and Waukesha Tower purchased the Beeheim Road property.