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Effect on Small Business
This rule order does not affect small business.
Agency Contact Person
Please contact Dale Kleven at (608) 266-8253 or dale.kleven@revenue.wi.gov, if you have any questions regarding this rule order.
Text of Proposed Rule
SECTION 1. Tax 61.08 (11) (h) and (k) and (13) (a) are amended to read:
Tax 61.08 (11) (h) The retailer may not add any service fee, handling fee or other expense to the purchase of a ticket or share without the written permission of the administrator.
(k) The retailer may not conduct sales of lottery tickets or shares to off-premises customers by telephone, email, instant messaging or similar electronic means, or by mail, parcel, delivery service or similar service, without the written permission of the administrator.
(13) (a) The retailer shall be responsible for the condition and security of lottery tickets received. If the retailer's lottery tickets are lost, stolen, mutilated, damaged, unaccountable or otherwise unsalable, the retailer shall be solely responsible for those tickets. The Except as provided in pars. (c) and (cm), the administrator may not reimburse the retailer for those losses other than unsalable tickets under par. (c).
SECTION 2. Tax 61.08 (13) (cm) is created to read:
Tax 61.08 (13) (cm) 1. The administrator may credit the retailer's account for the value the retailer paid for instant scratch tickets that are stolen. In determining whether to provide credit, the administrator may consider the following factors:
a. Compliance with the reporting requirement under par. (b).
b. Whether the theft has been reported to law enforcement.
c. Final return date of the game to which the stolen tickets belong.
d. Validation of any ticket that is reported stolen.
e. The retailer's prior record of reporting stolen tickets to the department.
f. Security of the retailer's business and the place where tickets are stored.
g. Any other facts and circumstances the administrator believes pertinent.
2. Credit under this paragraph shall be the retailer's purchase price, and any credit shall be made to the retailer's electronic fund transfer account.
SECTION 3. Effective date. This rule shall take effect on the first day of the month following publication in the Wisconsin Administrative Register as provided in s. 227.22 (2) (intro.), Stats.
ADMINISTRATIVE RULES
Fiscal Estimate & Economic Impact Analysis
Type of Estimate and Analysis
X Original Updated Corrected
Administrative Rule Chapter, Title and Number
Chapter Tax 61 — Retailers
Subject
Lottery retailers
Fund Sources Affected
Chapter 20 , Stats. Appropriations Affected
GPR FED PRO PRS X SEG SEG-S
Fiscal Effect of Implementing the Rule
No Fiscal Effect
Indeterminate
Increase Existing Revenues
X Decrease Existing Revenues
X Increase Costs
X Could Absorb Within Agency's Budget
Decrease Costs
The Rule Will Impact the Following (Check All That Apply)
State's Economy
Local Government Units
Specific Businesses/Sectors
Public Utility Rate Payers
Would Implementation and Compliance Costs Be Greater Than $20 million?
Yes X No
Policy Problem Addressed by the Rule
The rule does not create or revise policy, other than to reflect current law and department policy.
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
As indicated in the attached fiscal estimate, the proposed rule is expected to result in no significant change to total ticket sales or lottery operations, and has minimal fiscal effect.
No comments concerning the economic effect of the rule were submitted in response to the department's solicitation.
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
Clarifications and guidance provided by administrative rules may lower the compliance costs for lottery retailers.
If the rule is not implemented, Chapter Tax 61 will be incomplete in that it will not reflect current law or department policy.
Long Range Implications of Implementing the Rule
No long-range implications are anticipated.
Compare With Approaches Being Used by Federal Government
N/A
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
N/A
FISCAL ESTIMATE FORM
2013 Session

X ORIGINAL UPDATED
LRB #
INTRODUCTION #
CORRECTED SUPPLEMENTAL
Admin rule #
Tax 61: Lottery retailers
Subject
Proposed order of the Department of Revenue relating to lottery retailers.
Fiscal Effect
State: No State Fiscal Effect
Check columns below only if bill makes a direct appropriation or
affects a sum sufficient appropriation
Increase Existing Appropriation Increase Existing Revenues
Decrease Existing Appropriation X Decrease Existing Revenues
Create New Appropriation
X Increase Costs — May be Possible to Absorb Within Agency's Budget X Yes No
Decrease Costs
Local: X No Local Government Costs
1. Increase Costs
3. Increase Revenues
5. Types of Local Governmental Units Affected:
Permissive Mandatory
Permissive Mandatory
Towns Villages Cities
2. Decrease Costs
4. Decrease Revenues
Counties Others
Permissive Mandatory
Permissive Mandatory
School Districts WTCS Districts
Fund Sources Affected
GPR FED PRO PRS X SEG SEG-S
Affected Ch. 20 Appropriations
Assumptions Used in Arriving at Fiscal Estimate
The proposed rule updates Chapter Tax 61 of the Administrative Code, pertaining to the state lottery, to eliminate discretionary authority provided to the lottery administrator that is not allowed under current law. The proposed rule also amends ch. Tax 61 provisions to provide the administrator authority to reimburse retailers for stolen tickets.
Specifically, the proposed rule includes:
Removing the administrator's authority to allow retailers to add any service fee, handling fee, or other expenses to the purchase of a ticket.
Removing the administrator's authority to permit retailers to sell lottery tickets to customers by phone, mail, email, similar electronic means, delivery, or similar service.
Providing the administrator with the authority to credit a retailer's account for the value the retailer paid for instant scratch tickets that are stolen.
The department has the ability to cancel tickets that are reported lost or stolen. The administrative costs of providing retailers credit for stolen game tickets would be minimal and absorbed by the department. Since stolen tickets represent only a very small fraction of total ticket sales, and since it is anticipated that retailers will purchase tickets to replace stolen tickets, the proposed rule is expected to result in no significant change to total ticket sales or lottery operations.
Notice of Hearing
Revenue
NOTICE IS HEREBY GIVEN that, pursuant to ss. 73.10 (2) (b) 1. and 79.05, Stats., the Department of Revenue will hold a public hearing to consider permanent rules revising Chapters Tax 16 and 19, relating to local financial reporting and expenditure restraint payments.
Hearing Information
Date: Friday, July 12, 2013
Time:
1:00 p.m.
Location:
Events Room
State Revenue Building
2135 Rimrock Road
Madison, WI 53713
Handicap access is available at the hearing location.
Appearances at the Hearing and Submittal of Written Comments
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person listed below or to adminrules.wisconsin.gov no later than July 12, 2013, and will be given the same consideration as testimony presented at the hearing.
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Telephone: (608) 266-8253
Analysis by the Department of Revenue
Statute interpreted
Sections 73.10 and 79.05, Stats.
Statutory authority
Sections 73.10 (2) (b) 1. and 79.05, Stats.
Explanation of agency authority
Section 73.10 (2) (b) 1., Stats., provides that "[t]he department may require by rule all of the following:
a. That the information it needs under par. (a) be submitted as annual financial statements, notes to the financial statements, and supporting schedules.
b. That the statements, notes, and schedules under subd. 1. a. conform to generally accepted accounting principles promulgated by the Governmental Accounting Standards Board or its successor bodies.
c. That the statements, notes, and schedules under subd. 1. a. be audited in accordance with generally accepted auditing standards."
Section 79.05, Stats., is the underlying statutory basis for Chapter Tax 19.
Related statute or rule
There are no other applicable statutes or rules.
Plain language analysis
The proposed rule makes the following changes:
Amends s. Tax 16.04 (2) to reflect current reporting requirements. With the availability of electronic filing and department forms on the Internet, there is no longer a need for local governments to submit their own forms.
Amends s. 16.06 (4) to reflect current address information.
Revises s. Tax 19.03 (1) (c) to correct a typographical error.
Summary of, and comparison with, existing or proposed federal regulation
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states
The department is not aware of a similar rule in an adjacent state.
Summary of factual data and analytical methodologies
2012 Executive Order 61 and 2011 Wisconsin Act 46 requires state agencies to work with the Small Business Regulatory Review Committee to review the agency's administrative rules that may be particularly onerous to small businesses in Wisconsin. In response, the department initiated a comprehensive review of all of its administrative rules. The changes described above were identified as part of that review. No other data was used in the preparation of this rule order or this analysis.
Analysis and supporting documents used to determine effect on small business
This rule order makes changes to reflect current law and current department policy. It makes no policy or other changes having an effect on small business.
Anticipated costs incurred by private sector
This rule order does not have a fiscal effect on the private sector.
Effect on Small Business
This rule order does not affect small business.
Agency Contact Person
Please contact Dale Kleven at (608) 266-8253 or dale.kleven@revenue.wi.gov, if you have any questions regarding this rule order.
Text of Proposed Rule
SECTION 1. Tax 16.04 (2) is amended to read:
Tax 16.04 (2) The required schedules shall be prepared on the forms provided by the department and in accordance with instructions issued by the department. Local governments may elect to submit the required schedules on their own forms so long as those forms meet the specifications established by the department. Local governments electing to submit their own forms shall submit an example of their forms for review and approval by the department prior to December 31 of the year for which the schedules are to be prepared.
SECTION 2. Tax 16.06 (4) (Note 1) is amended to read:
Tax 16.06 (4) (Note 1) Copies of the draft schedules required by s. Tax 16.04 (1) and the specifications referenced in s. Tax 16.04 (2) may be obtained from:
Wisconsin Department of Revenue
Division of State/Local Finance
125 South Webster Street
P.O. Box 8933 8971
Madison, WI 53708-8971
Telephone (608) 266-1611 264-6892
These schedules are new forms that substitute for the current annual financial report form filed by governmental units with the department of revenue.
SECTION 3. Tax 19.03 (1) (c) (intro.) is amended to read:
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