Chapter 135 of the statutes, enacted in 1973 as the Wisconsin Fair Dealership Act (WFDA), governs dealership practices in the state, providing dealers with rights and remedies in addition to those existing by contract or common law. These provisions would create similar and expanded provisions for the governance of intoxicating liquor dealerships and the relationship between suppliers and wholesalers of intoxicating liquor (excluding beer and wine). In addition, they would create an administrative review structure that calls for a hearing examiner in the Division of Hearings and Appeals of DOA to be assigned and preside over a hearing of a contested case involving the relationship between a supplier and a wholesale (under current law, a wholesaler wanting to contest an action by a supplier must bring an action in a court of competent jurisdiction). The provisions would also create a funding mechanism for the administrative review structure in the form of fees to holders of wholesale permits and cost recovery from the losing party at a hearing.
It should be noted that, according to the Legislative Reference Bureau Drafter's Note, these provisions may impermissibly impair contractual relationships in violation of certain sections of the Wisconsin Constitution and the United States Constitution.
Conference Committee/Legislature: Modify the Wisconsin Fair Dealership Act, which governs dealership practices, as follows:
Definition of Dealership
Expand the definition of "dealership." WFDA currently defines dealership to mean the following: (a) an oral or written contract or agreement, either expressed or implied, between two or more persons to sell or distribute goods or services or to use a trade name, trademark, service mark, logotype, advertising or other commercial symbol; and (b) a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease, agreement or otherwise. The modified provisions would expand the definition to include the current definition or the following: an oral or written contract or agreement, either expressed or implied, between two or more persons by which a wholesaler is granted the right to sell or distribute intoxicating liquor or use a trademark, service mark, logotype, advertising or other commercial symbol related to intoxicating liquor.
For the purpose of this modification to the definition of dealership, define a "wholesaler" as a person, other than a brewer, manufacturer or rectifier, that sells alcohol beverages to a licensed retailer or to another person that holds a permit or license to sell alcohol beverages at wholesale. In addition, define "intoxicating liquor" as all beverages containing 0.5% or more alcohol by volume that are ardent, spirituous, distilled or vinous liquors, liquids or compounds, whether medicated, proprietary, patented or not (this definition of intoxicating liquor would include wine but not fermented malt beverages).
Specify that the expanded portion of the definition of a dealership would not apply to any of the following:
1. Dealerships in which a grantor, including any affiliate, division or subsidiary of the grantor, has never produced more than 200,000 gallons of intoxicating liquor in any year. [WFDA defines a "grantor" as a person who grants a dealership. In the case of intoxicating liquor dealerships, a liquor supplier would be a grantor.]
2. Dealerships in which: (a) the dealer's net revenues from the sale of all of the grantor's brands of intoxicating liquor, except wine, constitute less than 5% of the dealer's total net revenues from the sale of intoxicating liquor, except wine, for the dealer's most recent fiscal year preceding a grantor's cancellation or termination of the dealership; and (b) the dealer's net revenues from the sale of all of the grantor's brands of wine constitute less than 5% of the dealer's total net revenues from the sale of wine for the dealer's most recent fiscal year preceding a grantor's cancellation or alteration of the dealership. [WFDA defines a "dealer" as a person who is a grantee of a dealership. In the case of intoxicating liquor dealerships, a liquor wholesaler would be a dealer.]
Intoxicating Liquor Dealerships
Create a new section in WFDA with expanded provisions for the governance of certain intoxicating liquor dealerships in addition to the current law WFDA provisions covering such dealerships. Specify that the Legislature finds the following:
The Legislature finds that a balanced and healthy 3-tier system for distributing intoxicating liquor is in the best interest of this state and its citizens; that the 3-tier system for distributing intoxicating liquor has existed since the 1930s; that a balanced and healthy 3-tier system ensures a level system between the manufacturer and wholesale tiers; that a wholesale tier consisting of numerous healthy competitors is necessary for a balanced and healthy 3-tier system; that the number of intoxicating liquor wholesalers in this state is in significant decline; that this decline threatens the health and stability of the wholesale tier; that the regulation of all intoxicating liquor dealerships, regardless of when they were entered into, is necessary to promote and maintain a wholesale tier consisting of numerous healthy competitors; and that the maintenance and promotion of the 3-tier system will promote the public health, safety and welfare. The Legislature further finds that a stable and healthy wholesale tier provides an efficient and effective means for tax collection. The Legislature further finds that dealerships 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 dealerships expect changes to state legislation regarding those dealerships.
Definitions
Specify that the following definitions apply to the new section on intoxicating liquor dealerships:
1. "Intoxicating liquor" and "wholesaler" have the meanings described above under "Definition of Dealership."
2. "Net revenues" means the gross dollar amount received from the sale of intoxicating liquor minus adjustments for returns, discounts and allowances.
3. "Wine" means products obtained from the normal alcohol fermentation of the juice or must of sound, ripe grapes, other fruits or other agricultural products, imitation wine, compounds sold as wine, vermouth, cider, perry, mead and sake, if such products contain 0.5% or more of alcohol by volume.
Liability of Transferee of Intoxicating Liquor Grantor
Specify that a "transferee" is considered a grantor for the purposes of WFDA and is bound by the grantor's dealerships with the grantor's wholesalers. For the purpose of this provision, define "transferee" as a person that acquires any asset or activity of a grantor's intoxicating liquor business and that uses the goodwill associated with the intoxicating liquor of the grantor. In addition, define "goodwill" to include the use of a trademark, trade name, logotype or other commercial symbol and the use of a variation of a trademark, trade name, logotype, advertisement or other commercial symbol.
Change in Ownership
For the purpose of this provision, define a "successor wholesaler" as a wholesaler that succeeds to the management, ownership or control of a wholesaler or all or any part of a wholesaler's business, whether by stock purchase, sale of assets, transfer or assignment of a brand which is the subject of a dealership agreement or otherwise.
Provide that a change in the management, ownership or control of a wholesaler or all or any part of a wholesaler's business is not good cause for a grantor to terminate, cancel, fail to renew or substantially change the competitive circumstances of its dealership with a successor wholesaler if the successor wholesaler meets the grantor's reasonable and material qualifications for wholesaler applicants in effect at the time of the change. Specify that if the successor wholesaler meets the grantor's reasonable and material qualifications for wholesaler applicants in effect at the time of the change, the successor wholesaler will succeed to the dealership rights of the predecessor wholesaler and the grantor will continue to be bound by the dealership.
Nonapplicability and Severability
Specify that these provisions on intoxicating liquor dealerships are severable and do not apply to any intoxicating liquor dealerships that are specifically exempted from the expanded definition of a dealership (as described above under "Definition of Dealership").
Effective Date
Specify that these provisions would take effect retroactively to October 1, 1998.
Specify that these provisions would first apply to dealerships (as defined by WFDA and modified by these provisions) in effect on October 1, 1998, and to any cause of action under WFDA for which final judgement has not been entered on or before the day after publication of the bill.
Summary of Provisions
Similar to the Senate provisions, these provisions would extend the applicability of regulations on dealership practices to a broader spectrum of intoxicating liquor dealerships than those currently covered under WFDA. Both the Conference Committee and Senate provisions would extend the regulations to include all intoxicating liquor dealerships, whether or not there is a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease agreement or otherwise. [However, both the Conference Committee and Senate provisions specify minimum volumes of business which must exist in a dealership relationship for the expanded provisions to apply.] In addition, both provisions would specify that a transferee of an intoxicating liquor grantor would be bound by a grantor's dealerships and that a successor wholesaler would generally succeed to the dealership rights of the predecessor wholesaler. The Conference Committee provisions would differ from the Senate provisions in areas including, but not limited to, the following:
(a) The provisions would prevent a grantor of an intoxicating liquor dealership from substantially changing the competitive circumstances of a dealership agreement without good cause, as opposed to a relationship under the Senate version.
(b) The provisions would include wine in the definition of intoxicating liquor, which the Senate provisions would not.
(c) The provisions would specify no modifications to WFDA with respect to actions available to a dealer to pursue perceived unlawful termination or change in a dealership by a supplier (the Senate provision would provide for an administrative hearing process under the Division of Hearings and Appeals).
(d) The provisions would not specify limitations on suppliers with respect to supply within certain geographic areas and the right to limit the supply of altered or new products, which the Senate provisions would do.
(e) The provisions would first apply to dealerships in effect on October 1, 1998, whereas the Senate provisions would apply to all relationships, regardless of when the relationships were entered into (subject to certain limitations related to volume of business).
It should be noted that, according to the Legislative Reference Bureau Drafter's Note, the retroactive application of these provisions may impermissibly impair contractual relationships in violation of certain sections of the Wisconsin Constitution and the United States Constitution. The Drafter's Note also suggests practical implementation problems with the retroactive application of these provisions.
Veto by Governor [F-4]: Delete the provisions that do the following: (a) include wine under the definition of intoxicating liquor; (b) define net revenues and reference net revenues from sales of wine [for the purpose of determining the applicability of these provisions]; (c) specify an October 1, 1998, retroactive effective date; and (d) specify the applicability of these provisions to any cause of action for which final judgement had not been entered on or before the day after publication of the bill. In addition, delete the provisions on liability of a transferee of an intoxicating liquor grantor and on change of ownership.
[Act 9 Sections: 2166e thru 2166s]
[Act 9 Vetoed Sections: 2166m, 2166s, 9358(7c) and 9458(3c)]
1999 WISCONSIN ACT 10
Comparative Summary of Sales Tax Rebate Legislation
1. SALES TAX REBATE -- REBATE AMOUNTS AND APPROPRIATION
GPR $700,000,000
Governor: Provide a sales tax rebate in Wisconsin on a one-time basis to be paid during 1999-00 at an estimated cost of $700 million. Create a sum sufficient appropriation for this purpose. The rebate schedule is shown below.
Married-Joint & Single &
Wisconsin AGI Head-of-Household Married-Separate
$25,000 and Under $337 $190
25,001 to 50,000 345 198
50,001 to 75,000 362 216
75,001 to 100,000 380 233
100,001 to 200,000 414 267
200,001 to 500,000 457 311
500,001 and Over 500 354
Assembly: Modify the sales tax rebate schedule so that married couples filing a joint return would receive a rebate under one schedule and single, head-of-household and married-separate claimants would receive a rebate under a second schedule, as shown below. In addition, modify the schedule so that the rebate and income amounts for single, head-of-household and married-separate claimants would equal one-half of the married-joint amounts, with the exception of the first income range.
Single, Head-of-Household
Married-Joint and Married-Separate
$25,000 and Under $368
25,001 to 50,000 376 $25,000 and Under $188
50,001 to 75,000 394 25,001 to 37,500 197
75,001 to 100,000 414 37,501 to 50,000 207
100,001 to 200,000 452 50,001 to 100,000 226
200,001 to 500,000 498 100,001 to 250,000 249
500,001 and Over 546 250,001 and Over 273
Senate/Legislature: Reduce the rebate amounts from the Assembly and Joint Finance version to the amounts shown below and allow taxpayers who were claimed as a dependent on another person's return to receive the rebate if the individual had income of $5,000 or more and a state income tax liability in 1998.
Single, Head-of-Household
2. SALES TAX REBATE -- ELIGIBILITY AND CONDITIONS
Married-Joint Married-Separate and Dependent
$25,000 and Under $360
25,001 to 50,000 368 $25,000 and Under $184
50,001 to 75,000 385 25,001 to 37,500 193
75,001 to 100,000 405 37,501 to 50,000 203
100,001 to 200,000 442 50,001 to 100,000 221
200,001 to 500,000 487 100,001 to 250,000 244
500,001 and Over 534 250,001 and Over 267
[Act 10 Sections: 1 and 4]
Governor: Create the following eligibility requirements and conditions related to the sales tax rebate.
Eligibility, Calculation and Issuance Procedures. The following sections describe eligibility requirements and how the Department of Revenue (DOR) would calculate and issue the rebate for each category of recipient:
Residents Who Filed a 1998 Tax Return. Direct DOR to calculate and issue the rebate for full-year and part-year state residents automatically based on the individual's or married couple's filing status and AGI reported on their 1998 Wisconsin income tax return.
Resident Nonfilers Who Received a Homestead Credit in 1998. Direct DOR to calculate and issue the rebate automatically to those who filed a homestead credit form in 1998 but did not file a state income tax return. Direct DOR to calculate the rebate as if the individual's or couple's AGI is $25,000.
Resident Nonfilers. Specify that a resident or part-year resident individual or couple who did not file a 1998 income tax return or homestead credit form by October 15, 1999, would be eligible to receive a rebate only if a claim is filed with DOR by June 30, 2000. Require DOR to prepare a form no later than 60 days after the effective date of the bill for this purpose. Specify that these individuals and couples would receive the minimum rebate for the appropriate filing status.
Dependents. Specify that taxpayers who were claimed as a dependent on another person's 1998 federal income tax return would not be eligible for the rebate.
Nonresidents. Specify that a nonresident of Wisconsin would be eligible to receive a rebate if a claim is filed with DOR no later than 30 days after the effective date of a the bill. Direct DOR to prepare a form for this purpose. Require nonresident claimants to document their sales taxes paid to Wisconsin in 1998 in order to receive the rebate. The documented amount must be at least $20. The rebate would be calculated as 30.4% of the documented amount up to a maximum rebate of $354, which would apply to individual claimants as well as married couples.
Limitations and Conditions. The following limitations and conditions would apply to the sales tax rebate.
· Prohibit DOR from considering any adjustments or amendments to 1998 income tax returns that are made after October 15, 1999, in its calculation of the rebate.
· Specify that the rebate would first be applied against a debt that is owned to state agencies, municipalities, counties or for certified delinquent payments of child or family support, in the same manner as income tax refunds are currently applied under these offset provisions. Consider each spouse to have a 50% ownership interest in the rebate if only one spouse owes a debt.
· Allow DOR to enforce the rebate and take any action, conduct any proceeding and proceed as it is authorized in respect to income taxes under current law. Specify that the income tax provisions relating to assessments, refunds, appeals, collection, interest and penalties also apply.
· Allow married couples who filed joint returns to request a separate check for 50% of the joint rebate after the rebate has been issued but before the check, share draft or other draft has been cashed.
· Specify that the right to the rebate would lapse if DOR is unable to locate the individual or couple or if an issued check, share draft or other draft is not cashed by December 31, 2000.
· Specify that the rebates of residents who filed a 1998 income tax return or homestead credit claim and who become deceased after their tax returns or credit claims were filed would be paid to the claimant's estate.
· Provide that the provisions related to the sales tax rebate would not apply after December 31, 2000.
Assembly: Include the Governor's provisions with the following modifications:
Eligibility, Calculation and Issuance Procedures. Modify the eligibility requirements as follows.
Residents and Part-Year Residents Who Were Married to Nonresidents. Allow residents and part-year residents who were married to nonresidents to claim the rebate based on their Wisconsin AGI. However, the Assembly provision would still not allow part-year residents who were married to nonresidents who did not file an income tax return to receive the rebate.
Limitations and Conditions. Direct DOR to calculate the rebate for the family only of an individual who has been, or was, incarcerated in a state or federal prison during tax year 1998. In addition, prohibit DOR from sending any rebate checks to any state or federal prison facility.
Joint Finance: Specify that the rebate would be a "one-time rebate of nonbusiness consumer sales tax paid by individuals" rather than a "one-time sales tax rebate."
Eligibility, Calculation and Issuance Procedures. Modify eligibility, calculation and issuance procedures as follows.
Residents and Part-Year Residents Who Were Married to Nonresidents. Allow part-year residents who were married to nonresidents who did not file an income tax return to receive the rebate.
Nonresidents. Reduce the maximum rebate for nonresidents, from $354 to $273 to reflect the Assembly's reduced rebate amounts for single claimants. In addition, specify that a nonresident would not be eligible for a rebate if their spouse is eligible to receive a rebate.
Limitations and Conditions. Specify that the sales tax rebate would not be counted as income or an asset for the purposes of determining eligibility or benefits for the W-2 program, W-2 child care assistance and other state assistance programs in the month received and the following month. Direct the Department of Health and Family Services to seek a waiver from the federal government and amend its state plan to disregard the rebate in determining eligibility for medical assistance. In addition, specify that, to the extent allowed under federal law, state agencies must disregard the sales tax rebate as income or assets in determining eligibility or benefits under federal assistance programs.
Senate/Legislature. Include the Governor's and Finance Committee's provisions with the following modifications.
Eligibility, Calculation and Issuance Procedures. Modify the eligibility requirements as follows.
Dependents. Allow taxpayers who were claimed as a dependant on another person's federal income tax return in 1998 to receive the rebate if the individual had Wisconsin AGI of $5,000 or more and a state income tax liability in 1998.
[Act 10 Sections: 4 and 6(1)]
3. PROPERTY TAX/RENT CREDIT
Governor: Eliminate the property tax/rent credit (PTRC) beginning with the 1999 tax year. Compared to Act 9, this would increase general fund revenues by an estimated $399.1 million in 1999-00 and $241.7 million in 2000-01 for a total of $640.8 million over the biennium.
Under Act 9, the PTRC would have been equal to 16.4% of the first $2,000 in property taxes or rent constituting property taxes to a maximum credit of $328 in 1999. For tax year 2000, the PTRC would have been 10% of property taxes or rent to a maximum credit of $200. The PTRC would have been eliminated beginning with the 20001 tax year.
Assembly/Joint Finance: Restore the PTRC beginning in tax year 2001 at 10% of property taxes or rent to a maximum of $2,000, for a maximum credit of $200. Restoring the PTRC in tax year 2001 would have no impact on revenues during the 1999-01 biennium.
Senate/Legislature: Restore the PTRC in 1999 and 2000 at 8.4% to a maximum of $2,000 of property taxes or rent for a maximum credit of $168. This would reduce income tax revenues by an estimated $208.0 million in 1999-00 and $203.0 million in 2000-01. The 10% PTRC for 2001 and thereafter as adopted by the Assembly and Joint Finance would be retained.
Veto by Governor: Eliminate the PTRC for tax years 1999 and thereafter. Compared to the enrolled bill passed by the Legislature, this would increase income tax revenues by an estimated $208.0 million in 1999-00 and $203.0 million in 2000-01.
[Act 10 Sections: 1m, 2, 2m and 3]
[Act 10 Vetoed Section: 2m]
