​​This article provides sales and use tax information about the sale of and service to dishwashers. It also explains when a seller may purchase the dishwasher (and other parts and materials) without tax and when its purchases are subject to tax. Note: Also see the article titled "Sales of Appliances, Including 'Built-In' Appliances," on Page 1 of the July 2013 Sales and Use Tax Report​.

Sales of Dishwashers
In order to determine the tax treatment of the sale of a dishwasher, an evaluation must be made of whether the seller is making a real property improvement or selling tangible personal property. Sales of real property improvements are not taxable, while sales of tangible personal property are taxable.

The sale of an uninstalled dishwasher, including charges for shipping or delivery, is subject to Wisconsin sales tax, since it is the sale of tangible personal property. The seller may purchase, without tax for resale, the dishwasher and all parts and materials that are physically transferred to the customer in its sale of a dishwasher that is sold as tangible personal property.

Example 1: Customer A goes to Retail Store B and purchases a dishwasher for $700. Retail Store B's employee loads the dishwasher in the back of Customer A's truck. Retail Store B's sale of the uninstalled dishwasher to Customer A is subject to Wisconsin sales tax, since Retail Store B is selling tangible personal property. Retail Store B may purchase the dishwasher without tax for resale.

Example 2: Customer C places an order for a dishwasher from Seller D, a Wisconsin seller, for $650 plus a shipping charge of $80. The dishwasher is shipped to Customer C. Seller D's sale of the uninstalled dishwasher to Customer C is subject to Wisconsin sales tax, since Seller D is selling tangible personal property. The tax is computed on Seller D's sales price of $730 ($650 for the dishwasher plus $80 for the shipping). Seller D may purchase the dishwasher without tax for resale.

The sale of an installed dishwasher in a residential facility (e.g., individual's home, apartment building) is not taxable, since the seller is making a real property improvement. The sale of a real property improvement is not subject to sales tax; however, the seller of the real property improvement (i.e., installed dishwasher) must pay sales or use tax on its purchase of the dishwasher and any other parts and materials used in making the real property improvement.

Example: Customer E goes to Retail Store F and purchases a dishwasher for $600. Customer E has Retail Store F deliver and install the dishwasher, for which Retail Store F charges an additional $80 and $200, respectively. Retail Store F's employee delivers and installs the dishwasher in Customer E's home. Retail Store F's sale of the installed dishwasher to Customer E is not subject to Wisconsin sales tax, since Retail Store F is making a real property improvement. Retail Store F's purchase of the dishwasher is subject to tax.

An installed dishwasher that is used to carry on a trade or business in a business, industrial, or commercial building, school, or hospital (but not in an apartment building, convalescent home, or other residential building), serves a process or business function and is considered to be tangible personal property. The seller may purchase, without tax for resale, the dishwasher and all parts and materials that are physically transferred to the customer in its sale of the dishwasher that is sold as tangible personal property.

Example: Restaurant G goes to Retail Store H and purchases a dishwasher for $600. The dishwasher will be used in Restaurant G's restaurant business. Restaurant G has Retail Store H deliver and install the dishwasher, for which Retail Store H charges an additional $80 and $200, respectively. Retail Store H's employee delivers and installs the dishwasher in Restaurant G. Retail Store H's sale of the installed dishwasher to Restaurant G is subject to Wisconsin sales tax, since Retail Store H is selling tangible personal property (dishwasher that is used to carry on a trade or business). The tax is computed on Retail Store H's sales price of $880 ($600 for the dishwasher, plus $80 for the shipping, and $200 for the installation). Retail Store H may purchase the dishwasher without tax for resale.

Repair or Other Service to Dishwashers
The repair of or other service to a dishwasher is subject to Wisconsin sales or use tax. The law deems certain items, such as dishwashers, to retain their character as tangible personal property for purposes of repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, and maintenance. The service provider may purchase without tax, for resale, the repair parts that it physically transfers to its customer in the performance of such services.

NOTE: The tax treatment stated in the preceding paragraph, relating to repair and other service, applies for dishwashers in both residential and non-residential buildings. It also applies regardless of whether the dishwasher was tangible personal property or a real property improvement when originally installed.

Seller's Purchase of Dishwashers
The seller is liable for tax on its purchase of dishwashers and other materials that it uses in making a real property improvement. However, a seller of tangible personal property (e.g., uninstalled dishwasher) may purchase the dishwasher, and other parts and materials that are transferred to its customer, without tax for resale.

If a seller does not know at the time of purchase whether it will use the dishwasher (and other parts and materials) in making a real property improvement or it will sell it as tangible personal property, the seller may do one of the following at the time of making purchases:

1. Give an exemption certificate, claiming resale, to suppliers and purchase the dishwasher (and other parts and materials) without tax. If the seller later sells the dishwasher as tangible personal property, the seller must collect and remit sales tax on this retail sale. If the seller later uses the dishwasher in making a real property improvement, the seller must pay use tax on its purchase price of the dishwasher (and other parts and materials).
2. Pay sales tax to suppliers on all dishwashers (and other parts and materials) purchased. If the seller later uses the dishwasher in making a real property improvement, the tax obligation is taken care of. If the seller later sells the dishwasher (and other parts and materials) as tangible personal property, the seller must collect and remit sales tax on this retail sale, but may take a credit for the sales tax that it paid to its supplier on the purchase of the dishwasher (and other parts and materials).

Additional information about these options is found in Part 5.C. of Publication 207, Sales and Use Tax Information for Contractors. This publication also provides detailed information about sales of tangible personal property versus real property improvements.

May 6, 2019