Wisconsin’s Milwaukee County Applies “Exposition Tax” on Prepared Food
The City of Milwaukee created the “Wisconsin Center Tax District” for the purpose of acquiring and managing exposition center facilities. This local exposition district adopted several taxes to fund these facilities.
Some examples of the newly-imposed taxes include a 0.5 percent food and beverage tax, a 2.5 percent basic room tax, a 7 percent additional room tax in the city of Milwaukee only, and a 3 percent rental car tax imposed on businesses primarily engaged in short-term passenger automobile rentals in cities or towns located wholly or partially within Milwaukee County. For purposes of this local exposition tax, Milwaukee County includes the Village of Bayside and the City of Milwaukee.
Applying the Exposition Tax
All sellers — including retailers — of certain food or beverages in Milwaukee County are required to collect and remit the 0.5 percent local exposition tax on sales taking place in Milwaukee County, regardless of whether or not the retailer is “engaged in business” in the county.
“Prepared food” is defined as foods sold in a heated state, foods heated by a retailer, two or more food ingredients mixed or combined by a retailer for sale as a single item, and food sold with eating utensils provided by a retailer. Because of this, prepared food sales are not limited to a meal provided by restaurants; they can also be sold by grocery stores and other similar types of businesses, such as convenience stores.
Examples of “prepared food” include rotisserie chickens as well as milk from a dispenser provided to customer in a cup or utensil.
Exceptions for Prepared Foods
There are exceptions to the prepared foods rule, including:
- Two or more food ingredients that are mixed or combined by a retailer for sale as a single item if the retailer’s primary classification in the North American Industry Classification System (NAICS) is manufacturing.
- Bakery items made by a retailer, including bread, rolls, pastries, buns, biscuits, bagels, croissants, donuts, Danish pastries, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.
- Two or more food ingredients mixed or combined by a retailer for sale as a single item, sold unheated, and sold by weight or volume.
Here are some specific examples of how these exceptions — which are not subject to the .5 percent local exposition tax — apply:
- A food manufacturer makes hot dogs by mixing and combining two or more food ingredients, heating the hot dogs so they are fully cooked and then packaging the hot dogs for sale after they have cooled. The hot dogs are made up of combined ingredients, thus being exempted from the prepared foods rule.
- A bakery mixes ingredients together to bake a cake. Once the cake cools, it is decorated and sold to a customer. In this example, it is not prepared food because it meets the exception for bakery items.
- A grocery store prepares potato salad for sale to its customers by boiling potatoes with various other ingredients. The store weighs the container, prints out a label containing the weight and the price. The potato salad is not prepared food since it is sold unheated by weight.
The local exposition tax on prepared food is a rather complicated rule with which retailers must comply when doing business in Milwaukee County. Many other complex rules apply to sales transactions taking place in other smaller taxing jurisdictions throughout the U.S.
Keeping up with such complex rules can be a difficult task for any business. The powerhouse Sovos research team has the experience and knowledge to provide our retail customers with the information and understanding of how these local taxes affect their business.
For more information regarding the application of the Milwaukee County local exposition tax, please see the Wisconsin Department of Revenue Publication 410 – Local Exposition Taxes.
Learn more about automating your sales tax compliance with Sovos.
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