Communications and Data Cabling May Be Subject to Wisconsin Sales Tax

February 4, 2015

When you build or remodel a building, oftentimes electrical wiring is run simultaneously with communications and data cabling. You need to know that Wisconsin sales tax treatment is different for these two types of wiring.

In most cases, general electrical wiring is considered a real property improvement, so the installation would not be subject to sales tax. Tax treatment varies, however, for communications and data cable installation. Cabling may or may not be taxable, depending on whether the building is residential or commercial, and whether it is installed within the walls or outside the walls (jack to equipment). Communications equipment includes communications cabling, intercoms, and music and sound equipment.

You need to determine if the cabling is real property or tangible personal property for sales tax purposes. Use these guidelines: 

  • First, determine whether the building is residential or commercial property.
    If the building is commercial, the cable installation is subject to sales tax. Cabling is considered tangible personal property in a commercial building, regardless of whether it is installed within or outside the walls.
  • If the building is residential, taxability is determined by whether the cabling is installed within or outside the walls.
    • If installed within the walls, the cable installation is considered a real property improvement and is not taxable.
    • If installed outside the walls (jack to equipment), the cable installation is considered tangible personal property and is therefore subject to sales tax.
     

Example: A subcontractor installs the communications and data cabling in a commercial building being constructed by a general contractor. The subcontractor should purchase all the materials using an exemption certificate claiming resale. The subcontractor should then charge the general contractor sales tax on its sale price from the sale and installation of the communications and data cabling unless the general contractor gives the subcontractor an exemption certificate claiming resale. The charge by the general contractor to the final customer for the communications and data cabling is subject to sales and use tax.

For more information or for help with sales tax on other items and in other states, please contact your Schenck advisor, or call any member of the State & Local Tax team  at 800-236-2246.