The 2013-2014 Legislative session has made various changes to Wisconsin's income and franchise tax provisions. The department has created this proposed rule order to reflect these statutory changes. No other data was used in the preparation of this proposed 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
Text of Rule
SECTION 1. Tax 2.32 (1) (Note) is amended to read:
Tax 2.32 (1) (Note) For any taxable year years beginning before January 1, 2013, an economic development surcharge is imposed on: (a) individuals, estates, trusts, statutory employees and partnerships that have at least $4,000,000 in gross receipts from a trade or business for the taxable year; (b) corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year; and (c) individuals, estates, trusts and partnerships engaged in farming that have at least $4,000,000 in gross receipts from farming for the taxable year. For taxable years beginning on or after January 1, 2013, an economic development surcharge is only imposed on corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year.
SECTION 2. Tax 2.32 (2) (e) to (h) and (3) (Note 1) are repealed.
SECTION 3. Tax 2.88 (3) (a) and (4) are amended to read:
Tax 2.88 (3) (a) Any refund of individual income or corporate franchise or income taxes, where the tax being refunded is from a return which has a filing due date on or after November 1, 1975, shall include interest at the rate of 9% 3% per year from the due date of the return to the date paid by the department, except as provided in par. (b).
(4)
Interest on deposit of contested taxes. Any refund of an amount deposited with the department pursuant to s.
71.90 (1), Stats., shall include interest at the rate of
9% 3% per year from the date the funds were deposited to the date refunded
, provided the funds being refunded are from a return which has a filing due date on or after November 1, 1975.
SECTION 4. Tax 2.88 (5) (Note) is created to read:
Tax 2.88 (5) (Note)
Note: 2013 Wis. Act 20 reduced the rate of interest on refunds of taxes and refunds of the deposit of contested taxes from 9% to 3%. The 3% rate applies to refunds paid on or after July 2, 2013, regardless of the taxable periods to which the refunds pertain.
SECTION 5. Tax 2.957 (7) (title) is amended to read:
Tax 2.957 (7) (title) Limitation
Limitations on credit and deduction.
SECTION 6. Tax 2.957 (7) is renumbered Tax 2.957 (7) (a).
SECTION 7. Tax 2.957 (7) (b) is created to read:
Tax 2.957 (7) (b) The credit or deduction under this section may not be claimed by a business that relocates to Wisconsin in a taxable year beginning after December 31, 2013.
SECTION 8. Tax 2.985 is repealed.
SECTION 9. Tax 2.986 is created to read:
Tax 2.986
Registration of a business under s. 73.03 (69), Stats. (1)
Purpose. This section establishes the method of valuing property and the registration deadline for purposes of s.
73.03 (69), Stats.
(2)
Definition. In this section, "doing business in this state" has the meaning given in s.
71.22 (1r), Stats.
(3)
Method of valuing property. For purposes of s.
73.03 (69) (b) 2., Stats., real and tangible personal property owned by the business shall be valued at its original cost and real and tangible personal property rented by the business shall be valued at an amount equal to the annual rental paid by the business, less any annual rental received by the business from sub-rentals, multiplied by 8.
(4)
Registration deadline. (a) Except as provided in par. (b), a business shall register with the department under s.
73.03 (69), Stats., on or before the close of the calendar year for which the business desires registration. A business may not be registered for a calendar year if the registration is not within the time provided in this subsection.
(b) A business that desires registration for the calendar year in which it begins doing business in this state shall register with the department during the following calendar year.
Example: Business A begins doing business in Wisconsin on March 8, 2014. Business A must register with the department for calendar year 2014 between January 1, 2015, and December 31, 2015.
SECTION 10. Tax 2.99 (1) (Note) is created to read:
Tax 2.99 (1) (Note)
Note: Sections
71.07 (3n),
71.28 (3n), and
71.47 (3n), Stats., were revised by
2013 Wis. Act 20 to provide the credit under this section may not be claimed for taxable years beginning on or after January 1, 2014.
SECTION 11. Tax 3.01 (4) (c) 8. (Note) and (e) 4.b. are amended to read:
Tax 3.01 (4) (c) 8. (Note) Financial Accounting Standards Board Interpretation number 48 is available on the Financial Accounting Standards Board's web site at
http://www.fasb.org/pdf/fin%2048.pdf www.fasb.org.
(e) 4.b. The Wisconsin economic development surcharge, which is imposed on
partnerships and tax-option (S) corporations pursuant to s.
77.93 (1), (3), and (5), Stats.
SECTION 12. Tax 3.05 (6) is amended to read:
SECTION 13. Tax 3.095 (2) (e) and (4) (a) 21. are created to read:
Tax 3.095 (2) (e) “WHEFA" means "Wisconsin Health and Educational Facilities Authority."
(4) (a) 21. WHEFA bonds or notes, if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued and the interest income received from the other bonds or notes is exempt from taxation under subch.
I of ch. 71, Stats.
SECTION 14. 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
AND ECONOMIC IMPACT ANALYSIS
|
Type of Estimate and Analysis
|
X Original ⍽ Updated ⍽ Corrected
|
Administrative Rule Chapter, Title and Number
|
Chapters Tax 2 and 3 — Income taxation, returns, records, gross income, deductions, exclusions, and exemptions
|
Subject
|
Income and franchise tax provisions
|
Fund Sources Affected
|
Chapter 20 , Stats. Appropriations Affected
|
⍽ GPR ⍽ FED ⍽ PRO ⍽ PRS ⍽ SEG ⍽ SEG-S
|
|
Fiscal Effect of Implementing the Rule
|
X No Fiscal Effect
⍽ Indeterminate
|
⍽ Increase Existing Revenues
⍽ Decrease Existing Revenues
|
⍽ Increase Costs
⍽ 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
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Would Implementation and Compliance Costs Be Greater Than $20 million?
⍽ Yes X No
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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)
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As indicated in the attached fiscal estimate, the proposed rule is intended to reflect and clarify existing law and does not impose any additional fiscal impact.
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 businesses, local governmental units, and individuals.
If the rule is not implemented, Chapters Tax 2 and 3 will be incomplete in that they 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 #
|
to be assigned
|
Subject
|
Proposed order of the Department of Revenue relating to income and franchise tax provisions
|
Fiscal Effect
|
State: X 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
⍽ Decrease Existing Revenues
⍽ Create New Appropriation
|
⍽ Increase Costs — May be Possible to Absorb Within Agency's Budget ⍽ Yes ⍽ No
⍽Decrease Costs
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Local: X No Local Government Costs
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1. ⍽ Increase Costs
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3. ⍽ Increase Revenues
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5. Types of Local Governmental Units Affected:
|
⍽ Permissive Mandatory
|
⍽ Permissive Mandatory
|
⍽ Towns ⍽ Villages
⍽ Cities
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2. ⍽ Decrease Costs
|
4. ⍽ Decrease Revenues
|
⍽ Counties ⍽ Others
|
_______
|
⍽ Permissive Mandatory
|
⍽Permissive Mandatory
|
⍽ School Districts ⍽ WTCS Districts
|
Fund Sources Affected
⍽ GPR
⍽ FED ⍽
PRO ⍽ PRS
⍽ SEG ⍽
SEG-S
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Affected Ch. 20 Appropriations
|
Assumptions Used in Arriving at Fiscal Estimate:
The proposed rule makes the following changes:
•Revises s
. Tax 2.32 to reflect that, for taxable years beginning after December 31, 2012, the economic development surcharge does not apply to individuals, estates, trusts, partnerships, and limited liability companies treated as partnerships.
•Revises s
. Tax 2.88 to reflect, effective July 2, 2013, the reduction in the rate of refund interest from 9% to 3%.
•Revises s
. Tax 2.957 to reflect that the relocated business credit and deduction may not be claimed by a business that relocates to Wisconsin in a taxable year beginning after December 31, 2013.
•Repeals s
. Tax 2.985 to reflect that the electronic medical records credit may not be claimed for taxable years beginning after December 31, 2013.
•Creates s
. Tax 2.986 to administer the registration of "qualified Wisconsin businesses" for purposes of the capital gains exclusion in s
. 71.05 (25), Stats., and the income tax deferral in s
. 71.05 (26), Stats.
•Revises s
. Tax 2.99 to reflect that the dairy and livestock farm investment credit may not be claimed for taxable years beginning after December 31, 2013.
•Revises s
. Tax 3.095 to reflect that, effective for taxable years beginning after December 31, 2012, certain interest from bonds issued by the Wisconsin Health and Educational Facilities Authority is exempt.
These changes reflect current law enacted during the 2013-2014 Legislative session. The rules are intended to reflect and clarify existing law and do not impose any additional fiscal impact.
Notice of Hearing
Revenue
NOTICE IS HEREBY GIVEN That, pursuant to ss.
77.65 (3) and
227.11 (2) (a), Stats., the Department of Revenue will hold a public hearing to consider permanent rules revising Chapter
Tax 11, relating to sales and use tax provisions.
Hearing Information
Date: Tuesday, February 11, 2014
Time: 2:00 p.m.
Location: Events Room
State Revenue Building
2135 Rimrock Road
Madison, Wisconsin 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 February 11, 2014, 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
Statutes interpreted
Sections
77.51 (2d),
(10f),
(11m),
(12m), and
(15b),
77.52 (2) (a) 6. and
11.,
77.522 (4) (a) 9., and
77.54 (9) (a),
(57),
(57d),
(59),
(60), and
(61), Stats.
Statutory authority
Explanation of agency authority
Section
77.65 (3), Stats., provides “[t]he department may promulgate rules to administer this section
…"
Section
227.11 (2) (a), Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute..."
Related statute or rule
There are no other applicable statutes or rules.
Plain language analysis
The rule (1) reflects law changes in
2013 Wisconsin Act 20, (2) corrects two errors in current rule provisions, and (3) deletes an obsolete reference.
a. Custom farming services. Reflects the creation of s.
77.51 (2d), Stats., to provide that “custom farming services" includes services performed by veterinarians to farm livestock or work stock used exclusively in the business of farming. This requires updates to the provisions of ss.
Tax 11.12 and
11.61.
b. “Drugs." In s.
Tax 11.20 (3) (a) 2., reflects the amendment to s.
77.54 (57) (b) 4., Stats., to replace “medicines" with “drugs" so the rule correctly reflects the updated exemption.
c. Health Insurance Risk-Sharing Plan Authority. Reflects the amendment to s.
77.54 (9) (a), Stats. Due to the dissolution of the Health Insurance Risk-Sharing Plan and Authority, the exemption for sales made to the authority is being rescinded. This requires updates to ss.
Tax 11.04 (1),
11.05 (4) (a), and
11.49 (2) (b).
d. Lump sum contracts. Reflects the creation of the exemption in s.
77.54 (60), Stats. This provision exempts certain property sold by a contractor as a part of a lump sum contract and deems the contractor the consumer of such property, with exception. Amendments are needed to s.
Tax 11.68 (7) (b) and the examples following it.
