Change in Tax Treatment of Waterslides in Water Parks

The sale and installation of waterslides in a water park, including the waterslide flumes and the steel support beams that hold up the flumes, are real property improvements. Previously, the department considered waterslide flumes and steel support beams to remain tangible personal property when installed.

The sale of a real property improvement in Wisconsin is not subject to sales tax. A contractor that purchases waterslide materials and installs them in a water park is the consumer of all materials and supplies that it uses in making the real property improvement and is liable for tax on its purchase of such materials and supplies (e.g., flumes, support beams that hold up the flumes, supports, concrete, bolts).

The repair, service, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of any waterslide remains subject to Wisconsin sales or use tax. The service provider may purchase without tax, for resale, any materials that are physically transferred to the customer in the repair or other service to a waterslide.

Buyers of Installed Waterslides in Water Parks

If a buyer paid tax on its purchase of an installed waterslide in a water park, the buyer may do either of the following:

  1. Do nothing. The department will not adjust a buyer's sales and use tax liability for these items.

  2. File a claim for refund for purchases made within the statute of limitations:*
    • If the tax was paid to the seller, the buyer may request a refund of the tax from the seller. The seller may reduce the amount of the tax it refunds to the buyer by its use tax liability on its purchase of the materials that were physically transferred to the buyer, or
    • If the tax was paid to the seller or paid directly to the Department of Revenue, the buyer may file a Buyer's Claim for Refund with the department.

Sellers of Installed Waterslides in Water Parks

Sellers are required to pay sales or use tax on the purchase price of materials that are physically transferred to the customer on the sale and installation of waterslides in water parks that take place on or after October 1, 2015. Exception: If, prior to October 1, 2015, a seller entered into an irrevocable contract to sell and install a waterslide in a water park, the sale will be treated as if it took place prior to October 1, 2015.

For sales that take place prior to October 1, 2015 where a seller charged tax on the sale of an installed waterslide at a water park, the seller may do either of the following:

  1. Do nothing. The department will not adjust a seller's sales and use tax liability for these items.

  2. File a claim for refund for sales tax paid to the Department of Revenue for sales of installed waterslides in water parks if the sale took place within the statute of limitations*. However, the seller will owe Wisconsin use tax based on its purchase price of the materials used in making the real property improvement (e.g., flumes, structural supports).

    CAUTION: If tax was collected from buyers, the seller must return the tax and related interest refunded by the department to the buyers from whom the tax was collected. The seller may reduce the refund given to the buyer by the amount of tax and interest due and paid on the seller's purchase of materials that are physically transferred to the buyer in the seller's sale and installation of the waterslide.

* The statute of limitations for claiming refunds is generally four years from the unextended due date of the claimant's income or franchise tax return. See Publication 216, Filing Claims for Refund of Sales or Use Tax, for exceptions and additional information about filing claims.

May 10, 2016