​If 100% of the propane sold to a customer in Wisconsin is for use in the person's permanent residence or for farm use, an exemption certificate is not required. However, the seller must maintain adequate records to identify which sales are exempt. If for any reason the propane is not 100% exempt from Wisconsin sales and use tax, then an exemption certificate must be completed by the customer and kept on file by the seller. Sellers of propane should always have an exemption certificate on file for sales to manufacturers who claim some or all of their propane is exempt from Wisconsin sales and use tax.

Examples of uses of propane in a person's permanent residence that are considered for "residential use" such that the propane is exempt from Wisconsin sales and use tax include use in (this list is not all-inclusive):

• An attached garage, regardless of whether there is a separate tank or meter
• An unattached garage, regardless of whether there is a separate tank or meter
• A backyard swimming pool
• A gas grill
• Outdoor gas lights and lamps
• A whirlpool or sauna
• A space heater

Examples of uses of propane that are not considered for "residential use" such that the propane is subject to Wisconsin sales or use tax include use in (this list is not all-inclusive):

• A gas grill at a campground
• A recreational vehicle
• A pool at a health club
• A garage where a trade or business is carried on (e.g., garage at a residence that is used to conduct the resident's business of small engine repair)

Note: Although a sales and use tax exemption certificate may not be required to be obtained by the seller, the seller is still required to maintain adequate records to identify which sales are exempt. Acceptable "adequate records" would include asking each customer if the propane is being purchased for use in the person's permanent residence and doing one of the following:

• Recording that the sale of the propane is for "residential use" on the invoice;
• Pushing a certain register key that keeps a record indicating that the sale of the propane is for residential use; or
• Noting on the customer's credit application that the customer states the propane is for use in his or her permanent residence

Here are three examples that may help clarify all of the above.

Example 1 - Propane Supplier A delivers 1000 lbs of propane gas to a tank that is installed at Individual B's permanent residence. At the time Individual B signed up to have propane delivered to her residence by Propane Supplier A, she completed a credit application with Propane Supplier A and indicated on the application that the propane delivered to her tank would be for residential use and that the structure served by the propane tank is her permanent residence. Propane Supplier A is not required to obtain an exemption certificate from Individual B in order to sell the propane to Individual B without charging Wisconsin sales or use tax since they have received information from Individual B indicating that all of the propane delivered to her propane tank was for residential use and that the location served by the tank into which the propane was delivered is her permanent residence.

Example 2 - Same as Example 1, except that when Individual B completed the credit application with Propane Supplier A, she indicated that the location served by the tank into which the propane was delivered was a secondary home, as opposed to her permanent residence. The sale of the propane to Individual B in this example is subject to Wisconsin sales tax since it is not being used in her permanent residence.

Example 3 - Propane Supplier X sells 20, 30, and 100 lb propane gas cylinders. In some cases the customer picks up the cylinders at Propane Supplier X's location and in other situations Propane Supplier X delivers the cylinders to the customer. If 100% of the propane contained in a cylinder is for use in a person's permanent residence and Propane Supplier X has records to prove this on these sales, Propane Supplier X is not required to obtain an exemption certificate in order to make these sales without charging the customer Wisconsin sales or use tax. However, if Propane Supplier X does not have adequate records to prove that the sales of this propane are 100% for residential use in a person's permanent residence, Propane Supplier X should charge the appropriate Wisconsin sales tax on these sales.

March 9, 2011