The building materials exemption applies to the contractor’s purchase of materials consumed in real
property construction activities and the following requirements are met:

  •  The construction must be for a qualifying exempt entity;
  • The property must become part of a ”facility” in WI that is owned by the exempt entity; and
  • The property must be transferred to the qualifying exempt entity.

The contractor determines whether its material purchases qualify for this exemption and is liable for any use tax, interest and penalties due in the case that the exemption criteria are not met or cannot be substantiated.

This exemption is limited:

  •  Only applies to contracts with certain exempt entities – not all exempt entities qualify
  •  A manufacturer, farmer, or other entity that presents a use-based exemption is NOT an exempt entity
  • Location of facility must be in WI
  • “Facility” is narrowly defined
  • Facility must be owned by qualifying exempt entity
  • Upon completion of the contract, the facility must be transferred to/first used by the qualifying
    exempt entity

A Qualifying Exempt Entity is:

1. Any county, city, village, town within Wisconsin
2. Any public school district within Wisconsin
3. A county-city hospital established under sec. 66.0927, Wis. Stats.
4. A sewerage commission organized under sec. 281.43(4), Wis. Stats., or
5. A metropolitan sewerage district organized under secs. 200.01 to 200.15 or 200.21 to 200.65 Wis. Stats.
6. Any joint local water authority created under sec. 66.0823, Wis. Stats.
7. Any nonprofit organization that holds a WI Certificate of Exempt Status (CES) number
8. A nonprofit organized under sec. 501(c)(3), IRC– Federal determination letter

9. Technical college district
10. The Board of Regents of the University of Wisconsin System
11. An institution, as defined in s. 36.05(9),
12. College campus, as defined in s. 36.05(6m)
13. University of Wisconsin-Extension
14. State veterans organization (exempt entity status does not include bar or food service related items)
15. 501(c)(2) holding company

  •  Organized under sec. 501(c)(2), IRC;
  • Exempt from federal income tax under sec. 501(a), IRC; and
  • Organized for the exclusive purpose of holding title to property, collecting income from that property, and turning over the entire amount of that income, less expenses, to any 501(c)(3) organization

16. University of Wisconsin Hospitals and Clinics Authority (contracts effective 2/1/2021 and

This exemption does not apply to facilities constructed for the following entities, even if the entity holds
a WI CES number:

  •  A non-WI county, city, village or town
  •  A non-WI public school district
  •  A state governmental unit
  •  University of Wisconsin Hospitals and Clinics Authority (contracts entered into prior to February 1, 2021)
  •  A federal governmental unit
  •  Individual Native American Tribe members


What is a Facility?
 Building or Shelter
 Parking Lot or Parking Garage
 Athletic Field or Athletic Park
 Storm Sewer, Water Supply System, or Sewerage & Waste Water Treatment Facility

What is NOT Facility?
 Highway, Street, or Road
 Anything Not Specifically Identified as a Facility

Important: A General Contractor does NOT provide its subcontractor an exemption certificate claiming the building materials exemption and/or claiming its customer’s CES information. If the end customer is a qualifying exempt entity, the General Contractor should pass on the following information, along with a copy of the customer’s CES information or federal determination letter, to a subcontractor (below copied from WI Department of Revenue Form S-227):

For additional information and training on this topic refer to WI Dept of Revenue VIDEO or contact Holly Hoffman, owner of Sales and Income Tax Advisory Network at

Holly Hoffman, Owner
Sales & Income Tax Advisory Network, LLC