Governor/Legislature: 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.
2. ILLINOIS-WISCONSIN INCOME TAX RECIPROCITY PAYMENTS
GPR - $2,750,000
Governor/Legislature: 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.
3. ILLINOIS-WISCONSIN INCOME TAX RECIPROCITY STUDY
GPR $2,500
Governor/Legislature: 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.
4. INTEREST ON OVERPAYMENT OF TAXES
GPR $700,000
Governor/Legislature: 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.
5. SALES TAX LATE FILING FEE [LFB Paper 130]
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.
Joint Finance/Legislature: Modify provision to increase the late filing fee for delinquent sales and use tax returns from $10 to $20, rather than $30. Compared to current law, this modification would increase general fund tax revenues by an estimated $565,000 in 1999-00 and $700,000 in 2000-01. Compared to the bill, it would reduce revenues by an estimated $565,000 in 1999-00 and $700,000 in 2000-01.
[Act 9 Sections: 1815 and 9343(8)]
[Bill Sections: 1792 and 9343(22)]
Alcohol and Tobacco Regulation
1. CIGARETTE MULTIPLE RETAILER PERMIT
Joint Finance: Eliminate the cigarette multiple retailer permit. Remove all references to the permit in Wisconsin statutes.
Chapter 139 of the statutes specifies that a permit must be obtained from DOR for the following: (a) to manufacture cigarettes in this state; (b) to sell cigarettes in this state as a distributor, jobber, vending machine operator or multiple retailer; and (c) to operate a warehouse to store cigarettes in this state for another person. Section 139.30 (8) defines a "multiple retailer" as a person who acquires stamped cigarettes from manufacturers or permittees, stores them and sells them to consumers through ten or more retail outlets which he or she owns and operates within or without the state. A multiple retailer that also holds a permit as a distributor has the option to acquire unstamped cigarettes from manufacturers and to affix the tax stamps. Multiple retailers are required to keep records and file reports of all purchases and disposition of cigarettes, as are manufacturers, distributors, jobbers and vending machine operators.
Chapter 100 of the statutes, which addresses marketing and trade practices, specifies minimum markups that apply to the sale of cigarettes. The statutes require cigarette wholesalers to mark up the price of cigarettes by 3% of the cost of the merchandise to the wholesaler, in the absence of proof of a lesser cost of doing business, when selling to a retailer. The "cost to the wholesaler," on which the markup is determined, is based on the invoice cost of the merchandise to the wholesaler, adjusted as follows: (a) certain trade discounts are to be deducted from the wholesaler costs; and (b) excise taxes previously imposed are to be included in the wholesaler costs. In a similar manner, retailers are required to mark up the price of cigarettes to the consumer by 6% of the cost to the retailer, excluding specified discounts and including excise taxes.
Chapter 100 defines multiple retailers as wholesalers. A sale at wholesale between wholesalers is exempt from the wholesaler mark-up requirement. Therefore, distributors may sell cigarettes to multiple retailers and any other wholesaler without charging the minimum 3% wholesaler markup. Section 100.30 (2)(f) requires that, in cases in which a merchant acts as both a wholesaler and a retailer, the merchant must add both the wholesaler and retailer markups to the retail sales price. However, unlike the wholesaler markup from a distributor to an individual retail store, which is applied after deducting certain trade discounts, the statutes specify that the wholesaler markup for a multiple retailer is to be determined disregarding any manufacturer's discounts and any discounts related to cigarette tax stamp payments.
These provisions would eliminate the cigarette multiple retailer permit and all statutory references to it. The individual retail stores currently operating under a multiple retailer permit would no longer be able to purchase cigarettes without paying a 3% wholesaler markup.
Assembly/Legislature: Delete provision.
2. LIQUOR LICENSE FOR A COLISEUM SUITE
Joint Finance/Legislature: Provide that a "Class B" license for retail sales of intoxicating liquor authorizes a coliseum or a business servicing a coliseum suite as a concessionaire to furnish a coliseum suite holder with a selection of intoxicating liquor in a coliseum suite that is not part of the "Class B" premises. Define a "coliseum" as a multipurpose facility designated principally for sports events, with a capacity of 18,000 or more. Specify that the conditions that apply to the furnishing of intoxicating liquor to a hotel guest in a guest room that is not part of the "Class B" premises would apply in the case of a coliseum and a coliseum suite, with the following exceptions: (a) provide that a coliseum suite could be locked in lieu of providing a locked storage place to store the liquor within the suite; (b) exclude a coliseum from the requirement for hotels that a key be provided (to a hotel guest) to the locked storage place and that a liquor price list be prominently displayed; and (c) specify that a coliseum suite holder may pay for the liquor in accordance with the terms of the agreement with the owner of the coliseum suite. Specify similar provisions with respect to a Class "B" license for fermented malt beverages.
[Act 9 Sections: 2165e and 2165j]
3. "CLASS C" LICENSE TO SELL WINE
Assembly/Legislature: Provide that a restaurant may obtain a "Class C" license for the retail sale of wine for consumption on the premises where sold whether or not there is a "Class B" license for the sale of liquor and wine available in the community. Specify that a "Class C" license could be issued if: (a) the sale of alcohol beverages accounts for less than 50% of the restaurant's gross receipts; and (b) the restaurant does not have a barroom or has a barroom in which wine is the only intoxicating liquor sold.
Under current law, a municipality may issue a restaurant a "Class C" wine license under the following conditions: (a) the sale of alcohol beverages accounts for less than 50% of gross receipts; (b) the restaurant does not have a barroom; and (c) there is not a "Class B" liquor license available in the municipality. These provisions would authorize a restaurant to obtain a "Class C" license even if a "Class B" license is available and even if the restaurant has a barroom (as long as the only intoxicating liquor sold in the barroom is wine).
[Act 9 Section: 2165L]
4. RESTAURANT-WINERY PERMIT
Assembly: Create a restaurant-winery permit authorizing the retail sale of wine manufactured on the premises for consumption on the premises where sold or in an original unopened package or container for consumption off the premises where sold. Specify that the permit, to be issued by the Department of Revenue, may be issued only for a restaurant in which the sale of alcohol beverages accounts for less than 50% of gross receipts and that manufactures less than 2,500 gallons of wine per year.
Conference Committee/Legislature: Delete provision.
5. "CLASS B" LIQUOR LICENSE FOR A HOTEL
Assembly/Legislature: Provide that a municipality that has issued its quota of "Class B" licenses for the sale of intoxicating liquor may issue a "Class B" license to a hotel under the following conditions: (a) the hotel has 50 or more rooms of sleeping accommodations; and (b) the hotel has either an attached restaurant with a seating capacity of 150 or more persons or a banquet room in which banquets attended by 400 or more persons may be held. Under current law, the same conditions apply except that a hotel must have a minimum number of 100 rooms of sleeping accommodations to be eligible for the license, rather the 50-room minimum under this provision.
[Act 9 Section: 2165m]
6. INTOXICATING LIQUOR DEALERSHIPS
Senate: Create the following provisions related to the governance of relationships between wholesalers and suppliers of intoxicating liquor:
Administrative Provisions
1. Require the administrator of the Division of Hearings and Appeals (Division) in the Department of Administration (DOA) to assign a hearing examiner to preside over any hearing of a contested case that is required to be conducted by the Department of Revenue with respect to relationships between wholesalers and suppliers of intoxicating liquor.
2. Authorize the administrator of the Division to set the fees to be charged for any services rendered to DOR by a hearing examiner under (1) above. Specify that the fee shall cover the total cost of the services less any costs covered by: (a) the DOA appropriation for Hearings and Appeals operations; and (b) those costs recovered through fees charged for such purposes by DOR to holders of wholesalers' permits [see (4) below].
3. Require DOR to pay all costs of the services of a hearing examiner assigned as in (1) above, including costs of support services, according to the fees set under (2) above.
4. Authorize DOR to establish, by rule, a procedure to collect annually from holders of wholesaler's permits fees in amounts necessary to reimburse DOR for charges paid to the Division for the services of a hearing examiner, including support services.
Relationships Between Wholesalers and Suppliers of Intoxicating Liquor
Specify that the Legislature finds the following:
The Legislature finds that the 3-tier system for distributing intoxicating liquor has existed in Wisconsin for over 60 years and continues to be necessary to promote the public health, safety and welfare; that the 3-tier system was established, among other reasons, to prevent suppliers from controlling pricing and distribution in a manner that harms the interests of the citizens of Wisconsin; that a stable and healthy middle tier of the 3-tier system, the wholesaler, is integral to the 3-tier system because the middle tier prevents supplier control of pricing and distribution and provides an efficient and effective means for tax collection; that significant consolidation of market power has occurred at the supplier level; that the number of intoxicating liquor wholesalers in Wisconsin has significantly declined over the past two decades increasing the risk of supplier control of pricing and distribution; and that this legislation is necessary to promote and maintain a stable and healthy middle tier. The Legislature further finds that relationships between intoxicating liquor wholesalers and suppliers have been subject to state regulation since the enactment of the 21st Amendment to the U.S. Constitution and that the parties to those relationships expect changes to state legislation regarding those relationships.
Applicability
Provide that the following apply with respect to relationships between wholesalers and suppliers of intoxicating liquor:
1. These provisions apply to all relationships, regardless of when they were entered into, except that the provisions do not apply to a relationship in which the volume of the business done by a wholesaler with a supplier, including a supplier's affiliates, does not exceed five percent of the wholesaler's total business volume;
2. The effect of these provisions may not be varied by contract or agreement. Any contract or agreement purporting to do so is void and unenforceable to that extent only.
3. Provisions of a relationship that prevent a wholesaler, through choice of law or forum provisions, from bringing an action or filing a notice of contest in this state under these provisions are void and unenforceable to that extent only.
Definitions
Specify the following definitions with respect to wholesaler-supplier relationships:
1. "Altered product" means an existing product altered by age, by alcohol content, blend mixture, flavor or in some other way and principally identified by a trademark, trade name, logotype or other commercial symbol used to identify an existing product.
2. "Existing product" means intoxicating liquor that is distributed in the United States before or on the effective date of these provisions.
