Train With Grain Elevator

CLA has clarification around sales and use tax as it applies to concrete foundations.

Tax strategies

Concrete Foundations May Be Exempt From Sales and Use Tax in Wisconsin

  • Jerome Leis
  • 12/13/2016

Generally a contractor must pay sales tax, or accrue use tax, on materials used in real property construction activities.

However, construction or repair of a concrete foundation related to a holding structure for feed, fertilizer, and grain drying — when used directly and exclusively in a manufacturing process — is exempt from sales and use tax in the state of Wisconsin.

This WDOR statute is applicable to projects put into use after April 19, 2014.

Purchaser scenarios

General contractor (GC) — If a GC installed the concrete for the end user, the contractor would not need to charge itself use tax on the concrete. The contractor could also request a refund of those balances paid, as long as the wet bin is used exclusively in the manufacturing process.

End user — If end users act as general contractors and purchase the concrete for the wet bin themselves, they would not need to charge themselves use tax on the concrete. End users could also retroactively request a refund of the use taxes paid after April 2014, but, again, only if the foundation related to a holding structure is used exclusively during manufacturing.

Grain, feed, or fertilizer plants

If you will be building or adding to grain, feed, or fertilizer plants, the use tax does not typically show up as a separate line item when billed to you, but it is often built into the installer’s bid. This might provide an opportunity to negotiate lower project costs with general contractors, knowing that the work may be non-taxable.

If the amount of foundation attributable to the holding structure is not separately stated, the WDOR will allow the amount to be broken out using any reasonable method.

Refund process and potential audit trigger

You are allowed to request a refund up to four years after the tax was incurred, but after the window closes, you can no longer apply for the refund. We can help you determine if a refund might apply to your situation. However, requesting a refund could trigger a sales tax audit by the WDOR. Talk with your advisor to understand the risks.