Under current law, the standard income tax deduction has four different
categories, each of which has a different deduction amount based on income. The
maximum standard deduction amounts in each category phase out as income
increases. This bill retains the same four categories and increases the maximum
income at which the standard deduction reaches $0.
Under current law, the dollar amounts of the standard deduction and the dollar
amounts of Wisconsin AGI are indexed for inflation for taxable years that begin after
December 31, 1998. This bill suspends indexing for taxable year 2000.
Under current law, there are three income tax brackets for single individuals,
certain fiduciaries, heads of households and married persons. This bill expands the
number of brackets to four and lowers the rate of taxation in all four brackets in
taxable year 2000. The bill also lowers the rate of taxation for taxable year 2001 and
all taxable years thereafter for the first three brackets. The brackets remain the
same for taxable year 2001 and are indexed for inflation in taxable years thereafter.
Under current law, the individual income tax brackets are indexed for inflation
for taxable years beginning after December 31, 1998. This bill suspends indexing
until taxable years beginning after December 31, 2001.
Under current law, after an individual calculates his or her gross tax liability,
several tax credits may be calculated to reduce his or her gross tax liability. Some
credits, like the earned income tax credit and the homestead tax credit, are
refundable. Some credits, like the school property tax credit, the working families
tax credit and the married persons credit, are nonrefundable. Generally, with a
refundable credit, if the amount of the claim exceeds the taxpayer's tax liability, or
if there is no tax due, the excess amount of the credit is paid to the claimant by a check
from the state. With a nonrefundable credit, the amount of the credit is available
only up to the amount of the taxpayer's tax liability.
Under this bill, for taxable years beginning after December 31, 1999, no new
claims may be filed for the following nonrefundable tax credits: the school property
tax credit, the working families tax credit, the dependent credit and the senior credit.
In addition, the bill increases the married persons tax credit from a maximum credit
of $385 to $440 in taxable year 2000 and from a maximum of $420 to $480 in taxable
years beginning after December 31, 2000.
Under current law, the department of revenue (DOR) may not adjust the
withholding tables to reflect the changes made to the tax rates or the changes in
dollar amounts with respect to bracket indexing or with respect to standard
deduction indexing for taxable years that begin before January 1, 2000. Under this
bill, DOR must adjust the withholding tables to reflect the changes made to the tax
rates and changes in dollar amounts with respect to bracket indexing that are made
in this bill on July 1, 2000.
Under current law, for homestead tax claims filed in 1991 and thereafter, the
threshold income is $8,000, the maximum property taxes that a claimant may use
in calculating his or her credit are $1,450 and the maximum eligible income is
$19,154. Under this bill, for claims filed in 2000 and thereafter, the maximum
eligible income is raised to $20,290. The threshold income and maximum property
taxes remain the same as under current law.
The bill also modifies the nonrefundable itemized deductions credit. Under
current law, the itemized deductions credit is calculated as 5% of the difference
between the sum of certain amounts that are allowed as itemized deductions under
the Internal Revenue Code (IRC) and the standard deduction. Under this bill,
miscellaneous itemized deductions that are allowed as itemized deductions under
the IRC are not allowed under the itemized deductions credit.
The bill creates a personal exemption for a taxpayer, the taxpayer's spouse and
the taxpayer's dependents. The personal exemption is $600 for each of these persons
in taxable year 2000 and $700 for each of these persons for taxable years that begin
after December 31, 2000. An additional personal exemption exists for taxpayers who
are at least 65 years old. This additional exemption is $200 for taxable year 2000 and
$250 for taxable years that begin after December 31, 2000. The bill also eliminates
the state's treatment of social security benefits, thus taxing the benefits at the rate
used by the federal government, which is a higher rate.
Under current law, when computing corporate income taxes and franchise
taxes, a formula is used to attribute a portion of a corporation's income to this state.
The formula has three factors: a sales factor, a property factor and a payroll factor.
The sales factor represents 50% of the formula and the property and payroll factors
each represent 25% of the formula. When computing income taxes and franchise
taxes for an insurance company, a formula with a premiums factor and a payroll
factor is used to attribute a portion of an insurance company's income to this state.
Under this bill, beginning on January 1, 2000, the sales factor will be the only
factor used to attribute a portion of a corporation's income to this state and the
premiums factor will be the only factor used to attribute a portion of an insurance
company's income to this state.
The bill also broadens the definition of sales as it relates to the sales factor used
to apportion income for tax purposes. Receipts from the lease or rental of motor
vehicles, rolling stock, aircraft and vessels used in this state are included in the sales
factor. The sales factor also includes the royalties for the use of intangible property,
the sales of intangible property and receipts from the performance of services.
Under current law, each separate corporation doing business in this state must
file a tax return with DOR reporting its net income. Even separate corporations that
are part of a unitary business, which is, generally, an affiliated group of corporations
that operate as a unit and which is characterized by centralized management and
decision making, are not required to file a combined tax return. Instead, a
corporation doing business in this state that is part of a unitary business files a
separate return.
This bill requires that an affiliated group of corporations that is part of a
unitary business file a combined tax return with DOR. The bill creates a
presumption that all corporations that are part of an affiliated group are unitary and
must file a combined return.
Under current law, an eligible claimant may recover a certain amount of
property taxes paid through the refundable farmland preservation credit. One of the
eligibility requirements for the farmland preservation credit is that the farmland to
which the credit relates must be subject either to a farmland preservation agreement
or to a county exclusive agricultural use zoning ordinance that requires the claimant
to abide by certain soil and water conservation standards.
Currently, the credit is computed under a formula that is based on property
taxes accrued on the claimant's farmland in the preceding calendar year, the
claimant's household income and the agreement or zoning provisions that cover the
farmland. This bill retains most of the current law's formula but, for taxable years
beginning after December 31, 2000, the formula does not include any factor for a
farmland preservation agreement or exclusive agricultural use zoning.
See
AGRICULTURE. For new claims that are filed for taxable years beginning after
December 31, 2000, the maximum credit for which a claimant is eligible is reduced
from current law levels and no new claims may be filed for a taxable year that begins
after December 31, 2002.
The bill also creates a new, refundable farmland preservation acreage credit.
This credit may be claimed by any person who is an eligible claimant under the
farmland preservation credit. Under the acreage credit, a claimant who sells,
donates or otherwise transfers the development rights to the claimant's farmland to
a nonprofit entity, the state or a city, village, town or county may claim the credit.
The bill defines development rights as a holder's nonpossessory interest in farmland
that imposes a limitation or affirmative obligation, the purpose of which is to retain
or protect natural, scenic or open space values of farmland, assuring the availability
of farmland for agricultural, forest, wildlife habitat or open space use, protecting
natural resources or maintaining or enhancing air or water quality.
A nonprofit entity may develop the farmland with the written consent of the
owner of the property and of the department of agriculture, trade and consumer
protection, but only in a way that retains or protects natural, scenic or open space
values of the farmland. If a claimant sells, donates or otherwise transfers
development rights to a political subdivision, the political subdivision may develop
the farmland only in a way that is consistent with certain comprehensive planning
requirements.
The acreage credit may only be claimed by the claimant who owns the farmland
when the development rights are initially transferred. No new claims may be filed
under the acreage credit for taxable years that begin after December 31, 2002.
Current law provides a tuition expenses subtraction, or deduction, from federal
adjusted gross income of up to $3,000 per year per student for tuition to attend a
university, college, technical college or other approved school that is located in this
state or that is subject to the Minnesota-Wisconsin reciprocity agreement. The
subtraction is phased out at certain income levels. Also under current law,
nonresidents and part-year residents of this state may claim a prorated amount of
the subtraction. This bill clarifies that the proration applicable to nonresidents and
part-year residents of this state applies at all times and not just when the taxpayer
is subject to the phaseout provisions and also changes current law such that the
limitation of the credit to a claimant's total wages, income and net earnings from a
trade or business taxable by this state applies to all taxpayers.
Under federal law, the amounts claimed under the state tuition expenses
subtraction may also be claimed as a federal itemized deduction if the expenses are
job-related. Under this bill, amounts claimed as a deduction under the tuition
expenses subtraction may not be used in calculating the itemized deductions credit.
Under current law, an individual income tax refund that is payable on the basis
of a joint return must be issued jointly to the persons who filed the return. Under
this bill, if DOR is sent a copy of a formerly married couple's divorce judgment and
that judgment apportions any tax refund that may be due the former couple, DOR
is required to send the refund check to the person to whom the tax refund is
apportioned, or one check to each of the former spouses, according to the
apportionment that is specified under the terms of the judgment.
Currently, Wisconsin statutes provide that alimony and supplemental
unemployment compensation that are paid while an individual is not a resident of
this state may not be claimed as deductions for Wisconsin income tax purposes. The
U.S. Supreme Court has ruled that a similar New York law violates the privileges
and immunities clause of the U.S. Constitution. This bill modifies the statutes to
conform to the U.S. Supreme Court's decision in the New York case.
Currently, the department of commerce administers three types of
development zone programs. Generally, after the department designates an area as
one of the three types of development zones, a person or corporation that conducts
or that intends to conduct economic activity in the designated zone is or may be
certified by the department as eligible for certain tax credits.
The calculation of one of these credits is based in part on a claimant's hiring
members of a targeted group, as defined in the IRC, who are certified under a 90-day
requirement by the department and who are also subject to certification rules under
the IRC. This bill eliminates the requirement that certification must occur within
a 90-day period.
Under current law, the state imposes an income or franchise tax on a foreign
corporation doing business in this state. However, a foreign corporation may engage
in certain business-related activities in this state without becoming subject to the
state income or franchise tax.
This bill allows a foreign corporation to store its tangible personal property in
this state and transfer possession of its tangible personal property to a person in this
state, without becoming subject to the state income or franchise tax, if the other
person uses the personal property for fabricating, processing, manufacturing or
printing.
Property taxation
Under current law, DOR assesses the value of taxable property in a county or
taxation district. A county or taxation district may appeal DOR's assessment of the
property in the county or taxation district by filing an appeal with the tax appeals
commission. If the tax appeals commission determines on appeal that DOR
incorrectly assessed the taxable property in a county or taxation district, the tax
appeals commission may redetermine the assessment. Under current law, the tax
appeals commission is authorized to hear appeals of tax matters, at times and places
designated by the commission, and tax matters that are small claims cases in which
the amount in controversy is less than $2,500. The tax appeals commission may
impose a $1,000 penalty on a taxpayer who pursues a frivolous appeal.
Under this bill, a county or taxation district may appeal DOR's assessment of
the property of the county or taxation district by filing an appeal with DOR. DOR
hears the appeal and, if DOR determines that the appealed assessment is incorrect,
DOR redetermines the assessment. DOR's decision on appeal may be appealed to the
tax appeals commission.
The bill authorizes the tax appeals commission to submit a case to summary
proceedings (an alternative dispute resolution proceeding) if the amount in
controversy is less than $100,000. The bill also increases the penalty for pursuing
a frivolous appeal to $5,000 and provides that the commission may hold hearings
only in the following places: Appleton, Eau Claire, LaCrosse, Madison, Milwaukee
and Wausau.
Under current law, if a person does not pay the tax that is due on a parcel of real
property before September 1, the county treasurer must issue a tax certificate to the
county that relates to that property. The issuance of a tax certificate begins the
redemption period during which the taxpayer may retain his or her property by
paying the delinquent taxes. If the property is not redeemed during the redemption
period, which is usually two years, the county may acquire the property by taking
a tax deed or by other methods.
Under this bill, if a county does not, within two years after the expiration of the
redemption period, take a tax deed for property that is subject to a tax certificate and
that is contaminated by a hazardous substance, the county must, upon receiving a
written request from the city, village or town within whose jurisdiction the property
is located, acquire the property by taking a tax deed. The county may then either
retain ownership of the property or transfer ownership of the property, without
consideration, to the municipality.
Under current law, a taxation district transfers its tax roll to the county or
counties in which the taxation district is located. The county accepts all delinquent
property taxes from the taxation district and credits the taxation district for
delinquent taxes in the next tax levy. The county attempts to collect the delinquent
property taxes by issuing a tax certificate. After the county issues a tax certificate,
an owner of real property has two years to redeem the certificate by paying the
delinquent taxes. If the taxes remain unpaid after two years, the county may record
a tax deed on the property. However, a county may cancel the delinquent taxes if the
property is contaminated by a hazardous substance and the property owner agrees
to clean up, maintain and monitor the property. The taxation district that
transferred the relevant tax roll receives a credit on its tax levy from the county even
though the county has canceled the tax.
This bill requires a county that cancels delinquent taxes to charge back to the
appropriate taxation district any or all of the amount of the canceled taxes and to
include that amount in the county's next tax levy against the taxation district.
Other taxation
Under current law, computers are exempt from the general property tax paid
by businesses. Also under current law, computers owned by telephone companies,
which are ad valorem taxpayers, are exempt from the ad valorem tax. An ad valorem
tax is a tax imposed on property or on an article of commerce in proportion to its
value.
This bill exempts from ad valorem taxation computers owned by other ad
valorem taxpayers, such as railroads, airlines, pipeline companies, conservation and
regulation companies and municipal electric association projects.
The bill also creates a personal property tax exemption for fax machines,
copiers, cash registers and automated teller machines.
Under current law, the sale of time-share property is subject to the real estate
transfer fee. This bill exempts from real estate transfer fees conveyances of those
time-share properties that give the owner the right to use or occupy the real property
during at least four separate periods over at least four years. Under current law,
some, but not all, conveyances that are exempt from the real estate transfer fee are
also exempt from the requirement of filing a real estate transfer return. This bill
exempts from the requirement of filing a real estate transfer return these
conveyances of time-share property.
The furnishing of rooms or lodging through the sale of time-share properties
that are exempted from the real estate transfer fee by this bill is currently subject
to the sales tax only if the use of the rooms or lodging is not fixed at the time of sale
as to the starting date or the lodging unit and is for less than one month. This bill
subjects to the sales tax all sales of time-share properties that are for less than one
month, whether or not they are exempted from the real estate transfer fee by this bill,
and whether or not the use of the rooms or lodging is fixed at the time of the sale.
The bill also subjects to the sales tax those charges associated with time-share
property that at the time of the charges would be subject to the sales tax.
Under current law, a county may adopt an ordinance to impose sales and use
taxes upon county retailers. DOR collects the sales and use taxes imposed by
counties. The state retains 1.5% of the sales and use taxes collected to cover the costs
incurred by the state to administer, enforce and collect the taxes. DOR distributes
the remaining taxes collected to the respective counties. This bill increases from
1.5% to 1.75% the amount of taxes collected that are retained by the state.
This bill changes the tobacco products tax from an occupational tax to an excise
tax. The change allows the state to tax certain sales of tobacco products sold on
reservations by American Indians to persons who are not American Indians.
This bill permits DOR to enter into agreements with American Indian tribes to
provide for the refunding of the tobacco products tax imposed on tobacco products
sold on reservations to enrolled members of the tribe residing on the tribal
reservation. In addition, DOR is required to refund 50% of the taxes collected with
respect to sales on reservations or trust lands of an American Indian tribe to the
tribal council of the tribe having jurisdiction over the reservation or trust land on
which the sale is made. These two provisions parallel existing authority of DOR in
regard to cigarette taxes.
The bill also reduces from 70% to 50% the percentage of cigarette tax revenue
collected in sales on reservations or trust lands that must be refunded to American
Indian tribes.
Under current law, any taxpayer may petition DOR to compromise delinquent
income or franchise taxes, including any applicable costs, penalties and interest.
Under this bill, DOR is authorized to compromise any taxes, interest, penalties and
costs that are due this state and that have not yet been recorded as delinquent.
This bill changes the rate of the gross earnings tax that is levied on a car line
company and the amount that a railroad company must withhold from rental
payments made to a car line company. A car line company is any person, other than
a railroad, engaged in the business of leasing or furnishing car line equipment to a
railroad and car line equipment is any railroad car or other equipment used in
railroad transportation under a rental agreement.
Under current law, delinquent sales and use tax returns are subject to a $10 late
filing fee unless the return was not timely filed because of the death of the person
required to file or because of reasonable cause, but not because of neglect. This bill
changes the late filing fee to $30 for returns that are filed for periods beginning after
September 30, 1999.
This bill removes the requirement that the recertification application for
assessors and assessment personnel be notarized and that it be submitted at least
60 days before the expiration date of the current certificate. Under the bill, DOR may,
for good cause, accept an application for renewal up to one year after the expiration
of the current certificate if the applicant has complied with the current continuing
education and other recertification requirements.
transportation
Highways
Current law requires that any major highway project, unlike other construction
projects undertaken by the department of transportation (DOT), receive the
approval of the transportation projects commission (TPC) and the legislature before
the project may be constructed. A major highway project is a project having a total
cost of more than $5,000,000 and involving construction of a new highway 2.5 miles
or more in length; reconstruction or reconditioning of an existing highway that
relocates at least 2.5 miles of the highway or adds one or more lanes five miles or more
in length to the highway; or improvement of an existing multilane divided highway
to freeway standards. There are currently 75 enumerated major highway projects
approved for construction. This bill adds one major highway project to the list of 75
enumerated projects already approved for construction.
Under current law, the building commission may issue revenue bonds in a
principal amount of $1,348,058,900, of which $1,255,499,900 may be used for major
highway projects and other transportation facilities and $92,559,000 may be used for
fees and other expenses related to the revenue obligations.
This bill increases the level of revenue bonding for major highway projects and
transportation administrative facilities by 14.3% to $1,435,165,900. The bill also
authorizes the building commission to contract revenue obligations in any amount
to pay fees and other expenses related to the revenue obligations.
This bill authorizes DOT to designate highways that have outstanding intrinsic
value as scenic byways. The bill allows DOT to apply for federal designation of a
scenic byway as a national scenic byway. Federal designation would make the scenic
byway eligible for federal aid for scenic byways.
Under current law, outdoor advertising signs that are located along interstates
and certain other highways and that advertise activities conducted on the property
on which the signs are located (on-property signs) are subject to restrictions as to
size, number and location. This bill prohibits the erection of on-property signs at
locations that constitute traffic hazards and eliminates specific restrictions that
apply solely to on-property signs located outside the incorporated area of a city or
village. The bill specifies that on-property signs do not require permits issued by
DOT.
Drivers and motor vehicles
Current law authorizes circuit courts and municipal courts to suspend or
revoke a person's motor vehicle operating privilege for a variety of reasons, including
failure to pay an amount ordered by the court for ordinance violations unrelated to
operating a motor vehicle, such as failing to properly keep sidewalks clear of snow
and ice. Suspensions and revocations for failure to pay generally continue until the
person pays the amount owed. The suspension and revocation orders are forwarded
to DOT, which updates the person's driving record to reflect the suspension or
revocation.
This bill requires DOT to develop a process, by rule, to charge courts a
processing fee for each court order that suspends or revokes a person's operating
privilege for failure to pay a forfeiture that was imposed for violating an ordinance
unrelated to the violator's operation of a motor vehicle. The bill also allows courts
to charge the violator a fee in an amount not more than the fee DOT charges the court
for processing the order.
Current law requires DOT to redesign motor vehicle registration plates that are
issued to certain specified vehicles, primarily automobiles and light-duty trucks, or
that identify the registrant as a member of an authorized special group (such as U.S.
military or veteran, physically disabled, University of Wisconsin campus or natural
resources). DOT must begin issuing the newly designed plates beginning with
registrations effective July 1, 2000, and must issue newly designed plates for every
specified vehicle registered in this state by July 1, 2003. Vehicle registrants must
pay $10 or $15, depending on the type of plate, for the newly designed plates.
This bill allows DOT until July 1, 2005, to complete the issuance of the newly
designed plates. The bill also requires DOT to redesign these registration plates
every six years, and to issue plates of the new design to replace plates that are six
or more years old.
Under current law, if a person arrested for operating a motor vehicle while
under the influence of an intoxicant (OWI) refuses to take a test to determine the
amount of alcohol in his or her blood or breath, the law enforcement officer who
requested the test takes possession of the person's license, prepares a notice of intent
to revoke the person's operating privilege and gives a copy of the notice to the person,
to the circuit court and to the district attorney. The notice informs the person of a
number of items, including the right to request a court hearing to contest the
revocation. The Wisconsin court of appeals, in State v. Schoepp, 204 Wis. 2d 266
(1996), held that a person who receives a notice of intent to revoke the person's
operating privilege may utilize the full range of discovery procedures under state
law, including the use of depositions and interrogatories.
