Wisconsin Dept. of Revenue v. Parks-Pioneer Corp., PARKS-PIONEER

• Court: Court of Appeals of Wisconsin
• Writing for the Court: Before EICH, C.J., GARTZKE, P.J., and DYKMAN; GARTZKE
• Citation: 170 Wis.2d 44,487 N.W.2d 63
• Parties: WISCONSIN DEPARTMENT OF REVENUE, Petitioner-Appellant, v.CORPORATION, Respondent-Respondent. d
• Docket Number: No. 91-0810,PARKS-PIONEER,91-0810
• Decision Date: 25 June 1992

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487 N.W.2d 63 170 Wis.2d 44 WISCONSIN DEPARTMENT OF REVENUE, Petitioner-Appellant,
v.
PARKS-PIONEER CORPORATION, Respondent-Respondent.
^d No. 91-0810. Court of Appeals of Wisconsin. June 25, 1992.

Page 64

[170 Wis.2d 45] For the petitioner-appellant the cause was submitted on the brief of James E. Doyle, Atty. Gen., with Gerald S. Wilcox, Asst. Atty. Gen.

For the respondent-respondent the cause was submitted on the brief of Frederic J. Brouner and Margaret Baumgartner of DeWitt, Porter, Huggett, Schumacher & Morgan, S.C. of Madison.

Before EICH, C.J., GARTZKE, P.J., and DYKMAN, J.

GARTZKE, Presiding Judge.

The Wisconsin Tax Appeals Commission reversed a sales and use tax determination by the department of revenue against Parks-Pioneer Corporation. The circuit court agreed with the commission. The department appeals. The issues are whether Parks-Pioneer's machinery and equipment purchases, and its purchase of engine starting fluid, come under the recycling exemption in sec. 77.54(26m), Stats. ¹

[170 Wis.2d 46] We conclude that the machinery and equipment are not directly used for recycling activities, within the meaning of sec. 77.54(26m), Stats., and are therefore not exempt, and the starting fluid is not machinery, equipment, or parts therefor and is not exempt under that statute. We reverse.

Parks-Pioneer recycles solid waste. It prepares, sorts, weighs and processes scrap metal for use by smelters, foundries and steel mills. In 1984, 1985 and 1986, it purchased lugger boxes and roll-off boxes;

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tarps and bands to cover the lugger boxes; truck scales, including repair and replacement parts; platform scales; a dead-lift roll-off hoist mounted on one of its trucks; replacement hydraulic hose for its trucks; and starting fluid used to start crane engines on its premises. It paid no sales or use tax on those purchases.

In this state, for the privilege of selling tangible personal property at retail, a tax is imposed on all retailers at the rate of five percent on the gross receipts from the sale. Section 77.52(1), Stats. A tax at the same rate is imposed on the use of the property described in sec. [170 Wis.2d 47] 77.52, Stats. Section 77.53(1), Stats. Section 77.54, Stats., exempts certain transactions from the sales and use tax. The recycling exemption in sec. 77.54(26m), Stats., applies to the gross receipts from the sale and use of "recycling machinery and equipment ... exclusively and directly used for ... recycling activities." The department contends that the machinery and equipment at issue are not "exclusively and directly used for" Parks-Pioneer's recycling business, and that the starting fluid is not machinery or equipment and, in any event, the fluid is not used in connection with machinery or equipment coming within the exemption.

The commission's findings of fact are not contested. The commission found that Parks-Pioneer uses the lugger and roll-off boxes solely to collect scrap metal at its suppliers' premises, to transport the scrap to its premises and to deliver recycled metal to its customers. Customer delivery does not exceed ten percent of the total use of the boxes. The record shows that Parks-Pioneer places the boxes at scrap collection sites. It picks up the full boxes, leaves replacement boxes, and transports the scrap metal in the boxes to its premises. Tarps and bands are used solely to cover the boxes to prevent the metal from falling out in transit. Truck and platform scales are used solely to weigh the metal to determine its purchase or sale price. Dead-lift roll-hoists are mounted on trucks and used to lift the boxes onto and off the trucks. Hydraulic hoses are replacement parts for the trucks. Starting fluid is used in cold weather to start engines on cranes Parks-Pioneer has on its premises to move heavy pieces of scrap metal.

The application of a statute to undisputed facts is an issue of law. DOR v. Bailey-Bohrman Steel Corp., 93 Wis.2d 602, 606, 287 N.W.2d 715, 717 (1980). We must [170 Wis.2d 48] strictly construe tax exemption statutes against the taxpayer. Ladish Malting Co. v. DOR, 98 Wis.2d 496, 502, 297 N.W.2d 56, 58 (Ct.App.1980). That the items Parks-Pioneer purchased, except the starting fluid, are machinery and equipment and parts therefor is uncontested. The question is whether they are "exclusively and directly used for ... recycling activities," within the meaning of the exemption in sec. 77.54(26m), Stats.

The department makes a three-part attack on Parks-Pioneer's claim under the exemption. First, the department contends that the items claimed exempt are not used in a "recycling activity." Second, if the items are used in a "recycling activity," they are neither exclusively nor directly used for that activity. Third, starter fluid is not machinery or equipment or a part therefor.

"Recycling activities" is not...