What Services Are Taxable in Wisconsin?

Wisconsin’s sales tax framework applies to the sale of tangible personal property. Many services are exempt from sales tax, but specific exceptions exist. Understanding these distinctions helps ensure compliance and avoid unexpected costs.

Understanding Taxable Services in Wisconsin

Wisconsin sales tax applies to tangible personal property and certain specified services. Most services remain exempt unless explicitly enumerated as taxable under state law, Wis. Stat. § 77.52. The taxability of a service depends on its specific nature and how it is categorized. The Wisconsin Department of Revenue (DOR) provides guidance to clarify what constitutes a taxable service. A service can also become taxable if it is part of a bundled transaction or closely related to the sale of tangible personal property.

Common Taxable Service Categories

Several common types of services are subject to sales tax in Wisconsin. Landscaping and lawn maintenance services, including activities like designing, planting, weeding, and mowing, are taxable. This includes both labor and any tangible personal property transferred with the service. Building cleaning and maintenance services also fall under taxable categories.

Telecommunications services are taxable, encompassing intrastate, interstate, and international calls, mobile, and VoIP services. This extends to ancillary services such as conference bridging, directory assistance, and voicemail. Cable television and satellite services are also subject to sales tax.

Security and protective services, including security monitoring that involves recorded messages, are taxable. Laundry, dry cleaning, and linen and clothing supply services are taxable. Parking and storage of motor vehicles and aircraft are also taxable services.

Certain digital goods and services, such as specified digital products like digital audio works, digital audiovisual works, and digital books, are taxable. Photographic services, including commercial photography, are also subject to sales tax.

Services Connected to Tangible Property

Services can become taxable in Wisconsin when they are performed on or in connection with tangible personal property. Installation services are taxable when the installation charge is part of the sale price of tangible personal property or necessary for the property’s function. This applies, for example, to the installation of computer hardware and prewritten software.

Repair and maintenance services performed on tangible personal property, such as auto, appliance, or computer repairs, are taxable. This includes the labor portion of the repair, especially when parts used in the repair are also subject to sales tax. For instance, if a contractor repairs a refrigerator, both the service and any parts are taxable. However, if a contractor is repairing real property, they are considered the consumer of the materials and pay tax on their purchases, but their charge to the customer for the real property repair is not taxable.

Fabrication services, which involve creating new tangible personal property or significantly altering existing property, are also taxable. This includes producing, fabricating, and printing services. When multiple products, including services, are sold for one non-itemized price, this forms a “bundled transaction.” The entire sales price of a bundled transaction is subject to sales tax if the taxable products or services constitute 10% or more of the total value.

Business Responsibilities for Sales Tax

Businesses providing taxable services in Wisconsin must register with the Department of Revenue (DOR) by obtaining a seller’s permit. This permit is required for any individual or organization making retail sales of taxable products or services in the state. The application can be completed online through the DOR’s My Tax Account portal, and there is a registration fee of $20.

Once registered, businesses must collect sales tax from customers on all taxable services. The statewide sales tax rate in Wisconsin is 5%, though local taxes can increase the combined rate depending on the location. After collection, businesses must file sales and use tax returns and remit the collected tax to the DOR.

Filing frequency for sales tax returns is determined by a business’s taxable sales volume. Businesses with taxable sales exceeding $2,000 per month file monthly, while those with sales between $600 and $2,000 per month file quarterly. Businesses with taxable sales under $600 per month may file annually. Returns are due on the 20th day of the month following the reporting period for monthly filers, or the last day of the month following the reporting period for quarterly and annual filers.

Maintaining accurate records of sales, collected tax, and any exemptions is necessary for compliance. Businesses must preserve records such as invoices, receipts, and other pertinent documents for at least four years, which is the period open to audit. These records help verify tax due and support any claimed exemptions.