LRB-2958/1
JK:jld:rs
2005 - 2006 LEGISLATURE
June 14, 2005 - Introduced by Representatives Kerkman, Albers, Bies, Hines,
Hubler, Kreibich, Lehman, Musser, Townsend, Toles, Pridemore and
Gielow, cosponsored by Senators Roessler, A. Lasee, Lassa, Miller and
Hansen. Referred to Committee on Ways and Means.
AB482,2,4
1An Act to repeal 71.07 (5d) (c) 3.;
to renumber 72.23;
to renumber and amend
277.59 (4) (c);
to amend 50.14 (4), 70.07 (6), 70.075 (6), 71.03 (6) (a), 71.03 (7) (d),
371.03 (8) (b), 71.10 (6) (a), 71.10 (6) (b), 71.10 (6m) (a), 71.63 (3) (c), 71.65 (5) (a)
41., 71.80 (18), 71.88 (2) (b), 73.01 (4) (a), 77.59 (5), 77.61 (14), 78.22 (4), 110.20
5(8) (e), 139.03 (2x) (d), 139.05 (2a), 139.315 (4), 139.38 (5) and 560.205 (3) (d);
6and
to create 71.01 (7n), 71.10 (6) (e), 71.10 (6m) (c), 71.22 (5m), 71.34 (1m),
771.42 (2m), 71.65 (3) (h), 72.23 (2), 73.13, 78.39 (5d), 78.39 (5m) and 139.75 (9m)
8of the statutes;
relating to: appealing a determination by the board of
9assessors, claiming angel and early stage investment tax credits, employers
10who must withhold state income taxes, benefits to persons serving in Operation
11Iraqi Freedom, eliminating the requirement that the Department of Revenue
12audit the records of contractors who perform emissions inspections, the liability
13of married persons filing a joint income tax return, the payment of the alternate
14fuel tax and the tobacco products tax, estate tax interest, qualified retirement
1systems, reducing nondelinquent taxes, extending the time for filing a tax
2reconciliation report, delivering tax-related documents and related payments,
3appeal of redetermination of earned income tax credits, granting rule-making
4authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
Property taxes
Under current law, a person who owns property in a first class city or in certain
second class cities and who wants to appeal his or her property tax assessment, must
first appeal the assessment to the city assessor. The city assessor reviews the appeal
and makes a recommendation to the board of assessors. The board of assessors
considers the city assessor's recommendation and, ultimately, notifies the property
owner of the board's determination regarding the property owner's appeal. The
property owner may appeal the determination of the board of assessors to the board
of review by providing a notice of appeal to the commissioner of assessments within
ten days. Current law, however, is not clear as to whether the notice to appeal to the
board of review is due within ten days from the date that the board of assessors issues
its determination or from the date that the property owner receives the
determination of the board of assessors.
This bill specifies that a property owner may appeal the determination of the
board of assessors to the board of review by providing a notice of appeal to the
commissioner of assessments within 15 days from the date that the board of
assessors issues its determination.
Reducing taxes
Under current law, any taxpayer may petition the Department of Revenue
(DOR) to reduce delinquent taxes, including any applicable costs, penalties, and
interest. If DOR determines that the taxpayer is unable to pay in full the amount
due, based on an examination of the taxpayer under oath, the taxpayer's financial
statements, and any other information required by DOR, DOR determines the
amount that the taxpayer is able to pay and then enters an order reducing the taxes,
costs, penalties, and interest owed by the taxpayer.
If within three years from either the date on which DOR enters the order that
reduces the taxpayer's taxes or the date of the final payment according to a payment
schedule determined by DOR, whichever is later, DOR determines that the taxpayer
has an income or owns property that is sufficient to enable the taxpayer to pay the
remainder of the original delinquent taxes, including costs, penalties, and interest,
DOR must reopen the order and order the payment in full of such taxes, costs,
penalties, and interest.
This bill expands current law so that DOR is authorized to reduce any taxes,
costs, penalties, and interest that are due from a taxpayer, regardless of whether the
taxes, costs, penalties, and interest are delinquent.
Income and franchise taxes
Under current law, spouses that file a joint income tax return are both liable for
the payment of any tax related to that return. However, DOR may relieve a person
of any tax liability related to a joint return, in a manner specified by the Internal
Revenue Code (IRC) and adopted by this state. Generally, DOR may relieve a person
of any tax liability related to a joint return if the person's spouse did not notify the
person of any tax liability or understatement of taxes related to the joint return. This
bill corrects an outdated reference to the sections of the Internal Revenue Code that
relate to a spouse's tax liability for a joint income tax return. The bill also requires
a spouse to apply for relief from tax liability within two years from the date on which
DOR begins collection activities on the spouse's tax liability or within two years from
the effective date of the provision, whichever is later.
Under current law, a person may claim an individual income tax credit equal
to 12.5 percent of the person's investment in a qualified new business venture, as
certified by the Department of Commerce. Current law refers to this investment as
a "bona fide angel investment." In addition, a person may claim an income or
franchise tax credit equal to 25 percent of the amount that the person pays to a fund
manager who invests the amount in a qualified new business venture, as certified
by the Department of Commerce. Current law refers to this investment as an "early
stage seed investment."
Under current law, a person who claims the bona fide angel investment credit
and who is not a resident of this state or who is a part-year resident of this state must
prorate the amount of the bona fide angel investment credit based on his or her
Wisconsin adjusted gross income as compared to his or her federal adjusted gross
income. Nonresidents and part-year residents who claim the early stage seed
investment credit, however, are not required to prorate the amount of the credit.
This bill eliminates the requirement that nonresidents and part-year residents
prorate the bona fide angel investment credit.
Under current law, the Department of Commerce must promulgate rules to
limit the aggregate amount of bona fide angel investment credits to $3,000,000 per
taxable year and the aggregate amount of early stage seed investment credits to
$3,500,000 per taxable year. Under the bill, the Department of Commerce must
promulgate rules to limit the aggregate amount of bona fide angel investment credits
to $3,000,000 per calendar year and the aggregate amount of early stage seed
investment credits to $3,500,000 per calendar year.
Under current law, every employer must withhold state income taxes from the
pay of each employee and remit the taxes to DOR. In the case of a single-owner entity
that is disregarded as a separate entity under the Internal Revenue Code, the owner
of the entity is considered to be the employer for purposes of withholding and
remitting state income taxes. In addition, an employer must file a tax reconciliation
report with DOR on an annual basis. Under current law, DOR cannot grant an
extension for filing the report.
Under this bill, the owner of a single-owner entity that is disregarded as a
separate entity under IRC is considered to be the employer for purposes of
withholding and remitting state income taxes, unless the entity has elected to be an
employer for the purpose of withholding federal income taxes. This bill also allows
DOR to grant a 30-day extension for filing an annual reconciliation report.
This bill clarifies that a qualified retirement fund for federal income tax
purposes is a qualified retirement fund for state income tax purposes.
Sales and use taxes
Under current law, if a seller makes a claim for a refund of sales taxes or use
taxes and the claim is honored, the seller is required to pass along the refund and
related interest to the buyers and to submit to DOR the portion of the refund that
could not be passed on, along with a penalty. Under current law, if a seller receives
a sales or use tax refund as the result of an audit, the seller is not required to submit
the refund and related interest to the buyers. Also, a seller is not required to submit
to the buyers sales or use taxes that are collected erroneously.
This bill requires a seller who receives any refund of sales or use taxes, or who
collects sales or use taxes erroneously, to submit such a refund or taxes to the buyer,
or to DOR if the buyer cannot be located, within 90 days after receiving a refund or
after discovering that the seller has collected taxes erroneously. Any portion of a
refund or taxes not submitted to the buyer, or to DOR if the buyer cannot be located,
within that 90 days must be submitted to DOR, along with a penalty.
Other taxation
Under current law, an estate tax that is not paid on the date on which it is due
is subject to interest at the rate of 12 percent a year from the date of the decedent's
death. Under the bill, DOR may waive the interest imposed on any additional estate
taxes that arise from the discovery of property omitted in the inventory of the estate's
total assets or in the original tax determination, if due diligence was exercised in
determining the assets.
Under current law, generally, a tax-related document or payment that DOR
must receive by a specified date is timely received, if the document or payment is
mailed in a properly addressed envelope; the sender pays the postage; the envelope
is postmarked on the day that the document or payment is due; and the document
or payment is received within five days from the date on which the document or
payment is due.
Under this bill, mailing a tax-related document or payment includes using a
delivery service that has been approved by the Internal Revenue Service, for federal
tax purposes.
Under current law, a person may appeal DOR's redetermination of various tax
credits without paying a $25 filing fee. Under this bill, a person may appeal DOR's
redetermination of an earned income tax credit without paying the filing fee.
This bill eliminates the requirement that the DOR audit the records of persons
who perform emissions inspections under a contract with the Department of
Transportation.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB482, s. 1
1Section
1. 50.14 (4) of the statutes is amended to read:
AB482,5,82
50.14
(4) Sections 77.59 (1) to
(5)
(5m), (6) (intro.), (a) and (c) and (7) to (10),
377.60 (1) to (7), (9) and (10), 77.61 (9) and (12) to (14) and 77.62, as they apply to the
4taxes under subch. III of ch. 77, apply to the assessment under this section, except
5that the amount of any assessment collected under s. 77.59 (7) in excess of
6$14,300,000 in fiscal year 2003-04, in excess of $13,800,000 in fiscal year 2004-05,
7and, beginning July 1, 2005, in excess of
45% 45 percent in each fiscal year shall be
8deposited in the Medical Assistance trust fund.
AB482, s. 2
9Section
2. 70.07 (6) of the statutes is amended to read:
AB482,6,510
70.07
(6) The board of assessors shall remain in session until all corrections
11and changes have been made, including all those resulting from investigations by
12committees of objections to valuations filed with the commissioner of assessments
13as provided in this subsection, after which the commissioner of assessments shall
14prepare the assessment rolls as corrected by the board of assessors and submit them
15to the board of review not later than the 2nd Monday in October. The person
16assessed, having been notified of the determination of the board of assessors as
17required in sub. (4), shall be deemed to have accepted the determination unless the
18person notifies the commissioner of assessments in writing, within
10 15 days
from
19the date that the notice of determination was issued under sub. (4), of the desire to
20present testimony before the board of review. After the board of review has met, the
21commissioner of assessments may appoint committees of the board of assessors to
1investigate any objections to the amount or valuation of any real or personal property
2which have been filed with the commissioner of assessments. The committees may
3at the direction of the commissioner of assessments report their investigation and
4recommendations to the board of review and any member of any such committee
5shall be a competent witness in any hearing before the board of review.
AB482, s. 3
6Section
3. 70.075 (6) of the statutes is amended to read:
AB482,6,227
70.075
(6) The board of assessors shall remain in session until all corrections
8and changes have been made, including all those resulting from investigations by
9committees of objections to valuations filed with the city assessor as provided in this
10section, after which the city assessor shall prepare the assessment rolls as corrected
11by the board of assessors and submit them to the board of review not later than the
12last Monday in July. A person assessed who has been notified of the determination
13of the board of assessors as required in sub. (4) is deemed to have accepted such
14determination unless the person notifies the city assessor in writing, within
10 15 15days
from the date that the notice of determination was issued under sub. (4), of a
16desire to present testimony before the board of review. After the board of review
17meets, the city assessor may appoint committees of the board of assessors to
18investigate any objections to the amount or valuation of any real or personal property
19which are referred to the city assessor by the board of review. The committees so
20appointed may at the city assessor's direction report their investigation and
21recommendations to the board of review and any member of any such committee
22shall be a competent witness in any hearing before the board of review.
AB482, s. 4
23Section
4. 71.01 (7n) of the statutes is created to read:
AB482,7,3
171.01
(7n) Notwithstanding sub. (6), a qualified retirement fund for a taxable
2year for federal income tax purposes is a qualified retirement fund for the taxable
3year for purposes of this subchapter.
AB482, s. 5
4Section
5
. 71.03 (6) (a) of the statutes is amended to read:
AB482,7,165
71.03
(6) (a) Reports required under this section shall be made on or before
6April 15
, or April 30 if the person files an electronic return, following the close of a
7year referred to in sub. (2) (a), or if such person's fiscal year is other than the calendar
8year then on or before the 15th day
, or the last day if the person files an electronic
9return, of the 4th month following the close of such fiscal year, or if the return is for
10less than a full taxable year on the date applicable for federal income taxes under the
11internal revenue code Internal Revenue Code, to the department of revenue, in the
12manner and form prescribed by the department of revenue, whether notified to do
13so or not. Such persons shall be subject to the same penalties for failure to report as
14those who receive notice. If the taxpayer is unable to make his or her own return,
15the return shall be made by a duly authorized agent or by the guardian or other
16person charged with the care of the person or property of such taxpayer.
AB482, s. 6
17Section
6. 71.03 (7) (d) of the statutes is amended to read:
AB482,7,2418
71.03
(7) (d) For taxable years beginning after December 31, 2002, and before
19January 1,
2005 2007, for persons who served in support of Operation Iraqi Freedom
20or an operation that is a successor to Operation Iraqi Freedom in the United States,
21or for persons who qualify for a federal extension of time to file under
26 USC 7508,
22who served outside the United States because of their participation in Operation
23Iraqi Freedom or an operation that is a successor to Operation Iraqi Freedom in the
24Iraqi Freedom theater of operations.
AB482, s. 7
25Section
7
. 71.03 (8) (b) of the statutes is amended to read:
AB482,8,9
171.03
(8) (b) The final payment of taxes on incomes of persons other than
2corporations who file on a calendar year basis shall be made on or before April 15
,
3or April 30 if the person files an electronic return, following the close of the calendar
4year, except for persons electing to have the department compute their tax under sub.
5(4). If the return of a person other than a corporation is made on the basis of a fiscal
6year, such final payment shall be made on or before the 15th day
, or the last day if
7the person files an electronic return, of the 4th month following the close of such fiscal
8year, except for persons electing to have the department compute their tax under sub.
9(4).
AB482, s. 8
10Section
8. 71.07 (5d) (c) 3. of the statutes is repealed.
AB482, s. 9
11Section
9. 71.10 (6) (a) of the statutes is amended to read:
AB482,8,1712
71.10
(6) (a)
Joint returns. Persons filing a joint return are jointly and severally
13liable for the tax, interest, penalties, fees, additions to tax and additional
14assessments under this chapter applicable to the return. A person shall be relieved
15of liability in regard to a joint return in the manner specified in section
6013 (e) 6015
16(a) to (d) and (f) of the
internal revenue code, notwithstanding the amount or
17percentage of the understatement Internal Revenue Code.
AB482, s. 10
18Section
10. 71.10 (6) (b) of the statutes is amended to read:
AB482,9,419
71.10
(6) (b)
Separate returns. A spouse filing a separate return may be
20relieved of liability for the tax, interest, penalties, fees, additions to tax and
21additional assessments under this chapter
with regard to unreported marital
22property income in the manner specified in section
66 (c) of the
internal revenue code 23Internal Revenue Code. The department may not apply ch. 766 in assessing a
24taxpayer with respect to marital property income the taxpayer did not report if that
25taxpayer failed to notify the taxpayer's spouse about the amount and nature of the
1income before the due date, including extensions, for filing the return for the taxable
2year in which the income was derived. The department shall include all of that
3marital property income in the gross income of the taxpayer and exclude all of that
4marital property income from the gross income of the taxpayer's spouse.
AB482, s. 11
5Section
11. 71.10 (6) (e) of the statutes is created to read:
AB482,9,106
71.10
(6) (e)
Application for relief. A person who seeks relief from liability
7under par. (a) or (b) shall apply for relief with the department, on a form prescribed
8by the department, within 2 years after the date on which the department first
9begins collection activities after the effective date of this paragraph .... [revisor
10inserts date].
AB482, s. 12
11Section
12. 71.10 (6m) (a) of the statutes is amended to read:
AB482,9,2312
71.10
(6m) (a) A formerly married or remarried person filing a return for a
13period during which the person was married may be relieved of liability for the tax,
14interest, penalties, fees, additions to tax and additional assessments under this
15chapter
for unreported marital property income from that period as if the person
16were a spouse under section
66 (c) of the
internal revenue code Internal Revenue
17Code. The department may not apply ch. 766 in assessing the former spouse of the
18person with respect to marital property income that the former spouse did not report
19if that former spouse failed to notify the person about the amount and nature of the
20income before the due date, including extensions, for filing the return for the taxable
21year during which the income was derived. The department shall include all of that
22marital property income in the gross income of the former spouse and exclude all of
23that marital property income from the gross income of the person.
AB482, s. 13
24Section
13. 71.10 (6m) (c) of the statutes is created to read:
AB482,10,2
171.10
(6m) (c) A person who seeks relief from liability under par. (a) shall apply
2for relief with the department as provided under sub. (6) (e).