Posted by WI DOR: April 2020

Due to the outbreak of COVID-19 throughout the country, manufacturing companies are reprioritizing to focus on manufacturing personal protective equipment (PPE) or donating or selling their inventory to assist in overcoming the shortages facing healthcare workers. The tax treatment for selling or donating these items is described below.

Selling PPE:

The sale of face shields, goggles, gloves, masks, hand sanitizer, and other protective equipment and supplies are taxable, unless an exemption applies. Such items can be sold without tax to certain nonprofit organizations that hold a Wisconsin Certificate of Exempt Status (CES) number, the federal government, and Wisconsin governmental units. An exempt organization purchasing PPE must provide the seller with a fully completed exemption certificate (Form S-211 or S-211E) or its CES number, which must be recorded on the seller’s billing document. In lieu of an exemption certificate or CES number, the federal government and Wisconsin governmental units may provide the seller with a completed purchase order or similar document clearly identifying the governmental unit as the purchaser.

Additional information on exempt entities and the documentation a seller must obtain is provided in Part 11.D. of Publication 201, Wisconsin Sales and Use Tax Information.

Donating PPE:

If a business donates face shields, goggles, gloves, masks, hand sanitizer, and other protective equipment purchased without tax (e.g., inventory bought without tax for resale), use tax is due on the purchase price of the PPE when donated. The donation of the PPE is considered use of the property.

Exception: No use tax is due if the PPE is donated to an exempt organization listed in sec. 77.54(9a), Wis. Stats. To claim the use tax exemption, the person donating the property must establish and document that it is donating the property to a qualifying organization. Documentation may include a statement from the organization receiving the donation that shows the organization is exempt under sec. 77.54(9a), Wis. Stats. (e.g., copy of Certificate of Exempt Status).

If a business donates PPE purchased with Wisconsin sales or use tax, no additional use tax is due. The donating business may NOT claim a refund for the sales or use tax paid on the purchase of the donated PPE.

If a company purchases PPE specifically to donate to an exempt or nonexempt organization, the company is liable for sales or use tax on the purchase of the PPE that is being donated.