2005 Wisconsin Act 25

25,1431 Section 1431. 71.775 of the statutes is created to read:

71.775 Withholding from nonresident members of pass-through entities. (1) Definitions. In this section:

(a) "Nonresident" includes an individual who is not domiciled in this state; a partnership, limited liability company, or corporation whose commercial domicile is outside the state; and an estate or a trust that is a nonresident under s. 71.14 (1) to (3m).

(b) "Pass-through entity" means a partnership, a limited liability company, a tax-option corporation, an estate, or a trust that is treated as a pass-through entity for federal income tax purposes.

(2) Withholding tax imposed. (a) For the privilege of doing business in this state or deriving income from property located in this state, a pass-through entity that has Wisconsin income for the taxable year that is allocable to a nonresident partner, member, shareholder, or beneficiary shall pay a withholding tax. The amount of the tax imposed under this subsection to be withheld from the income distributable to each nonresident partner, member, shareholder, or beneficiary is equal to the nonresident partner's, member's, shareholder's, or beneficiary's share of income attributable to this state, multiplied by the following:

1. For an individual, an estate, or a trust that is a pass-through entity, the highest tax rate for a single individual for the taxable year under s. 71.06.

2. For a partnership, a limited liability company, or a tax-option corporation that is a pass-through entity, the highest tax rate for the taxable year under s. 71.27.

(b) A pass-through entity that is also a member of another pass-through entity is subject to withholding under this subsection and shall pay the tax based on the share of income that is distributable to each of the entity's nonresident partners, members, shareholders, or beneficiaries.

(3) Exemptions. (a) A nonresident partner's, member's, shareholder's, or beneficiary's share of income from the pass-through entity that is attributable to this state shall not be included in determining the withholding under sub. (2) if any of the following applies:

1. The partner, member, shareholder, or beneficiary is exempt from taxation under this chapter. For purposes of this subdivision, the pass-through entity may rely on a written statement from the partner, member, shareholder, or beneficiary claiming to be exempt from taxation under this chapter, if the pass-through entity attaches a copy of the statement to its return for the taxable year and if the statement specifies the name, address, federal employer identification number, and reason for claiming an exemption for each partner, member, shareholder, or beneficiary claiming to be exempt from taxation under this chapter.

2. The partner, member, shareholder, or beneficiary has no Wisconsin income other than his or her share of income from the pass-through entity that is attributable to this state and his or her share of such income is less than $1,000.

(b) A pass-through entity that is a joint venture is not subject to the withholding under sub. (2), if the pass-through entity has elected not to be treated as a partnership under section 761 of the Internal Revenue Code.

(cm) A pass-through entity that is a publicly traded partnership, as defined under section 7704 (b) of the Internal Revenue Code, that is treated as a partnership under the Internal Revenue Code is not subject to the withholding under sub. (2), if the entity files with the department an information return that reports the name, address, taxpayer identification number, and any other information requested by the department for each unit holder with an income in this state from the entity in excess of $500.

(4) Administration. (a) Each pass-through entity that is subject to the withholding under sub. (2) shall pay the amount of the tax withheld to the department no later than:

1. For tax-option corporations, the 15th day of the 3rd month following the close of the taxable year.

2. For partnerships, limited liability companies, estates, and trusts, the 15th day of the 4th month following the close of the taxable year.

(b) 1. If the pass-through entity has an extension of time to file its return, the tax withheld under sub. (2) is due on the unextended due date of the entity's return as provided under s. 71.13 (1), 71.20 (1), or 71.24 (1).

2. A pass-through entity that pays the tax withheld under sub. (2) as provided under subd. 1. is not subject to an underpayment of estimated tax under s. 71.09 or 71.29, if 90 percent of the tax that is due for the current taxable year is paid by the unextended due date or if 100 percent of the tax that is due for the taxable year immediately preceding the current taxable year is paid by the unextended due date and the taxable year immediately preceding the current taxable year was a 12-month period. Interest at the rate 12 percent shall be imposed on the unpaid amount of the tax withheld under sub. (2) during any extension period and interest at the rate of 18 percent shall be imposed on the unpaid amount of the tax withheld under sub. (2) for the period beginning with the extended due date and ending with the date that the unpaid amount is paid in full.

(c) On or before the due date, including extensions, of the entity's return, a pass-through entity that withholds tax under sub. (2) shall annually notify each of its nonresident partners, members, shareholders, or beneficiaries of the amount of the tax withheld under sub. (2) that the pass-through entity paid on the nonresident partner's, member's, shareholder's, or beneficiary's behalf. The pass-through entity shall provide a copy of the notice to the department with the return that it files for the taxable year.

(d) A nonresident partner, member, shareholder, or beneficiary of a pass-through entity may claim a credit, as prescribed by the department, on his or her Wisconsin income or franchise tax return for the amount withheld under sub. (2) on his or her behalf. For purposes of this paragraph, the amount withheld under sub. (2) is considered to be paid on the last day of the pass-through entity's taxable year for which the tax is paid.

(e) Any tax withheld under this section shall be held in trust for this state, and a pass-through entity subject to withholding under this section shall be liable to the department for the payment of the tax withheld. No partner, member, shareholder, or beneficiary of a pass-through entity shall have any right of action against the pass-through entity with respect to any amount withheld and paid in compliance with this section.

(f) If a pass-through entity subject to withholding under this section fails to withhold tax as required by this section, the pass-through entity shall be liable for any tax, interest, and penalties. If a nonresident partner, member, shareholder, or beneficiary of the pass-through entity files a return and pays the tax due, the pass-through entity shall not be liable for the tax, but shall be liable for any interest and penalties otherwise applicable for failure to withhold, as provided under ss. 71.82 (2) (d) and 71.83.

25,1431s Section 1431s. 71.78 (2) of the statutes is amended to read:

71.78 (2) Disclosure of net tax. The department shall make available upon suitable forms prepared by the department information setting forth the net Wisconsin income tax, Wisconsin franchise tax or Wisconsin gift tax reported as paid or payable in the returns filed by any individual or corporation, and any amount of delinquent taxes owed, as described in s. 73.03 (62), by any such individual or corporation, for any individual year upon request. Before the request is granted, the person desiring to obtain the information shall prove his or her identity and shall be required to sign a statement setting forth the person's address and reason for making the request and indicating that the person understands the provisions of this section with respect to the divulgement, publication or dissemination of information obtained from returns as provided in sub. (1). The use of a fictitious name is a violation of this section. Within 24 hours after any information from any such tax return has been so obtained, the department shall mail to the person from whose return the information has been obtained a notification which shall give the name and address of the person obtaining the information and the reason assigned for requesting the information. The department shall collect from the person requesting the information a fee of $4 for each return.

25,1432c Section 1432c. 71.78 (4) (r) of the statutes is created to read:

71.78 (4) (r) The secretary of revenue and employees of that department for the purpose of preparing and maintaining the list of persons with unpaid tax obligations as described in s. 73.03 (62) so that the list of such persons is available for public inspection.

25,1432m Section 1432m. 71.83 (1) (ce) of the statutes is created to read:

71.83 (1) (ce) Health savings accounts. Any person who is liable for a penalty for federal income tax purposes under section 223 (f) (4) of the Internal Revenue Code is liable for a penalty equal to 33 percent of that penalty. The department of revenue shall assess, levy, and collect the penalty under this paragraph as it assesses, levies, and collects taxes under this chapter.

25,1434 Section 1434. 71.93 (1) (a) 1. of the statutes is amended to read:

71.93 (1) (a) 1. An amount owed to a state agency that, if the amount has been reduced to a judgment or if the state agency has provided the debtor reasonable notice and an opportunity to be heard with regards to the amount owed.

25,1435 Section 1435. 71.93 (1) (a) 3. of the statutes is amended to read:

71.93 (1) (a) 3. An amount that the department of health and family services may recover under s. 49.45 (2) (a) 10. or, 49.497, 49.793, or 49.847, if the department of health and family services has certified the amount under s. 49.85.

25,1436 Section 1436. 71.93 (1) (a) 4. of the statutes is amended to read:

71.93 (1) (a) 4. An amount that the department of workforce development may recover under s. 49.161, or 49.195 (3), or 49.793, or may collect under s. 49.147 (6) (cm), if the department of workforce development has certified the amount under s. 49.85.

25,1437 Section 1437. 71.93 (1) (cm) of the statutes is created to read:

71.93 (1) (cm) "Disbursement" means any payment to a person who provides goods and services to the state under subch. IV or V of ch. 16 or under ch. 84.

25,1438 Section 1438. 71.93 (2) of the statutes is amended to read:

71.93 (2) Certification. A state agency may certify to the department for setoff any properly identified debt exceeding $20 so that the department may set off the amount of the debt against a refund to the debtor or so that the department of administration may reduce a disbursement to the debtor by the amount of the debt. At least 30 days prior to certification each debtor shall be sent a notice by the state agency of its intent to certify the debt to the department for setoff or reduction and of the debtor's right of appeal. At the time of certification, the certifying state agency shall furnish the social security number of individual debtors and the federal employer identification number of other debtors.

25,1439 Section 1439. 71.93 (3) of the statutes is renumbered 71.93 (3) (a) and amended to read:

71.93 (3) (a) Administration. In administering this section the department shall first check with the state agency certifying the debt to determine whether the debt has been collected by other means. If the debt remains uncollected the department of revenue shall setoff any debt or other amount owed to the department, regardless of the origin of the debt or of the amount, its nature or its date. If after the setoff there remains a refund in excess of $10, the department shall set off the remaining refund against certified debts of other state agencies. If more than one certified debt exists for any debtor, the refund shall be first set off against the earliest debt certified, except that no child support or spousal support obligation submitted by an agency of another state may be set off until all debts owed to and certified by state agencies of this state have been set off. When all debts have been satisfied, any remaining refund shall be refunded to the debtor by the department. Any legal action contesting a setoff under this paragraph shall be brought against the state agency that certified the debt under sub. (2).

25,1440 Section 1440. 71.93 (3) (b) of the statutes is created to read:

71.93 (3) (b) The department shall provide the information obtained under sub. (2) to the department of administration. Before reducing any disbursement as provided under this paragraph, the department of administration shall contact the department to verify whether a certified debt that is the basis of the reduction has been collected by other means. If the certified debt remains uncollected, the department of administration shall reduce the disbursement by the amount of the debtor's certified debt under sub. (2), notify the department of such reduction and disbursement, and remit the amount of the reduction to the department in the manner prescribed by the department. If more than one certified debt exists for any debtor, the disbursement shall be reduced first by any debts certified under s. 73.12 then by the earliest debt certified. Any legal action contesting a reduction under this paragraph shall be brought against the state agency that certified the debt under sub. (2).

25,1441 Section 1441. 71.93 (4) of the statutes is amended to read:

71.93 (4) Settlement. Within 30 days after the close of each calendar quarter, the department shall settle with each state agency that has certified a debt. Each settlement shall note the opening balance of debts certified, any additions or deletions, reductions or amounts set off, and the ending balance at the close of the settlement period.

25,1442 Section 1442. 71.93 (5) of the statutes is amended to read:

71.93 (5) State agency charged for costs. At the time of each settlement, each state agency shall be charged for administration expenses, and the amounts charged shall be credited to the department's appropriation under s. 20.566 (1) (h). Annually on or before November 1, the department shall review its costs incurred during the previous fiscal year in administering state agency setoffs and reductions and shall adjust its subsequent charges to each state agency to reflect that experience.

25,1443 Section 1443. 71.93 (6) of the statutes is amended to read:

71.93 (6) Written agreement and authority of department. Any state agency wishing to certify debts to the department shall enter into a written agreement with the department prior to any certification of debt. Any certification of debts by a state agency or changes to certified debts shall be in a manner and form prescribed by the department. The secretary of revenue shall be the final authority in the resolution of any interagency disputes in regard to certification of debts. If a refund or disbursement is adjusted after a setoff or reduction, the department may readjust any erroneous settlement with a certifying state agency.

25,1444 Section 1444. 71.93 (7) of the statutes is amended to read:

71.93 (7) Exchange of information. Information relative to changes to any debt certified shall be exchanged promptly by each agency and the department setoff. Setoff of refunds and reduction of disbursements against debts certified by agencies, and any reports report of the setoff or reduction to certifying state agencies, is not a violation of ss. 71.78, 72.06, 77.61 (5), 78.80 (3), and 139.38 (6).

25,1445 Section 1445. 71.935 (1) (cm) of the statutes is created to read:

71.935 (1) (cm) "Disbursement" means any payment to a person who provides goods and services to the state under subch. IV or V of ch. 16 or under ch. 84.

25,1446 Section 1446. 71.935 (2) of the statutes is amended to read:

71.935 (2) A municipality or county may certify to the department any debt owed to it. Not later than 5 days after certification, the municipality or county shall notify the debtor in writing of its certification of the debt to the department, of the basis of the certification and of the debtor's right to appeal and, in the case of parking citations, of the debtor's right to contest the citation. At the time of certification, the municipality or county shall furnish to the department the name and social security number or operator's license number of each individual debtor and the name and federal employer identification number of each other debtor.

25,1447 Section 1447. 71.935 (3) of the statutes is renumbered 71.935 (3) (a) and amended to read:

71.935 (3) (a) If the debt remains uncollected and, in the case of a parking citation, if the debtor has not contested the citation within 20 days after the notice under sub. (2), the department shall set off the debt against any refund that is owed to the debtor after the setoff under s. 71.93. Any legal action contesting a setoff shall be brought against the municipality or county that certified the debt under sub. (2).

25,1448 Section 1448. 71.935 (3) (b) of the statutes is created to read:

71.935 (3) (b) The department shall provide the information obtained under sub. (2) to the department of administration. Before reducing any disbursement as provided under this paragraph, the department of administration shall contact the department to verify whether a certified debt that is the basis of the reduction has been collected by other means and, in the case of a parking citation, whether the debtor has contested the citation within 20 days after the notice under sub. (2). If the certified debt remains uncollected and, in the case of a parking citation, the citation has not been contested within 20 days after the notice under sub. (2), the department of administration shall, after any reduction under s. 71.93, reduce the disbursement by the amount of the debtor's certified debt under sub. (2), notify the department of such reduction and disbursement, and remit the amount of the reduction to the department in the manner prescribed by the department. If more than one debt certified under sub. (2) exists for any debtor, the disbursement shall be reduced first by the earliest debt certified. Any legal action contesting a reduction under this paragraph shall be brought against the municipality or county that certified the debt under sub. (2).

25,1449 Section 1449. 71.935 (4) of the statutes is amended to read:

71.935 (4) Within 30 days after the end of each calendar quarter, the department shall settle with each municipality and county for the amounts that the department setoff set off or reduced against certified debts for the municipality or county during that calendar quarter.

25,1450 Section 1450. 71.935 (5) of the statutes is amended to read:

71.935 (5) At the time of each settlement, each municipality and county shall be charged for administration expenses, and the amounts charged shall be credited to the appropriation account under s. 20.566 (1) (h). Annually on or before November 1, the department shall review its costs incurred during the previous fiscal year in administering setoffs and reductions under this section and shall adjust its subsequent charges to each municipality and county to reflect that experience.

25,1450g Section 1450g. Subchapter XVI of chapter 71 [precedes 71.98] of the statutes is created to read:

Chapter 71

subchapter xvi
Internal revenue code update

71.98 Internal Revenue Code update. The following federal laws, to the extent that they apply to the Internal Revenue Code, apply to this chapter:

(1) Health savings accounts. Section 1201 of P.L. 108-173, relating to health savings accounts.

25,1456c Section 1456c. 73.03 (62) of the statutes is created to read:

73.03 (62) To prepare and maintain a list of all persons who owe delinquent taxes, including interest, penalties, fees, and costs, to the department, in excess of $25,000, which are unpaid for more than 90 days after all appeal rights have expired, and to post the names of persons from this list on the Internet at a site that is created and maintained by the department for this purpose. The Internet site shall list the name, address, type of tax due, and amount of tax due, including interest, penalties, fees, and costs for each person who has one of the delinquent taxpayer accounts, and the Internet site shall also contain a special page for the persons who have the 100 largest delinquent taxpayer accounts. Except as otherwise provided in this subsection, the department shall update the Internet site on a quarterly basis. The department may not post on the Internet the name of any person who has reached an agreement or compromise with the department, or the department of justice, under s. 71.92 and is in compliance with that agreement, regarding the payment of delinquent taxes, or the name of any person who is protected by a stay that is in effect under the Federal Bankruptcy Code; the Internet posting shall be updated each business day, as defined in s. 562.01 (3m), to comply with these prohibitions.

25,1459 Section 1459. 73.0301 (1) (d) 3. of the statutes is amended to read:

73.0301 (1) (d) 3. A license, certificate of approval, provisional license, conditional license, certification, certification card, registration, permit, training permit or approval specified in s. 50.35, 50.49 (6) (a) or (10), 51.038, 51.04, 51.42 (7) (b) 11., 51.421 (3) (a), 51.45 (8), 146.40 (3) or (3m), 146.50 (5) (a) or (b), (6g) (a), (7) or (8) (a) or (f), 250.05 (5), 252.23 (2), 252.24 (2), 254.176, 254.20 (3), 255.08 (2) (a) or 343.305 (6) (a) or a permit for operation of a campground specified in s. 254.47 (1).

25,1460 Section 1460. 73.0301 (2) (b) 1. a. of the statutes is amended to read:

73.0301 (2) (b) 1. a. If, after a request is made under par. (a) 1. or 2., the department of revenue certifies that the license holder or applicant for a license or license renewal or continuation is liable for delinquent taxes, revoke the license or deny the application for the license or license renewal or continuation. The department of transportation may suspend licenses described in sub. (1) (d) 7. in lieu of revoking those licenses. A suspension, revocation or denial under this subd. 1. a. is not subject to administrative review or, except as provided in subd. 2. and sub. (5) (am), judicial review. With respect to a license granted by a credentialing board, the department of regulation and licensing shall make a revocation or denial under this subd. 1. a. With respect to a license to practice law, the department of revenue shall not submit a certification under this subd. 1. a. to the supreme court until after the license holder or applicant has exhausted his or her remedies under sub. (5) (a) and (am) or has failed to make use of such remedies.

25,1461 Section 1461. 73.0301 (2) (b) 1. b. of the statutes is amended to read:

73.0301 (2) (b) 1. b. Mail a notice of suspension, revocation or denial under subd. 1. a. to the license holder or applicant. The notice shall include a statement of the facts that warrant the suspension, revocation or denial and a statement that the license holder or applicant may, within 30 days after the date on which the notice of denial, suspension or revocation is mailed, file a written request with the department of revenue to have the certification of tax delinquency on which the suspension, revocation or denial is based reviewed at a hearing under sub. (5) (a). With respect to a license granted by a credentialing board, the department of regulation and licensing shall mail a notice under this subd. 1. b. With respect to a license to practice law, the department of revenue shall mail a notice under this subd. 1. b. and the notice shall indicate that the license holder or applicant may request a hearing under sub. (5) (a) and (am) and that the department of revenue shall submit a certificate of delinquency to suspend, revoke, or deny a license to practice law to the supreme court after the license holder or applicant has exhausted his or her remedies under sub. (5) (a) and (am) or has failed to make use of such remedies. A notice sent to a person who holds a license to practice law or who is an applicant for a license to practice law shall also indicate that the department of revenue may not submit a certificate of delinquency to the supreme court if the license holder or applicant pays the delinquent tax in full or enters into an agreement with the department of revenue to satisfy the delinquency.

25,1462 Section 1462. 73.0301 (2) (b) 2. of the statutes is amended to read:

73.0301 (2) (b) 2. If Except as provided in subd. 2m., if notified by the department of revenue that the department of revenue has affirmed a certification of tax delinquency after a hearing under sub. (5) (a), affirm a suspension, revocation or denial under subd. 1. a. A license holder or applicant may seek judicial review under ss. 227.52 to 227.60, except that the review shall be in the circuit court for Dane County, of an affirmation of a revocation or denial under this subdivision. With respect to a license granted by a credentialing board, the department of regulation and licensing shall make an affirmation under this subdivision.

25,1463 Section 1463. 73.0301 (2) (b) 2m. of the statutes is created to read:

73.0301 (2) (b) 2m. With respect to a license to practice law, if notified by the department of revenue that the department of revenue has affirmed a certification of tax delinquency after any requested review under sub. (5) (a) and (am), decide whether to suspend, revoke, or deny a license to practice law.

25,1464 Section 1464. 73.0301 (2) (c) 2. of the statutes is amended to read:

73.0301 (2) (c) 2. A licensing department may not disclose any information received under subd. 1. a. or b. to any person except to the department of revenue for the sole purpose of requesting certifications under par. (b) 2. in accordance with the memorandum of understanding under sub. (4) and administering state taxes or to the department of workforce development for the purpose of administering s. 49.22.

25,1465 Section 1465. 73.0301 (5) (a) of the statutes is amended to read:

73.0301 (5) (a) The department of revenue shall conduct a hearing requested by a license holder or applicant for a license or license renewal or continuation under sub. (2) (b) 1. b. or by an applicant for certification or recertification or a certificate holder under s. 73.03 (50) or 73.09 (7m) (b) to review a certification or determination of tax delinquency that is the basis of a denial or revocation of a license in accordance with this section or of a certificate, certification or recertification under s. 73.03 (50) or 73.09 (7m). A hearing under this paragraph is limited to questions of mistaken identity of the license or certificate holder or applicant and of prior payment of the delinquent taxes for which the department of revenue certified or determined the license or certificate holder or applicant is liable. At a hearing under this paragraph, any statement filed by the department of revenue, the licensing department or the supreme court, if the supreme court agrees, may be admitted into evidence and is prima facie evidence of the facts that it contains. Notwithstanding ch. 227, a person entitled to a hearing under this paragraph is not entitled to any other notice, hearing or review, except as provided in par. (am) and sub. (2) (b) 2.

25,1466 Section 1466. 73.0301 (5) (am) of the statutes is created to read:

73.0301 (5) (am) If a person who holds a license to practice law or who is an applicant for a license to practice law receives a hearing under par. (a) to review a certification or determination of tax delinquency that is the basis for a denial, suspension, or revocation of a license to practice law and such certification or determination is affirmed as a result of the hearing under par. (a), the person may seek judicial review of the certification or determination of tax delinquency under ss. 227.52 to 227.60, except that the review shall be in the circuit court for Dane County.

25,1467 Section 1467. 73.0301 (5) (b) (intro.) of the statutes is amended to read:

73.0301 (5) (b) (intro.) After a hearing conducted under par. (a) or, in the case of a determination related to a license to practice law, after a hearing under par. (a) or, if the hearing is appealed, after judicial review under par. (am), the department of revenue shall do one of the following:

25,1468 Section 1468. 73.12 (1) (b) of the statutes is amended to read:

73.12 (1) (b) "Vendor" means a person providing goods or services to this state under subch. IV or V of ch. 16 or under ch. 84 if the value of the contract for those goods or services is at least $500.