AB634: Bill Text

LRB-2437/5

JK:kmg&jlg:mrc

1999 - 2000 LEGISLATURE

1999 Assembly BILL 634

December 30, 1999 - Introduced by Representatives M. Lehman and Wood, cosponsored by Senators Wirch and Drzewiecki, by request of Department of Revenue. Referred to Committee on Ways and Means.

AB634,2,2 An Act to repeal 71.80 (19) (a) (title), 71.80 (19) (b), 71.80 (19) (c) and 77.54 (3) (b) 3.; to renumber and amend 71.80 (19) (a) and 77.59 (4) (c); to amend 50.14 (4), 71.10 (6) (a), 71.10 (6) (b), 71.10 (6m) (a), 71.65 (5) (a) 1., 73.01 (4) (a), 77.54 (5) (b), 77.54 (5) (c), 77.54 (6) (a), 77.54 (26m), 77.59 (5), 77.61 (3), 77.9941 (4), 77.9964 (2) and 78.68 (10); and to create 20.566 (1) (hd), 71.10 (6) (e), 71.10 (6m) (c), 71.80 (21), 72.30 (1m), 73.13, 77.51 (20m), 77.51 (22m), 77.58 (3) (c), 78.39 (5d), 78.39 (5m), 139.11 (2r), 139.38 (2r), 139.75 (9m) and 139.82 (2r) of the statutes; relating to: the liability of married persons filing a joint income tax return, the payment of the alternate fuel tax and the tobacco products tax, reducing nondelinquent taxes, rounding dollar amounts to whole dollars on all tax returns, allowing a mathematical computation of sales and use taxes, items used exclusively for tax-exempt purposes, paying taxes with a credit card, extending the time for filing a tax withholding report, granting rule-making authority, making an appropriation and providing a penalty.

Analysis by the Legislative Reference Bureau

Reducing taxes

Under current law, any taxpayer may petition the department of revenue (DOR) to reduce delinquent taxes, including any applicable costs, penalties and interest. If DOR determines that the taxpayer is unable to pay in full the amount due, based on an examination of the taxpayer under oath, the taxpayer's financial statements and any other information required by DOR, DOR determines the amount that the taxpayer is able to pay and then enters an order reducing the taxes, costs, penalties and interest owed by the taxpayer.

If within three years from the date on which DOR enters the order that reduces the taxpayer's taxes DOR determines that the taxpayer has an income or owns property that is sufficient to enable the taxpayer to pay the remainder of the original delinquent taxes, including costs, penalties and interest, DOR must reopen the order and order the payment in full of such taxes, costs, penalties and interest.

This bill expands current law so that DOR is authorized to reduce any taxes, costs, penalties and interest that are due from a taxpayer, regardless of whether the taxes, costs, penalties and interest are delinquent.

Income and franchise taxes

Under current law, spouses that file a joint income tax return are both liable for the payment of any tax related to that return. However, DOR may relieve a person of any tax liability related to a joint return, in a manner specified by the Internal Revenue Code and adopted by this state. Generally, DOR may relieve a person of any tax liability related to a joint return if the person's spouse did not notify the person of any tax liability or understatement of taxes related to the joint return. This bill corrects an outdated reference to the sections of the Internal Revenue Code that relate to a spouse's tax liability for a joint income tax return. The bill also requires a spouse to apply for relief from tax liability within two years from the date on which DOR begins collection activities on the spouse's tax liability or within two years from the effective date of the provision, whichever is later.

Under current law, an employer is required to deduct and withhold state income taxes from an employe's pay and to deposit those taxes with DOR on a quarterly basis. An employer must also file a tax withholding report with DOR on a monthly, quarterly or annual basis. Under current law, DOR cannot grant an employer an extension for filing such a report. Before 1999, DOR could grant a 30-day extension for filing a withholding report to an employer who showed good cause for granting that extension. This bill restores the prior law which allowed DOR to grant such an extension.

Sales and use taxes

Under current law, a retailer is required to use a bracket system, as determined by DOR, to compute the sales or use taxes that the retailer must collect from the sale of goods and services. Under this bill, a retailer may also use a straight mathematical computation, under rules promulgated by DOR, to compute the sales or use taxes that the retailer must collect from the sale of goods and services.

Under current law, the sales of certain goods are exempt from the sales and use taxes if those goods are used exclusively for a particular purpose. This bill clarifies the scope of such exemptions by providing that the sales of certain goods are exempt from the sales and use taxes if those goods are used in a nontaxable manner to the exclusion of all other uses, except for other uses that do not exceed 5% of total use in a year.

Under current law, if a seller makes a claim for a refund of sales taxes or use taxes and the claim is honored, the seller is required to pass along the refund and related interest to the buyers and to submit to DOR the portion of the refund that could not be passed on, along with a penalty. Under current law, if a seller receives a sales or use tax refund as the result of an audit, the seller is not required to submit the refund and related interest to the buyers. Also, a seller is not required to submit to the buyers sales or use taxes that are collected erroneously.

This bill requires a seller who receives any refund of sales or use taxes, or who collects sales or use taxes erroneously, to submit such a refund or taxes to the buyer, or to DOR if the buyer cannot be located, within 60 days after receiving a refund or after discovering that the seller has collected taxes erroneously. Any portion of a refund or taxes not submitted to the buyer, or to DOR if the buyer cannot be located, within that 60 days must be submitted to DOR, along with a penalty.

Other taxation

Under current law, a taxpayer may round dollar amounts on an income or franchise tax return to the nearest whole dollar. This bill permits DOR to require a taxpayer round dollar amounts to the nearest whole dollar on an income or franchise tax return. This bill also permits DOR to require that a taxpayer round dollar amounts to the nearest whole dollar on tax returns or tax reports related to sales and use taxes, estate taxes, fuel taxes, cigarette and tobacco product taxes, alcohol taxes, food and beverage taxes, premier resort area taxes, rental car fees and dry cleaning fees.

This bill allows DOR to accept payment for taxes, costs, penalties and interest from a taxpayer by use of a credit card and allows DOR to impose a credit card service charge on such payments.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB634, s. 1 Section 1. 20.566 (1) (hd) of the statutes is created to read:

AB634,4,6 20.566 (1) (hd) Credit card payment service charge. From moneys received from credit card payment service charges collected under s. 71.80 (21) (c), a sum sufficient to pay the costs incurred by the department of revenue to provide for the payment of taxes by credit card, including the cost of contracting services under s. 71.80 (21) (d).

AB634, s. 2 Section 2. 50.14 (4) of the statutes is amended to read:

AB634,4,10 50.14 (4) Sections 77.59 (1) to (5) (5m), (6) (intro.), (a) and (c) and (7) to (10), 77.60 (1) to (7), (9) and (10), 77.61 (9) and (12) to (14) and 77.62, as they apply to the taxes under subch. III of ch. 77, apply to the assessment under this section.

AB634, s. 3 Section 3. 71.10 (6) (a) of the statutes is amended to read:

AB634,4,18 71.10 (6) (a) Joint returns. Persons filing a joint return are jointly and severally liable for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter applicable to the return. A Except as provided in par. (e), a person shall be relieved of liability in regard to a joint return in the manner specified in section 6013 (e) 6015 (a) to (d) and (f) of the internal revenue code, notwithstanding the amount or percentage of the understatement Internal Revenue Code.

AB634, s. 4 Section 4. 71.10 (6) (b) of the statutes is amended to read:

AB634,5,6 71.10 (6) (b) Separate returns. A Except as provided in par. (e), a spouse filing a separate return may be relieved of liability for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter with regard to unreported marital property income in the manner specified in section 66 (c) of the internal revenue code Internal Revenue Code. The department may not apply ch. 766 in assessing a taxpayer with respect to marital property income the taxpayer did not report if that taxpayer failed to notify the taxpayer's spouse about the amount and nature of the income before the due date, including extensions, for filing the return for the taxable year in which the income was derived. The department shall include all of that marital property income in the gross income of the taxpayer and exclude all of that marital property income from the gross income of the taxpayer's spouse.

AB634, s. 5 Section 5. 71.10 (6) (e) of the statutes is created to read:

AB634,5,12 71.10 (6) (e) Application for relief. A person who seeks relief from liability under par. (a) or (b) shall apply for relief with the department, on a form prescribed by the department, within 2 years after the date on which the department first begins collection activities after the effective date of this paragraph .... [revisor inserts date].

AB634, s. 6 Section 6. 71.10 (6m) (a) of the statutes is amended to read:

AB634,6,2 71.10 (6m) (a) A Except as provided in par. (c), a formerly married or remarried person filing a return for a period during which the person was married may be relieved of liability for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter for unreported marital property income from that period as if the person were a spouse under section 66 (c) of the internal revenue code Internal Revenue Code. The department may not apply ch. 766 in assessing the former spouse of the person with respect to marital property income that the former spouse did not report if that former spouse failed to notify the person about the amount and nature of the income before the due date, including extensions, for filing the return for the taxable year during which the income was derived. The department shall include all of that marital property income in the gross income of the former spouse and exclude all of that marital property income from the gross income of the person.

AB634, s. 7 Section 7. 71.10 (6m) (c) of the statutes is created to read:

AB634,6,5 71.10 (6m) (c) A person who seeks relief from liability under par. (a) shall apply for relief with the department as provided under sub. (6) (e).

AB634, s. 8 Section 8. 71.65 (5) (a) 1. of the statutes is amended to read:

AB634,6,8 71.65 (5) (a) 1. Thirty days for filing a wage statement under sub. (1) or an annual withholding report under sub. (3) (a) or (d).

AB634, s. 9 Section 9. 71.80 (19) (a) (title) of the statutes is repealed.

AB634, s. 10 Section 10. 71.80 (19) (a) of the statutes is renumbered 71.80 (19) and amended to read:

AB634,6,17 71.80 (19) Whole dollar amounts. With At the request of the department, with respect to any amount required to be shown on a form prescribed for any return, statement or other document required by this chapter, if the amount of such item is other than a whole dollar amount the fractional part of a dollar shall be disregarded unless it amounts to 50 cents or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased to the next whole dollar.

AB634, s. 11 Section 11. 71.80 (19) (b) of the statutes is repealed.

AB634, s. 12 Section 12. 71.80 (19) (c) of the statutes is repealed.

AB634, s. 13 Section 13. 71.80 (21) of the statutes is created to read:

AB634,6,22 71.80 (21) Credit card payments. (a) In this subsection, "taxes" has the meaning given in s. 71.91 (6) (a) 4.

AB634,6,24 (b) The department may accept payment by credit card of taxes that are required to be paid to the department under this chapter.