Wisconsin

Planning a home improvement project in Wisconsin? It's essential to understand the state's specific requirements for contractor licensing and how sales tax applies to your project. Wisconsin has a clear framework for regulating home service contractors, and knowing the rules can help ensure a smooth and compliant experience.

Contractor Licensing in Wisconsin: What You Need to Know

Unlike some states, Wisconsin has a robust statewide licensing system for specific types of contractors, particularly those working on residential dwellings. The primary authority for this is the Wisconsin Department of Safety and Professional Services (DSPS).

Here are the key licenses and requirements you should be aware of:

• Dwelling Contractor and Dwelling Contractor Qualifier Licenses:
• Dwelling Contractor Certification: This license is held by the business entity (e.g., your contractor's company) and is required if they are building, improving, or altering a one- or two-family dwelling or accessory building. It typically needs annual renewal.
• Dwelling Contractor Qualifier Certification: This license is held by an individual (e.g., the owner, partner, or an employee of the Dwelling Contractor certified business) and demonstrates their competency. This individual must have completed a state-mandated 12-hour initial training course and passed an exam. This license needs to be renewed every two years and requires continuing education.
• Both are often required to pull permits for work on one- or two-family homes.
• Specialty Trade Licenses: Wisconsin also licenses specific trades at the state level through the DSPS:
• Electrical Contractors: Individuals performing electrical work must hold appropriate electrical licenses (e.g., Master Electrician, Journeyman Electrician).
• Plumbing Contractors: Plumbing work requires licenses such as a Master Plumber.
• HVAC Contractors: While the business may need a Dwelling Contractor license, individuals performing HVAC work on one and two-family dwellings will need to meet specific requirements.
• Other regulated areas include asbestos and lead abatement, and well-drilling.

Important Note: Even with state licenses, some local municipalities may have additional permitting or registration requirements. Always check with your city or county building department for any specific local rules.

Key Requirements for Licensed Contractors in Wisconsin (may vary by license type):

• Proof of financial responsibility (e.g., general liability insurance of at least $250,000, or a surety bond).
• Compliance with worker's compensation requirements (if they have employees).
• Compliance with unemployment compensation requirements.
• Passing required exams.
• Completing necessary training courses.
• Paying all applicable application and credential fees.

Sales Tax on Home Service Projects in Wisconsin

Wisconsin has a state sales and use tax of 5%. In addition to this, some counties may impose a local sales tax, typically 0.5%, bringing the combined rate up to 5.5% in most areas. However, some specific areas like Milwaukee County can have higher combined rates due to additional local taxes.

Here's how sales tax generally applies to home service projects in Wisconsin:

• Materials (Tangible Personal Property) are Taxable: Sales tax is generally applied to the cost of tangible personal property (materials) that your contractor purchases and incorporates into your home. The contractor pays this tax on their purchases, and it's typically passed on to you as part of the project cost.
• Labor for Real Property Construction Activities is Generally NOT Taxable: This is a crucial distinction in Wisconsin. For services that are considered "real property construction activities" – meaning the work is permanently affixed to your home and becomes part of the real estate (e.g., installing new windows, building an addition, painting, installing a furnace) – the labor portion of the project is generally not subject to sales tax.
• When Labor Might Be Taxable: If a contractor is primarily selling and installing tangible personal property that retains its identity after installation (and isn't considered "real property construction activity"), or performing repairs on items that are not considered part of the real property, the labor component could be taxable. However, for most typical home improvement projects, the labor is exempt.
• Lump-Sum Contracts: For contracts that include both taxable materials and non-taxable labor as a single "lump sum," the sales tax treatment can depend on the proportion of taxable products to the total contract price. Generally, if the taxable products are a minor portion (e.g., less than 10%) and not separately itemized, the contractor is considered the consumer of the materials and pays the tax, and the final lump-sum price to you is not subject to sales tax. If the taxable products are a significant portion, the contractor may be required to charge you sales tax on that portion.

It's highly recommended to get a detailed invoice from your contractor that clearly separates material costs from labor costs. If you have any doubt about the sales tax application, consult with your contractor or the Wisconsin Department of Revenue.

How to Verify Licensing in Wisconsin

Verifying a contractor's license in Wisconsin is straightforward, thanks to the DSPS's online tools.

1. Utilize the DSPS Credential/License Search:

• The Wisconsin Department of Safety and Professional Services (DSPS) provides a public online database where you can search for licensed professionals. This is the primary method for verifying licenses for Dwelling Contractors, Dwelling Contractor Qualifiers, Electricians, Plumbers, and other regulated trades.
• You can typically search by individual name, business name, or license number.
• DSPS License Look-Up Website: app.wi.gov/licensesearch (or search "Wisconsin DSPS license lookup")

1. Verify Business Registration:

• Regardless of specific trade licenses, any legitimate business operating in Wisconsin should be registered with the Wisconsin Department of Financial Institutions (DFI) / Wisconsin Secretary of State. This confirms the business is legally recognized in the state.
• You can search their business entity database online.
• Wisconsin Department of Financial Institutions (DFI) / Secretary of State - Corporate Registration Search: www.wdfi.org/apps/CorpSearch/ (or search "Wisconsin DFI business search")

1. Check for Insurance:

• While you can't always verify policy details directly, the DSPS license lookup may indicate if a contractor has met insurance requirements on file.
• Always ask your contractor for a Certificate of Insurance (COI) directly from their insurance provider, showing proof of general liability and workers' compensation (if they have employees). This certificate should list you as a certificate holder, ensuring you are notified if the policy lapses.

1. Local City/County Building Departments:

• As mentioned, some municipalities may have additional local registration or permitting requirements. It's wise to contact your local city or county building department to inquire about any local specificities for your project type and to confirm your contractor pulls necessary permits.

By diligently checking these credentials, you can significantly reduce your risk and gain confidence in the professionals you hire for your Wisconsin home project.

Sources and Resources:

• Wisconsin Department of Safety and Professional Services (DSPS):
• Official Website: dsps.wi.gov
• License Look-Up: app.wi.gov/licensesearch
• Search their site for specific information on Dwelling Contractor, Dwelling Contractor Qualifier, Electrical, Plumbing, and HVAC licenses.
• Wisconsin Department of Revenue (DOR):
• Official Website: revenue.wi.gov
• Search their site for "Sales and Use Tax" or "Construction Contracts" for detailed guidance on sales tax applicability.
• Wisconsin Department of Financial Institutions (DFI) / Secretary of State - Corporate Registration Search:
• Business Entity Search: www.wdfi.org/apps/CorpSearch/
• Procore - Wisconsin Contractor Licensing Guide:
• Provides a good overview of Wisconsin contractor licensing. (Note: commercial site)
• NEXT Insurance - Wisconsin General Contractor License and Insurance Requirements:
• Offers insights into licensing and insurance. (Note: commercial site)