There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule order.
Comparison with rules in adjacent states
Illinois:
Illinois Administrative Code, title 86, sec. 100.2430, provides that addbacks are required for interest and intangible expenses paid to 80-20 companies (companies that cannot be included in unitary group because 80% or more of their activities are outside U.S.), to the extent such amounts exceed taxable dividends received.
Iowa:
Iowa Admin. Code r. 701-46.4(2) provides that withholding is required against income distributable to nonresident individuals.
Summary of factual data and analytical methodologies
The department processes hundreds of thousands of paper checks, refund claims, reports, and returns each year. Each one costs more to process and takes more staff time to handle than if submitted electronically. The department has determined that in order to operate in the most cost effective and efficient manner possible, it is necessary to expand its electronic filing and payment requirements.
In addition, this rule order has been created to incorporate and provide further interpretation, explanation, and guidance with respect to the statutory provisions of 2009 Wisconsin Acts 2 and 28 and the statutory provisions relating to related entity expenses and pass-through entity withholding.
Analysis and supporting documents used to determine effect on small business
The department provides methods to electronically file and pay taxes with little or no cost. In addition, an exception to the requirements to file and pay electronically for situations where an undue hardship is caused is provided in the rule. Based on this, the department has concluded that this rule order does not have a significant effect on small business.
As explained above, this proposed rule order also has been created to reflect changes in and provide further interpretation, explanation, and guidance with respect to Wisconsin's tax laws. As the rule itself does not impose any significant financial or other compliance burden, the department has determined that it does not have a significant effect on small business.
Small Business Impact
This proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
The provisions relating to 2009 Wisconsin Acts 2 and 28 and related entity expenses interpret existing statutes and therefore have no fiscal effect. The provisions relating to treatment of withholding for pass-through entities are expected to generate minimal administrative savings. The provisions relating to electronic fund transfer payments and to electronic filing of returns, reports, and refund claims are anticipated to reduce administrative expenditures by an estimated $152,900 annually as described below.
The Department of Revenue estimates a potential 88% decrease in paper sales tax filings (from 422,000 to 48,000 annually) under the proposed rule, which translates into a cost savings of $152,900. This also would result in electronic sales tax filings increasing from 52% to 95% of all sales tax filings (increasing from 462,300 to 835,900 of 884,259 total sales tax returns based on a recent 12-month period). Additional cost savings may also be achieved as other filings, especially individual income tax withholdings, are shifted to electronic form. The timeline for cost savings, however, will be dependent on the pace at which this shift is implemented. Cost savings will also be reduced to the degrees to which waivers from the proposed rule are granted.
Anticipated costs incurred by private sector
This proposed rule order does not have a significant fiscal effect on the private sector.
Agency Contact Person
Dale Kleven, Dept. of Revenue
Mail Stop 6-40
2135 Rimrock Road
PO Box 8933
Madison, WI 53708-8933
Phone: (608) 266-8253
Notice of Hearing
Revenue
NOTICE IS HEREBY GIVEN That pursuant to s. 227.21 (2) (a), Stats., the Department of Revenue will hold a public hearing to consider the creation of Tax 4.001, 7.001, 8.001, and 9.001 and revision of Tax 11.01, relating to motor vehicle, alternate fuels, and general aviation fuel tax return and refund claim forms; fermented malt beverage tax return and refund claim forms; intoxicating liquor report, tax return, and refund claim forms; cigarette and tobacco products report, tax return, and refund claim forms; and sales and use tax, local exposition tax, and premier resort area tax return forms.
Hearing Information
The hearing will be held:
Date:   August 11, 2010
Time:   1:00 PM
Location:   Events Room
  State Revenue Building
  2135 Rimrock Road
  Madison, Wisconsin
Handicap access is available at the hearing location.
Submission 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 shown under Agency Contact Person listed below no later than August 17, 2010, and will be given the same consideration as testimony presented at the hearing.
Analysis by the Department of Revenue
Statutes interpreted
77.982(2), 77.9941(4), 78.005(6m), 78.39(4m), 78.55 (2r), 139.01(2r), 139.30 (4m), and 139.75 (4m), Stats.
Statutory authority
Section 227.11 (2) (a), Stats.
Explanation of agency authority
Section 227.11 (2) (a), Stats., provides that each agency may promulgate rules interpreting the provisions of any statute enforced or administered by it, 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
This rule order expands the returns, reports, and refund claims the department may require be filed electronically.
Comparison with federal regulations
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
The department processes hundreds of thousands of refund claims, reports, and returns each year. Each one costs more to process and takes more staff time to handle than if submitted electronically. The department has determined that in order to operate in the most cost effective and efficient manner possible, it is necessary to expand its electronic filing requirements.
Analysis and supporting documents used to determine effect on small business
The department provides methods to electronically file with little or no cost. In addition, an exception to the requirements to file electronically for situations where an undue hardship is caused is provided in the rule. Based on this, the department has concluded that this rule order does not have a significant effect on small business.
Small Business Impact
This rule order does not have a significant effect on small business.
Fiscal Estimate
Assumptions used in arriving at fiscal estimate
The Department of Revenue (DOR) processes millions of reports, returns and refund claims every year. To improve the department's efficiency, modern technologies are continuing to be deployed to increase the use of electronic processing, and, as a result, reduce dependency on paper transactions requiring manual processing. For example, the portion of individual income tax returns filed electronically increased from 66.7% in 2009 to 74.4% in 2010 (as measured through May 2010). Similarly, the portion of sales and use tax returns filed electronically increased from 52.6% for the entirety of 2009 to 75.5% during the first five months of 2010.
Section 227.11 (2) (a) of the statutes allows the department to promulgate rules interpreting the provisions of any statute enforced or administered by the department, if it considers the rule necessary to effectuate the purpose of the statute.
Utilizing the authority provided by this statute, the proposed rule permits DOR to require additional tax reports, tax returns, and refund claims to be filed electronically. Specifically, the rule would allow DOR to require electronic filing of the following forms and returns:
  Motor vehicle fuel, alternate fuel, and general aviation fuel tax returns and refund claim forms.
  Fermented malt beverage tax returns and refund claim forms.
  Intoxicating liquor reports, tax returns, and refund claim forms.
  Cigarette and tobacco products reports, tax returns, and refund claim forms.
  Local exposition tax returns.
  Premier resort area tax returns.
Consistent with certain forms for which the department may already require electronic filing, the proposed rule includes an exception which allows the DOR Secretary to waive the requirement to file electronically when the Secretary determines that the requirement causes an undue hardship.
Since the proposed rule will increase the number of transactions filed electronically, it will reduce paper based transactions and lead to a more efficient use of DOR's resources. Individuals and businesses submitting returns to DOR may also benefit by electronic increased electronic filling.
While cost savings will be achieved as various tax filings are shifted to electronic form, the timeline for these savings, will depend on the pace at which this shift is implemented. Some of these savings have already been realized as 64% of local exposition tax returns, 59% of premier resort area returns, and all liquor tax returns are already received electronically. In addition, DOR's cost savings will be reduced to the degree to which waivers from the proposed rule are granted.
Based on DOR estimates, the switch-over of certain excise tax forms from paper to electronic format will require the department to incur transitional costs of approximately $5, 000 per changeover (for form revisions, informational letters, and other one-time costs). These transitional costs are expected to be absorbed within existing expenditure authority and permit subsequent long-term savings.
State fiscal effect
Increase costs — may be possible to absorb within agency's budget.
Fund sources affected
GPR.
Affected Ch. 20 appropriations
Section 20.566 (1) (a), Stats.
Local government fiscal effect
None.
Anticipated costs incurred by private sector
This rule order does not have a significant fiscal effect on the private sector.
Text of Proposed Rule
SECTION 1. Tax 4.001 is created to read:
Tax 4.001 Motor vehicle, alternate fuels, and general aviation fuel tax return and refund claim forms. (1) FORMS. The department shall provide official forms for filing motor vehicle, alternate fuels, and general aviation fuel tax returns and refund claims. Except as approved by the department, tax returns and refund claims may only be filed using these official forms.
(2) FILING RETURNS. (a) Forms filed with the department shall be submitted by one of the following means:
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Links to Admin. Code and Statutes in this Register are to current versions, which may not be the version that was referred to in the original published document.