Analysis by the Legislative Reference Bureau
This bill makes various changes to laws administered by the Department of
Revenue.
Taxation
The bill creates a sales and use tax exemption for patient health care records
sold to the patient or a person that the patient authorizes to receive the records. The
exemption is consistent with a recent Tax Appeals Commission decision. See Cannon
& Dunphy, S.C. v. Wisconsin Dept. of Revenue
(CCH 401-970).
The bill also provides that tangible personal property transferred by a service
provider in conjunction with the sale of a service is not considered incidental to the
sale if the seller charges a separate and optional fee for the transferred property.
With regard to the county sales tax, the bill prohibits DOR from acting on any
claim for a refund or adjustment of the tax after the end of the year that is four years
after the year in which the county enacts an ordinance to repeal the tax.
The bill also replaces an obsolete reference to the definition of “active foreign
business income” under the Internal Revenue Code with the actual language of that
definition that existed prior to 2011. In addition, the bill modifies the law related to
filing informational returns for the payment of wages, salaries, commissions,
bonuses, and rent so that the same provisions that apply to individuals and
corporations apply to tax-options corporations.
For purposes of claiming a capital gains income tax deferral or exclusion based
on investments in a qualified business, the bill defines “investment” as amounts paid
to acquire stock or other ownership interest in a partnership, corporation, tax-option
corporation, or limited liability company treated as a partnership or corporation.
Under the bill, with regard to the administration of various excise taxes, DOR
must publish on its Internet site a list of persons holding valid permits for the sale
of cigarettes, tobacco products, and fermented malt beverages.
Finally, the bill makes technical changes related to the property tax assessment
roll, filing duplicate paperwork with DOR regarding managed forest land, the
charge-back of refunded or rescinded property taxes, the sales and use tax
exemption for fuel and electricity consumed in manufacturing, and the
administration of the food and beverage taxes imposed by an exposition district.
Unclaimed property
The bill does not require DOR to pay interest to a person who receives the
person's previously unclaimed property from the state if that property is a U.S.
savings bond. Under current law, DOR pays interest on unclaimed property received
by a claimant if the property was interest bearing to the owner on the date that the
person holding the property surrendered it to DOR.

Lottery
The bill explicitly prohibits the operation of a ticket courier service to sell
Wisconsin lottery tickets. Under the bill, a ticket courier service is a service operated
for the purpose of purchasing Wisconsin lottery tickets on behalf of individuals
located within or outside Wisconsin and delivering or transmitting those tickets, or
electronic images of those tickets, to those individuals as a for-profit, business
service. Currently, the Wisconsin Constitution generally prohibits the purchase of
Wisconsin lottery tickets or participation in the lottery by use of the telephone,
computer, or other electronic, telecommunication, video, or technological aid.
The bill specifies that DOR, with assistance of the Department of Justice, must
repeat, every five years, the background investigation of lottery employees, the
lottery administrator, and lottery vendors and certain associates of vendors. The bill
also allows DOR, with assistance from DOJ, to conduct initial background
investigations of any person who may come into contact with sensitive information
associated with the lottery and any person who may have access to secured areas and
requires DOR, with assistance from DOJ, to repeat the background investigation
every five years.
The bill changes from $1,000 to $600 the amount of lottery prize winnings for
which the lottery administrator must report the amounts of the winnings for the
purpose of determining whether the winner owes taxes or delinquent child support.
DOR must withhold the owed taxes or child support from the lottery winnings.
Police and fire protection fee
This bill makes changes to the administration of a fee charged for phone line
connections and prepaid wireless telecommunications plans. Under current law, the
Public Service Commission charges a communications provider or retailer a fee,
known as the police and fire protection fee, for each phone line connection or prepaid
wireless telecommunications plan provided by the communications provider or
retailer. Current law also provides that the PSC may contract with DOR only for the
collection of the fee for prepaid wireless telecommunications plans. The bill allows
the PSC to contract with DOR to administer the collection of the fee for each phone
line connection. If the PSC contracts with DOR for the collection of the fee, DOR may
require communications providers and retailers to register with DOR, conduct
audits of communications providers and retailers to ensure compliance with the fee,
and collect delinquent fee payments. The bill provides that a communications
provider or retailer may request a redetermination of the fee from DOR and may file
an objection to that redetermination with the PSC.
Alcohol regulation; restaurants
This bill changes the definition of “restaurant” for purposes relating to the
licensing and regulation of alcohol beverage establishments, and makes a change to
correspond to this definitional change. Under the bill, a place where meals are
prepared or served or sold to the general public may qualify as a restaurant even if
this is not the predominant activity at that place.

Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the 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:
AB140,1 1Section 1. 70.52 of the statutes is amended to read:
AB140,4,14 270.52 Clerks to examine and correct rolls. Each city, village, and town
3clerk upon receipt of the assessment roll shall carefully examine the roll. The clerk
4shall correct all double assessments, imperfect descriptions, and other errors
5apparent upon the face of on the roll, and strike off all correct the value of parcels of
6real property not liable to taxation. The clerk shall add to the roll any parcel of real
7property not listed on the assessment roll or item of personal property omitted by the
8assessors
from the roll and immediately notify the assessors of the additions and
9omissions. The assessors shall immediately view and value the omitted property and
10certify the valuation to the clerk. The clerk shall enter the valuation upon and
11property classification on
the roll, and the valuation shall be final. To enable the
12clerk to properly correct defective descriptions, the clerk may request aid, when
13necessary, from the county surveyor, whose fees for the services rendered shall be
14paid by the city, village, or town.
AB140,2 15Section 2. 71.05 (25) (a) 1m. of the statutes is created to read:
AB140,4,1816 71.05 (25) (a) 1m. “Investment” means amounts paid to acquire stock or other
17ownership interest in a partnership, corporation, tax-option corporation, or limited
18liability company treated as a partnership or corporation.
AB140,3 19Section 3. 71.05 (25) (a) 2. of the statutes is amended to read:
AB140,5,8
171.05 (25) (a) 2. “Qualifying gain" means a long-term capital gain under the
2Internal Revenue Code realized from the sale of an investment made after December
331, 2010, and held for at least 5 uninterrupted years in a business that for the year
4of investment and at least 2 of the 4 subsequent years was a qualified Wisconsin
5business; except that a qualifying gain may not include any amount for which the
6claimant claimed a subtraction under sub. (24) (b) or any gain described under sub.
7(26) (b) and may not exceed the fair market value of the investment on the date sold,
8less the fair market value of the investment on the date acquired
.
AB140,4 9Section 4. 71.05 (26) (a) 2m. of the statutes is created to read:
AB140,5,1210 71.05 (26) (a) 2m. “Investment” means amounts paid to acquire stock or other
11ownership interest in a partnership, corporation, tax-option corporation, or limited
12liability company treated as a partnership or corporation.
AB140,5 13Section 5. 71.255 (2) (c) of the statutes is renumbered 71.255 (2) (c) 1. and
14amended to read:
AB140,5,2015 71.255 (2) (c) 1. Except as provided in par. (d), if 80 percent or more of a
16corporation's worldwide income is active foreign business income, as defined in
17section 861 (c) (1) (B) of the Internal Revenue Code,
the income and apportionment
18factor or factors of the corporation shall not be included in the combined report, but
19the corporation shall compute and allocate or apportion its income from the unitary
20business separately.
AB140,6 21Section 6. 71.255 (2) (c) 2. of the statutes is created to read:
AB140,6,222 71.255 (2) (c) 2. For purposes of subd. 1., “active foreign business income”
23means gross income derived from sources outside the United States, as determined
24in subchapter N of the Internal Revenue Code, including income of a subsidiary

1corporation, and attributable to the active conduct of a trade or business in a foreign
2country or in a U.S. possession.
AB140,7 3Section 7. 71.255 (2) (c) 3. of the statutes is created to read:
AB140,6,74 71.255 (2) (c) 3. For purposes of subd. 2., a corporation is considered a
5subsidiary if the parent corporation owns, directly or indirectly, stock with at least
650 percent of the total voting power of the corporation and the stock has a value equal
7to at least 50 percent of the total value of the stock of the corporation.
AB140,8 8Section 8. 71.255 (7) (b) 7. of the statutes is amended to read:
AB140,6,149 71.255 (7) (b) 7. Executing waivers, closing agreements, powers of attorney,
10and other documents as necessary or required regarding the combined report filed
11under sub. (2) (a). Any waiver, agreement, power of attorney, or document executed
12by the designated agent relating to a combined report shall be considered as executed
13by all members of the combined group, including any corporation not included in the
14combined report that the department asserts is a member of the combined group
.
AB140,9 15Section 9. 71.34 (1k) (h) of the statutes is renumbered 71.34 (1k) (h) (intro.)
16and amended to read:
AB140,6,1817 71.34 (1k) (h) (intro.) Section 162 of the internal revenue code Internal
18Revenue Code
(relating to trade or business expenses) is modified so as follows:
AB140,6,21 193. So that payments for wages, salaries, bonuses, interest or other expenses
20paid to an entertainer or entertainment corporation may be deducted only if the
21corporation complies with ss. 71.63 (3) (b), 71.64 (4) and (5), and 71.80 (15) (e).
AB140,10 22Section 10. 71.34 (1k) (h) 1. of the statutes is created to read:
AB140,7,223 71.34 (1k) (h) 1. So that payments for wages, salaries, commissions, and
24bonuses of employees and officers may be deducted only if the name, address, and
25amount paid to each resident of this state to whom compensation of $600 or more has

1been paid during the taxable year is reported or if the department of revenue is
2satisfied that failure to report has resulted in no revenue loss to this state.
AB140,11 3Section 11. 71.34 (1k) (h) 2. of the statutes is created to read:
AB140,7,64 71.34 (1k) (h) 2. So that payments for rent may be deducted only if the amount
5paid, together with the names and addresses of the parties to whom rent has been
6paid, is reported as provided under s. 71.70 (2).
AB140,12 7Section 12. 74.41 (2) (intro.) of the statutes is amended to read:
AB140,7,98 74.41 (2) Amount required for submission. (intro.) A tax may be included on
9a form submitted under sub. (1) only if one all of the following applies apply:
AB140,13 10Section 13. 74.41 (2) (a) of the statutes is repealed.
AB140,14 11Section 14. 74.41 (2) (b) of the statutes is amended to read:
AB140,7,1312 74.41 (2) (b) The tax under sub. (1) for any single description of property in the
13tax roll for any one year is $500 $250 or more.
AB140,15 14Section 15. 74.41 (2) (bm) of the statutes is created to read:
AB140,7,1915 74.41 (2) (bm) The tax under sub. (1) was refunded or rescinded for any of the
165 assessment years immediately preceding the year in which the form under sub. (1)
17is submitted or refunded or rescinded because of a court determination and
18submitted under sub. (1) no later than one year after the date of the court's
19determination.
AB140,16 20Section 16. 77.51 (5) of the statutes is amended to read:
AB140,8,721 77.51 (5) For purposes of subs. (13) (e) and (f) and (15a) and s. 77.52 (2m),
22“incidental" means depending upon or appertaining to something else as primary;
23something necessary, appertaining to, or depending upon another which is termed
24the principal; or something incidental to the main purpose of the service. Tangible
25personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d)

1transferred by a service provider in conjunction with the sale of a service is incidental
2to the service if the purchaser's main purpose or objective is to obtain the service
3rather than the property, items, or goods, even though the property, items, or goods
4may be necessary or essential to providing the service. Tangible personal property
5or items, property, or goods under s. 77.52 (1) (b), (c), or (d) transferred by a service
6provider in conjunction with the sale of a service is not incidental to the service if the
7service provider charges a separate and optional fee for the property, items, or goods.
AB140,17 8Section 17. 77.51 (11d) of the statutes is amended to read:
AB140,8,129 77.51 (11d) For purposes of subs. (1ag), (1f), (3pf), and (9p), and (17g) and ss.
1077.52 (4), (20), and (21), 77.522, and 77.54 (51), (52), and (60), “product" includes
11tangible personal property, and items, property, and goods under s. 77.52 (1) (b), (c),
12and (d), and services.
AB140,18 13Section 18. 77.51 (13) (fm) of the statutes is created to read:
AB140,8,1514 77.51 (13) (fm) A person selling, performing, or furnishing any service under
15s. 77.52 (2) (a) 5. or 12. to a service provider described in s. 77.52 (2m) (am).
AB140,19 16Section 19. 77.51 (17g) of the statutes is created to read:
AB140,8,1817 77.51 (17g) “Separate and optional fee” means a fee charged to receive a
18distinct and identifiable product, if any of the following applies:
AB140,8,2319 (a) The fee is in addition to fees that the seller charges for other distinct and
20identifiable products sold to the same buyer, the fee is separately set forth on the
21invoice given by the seller to the buyer, and the seller does not require the buyer to
22pay the fee if the buyer chooses not to receive the additional distinct and identifiable
23product for which the fee applies.
AB140,9,524 (b) The seller charges a single amount for multiple distinct and identifiable
25products and offers the buyer the option of paying a lower amount if the buyer

1chooses not to receive one or more of the distinct and identifiable products. For
2purposes of this paragraph, the separate and optional fee is the single amount the
3seller charges for the multiple distinct and identifiable products less the reduced
4amount the seller charges to the buyer because the buyer chooses not to receive one
5or more of the products.
AB140,20 6Section 20. 77.52 (2m) (am) of the statutes is created to read:
AB140,9,107 77.52 (2m) (am) A person selling, performing, or furnishing any service in sub.
8(2) (a) 1., regardless of whether the selling, performing, or furnishing of the service
9is a retail sale, is the consumer of any services under sub. (2) (a) 5. or 12. purchased
10by the person for the person's use or for the use of the person's customers.
AB140,21 11Section 21. 77.52 (4) of the statutes is created to read:
AB140,9,1412 77.52 (4) If a seller charges a separate and optional fee for a product, the fee
13is a separate sale and the tax treatment is determined independently from fees that
14the seller charges for other products.
AB140,22 15Section 22. 77.54 (30) (a) 6. of the statutes is amended to read:
AB140,9,1816 77.54 (30) (a) 6. Fuel and electricity consumed directly in manufacturing
17tangible personal property, or items or property under s. 77.52 (1) (b) or (c), in this
18state.
AB140,23 19Section 23. 77.54 (30) (g) of the statutes is created to read:
AB140,9,2520 77.54 (30) (g) For purposes of par. (a) 6., fuel and electricity “consumed directly
21in manufacturing” means only fuel and electricity used to operate machines and
22equipment used directly in the step-by-step manufacturing process. For purposes
23of par. (a) 6., fuel and electricity are not “consumed directly in manufacturing” if they
24are used in providing plant heating or cooling, air conditioning, communications,
25lighting, safety and fire prevention, research and product development, receiving,

1storage, sales, distribution, warehousing, shipping, advertising, or administrative
2activities. For purposes of par. (a) 6., fuel and electricity used directly in
3manufacturing steam that is used by the manufacturer in further manufacturing or
4to heat a facility, or both, is consumed directly in manufacturing.
AB140,24 5Section 24. 77.54 (64) of the statutes is created to read:
AB140,10,86 77.54 (64) The sales price from the sale of and the storage, use, or other
7consumption of patient health care records that are sold to the patient or to a person
8that the patient authorizes to receive the records.
AB140,25 9Section 25. 77.70 of the statutes is amended to read:
AB140,10,25 1077.70 Adoption by county ordinance. Any county desiring to impose county
11sales and use taxes under this subchapter may do so by the adoption of an ordinance,
12stating its purpose and referring to this subchapter. The rate of the tax imposed
13under this section is 0.5 percent of the sales price or purchase price. The county sales
14and use taxes may be imposed only for the purpose of directly reducing the property
15tax levy and only in their entirety as provided in this subchapter. That ordinance
16shall be effective on the first day of January, the first day of April, the first day of July
17or the first day of October. A certified copy of that ordinance shall be delivered to the
18secretary of revenue at least 120 days prior to its effective date. The repeal of any
19such ordinance shall be effective on December 31. A certified copy of a repeal
20ordinance shall be delivered to the secretary of revenue at least 120 days before the
21effective date of the repeal. Except as provided under s. 77.60 (9), the department
22of revenue may not issue any assessment nor act on any claim for a refund or any
23claim for an adjustment under s. 77.585 after the end of the calendar year that is 4
24years after the year in which the county has enacted a repeal ordinance under this
25section.
AB140,26
1Section 26. 77.76 (3) of the statutes is amended to read:
AB140,11,242 77.76 (3) From the appropriation under s. 20.835 (4) (g) the department of
3revenue
shall distribute 98.25 percent of the county taxes reported for each enacting
4county, minus the county portion of the retailers' discounts, to the county and shall
5indicate the taxes reported by each taxpayer, no later than 75 days following the last
6day of the calendar quarter in which such amounts were reported. In this subsection,
7the “county portion of the retailers' discount" is the amount determined by
8multiplying the total retailers' discount by a fraction the numerator of which is the
9gross county sales and use taxes payable and the denominator of which is the sum
10of the gross state and county sales and use taxes payable. The county taxes
11distributed shall be increased or decreased to reflect subsequent refunds, audit
12adjustments, and all other adjustments of the county taxes previously distributed.
13Interest paid on refunds of county sales and use taxes shall be paid from the
14appropriation under s. 20.835 (4) (g) at the rate paid by this state under s. 77.60 (1)
15(a). The county may retain the amount it receives or it may distribute all or a portion
16of the amount it receives to the towns, villages, cities, and school districts in the
17county. After receiving notice from the department of revenue, a county shall
18reimburse the department for the amount by which any refunds, including interest,
19of the county's sales and use taxes that the department pays or allows in a reporting
20period exceeds the amount of the county's sales and use taxes otherwise payable to
21the county under this subsection for the same or subsequent reporting period.
Any
22county receiving a report under this subsection is subject to the duties of
23confidentiality to which the department of revenue is subject under s. 77.61 (5) and
24(6).
AB140,27 25Section 27. 77.82 (8) of the statutes is amended to read:
AB140,12,8
177.82 (8) Order. If an application under sub. (2), (4m), or (12) is approved, the
2department shall issue an order designating the land as managed forest land for the
3time period specified in the application. If an application under sub. (4) is approved,
4the department shall amend the original order to include the additional parcel. The
5department shall provide the applicant with a copy of the order or amended order and
6shall also file a copy with the department of revenue, the supervisor of assessments,
7and the clerk of each municipality in which the land is located, and shall record the
8order with the register of deeds in each county in which the land is located.
AB140,28 9Section 28. 77.98 (3) of the statutes is amended to read:
AB140,12,1510 77.98 (3) Except as provided in sub. (4), for For purposes of sub. (1) (a),
11“premises" shall be broadly construed and shall include the lobby, aisles, and
12auditorium of a theater or the seating, aisles, and parking area of an arena, a rink,
13or a stadium, or the parking area of a drive-in or an outdoor theater. The premises
14of a caterer with respect to catered meals or beverages shall be the place where
15served.
AB140,29 16Section 29. 77.98 (4) (a) of the statutes is amended to read:
AB140,13,217 77.98 (4) (a) Except as provided in par. (b), the tax imposed under this section
18shall not be imposed on the sale of alcoholic beverages, candy, prepared food, or soft
19drinks sold by a person primarily engaged, as determined by the department, in the
20retail trade as a food and beverage store, as classified under sector 44-45, subsector
21445, of the North American Industry Classification System, 1997 2017 edition,
22published by the U.S. office of management and budget, beginning on the first day
23of the calendar quarter that is at least 120 days after the date on which the bonds
24issued by the district under subch. II of ch. 229 during the first 60 months after April
2526, 1994, and any debt issued to fund or refund those bonds, are retired. The district

1shall notify the department of revenue, in the manner prescribed by the department,
2when such bonds and debt are retired.
AB140,30 3Section 30. 125.02 (18) of the statutes is renumbered 125.02 (18) (intro.) and
4amended to read:
AB140,13,115 125.02 (18) (intro.) “Restaurant" means a restaurant, as defined in s. 97.01
6(14g).
any building, room, or place where meals are prepared or served or sold to
7transients or the general public, including all places used in connection with it and
8including any public or private school lunchroom for which food service is provided
9by contract. For purposes of this subsection, “meals" does not include soft drinks, ice
10cream, milk, milk drinks, ices, and confections. “Restaurant" does not include any
11of the following:
AB140,31 12Section 31. 125.02 (18) (a) to (h) of the statutes are created to read:
AB140,13,1413 125.02 (18) (a) Taverns that serve free lunches consisting of popcorn, cheese,
14crackers, pretzels, cold sausage, cured fish, or bread and butter.
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