Wisconsin Department of Revenue v. Menasha Corp., 2008 WI 88

Summary

The Wisconsin Supreme Court reviewed whether Menasha Corporation's SAP R/3 System qualified as custom computer software exempt from Wisconsin sales and use tax. The court held that the Tax Appeals Commission's interpretation of the applicable statute and administrative rule was entitled to deference and affirmed the conclusion that the software was custom and therefore tax-exempt.

Holdings

1. The Commission's interpretation of the statute is entitled to due-weight deference.
2. The Commission's interpretation of the administrative rule is entitled to controlling-weight deference, and the Commission was not required to defer to the Department of Revenue's interpretation of the rule.
3. The R/3 System was a custom computer program and therefore was exempt from Wisconsin sales and use tax.

Questions Presented

1. What level of deference should the Wisconsin Supreme Court give to the Tax Appeals Commission's interpretations of Wis. Stat. § 77.51(20) and Wis. Admin. Code § Tax 11.71(1)(e)?
2. Was the Tax Appeals Commission required to defer to the Department of Revenue's interpretation of Wis. Admin. Code § Tax 11.71(1)(e)?
3. Did the Commission reasonably conclude that SAP's R/3 System was a custom computer program exempt from Wisconsin sales and use tax?

Disposition

affirmed