PUBLISHED OPINION
Case No.: 95-3215
†Petition for
Review filed.
Complete
Title
of
Case:S.C. JOHNSON &
SON, INC.,
Petitioner-Appellant,†
v.
WISCONSIN DEPARTMENT OF REVENUE,
Respondent-Respondent.
Submitted
on Briefs: April 12, 1996
COURT COURT OF
APPEALS OF WISCONSIN
Opinion
Released: June 6, 1996
Opinion
Filed: June
6, 1996
Source
of APPEAL Appeal from an order
Full
Name JUDGE COURT: Circuit
Lower
Court. COUNTY: Dane
(If
"Special" JUDGE: Daniel
R. Moeser
so
indicate)
JUDGES: Gartzke,
P.J., Sundby and Vergeront, JJ.
Concurred:
Dissented: Sundby,
J.
Appellant
ATTORNEYSFor the petitioner-appellant the
cause was submitted on the briefs of Timothy C. Frautschi of Foley
& Lardner of Milwaukee.
Respondent
ATTORNEYSFor the respondent-respondent the
cause was submitted on the brief of James E. Doyle, attorney general,
and Gerald S. Wilcox, asst. attorney general.
COURT OF
APPEALS DECISION DATED AND
RELEASED June
6, 1996 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 95-3215
STATE OF WISCONSIN IN
COURT OF APPEALS
S.C.
JOHNSON & SON, INC.,
Petitioner-Appellant,
v.
WISCONSIN
DEPARTMENT OF REVENUE,
Respondent-Respondent.
APPEAL
from an order of the circuit court for Dane County: DANIEL R. MOESER, Judge. Affirmed.
Before
Gartzke, P.J., Sundby and Vergeront, JJ.
VERGERONT,
J. S.C. Johnson & Son, Inc. (taxpayer) appeals from an
order affirming the determination of the Wisconsin Tax Appeals Commission that
certain of the taxpayer's real estate is not "manufacturing property"
within the meaning of § 70.995, Stats.[1] Manufacturing property is assessed by the
Department of Revenue, rather than by the local assessor. Section 70.995(5). We conclude the real estate is not manufacturing property and
affirm.
BACKGROUND
The material facts are
not disputed. The taxpayer is a
manufacturer of commercial, consumer and specialty chemical products. The taxpayer's manufacturing plant, research
facilities and office building are assessed as manufacturing property by the
Department of Revenue. The subject
property is Armstrong Park, a recreational/leisure center owned by the taxpayer
and situated on a 94-acre parcel of land in the Town of Caledonia, between four
and five miles from the taxpayer's other establishments. Armstrong Park consists of picnic areas,
tennis courts, softball diamonds and two major buildings--the Johnson Mutual
Benefit Association (JMBA) Recreation and Fitness Center and the Child Care
Center. The JMBA Center contains a
variety of gymnasiums, exercise rooms, an aquatic center, lounges, conference
rooms, offices, a kitchen, storage areas and other miscellaneous rooms.
Aside
from recreation and child care, the taxpayer uses the Armstrong Park facilities
for employee meetings and corporate social events, including dinner
parties. The facilities are used
exclusively by the taxpayer's employees, retirees, their guests and families,
and are not open to the public.
The
taxpayer asked the Department to assess Armstrong Park as manufacturing
property, arguing that it qualified as such under § 70.995(1), Stats., as well as § 70.995(2), which
refers to the Standard Industrial Classification (SIC) Manual, published by the
U.S. Office of Management and Budget.
The
SIC is a system developed by the federal government for classifying
establishments by type of economic activity.
The purpose of the SIC is to facilitate the collection, tabulation, presentation
and analysis of data relating to establishments and to promote uniformity and
comparability of statistical data. Standard Industrial Classification Manual,
11 (1987).[2]
Under
the SIC Manual, establishments primarily engaged in performing management or
support services for other establishments of the same enterprise are called
"auxiliary establishments." A
recreational facility or child day care facility maintained by an enterprise
solely for the benefit of its employees is classified as an auxiliary. Auxiliary establishments have the same SIC
classification as the primary activity of the operating establishment they
serve. The taxpayer's operating
establishment falls within the SIC manufacturing major group classification
28--Chemicals and Allied Products.
Therefore, the Armstrong Park facilities, as auxiliary facilities, fall
within that same classification.
When
the Department refused the taxpayer's request to assess Armstrong Park as
manufacturing property, the taxpayer filed a Form of Objection to Manufacturing
Classification Decision with the Department's State Board of Assessors. The Board of Assessors denied the request.
The
taxpayer filed a petition for review with the Wisconsin Tax Appeals
Commission. The Commission granted
summary judgment to the Department. The
Commission concluded that Armstrong Park does not qualify as manufacturing
property under § 70.995(1), Stats.,
because it is not used in manufacturing, assembling, processing, fabricating,
making or milling tangible personal property for profit, and is not a
warehouse, storage facility or office structure, the predominant use of which
is in support of the taxpayer's manufacturing property.
The
Commission also determined that Armstrong Park does not qualify as
manufacturing property under § 70.995(2), Stats. The Commission
acknowledged that the Armstrong Park facilities are classified in major group
28 of the SIC Manual, and that, pursuant to § 70.995(2), Armstrong Park is
therefore "deemed prima facie manufacturing property." However, citing § 903.01, Stats.,[3]
the Commission stated that the SIC Manual merely created a presumption that
Armstrong Park is manufacturing property, which the Department had successfully
rebutted "by showing that Armstrong Park fails to meet any of the
`manufacturing property' criteria required by related subsections (1) and (3)
of § 70.995 or of the Wisconsin Property Assessment Manual." (Emphasis in original.) The Commission also stated that even if it
could find some manufacturing activity or process occurring at Armstrong Park
along with the substantial recreational use, the taxpayer's claim would still
fail because of the Department's "nearly total" discretion under
§ 70.995(4) in determining what, if any, portion of such property to
assess. The trial court affirmed the
Commission's decision.
The
resolution of this case depends on an interpretation of § 70.995, Stats.
The ultimate goal of statutory interpretation is to ascertain the intent
of the legislature. Rolo v. Goers,
174 Wis.2d 709, 715, 497 N.W.2d 724, 726 (1993). We first look to the language of the statute itself. See UFE Inc. v. LIRC,
No. 94-2794, slip op. at 4 (Wis. May 22, 1996). If the plain meaning of the statute is clear, we do not look to
rules of statutory construction or other extrinsic aids. Id. Instead, we apply the clear meaning of the statute to the facts
of the case. Id. However, if the statute is ambiguous, we may
examine the scope, history, subject matter and purpose of the statute. Id. Furthermore, if the administrative agency has been charged with
the statute's enforcement, a court may also look to the agency's interpretation. Id. at 4-5.
DISCUSSION
Section 70.995(5), Stats., provides that the Department
"shall assess all property of manufacturing establishments included under
subs. (1) and (2) [of § 70.995]."
The taxpayer contends that Armstrong Park qualifies as manufacturing
property under both § 70.995(1) and (2).
The
first two sentences of § 70.995(1)(a), Stats.,
provide:
In this section "manufacturing
property" includes all lands, buildings, structures and other real
property used in manufacturing, assembling, processing, fabricating, making or
milling tangible personal property for profit.
Manufacturing property also includes warehouses, storage facilities and
office structures when the predominant use of the warehouses, storage
facilities or offices is in support of the manufacturing property, and all
personal property owned or used by any person engaged in this state in any of
the activities mentioned, and used in the activity, including raw materials,
supplies, machinery, equipment, work in process and finished inventory when
located at the site of the activity.
These
two sentences create three categories of manufacturing property: (1) lands, buildings, structures and
other real property used in manufacturing, assembling, processing, fabricating,
making or milling tangible personal property for profit; (2) warehouses,
storage facilities and office structures when the predominant use is in support
of property belonging to the first group; and (3) all personal property
owned or used by any person in this state in any of the activities mentioned,
and used in the activity. The third
category does not concern us. The
second category we will sometimes refer to as "support structures."
The
taxpayer concedes that the Armstrong Park facilities are not within the first
category and also concedes that the facilities are not warehouses, storage
facilities or office structures.
However, the taxpayer maintains that because the facilities are used
predominantly in support of its manufacturing property, they should nonetheless
qualify as manufacturing property under the second category. We disagree. Section 70.995(1)(a), Stats.,
does not provide that structures used predominantly in support of manufacturing
property are manufacturing property. It
plainly limits the support structures that qualify as manufacturing property to
warehouses, storage facilities or office structures.[4]
The
taxpayer may be correct that recreational and child care facilities are
frequently incorporated into office buildings or manufacturing plants and are
increasingly a necessary part of the corporate facility. We also understand that the Armstrong Park
facilities are used for corporate meetings, seminars and receptions. However, we cannot ignore the plain language
of the statute. Armstrong Park is not
incorporated into a structure that is used for manufacturing and it is not a
warehouse, storage facility or office structure. When the language of a statute is plain on its face, our inquiry
ends and we must apply that language to the facts of the case. Village of Shorewood v. Steinberg,
174 Wis.2d 191, 201, 496 N.W.2d 57, 61 (1993).
We conclude that Armstrong Park does not meet the definition of
manufacturing property under § 70.995(1)(a), Stats.
The
taxpayer also contends that § 70.995(2), Stats.,
provides a separate basis for determining whether property is manufacturing
property, independent of § 70.995(1).
Section 70.995(2) provides in part:
In addition to the criteria set forth in sub. (1),
property shall be deemed prima facie manufacturing property and eligible for
assessment under this section if it is included in one of the following major
group classifications set forth in the standard industrial classification
manual, 1987 edition, published by the U.S. office of management and budget.
....
(k) 28-Chemicals
and allied products.
The
taxpayer argues that because the Armstrong Park facilities come within the SIC
definition of auxiliary establishments and are therefore classified in major
group 28, Armstrong Park is "deemed prima facie manufacturing property and
eligible for assessment" by the Department.
The
Department responds that § 70.995(2), Stats.,
must be read in conjunction with § 70.995(1). The Department argues that while the taxpayer's production of
chemical products is a manufacturing activity, this does not mean that all of
its property is to be assessed as manufacturing property. According to the Department, even if the
Armstrong Park facilities are included in one of the SIC Manual's manufacturing
classifications under § 70.995(2), they must still come within one of the
three categories of manufacturing property in § 70.995(1)(a). In the Department's view, to conclude otherwise
would make that portion of § 70.995(1)(a) superfluous.[5]
We
conclude that both interpretations are reasonable. The statute is therefore ambiguous. See State v. Martin, 162 Wis.2d 883, 894, 470 N.W.2d 900, 904 (1991)
(ambiguity arises when more than one reasonable, although not necessarily
correct, meaning can be attributed to a word, phrase or statute). We therefore turn to extrinsic sources and
rules of statutory construction in order to determine the intent of the
legislature in enacting § 70.995(2), Stats. See UFE Inc., No.
94-2794, slip op. at 6. One such
extrinsic source is the interpretation of the agency charged with enforcing the
statute. Id.
The
Department contends that the Commission's interpretation of § 70.995, Stats., is entitled to great weight for
two reasons. First, citing Video
Wisconsin, Ltd. v. DOR, 175 Wis.2d 195, 498 N.W.2d 880 (Ct. App. 1993),
the Department argues that the Commission has longstanding experience in
interpreting § 70.995. Second, the
Department contends that the legal question is intertwined with factual
determinations.
We
disagree. The Commission did not rely
on any precedent in reaching its conclusion.
The Department acknowledged before the trial court that the taxpayer's
appeal to the Department's State Board of Assessors was "the first appeal
in the past 20 years to the State Board of Assessors to contest a denial to
classify an auxiliary establishment as manufacturing." The experience the Department has gained in
classifying manufacturing property generally does not provide special expertise
to resolve the legal issue of the relationship between auxiliary
classifications under the SIC Manual and § 70.995(1) and (2), Stats.
Also, the legal question is not intertwined with factual
determinations. The Commission decided
the case upon summary judgment and did not make any factual
determinations. Accordingly, we review
the issue de novo, without deference to the Commission's conclusion. See Local No. 695 v. LIRC,
154 Wis.2d 75, 84, 452 N.W.2d 368, 372 (1990).
In
interpreting § 70.995(2), Stats.,
we keep in mind that the true meaning of a single subsection of a statute,
however precise its language, cannot be considered apart from related
subsections. State v. Williams,
198 Wis.2d 516, 527, 544 N.W.2d 406, 410 (1996). We therefore analyze subsec. (2) not in isolation, but in
relation to the other subsections of § 70.995.
As
we have explained above, the first two sentences of § 70.995(1)(a), Stats., create three categories of
manufacturing property, each of which describes the property in relation to the
term "manufacturing." The
remainder of subsec. (1)(a) and (b) provides some definition to the term
"manufacturing." Section
70.995(1)(c) lists certain agricultural activities that are not included in the
term "manufacturing." Section
70.995(1)(d) gives further definition to the activities that are included in
the term "manufacturing," although it does so in a rather oblique
manner. It provides:
Except for the
activities under sub. (2), activities not classified as manufacturing in the
standard industrial classification manual, 1987 edition, published by the U.S.
office of management and budget are not manufacturing for this section.
In
order to understand subsec. (1)(d), we must refer to subsec. (2) and also
understand the legislative history of subsec. (1)(d). Subsection (2)(c)-(v) lists all industries classified in the SIC Manual as
manufacturing. Subsection (2)(a), (b),
(w), (x), (y) and (z) lists certain industries (or in the case of (z), a facility)
that are not classified in the SIC Manual as manufacturing, but for purposes of
§ 70.995, Stats., are
considered manufacturing establishments.
Prior
to 1992, § 70.995(1)(d), Stats.,
contained a long list of activities that were not considered manufacturing, in
addition to the agricultural activities excluded under subsec. (1)(c). 1991 Wis. Act 39 amended subsec. (1)(d) to
eliminate that list of excluded activities and to replace it with the present
statement that, "Except for the activities under sub. (2), activities not
classified as manufacturing in the standard industrial classification manual,
1987 edition, published by the U.S. office of management and budget are not
manufacturing for this section."
The present version of subsec. (1)(d), then, means that all activities
classified as manufacturing in the SIC Manual are included in the statutory
definition of manufacturing and that all those activities not classified as
manufacturing in the SIC Manual are not included in the statutory definition of
manufacturing, except for the activities listed in subsec. (2)(a), (b), (w),
(x), (y) and (z).
Section
70.995(3), Stats., elaborates
further on the activities in the production process that the term
"manufacturing, assembling, processing, fabricating, making or
milling" are intended to include.
When
the subsections of § 70.995, Stats.,
are read together, it is evident that there is a distinction between the
activities or industries that constitute manufacturing and the property that is
considered manufacturing property. The
activity or industry this taxpayer is engaged in clearly meets the statutory
definition of manufacturing: the
taxpayer is engaged in the industry of chemicals and allied products,
classified as a manufacturing industry in the SIC Manual and listed at subsec.
(2)(k). But, as we have held, Armstrong
Park does not come within any of the three categories of manufacturing property
in subsec. (1)(a).
The
taxpayer asks us to read subsec. (2) as creating a fourth category of
manufacturing property--property that meets the definition of an auxiliary
establishment for the SIC classifications listed in subsec. (2). We acknowledge that the introductory
language of subsec. (2) confuses the distinction between the activities or
industries included in the definition of manufacturing and the type of property
included in the definition of manufacturing property. Subsection (2) states that property is "deemed prima
facie manufacturing property" if it is included in the listed SIC
classifications of industries.
(Emphasis added.) We have
searched the legislative history for some indication that the legislature
intended this language to refer to all property considered auxiliary property
under the SIC Manual for the classifications listed in subsec. (2). We have found no such indication. We are therefore persuaded that the more
reasonable interpretation of subsec. (2) is that it defines the activities or
industries that are considered manufacturing.
It does not add a fourth category of manufacturing property.
We
reach this conclusion for two reasons.
First, subsec. (1)(d) refers to the classifications in subsec. (2)
as "activities." Second, the
taxpayer's fourth category subsumes the second category, making the requirement
that the support structure be a warehouse, storage facility or office structure
superfluous. We are to avoid
constructions that result in portions of a statute being superfluous. State v. Wachsmuth, 73 Wis.2d
318, 324, 243 N.W.2d 410, 414 (1976).
The definition of support structures in subsec. (1)(a) is narrower than
the SIC definition of auxiliary property.
If the legislature had intended that the broader SIC definition govern,
there would be no need to limit support structures to the three structures
listed in subsec. (1)(a). In view
of the specific definition of support structures in subsec. (1)(a), we are
not persuaded that the legislature intended to adopt the broader SIC definition
of auxiliary establishments in subsec. (2).
By
the Court.—Order affirmed.
No. 95-3215(D)
SUNDBY,
J. (dissenting). Johnson's Wax is one of
Wisconsin's oldest manufacturers, well known for its philanthropy and
enlightened management. It has four
main facilities in the state: Its
corporate headquarters located in the City of Racine; its main U.S.
manufacturing facility, known as Waxdale, located about six miles west of its
corporate headquarters; its entomology research laboratory, located about three
miles north of its corporate headquarters; and the subject property, known as
Armstrong Park. The park consists of
approximately ninety-five acres on which are constructed various outdoor
recreational facilities and two major buildings: the Johnson Mutual Benefit Association (JMBA) Recreation and
Fitness Center and the Child Care Center.
Armstrong Park is not open to the public and is devoted to recreational,
child care and corporate meeting purposes. In 1991, 1992 and 1993, the JMBA Center, exclusive of the child
care facility, was used over fifty percent of the time for business
purposes. Johnson's expects that
business use as a percentage of total use will continue to expand in future
years.
When
the business use of the JMBA Center is added to the child care use, the
non-recreational use of the subject property was 76% in 1991, 76.4% in 1992,
and 77.3% in 1993.
The
JMBA Center consists of approximately 101,800 square feet. It contains a large kitchen designed to
serve 800 people at a sit-down dinner in the oversized gymnasium. Its Farley Aquatic Center has a large apron
or patio adjacent to the pool designed to accommodate company social events or
dinner parties. It also has offices, a
conference area, a multi-purpose room used for both recreation and business
meetings, and telephone/computer booths for corporate use.
The
Child Care Center was built in 1991. It
contains 16,919 square feet, not including a 4,272 square foot mezzanine. The Child Care Center was constructed to
provide child care for those of Johnson's 2,700 employees who have young
children. Johnson's believes that the
recreational and child care facilities, as well as the conference and social
facilities, will attract and retain first-rate employees and increase the
productivity of employees.
In
1993, the Wisconsin Department of Revenue denied Johnson's request that
Armstrong Park be classified as "manufacturing property" under
§ 70.995(1), Stats. The Wisconsin Tax Appeals Commission
affirmed the department's denial.
However, the commission found:
"The undisputed evidence shows that the Armstrong Park recreational
facilities are classified in group 28 of the [Standard
Industrial Classification Manual] and that, pursuant to § 70.995(2)(k),
Armstrong Park is `deemed prima facie manufacturing property ....'"
The commission
concluded, however, that the department had overcome the prima facie
effect of the undisputed evidence by showing that Armstrong Park failed to meet
any of the criteria required by § 70.995(1) and (3), Stats., to be classified as
manufacturing property. The commission
concluded that the department had "nearly total discretion" under
§ 70.995(4) to determine what, if any, portion of the subject property to
assess. The commission therefore
granted the department's motion for summary judgment.
I
conclude that the department does not have "nearly total discretion"
under § 70.995(4), Stats. Section 70.995(4) provides in part:
Whenever real
property or tangible personal property is used for one, or some combination, of
the processes mentioned in sub. (3) and also for other purposes, the department
of revenue, if satisfied that there is substantial use in one or some
combination of such processes, may assess the property under this section. For all purposes of this section the
department of revenue shall have sole discretion for the determination
of what is substantial use and what description of real property or what unit
of tangible personal property shall constitute "the property" to be
included for assessment purposes ....
(Emphasis added.)
The
commission credits the department with discretion which is not conferred by
§ 70.995(4), Stats. The department's "nearly total
discretion" under this section is exercised only to classify what part of
a mixed use is manufacturing and what part is not. The commission's "discretion" in this case is to decide
a question of law: Are auxiliary
services "in support of" manufacturing processes properly classified
as manufacturing activities? The answer
to that question is not found in § 70.995(1) but in § 70.995(2) which
provides in part:
In addition to the
criteria set forth in sub. (1), property shall be deemed prima facie manufacturing property and
eligible for assessment under this section if it is included in one of the
following major group classifications set forth in the standard industrial
classification manual, 1987 edition, published by the U.S. office of management
and budget....
(Emphasis added.)
Johnson's
property is included in the Standard
Industrial Classification (SIC) Manual
as "28--CHEMICALS AND ALLIED PRODUCTS." SIC Manual 132
(1987). The legislative history of
§ 70.995, Stats., shows that
the legislature substituted for a lengthy list of activities that were not
considered manufacturing, the classification schedules appearing in the SIC Manual. The legislature adopted the SIC Manual
as a convenient, accurate, and uniform method of classifying property. When the legislature adopted this approach,
it also adopted the construction which the Industry and Commodity
Classification Branch of the U.S. Bureau of the Census has given to the
classifications which the Bureau has established. This process is analogous to Wisconsin's adoption of most of the
federal rules of civil procedure. We
have repeatedly held that the construction given to the federal counterparts of
our rules of civil procedure are at least persuasive. See Schauer v. DeNeveu Homeowner's Assoc., Inc.,
194 Wis.2d 62, 73, 533 N.W.2d 470, 474 (1995).
The
Chief of the Industry and Commodity Classification Branch of the Bureau of the
Census informed Johnson's as follows:
Recreational
facilities and child care facilities maintained by a company solely for the
benefit of its employees will be classified in the SIC major group of the
company--in Johnson's case, a manufacturing classification, Major Group
28, Chemicals and Allied Products. On
the other hand, if the facilities are used by the general public, they will be
classified as Services activities rather than Manufacturing--Major Group 79 for
recreational centers and Major Group 83 for child day care facilities.
If
Johnson's made its recreational facilities and child care facilities available
to the general public, at least in part, the department would then have the
"nearly total discretion" to determine what percent of the use, if
any, may be classified as manufacturing.
However, Johnson's does not allow the general public to use the
recreational or child care facilities of Armstrong Park. Therefore, there is no occasion for the
department to exercise its discretion under § 70.995(4), Stats.
Because
the legislature has adopted the SIC Manual
to classify manufacturing property, the classifications thereunder must be
given effect unless the classification is clearly contrary to the definition of
"manufacturing property" in § 70.995(1)(a), Stats.
I do not find anything in the definition of "manufacturing
property" which requires that the department reject the classification
system developed by the Technical Committee on Industrial Classification of the
Census Bureau. The SIC Manual classifies
"establishments." Id.
at 11. An establishment is an economic
unit, generally at a single physical location, where business is conducted or
where services or industrial operations are performed. Id. at 12. However, "establishments" may have
"auxiliaries." Id.
at 13. "Auxiliaries are
establishments primarily engaged in performing management or support services
for other establishments of the same enterprise." Id. The SIC Manual
gives as an example of an auxiliary establishment primarily engaged in
performing management or support services, "(10) Recreational facilities
such as gymnasiums, golf courses, and swimming pools, maintained by an
enterprise for the benefit of its employees." Id. at 15.
The Manual does not list
child care centers as auxiliary establishments, undoubtedly because few
employers are large enough or enlightened enough to provide such facilities for
its employees. However, in response to
Johnson's request that the Bureau classify the child care center, the Bureau
informed Johnson's that: "Child
day care facilities maintained by an enterprise solely for the benefit of its
employees are classified as auxiliaries."
The
basic flaw in the department's and the commission's reasoning is their failure
to appreciate that the legislature by adopting the SIC Manual has adopted the concept of "auxiliary
establishments." The legislature
has recognized that the Standard Industrial Classification developed by the
Bureau's Technical Committee on Industrial Classification provides a fairer and
more realistic classification of industrial establishments. I would reverse the trial court's decision
and instruct the court to remand this matter to the commission and the
department with instructions that they are to include property devoted to
auxiliary services for a manufacturing establishment as "manufacturing
property."
[1] Section 70.995, Stats., provides in relevant part:
State assessment of manufacturing property. (1) Applicability. (a) In
this section "manufacturing property" includes all lands, buildings,
structures and other real property used in manufacturing, assembling,
processing, fabricating, making or milling tangible personal property for
profit. Manufacturing property also
includes warehouses, storage facilities and office structures when the
predominant use of the warehouses, storage facilities or offices is in support
of the manufacturing property, and all personal property owned or used by any
person engaged in this state in any of the activities mentioned, and used in
the activity, including raw materials, supplies, machinery, equipment, work in
process and finished inventory when located at the site of the activity. Establishments engaged in assembling component
parts of manufactured products are considered manufacturing establishments if
the new product is neither a structure nor other fixed improvement. Materials processed by a manufacturing
establishment include products of agriculture, forestry, fishing, mining and
quarrying. For the purposes of this
section, establishments which engage in mining metalliferous minerals are
considered manufacturing establishments.
(b) Materials
used by a manufacturing establishment may be purchased directly from producers,
obtained through customary trade channels or secured without recourse to the
market by transfer from one establishment to another under the same
ownership. Manufacturing production is
usually carried on for the wholesale market, for interplant transfer or to
order for industrial users rather than for direct sale to a domestic consumer.
(c) Manufacturing
shall not include the following agricultural activities:
1. Processing
on farms if the raw materials are grown on the farm.
2. Custom
gristmilling.
3. Threshing
and cotton ginning.
(d) Except for
the activities under sub. (2), activities not classified as manufacturing in
the standard industrial classification manual, 1987 edition, published by the
U.S. office of management and budget are not manufacturing for this section.
(2) Further Classification. In addition to the criteria set forth in
sub. (1), property shall be deemed prima facie manufacturing property and
eligible for assessment under this section if it is included in one of the
following major group classifications set forth in the standard industrial
classification manual, 1987 edition, published by the U.S. office of management
and budget.
....
(k) 28-Chemicals
and allied products.
(3) For
purposes of subs. (1) and (2) "manufacturing, assembling, processing,
fabricating, making or milling" includes the entire productive process and
includes such activities as the storage of raw materials, the movement thereof
to the first operation thereon, and the packaging, bottling, crating or similar
preparation of products for shipment.
(4) Whenever
real property or tangible personal property is used for one, or some
combination, of the processes mentioned in sub. (3) and also for other
purposes, the department of revenue, if satisfied that there is substantial use
in one or some combination of such processes, may assess the property under
this section. For all purposes of this
section the department of revenue shall have sole discretion for the
determination of what is substantial use and what description of real property
or what unit of tangible personal property shall constitute "the
property" to be included for assessment purposes ....
[2] The basic principles underlying the SIC
classification are:
(1) The
classification is organized to reflect the structure of the U.S. economy. It does not follow any single principle,
such as end use, nature of raw materials, product, or market structure.
(2) The unit
classified is the establishment. An
establishment is an economic unit that produces goods or services—for example,
a farm, mine, factory, or store. In
most instances, the establishment is at a single physical location and is
engaged in one, or predominately one, type of economic activity. An establishment is not necessarily
identical with a company or enterprise.
(3) Each
establishment is classified according to its primary activity. Primary activity is determined by
identifying the predominant product or group of products produced or handled,
or service rendered.
(4) An
industry (four-digit SIC) consists of a group of establishments primarily
engaged in the same activity. To be
recognized as an industry, such a group of establishments must meet certain
criteria of economic significance.
Standard Industrial
Classification Manual, 699 Appendix B
(1987).
[3] Section 903.01, Stats., provides:
Except as provided
by statute, a presumption recognized at common law or created by statute, including
statutory provisions that certain basic facts are prima facie evidence of other
facts, imposes on the party relying on the presumption the burden of proving
the basic facts, but once the basic facts are found to exist the presumption
imposes on the party against whom it is directed the burden of proving that the
nonexistence of the presumed fact is more probable than its existence.
[4] We note that while the Wisconsin Property Assessment Manual
does list establishments that are considered to be in support of manufacturing
in addition to warehouses, storage facilities and office structures, it also
specifically provides that recreation facilities maintained for the benefit of
employees are not considered to be in support of manufacturing. Wisconsin
Property Assessment Manual, Vol. 1, Part 1 at 10-8 (Revised 12/93).