Current statutes on the real estate transfer fee do not specifically refer to sales of time-share property. However, the Department of Revenue has interpreted the law as subjecting only "fixed-time" time-share sales, in which the use of the rooms or lodging is fixed at the time of sale as to the starting day or lodging unit, to the real estate transfer fee. The bill would exempt these types of time-share transactions from the real estate transfer fee, if they meet the definition under s. 707.02(32).
Sales Tax
Under current law, the furnishing of rooms or lodging through the sale of time-share property as defined in s. 707.02(32) is subject to the sales tax if the use of the rooms or lodging is for continuous periods of less than one month and if the use of the rooms or lodging is not fixed at the time of the sale as to the starting date or lodging unit. The Governor's recommendation would subject all sales of time-share property for continuous periods of less than one month to the sales tax. This provision would also specify that charges associated with taxable time-share property would be taxable at the time the charges are incurred, even if those charges were not taxable at the time of the initial sale of the time-share property.
Additional Provisions
The bill would amend additional statutes to make them consistent with the exemption of time-share property from the real estate transfer fee. Currently, transfers of time-share property as defined in s. 707.02 (32) in this state are subject to certain reporting requirements related to disclosure by owners of residential real estate. In addition, such time-share property is subject to a requirement that the small claims procedure be the exclusive procedure used in circuit court in actions relating to the return of earnest money tendered pursuant to a contract for purchase of property. However, in both cases the statutes specify that transfers that are exempt from the real estate transfer fee are also exempt from such requirements.
The bill would specify that theses requirements would no longer apply to transfers of time-share property as defined under s. 707.02 (32). However, transfers of time-share property that do not meet the definition under s. 707.02 (32) would continue to be subject to the requirements on disclosure and on the specified use of the small claims procedure.
These provisions would take effect on the first day of the second month beginning after publication of the bill. The fiscal effect is estimated to be a net increase in general fund revenues of $1,200,000 in 1999-00 and $1,440,000 in 2000-01.
[Bill Section: 1811 thru 1814, 3050, 3073 and 9443(2)]
19. UTILITY TAX ON CAR LINE COMPANIES
Governor: Reduce the gross earnings tax on car line companies from 3% to 2.5% of gross earnings of such companies in this state. A "car line company" is any person, other than a person operating a railroad, that is engaged in the business of leasing or furnishing car line equipment to a railroad. "Car line equipment" includes railroad cars and other equipment used in railroad transportation. Under current law, a 3% gross earnings tax is levied on car line companies in lieu of all property taxes on their car line equipment.
This provision would first apply to taxable years beginning on January 1 of the year in which the bill generally takes effect, unless the bill's general effective date is after July 31. In that case, the tax decrease would first apply to taxable years beginning January 1 of the following year. It is estimated that this provision would reduce general fund revenues by $100,000 in 1999-00 and $200,000 in 2000-01, assuming that the tax reduction would first apply on January 1, 2000. However, these revenues are not accounted for in the bill.
[Bill Sections: 1809 and 9343(12)]
20. AD VALOREM TAX EXEMPTION FOR COMPUTERS AND COMPUTERIZED EQUIPMENT
GPR-REV - $225,000
Governor: Extend the exemption for mainframe computers, minicomputers, personal computers, networked personal computers, servers, terminals, monitors, disk drives, electronic peripheral equipment, tape drives, printers, basic operational programs, systems software, prewritten software and custom software, which currently applies to property subject to locally imposed property taxes and to telephone companies subject to state ad valorem taxation, to the property of air carrier, conservation and regulation, municipal electric, pipeline and railroad companies that are also subject to state ad valorem taxation, effective with assessments as of January 1, 1999.
Provide an exemption for fax machines, copiers, cash registers and automatic teller machines for all public utility property subject to ad valorem taxation, effective with assessments as of January 1 of the year following enactment of the bill.
The fiscal effect is estimated to be a reduction in general fund ad valorem tax collections of $75,000 in 1999-00 and $150,000 in 2000-01 from the following types of companies: conservation and regulation; municipal electric; pipeline; and telephone companies. In addition, it is estimated that transportation fund ad valorem tax collections for air carrier and railroad companies would be reduced by $50,000 in 1999-00 and $100,000 in 2000-01. The transportation fund reductions are reflected in this document under the section for "Transportation."
[Bill Sections: 1654, 1807, 1808, 1810 and 9443(3)&(4)]
Tax Administration
21. MINNESOTA-WISCONSIN INCOME TAX RECIPROCITY PAYMENTS
GPR $12,500,000
Governor: Provide $4,500,000 in 1999-00 and $8,000,000 in 2000-01 to reflect estimated Minnesota-Wisconsin income tax reciprocity payments. Total funding after these adjustments would be $44,500,000 in 1999-00 and $48,000,000 in 2000-01.
22. ILLINOIS-WISCONSIN INCOME TAX RECIPROCITY PAYMENTS
GPR - $2,750,000
Governor: Increase funding by $2,750,000 in 1999-00 and decrease funding by $5,500,000 in 2000-01 to reflect Illinois-Wisconsin income tax reciprocity payments. Total funding after these adjustments would be $8,250,000 in 1999-00. Under the current agreement, no payment will be made in 2000-01. However, payments will resume in 2001-02.
23. ILLINOIS-WISCONSIN INCOME TAX RECIPROCITY STUDY
GPR $2,500
Governor: Increase funding by $28,400 in 1999-00 and decrease funding by $25,900 in 2000-01 for a study to provide data for determining future income tax reciprocity payments between Wisconsin and Illinois. Total funding of $105,000 in 1999-00 and $50,700 in 2000-01 would be provided under this provision.
24. INTEREST ON OVERPAYMENT OF TAXES
GPR $700,000
Governor: Provide $300,000 in 1999-00 and $400,000 in 2000-01 for estimated interest paid on the overpayment of individual income taxes. Total funding would be $800,000 in 1999-00 and $900,000 in 2000-01.
25. SALES TAX LATE FILING FEE
GPR-REV $2,530,000
Governor: Increase the late filing fee for delinquent sales and use tax returns from $10 to $30. The current law exception from paying the fee in cases where there is a reasonable cause would be modified to require a good cause but not due to neglect. The bill would also clarify a provision regarding security that may be required by the Department for retailers. These provisions would first apply to sales and use tax returns that are filed for periods beginning after September 30, 1999. It is estimated that the increase in the late filing fee would result in additional general fund revenues of $1,130,000 in 1999-00 and $1,400,000 in 2000-01.
Under current law, delinquent sales and use tax returns are subject to a $10 late filing fee. However, the fee is not imposed in cases where the person who was required to file the return has died or where the return was not filed because of a reasonable cause and not because of neglect.
[Bill Sections: 1815 and 9343(8)]
26. COMPROMISING NONDELINQUENT TAXES
Governor: Authorize a taxpayer to petition the Department of Revenue to compromise taxes that are owed to the state but are not yet delinquent including costs, interest and penalties. The petition would have to be submitted on a form prescribed by the Department and include a sworn statement from the taxpayer. DOR would be authorized to examine the petitioner under oath concerning the matter and require the taxpayer to provide financial statements and other related information.
If the Department found that the taxpayer was unable to pay the taxes, costs, interest and penalties in full, it would be required to determine the amount that the taxpayer could pay and enter an order reducing the taxes, costs, penalties and interest in accordance with the determination. The compromise would be effective only if the amount owed was paid within ten days from the date the order was issued. Upon payment of the amount owed, DOR would credit the unpaid portion of the principal amount of the taxes and make an appropriate record of the unpaid amount of penalties, costs and interest accrued.
If, within three years of the date of the compromise order, DOR determined that the taxpayer had income or property sufficient to enable the taxpayer to pay the remainder of the tax, costs, penalties and interest, the Department would be required to reopen the matter and order the payment in full of the amount owed. Before entering such an order, DOR would be required to notify the taxpayer in writing of the Department's intention. If the taxpayer requested it, a hearing would be arranged. Once the order was entered, the Department would make a record of the taxes, costs, interest and penalties and they would become immediately due and payable. The taxes would be subject to interest and the delinquent tax fee. DOR would be required to immediately proceed to collect the amounts due and to impose the delinquent tax fee.
These provisions would take effect on the first day of the second month beginning after publication of the bill.
Under current law, DOR has authority to compromise delinquent income and franchise taxes including costs, penalties and interest, under provisions that are essentially the same as those described above. The bill would authorize DOR to compromise all types of taxes (not just income and franchise) that are owed to the state, but not yet delinquent.
[Bill Sections: 1803 and 9443(5)]
27. TAX APPEALS COMMISSION -- SUMMARY PROCEEDINGS
Governor: Replace the current provisions regarding "small claims" cases with similar provisions relating to "summary proceedings." A summary proceeding would be a matter in which the amount in controversy, including any penalty, after DOR takes its final action on the petition for redetermination, is less than $100,000. Exceptions would include cases where: (a) the Commission on its own motion determines that the case should not be heard as a summary proceeding; or (b) DOR or a party petitioning for review alleges that the case involves a constitutional issue or has statewide significance. A commissioner hearing a summary proceeding would have the same discretion as a judge under statutory alternative dispute resolution provisions to order the parties to select a settlement provided under those provisions. A commissioner assigned by the chairperson prior to the hearing would decide summary proceedings. In summary proceedings, the presiding commissioner would render an oral decision at the close of the hearing or a written decision to all parties within two weeks. Decisions in summary proceedings would not be precedents. Provisions governing DOR actions in response to adverse rulings would not apply to summary hearings. The Commission would be required to include a Summary Proceedings Division.
The bill would also provide that, in matters that are not heard as summary proceedings, consent of the parties would no longer be required for the presiding commissioner to render an oral decision. These provisions would first apply to appeals filed for tax years beginning on January 1, 2000.
Under current law, the Tax Appeals Commission is authorized to hear small claims cases. Small claims are matters in which the amount in controversy, including any penalty, after DOR takes final action on the petition for redetermination, is less than $2,500, unless the Commission determines not to hear the case as a small claims case or DOR determines that the case has statewide significance. Small claims cases are decided by one commissioner assigned by the chairperson prior to the hearing. In small claims cases, the presiding commissioner, without consent of the parties, may render either an oral decision at the close of the hearing or a written
decision to all parties within two weeks. Adverse ruling provisions do not apply to small claims cases. The Commission is currently required to include a Small Claims Division.
[Bill Sections: 18, 1791, 1795 thru 1797 and 9343(22)]
28. TAX APPEALS COMMISSION -- PENALTY FOR FRIVOLOUS OR GROUNDLESS APPEALS
Governor: Increase, from $1,000 to $5,000, the penalty that may be assessed for proceedings before the Tax Appeals Commission that are pursued primarily for delay or that are frivolous or groundless. This provision would first apply to appeals filed for tax years beginning on January 1, 2000.
[Bill Sections: 1794 and 9343(22)]
29. TAX APPEALS COMMISSION -- HEARING LOCATIONS
Governor: Provide that Commission hearings must be held in any of the following cities: Appleton, Eau Claire, LaCrosse, Madison, Milwaukee and Wausau. Under current law, the time and place of meetings and hearings of the Commission are designated by the chairperson. This modification would first apply to appeals filed for tax years beginning on January 1, 2000.
[Bill Sections: 1792 and 9343(22)]
ADMINISTRATION
Budget Change Items
General Agency Provisions
