BEI

We are bidding a job in Wisconsin as an Illinois contractor and buying our goods from an Illinois warehouse. There appears to be a tax law that makes us liable to the state of WI for sales tax and a use tax due to working in their state. Is anyone familiar? We want to make sure we add these costs in. I understand that our IL state sales tax will offset their rate, but the use tax confuses me. I also am not sure if we need to license there in order for them to track our receipts. This is for a siding project in residential new construction.

SLSTech

I would suggest contacting their Dept of Revenue & your accountant (You may end up owing 2 States Income taxes as well)

__________________
Northern Alabama Kitchen and Bathroom Remodeling by SLS Construction
Outdoor Living Solutions & Deck Builder serving Smith Lake, Decatur, & Huntsville areas
Cullman & Smith Lake Handyman Services SLS Construction Blog Site

concretemasonry

The Republic of Wisonsin has had a history of unique laws and building codes that are not compatible with the rest of the world.

I worked for a company that was not permitted by Wisconsin to collect either sales or use tax on materials delivered to Wisconsin from Minnesota. The bottom line is that the contractors were indiviusally responsible for the "use" tax for the materials. Fortunately, the Republic of Wisconsin did not push the small contractors too hard for the payment, but did make the G.C.s jump through hoops even on public projects that were tax-exempt (typical approach/solution). This was a few years ago and hopefully the folks in Madison are a little more in tune with the rest of the world. The recent demise of the Packers may have helped/changed todays situation.

We were selling a product and only collected taxes in-state based on prices for the material and not the delivery portion (about 18% of the total sales price). If our plant was 15 miles east, there would have been no problem since the contractor would have been billed for the appropriate sales tax.

We were not even able to provide product certifications since the Wisconsin standards and testing procedures were different from the rest of the U.S. and ASTM regarding properties, sampling and testing procedures and even most of the testing labs used ASTM.

Contact the supplier since they should be familiar with the tax/use laws, especially if you are dealing with someone on a project in southern Wisconsin. Get something in writing or the supplier has no right to do business in an area where a purchaser could be liable for oversights in quoting and collecting taxes.

__________________
Dick

Engineer, designer and consultant recently active internationally on construction and design in about 35 countries.

ChainsawCharlie

"Use tax" is what we have here. Officially called General Excise tax, and our rate is 4%. It is not a sales tax, but instead, a tax on the business. For every dollar I bring in, I have to give the state 4%. GE, or "use" tax is an expense on the business and differs from sales tax.

Find out what the use tax is, add that to your bid, but keep in mind, the tax will also apply to the amount you added to your bid, so you may want to and add an extra 1% on top of that. Why?

Here is how it works here:

I report $100 in sales. I have to give 4% to the state. That leaves me with $96.
Well, I want to clear $100, so I add 5% to my bid, for $105. Because it is not a sales tax, I have to now report $105 in income, and give the state 4% of 105. Now I can still clear $100.

I don't know the numbers or how it works in WI, so make the proper inquiries. just sharing how it works here for possible comparison/what to expect.

ChainsawCharlie

double post

BEI

Thanks for all the insight! Much appreciated! "Republic of Wisconson" LOL Too true. We may have a hard time with this one anyway just due to our union wages being higher than theirs. We don't have much of a competetive edge when you figure this in as well Wish us luck. We sure could use the work.

MBS

Wisconsin's sales tax laws are designed to be confusing. Have you considered buying your materials in Wisconsin and avoid much of the problems involved with interstate commerce? You may also save money. Sales tax on construction materials in WI is 5.5%. 5% to the state, .5% to the county. If you pay the tax at the time of purchase, its done. No forms or sales tax permits needed. Simple and clean.

There is no sales tax on construction labor unless it gets into finish landscaping. So if you add the tax for materials only right onto the bid, don't itemize it, and pay it at the WI supplier, you avoid lots of expensive paperwork for the two states.

__________________
Build it like you love it.

concretemasonry

The Republic of Wisconsin has historically done its best to not comply with the rest of the developed world. The encorage/enforce purchasing in the republic. A prime example of the irresponsiblity to encourage people and truckers to buy fuel in either Illinois and Minnesota and avoid buying in Wisconsin where the road maintenance costs are incurred. In Minnesota, we get everyone to buy fuel without the higher taxes so they can do their business.

The good thing in that The Rupublic of Wisconsin has finally relaized that there is a major economic area that lives in Wisconsin, that buys products and earns income in Minnesota. the contractors that do work are Minnesota contractors with Minnesota tradesmen, so the tax differences are dictated by the purchasers and residents/aliens. At least there is a program to allow resident tuition to colleges. This is a start when the future legislators will get an open education.

Soon they will stop jamming the sports TV signals at the boarder now that Brett is gone and no one cares about the Brewers/ex-Braves.

What else do you expect from a provincial area that is ruled from a city that has 1/3 college students, 1/3 politicians and 1/3 other uninterested parties (but a great party town).

__________________
Dick

Engineer, designer and consultant recently active internationally on construction and design in about 35 countries.

BEI

MBS, thanks for the clear and concise advice! We do have that option- to buy our product in WI. It's a bit more $$, but highly logical.