AB40: Bill Text

This bill creates penalties for a person who negligently or fraudulently files an incorrect claim for a tax refund or credit. The penalty for negligence is 25 percent of the difference between the amount claimed and the amount that should have been claimed, and the penalty for fraud is 100 percent of the difference between the amount claimed and the amount that should have been claimed. In addition, any person, other than a corporation or limited liability company, who files an income tax return in which the person tries to obtain a refund or credit with fraudulent intent is guilty of a Class H felony.

This bill prohibits an individual who files a fraudulent claim for an earned income tax credit or homestead tax credit (credit) from filing a claim for either credit for ten years. The bill also prohibits an individual who files a reckless claim for one of these credits from filing a claim for either credit for two years. Under the bill, a claim is fraudulent if it is false or excessive and filed with fraudulent intent, as determined by DOR, and a claim is reckless if it is improper, due to reckless or intentional disregard of the provisions of the income tax statutes or of rules and regulations of DOR, as determined by DOR.

Under current law, capital gains on certain Wisconsin-sourced capital assets are exempted from taxation. For taxable years beginning after December 31, 2015, an individual; an individual partner or member of a partnership, limited liability company, or limited liability partnership; or an individual shareholder of a tax-option corporation (claimant) may subtract from federal adjusted gross income the lesser of the claimant's federal net capital gain as reported on the claimant's federal tax return if, in that year, the claimant had a qualifying gain, or the claimant's qualifying gain.

The capital gains exemption defines "qualifying gain" as the gain realized by the sale of any asset that is purchased after December 31, 2010, held for at least five consecutive years, is a Wisconsin capital asset at the time of purchase and for at least two of the next four years, and treated as a long-term gain under federal law. A "Wisconsin capital asset" is real or tangible personal property that is located in this state and used in a Wisconsin business, or stock or other ownership interest in a Wisconsin business. Currently, a business may apply to WEDC for annual certification for the exemption. WEDC may certify a business if it determines that, in the taxable year ending immediately before the date of the business's application, at least 50 percent of the business's payroll is paid in Wisconsin and at least 50 percent of the value of the business's real and tangible personal property is used by the business in this state.

This bill transfers from WEDC to DOR the responsibility for registering a business, subject to the business meeting the same conditions related to payroll and the value of the business's real and tangible personal property as is the case under current law certification. Also under the bill, excluded gain is not limited to net capital gain, and the bill clarifies that the exclusion is for gain on investments in a business and not for individual assets of the business.

Under current law, there are two income tax deferrals for capital gains that are reinvested in qualified Wisconsin businesses. Under one of the deferrals (long-term deferral), a claimant may elect to defer the payment of income taxes on up to $10,000,000 of the gain realized from the sale of any capital asset held more than one year (original asset) that is treated as a long-term gain under the Internal Revenue Code (IRC), if the claimant completes a number of requirements. Under the bill, the long-term deferral may no longer be claimed for taxable years beginning after December 31, 2013.

Under the other deferral (Wisconsin assets deferral), a claimant may elect to defer the payment of income taxes on any amount of the gain realized from the sale of any capital asset held more than one year (original new asset) that is treated as a long-term gain under the IRC, if the claimant completes a number of requirements.

Under this bill, for taxable years beginning after December 31, 2013, the current requirement that the gain realized from the sale of the applicable long-term asset be deposited into a segregated account in a financial institution does not apply. This bill transfers from WEDC to DOR the responsibility for registering a business under the Wisconsin assets deferral.

Under current law, an individual may claim as an income tax credit an amount equal to 25 percent of the individual's angel investment in a qualified new business venture in this state. The total amount of angel investment credits that all taxpayers may claim in all taxable years combined is $47,500,000. This bill eliminates the limit of the total amount of angel investment credits that taxpayers may claim.

This bill adopts, for state income and franchise tax purposes, changes made to the IRC related to transferring retirement plan amounts to designated ROTH accounts without distribution, limiting the amount of salary reduction for a health care flexible spending arrangement, eliminating a deduction for expenses allocable to a Medicare, Part D subsidy, increasing the threshold for itemized medical expense deductions from 7.5 percent to 10 percent of adjusted gross income, increasing the penalty for nonqualified distributions from a health savings account, and limiting the deduction for remuneration paid by health insurance providers.

The bill also adopts the changes made to the IRC related to free choice vouchers, corporate repurchasing of convertible debt instruments, pension funding rules for determining segment rates, transfers from excess pension assets to retiree medical accounts or for purchasing retiree group term life insurance, phased retirements, the installment method for accrual basis taxpayers, and the tax treatment of Blue Cross and Blue Shield organizations.

Under current law, an eligible claimant may claim a refundable farmland preservation tax credit (farmland credit) based on the number of the claimant's qualified acres and the type of zoning district in which the acres are located. Also under current law, the maximum amount of farmland credits that may be claimed in any fiscal year may not exceed $27,007,200. If the amount of eligible claims exceed this amount, the excess claims are paid in the next succeeding fiscal year and DOR must prorate the per acre amounts that may be claimed.

Under this bill, the maximum amount of farmland credits that may be claimed in the 2013-14 fiscal year, and in any succeeding fiscal year, may not exceed $25,304,300 and the treatment of excess claims and proration are the same as under current law.

Under current state law, certain individuals may claim an income tax deduction for amounts paid for medical care insurance for the individual, his or her spouse, and his or her dependents. Under the federal Patient Protection and Affordable Care Act (PPACA), beginning in 2014 certain individuals will be eligible to receive premium assistance in the form of federal tax credits to make it more affordable for such individuals to purchase medical care insurance.

This bill clarifies that the current state income tax deduction for medical care insurance may not be claimed for any amount that is paid for with a premium assistance credit under the PPACA.

Under current law, a health care provider may claim an income and franchise tax credit equal to 50 percent of the amount that the health care provider paid in the taxable year for information technology hardware or software that is used to maintain medical records in electronic form. Under this bill, no health care provider may claim the credit for taxable years beginning after December 31, 2013.

Under this bill, generally, a person who is subject to an assessment or audit determination by DOR is not liable for any amount that DOR asserts that the person owes if the liability asserted is the result of a tax issue that existed in a prior assessment or audit, a DOR employee involved in the prior assessment or audit knew of the tax issue, and DOR did not assert the liability for the tax issue at the time of the prior assessment or audit.

Under current law, the interest income from bonds issued by WHEFA is exempt from income taxation if the bond proceeds are used by a health facility to acquire information technology hardware or software. Under the bill, the interest income from bonds issued by WHEFA is also exempt from income taxation if the bonds are issued for the benefit of a person who is eligible to receive bond proceeds from another entity for the same purpose and the interest income received from the other bonds is exempt from taxation.

Under current law, if a person who is liable for income taxes fails to pay the taxes within ten days from the date that the taxes become delinquent, DOR may obtain the person's real or personal property and sell that property to pay the delinquent taxes. After DOR obtains the property, DOR must notify the property owner, in writing, that it has obtained the property and that the property will be sold if the delinquent taxes are not paid. DOR must also post a public notice of the sale. This bill allows DOR to provide notice of obtaining a person's property in the manner prescribed by DOR. Under the bill, DOR does not have to provide notice to the property owner of the sale of the person's property, but must still post a public notice of the sale.

Property taxation

Under current law, solar energy systems and wind energy systems are exempt from personal property taxes. Under this bill, biogas energy systems are also exempt from personal property taxes.

Under this bill, the state no longer appropriates moneys from the lottery fund to pay a portion of the school levy property tax credit.

Other taxation

Under current law, in order to offer cigarettes for sale in this state, a cigarette manufacturer must have a valid permit issued by DOR and pay the cigarette tax on all cigarettes offered for sale in this state. Cigarette manufacturers must also comply with fire safety standards for cigarettes and with the master settlement agreement entered into with U.S. tobacco product manufacturers. This bill specifies that a cigarette manufacturer includes a person who owns an automated roll-your-own machine that is used to make cigarettes, but does not include an individual who owns a roll-your-own machine and uses the machine solely to make cigarettes for his or her personal use or for the use of other individuals who live in his or her home.

This bill creates a sales and use tax exemption for items and services sold as part of a contract to perform real property construction activities and for which the contractor quotes the charge for labor, services of subcontractors, and materials as one price.

Under current law, the sale of tangible personal property, animals, and certain other items to a person who is primarily engaged in biotechnology or manufacturing in this state is exempt from the sales and use tax if the property, animals, or items are used for qualified research. This bill allows a member of a combined group of corporations to claim the exemption if another group member is conducting qualified research for the member who is engaged in biotechnology or manufacturing in this state.

Under current law, a retailer submits the sales and use taxes that the retailer collected during each calendar quarter to DOR no later than the last day of the month following the end of the previous calendar quarter. If, however, a retailer collects more than $600 in any calendar quarter, DOR may require the retailer to submit the taxes no later than the last day of the month following the month in which the taxes are collected. Under this bill, if a retailer collects more than $1,200 in any calendar quarter, DOR may require the retailer to submit the taxes no later than the last day of the month following the month in which the taxes are collected.

Under current law, DOR may enter into agreements with other states to provide for offsetting Wisconsin tax refunds against tax obligations of other states and offsetting tax refunds of other states against Wisconsin tax obligations. Under this bill, DOR may also enter into agreements with other states to provide for offsetting Wisconsin tax refunds against nontax obligations of other states and offsetting tax refunds of other states against Wisconsin nontax obligations.

Under current law, instead of paying local general property taxes, public utilities and telephone companies pay taxes imposed by the state based on property value. These taxes are referred to as ad valorem taxes. Under this bill, DOR may use the same methods used for collecting delinquent income taxes, including imposing a levy on a taxpayer's property, to collect delinquent ad valorem taxes owed by public utilities and telephone companies.

Under current law, DOR may write off from its records all sales, use, withholding, motor vehicle fuel, gift, beverage, and cigarette tax liabilities that it determines are not collectible. This bill allows DOR to write off all tax and fee liabilities it determines are not collectible.

Under current law, the printing of tangible personal property is not a service subject to the sales and use tax if it results in catalogs or other printed materials designed to promote the sale of merchandise. Under this bill, printing of tangible property that results in advertising and promotional direct mail is also not subject to the sales and use tax.

transportation

Highways

This bill makes changes with respect to which highway operations and activities are considered highway improvements and which are considered highway maintenance, which affects the source of funding for these operations and activities. However, under the bill, some highway operations and activities, such as maintenance for roadside improvements and private contractor maintenance, can be funded from more than one appropriation. Under this bill, highway maintenance activities no longer include, and highway improvements no longer exclude, the installation, replacement, or rehabilitation of traffic control signals and intelligent transportation (IT) systems, but maintenance of traffic control signals and IT systems are still considered maintenance activities. The bill limits DOT's expenditure, from certain highway improvement appropriations, of moneys for the installation, replacement, or rehabilitation of traffic control signals and IT systems to a total of $20,000,000 in any fiscal year.

This bill allows DOT to enter into sponsorship agreements under which DOT displays a sponsor's advertising or promotional material at locations owned or controlled by DOT in exchange for the sponsor's payment of fees or provision of services to DOT. The bill also allows DOT to enter into partnership agreements under which DOT authorizes a partner to engage in commercial activity at locations owned or controlled by DOT in exchange for the partner's payment of fees or provision of services to DOT. Fees received by DOT under these agreements may be used by DOT for, among other purposes, maintenance and repair of state trunk highways and roadside improvements. Contracts for sponsorship agreements and partnership agreements must be awarded on the basis of competitive proposals.

The bill does all of the following:

1. Allows general obligation bonds, in an amount not exceeding $200,000,000, to be used to fund high-cost state highway bridge projects, which are projects involving the construction or rehabilitation of a bridge on the state trunk highway system that have a total estimated cost of more than $150,000,000.

2. Authorizes an additional $107,000,000 in general obligation bond proceeds to fund the Zoo interchange project and the I 94 north-south corridor project.

3. Authorizes an additional $200,000,000 in general obligation bond proceeds to fund southeast Wisconsin freeway megaprojects. Debt service on these bonds is paid from the general fund.

4. Increases the revenue bond limit, from $3,351,547,300 to $3,768,059,300, for major highway projects and transportation administrative facilities.

This bill eliminates DOT's bicycle and pedestrian facilities program, transportation enhancement activities program, safe routes to school program, and traffic marking enhancement program and creates instead a transportation alternatives program. Under this program, DOT may award grants to political subdivisions for transportation alternatives activities such as: construction, planning, and design of trail facilities and infrastructure-related projects for pedestrians, bicyclists, and other nondrivers; trail conversion of abandoned railroad corridors; construction of overlooks and viewing areas; and preservation of historic transportation facilities.

Under current law, if a highway or bridge that is not on the state trunk highway system (highway) is damaged by flood, the county or municipality having jurisdiction over the highway may petition DOT for payment of flood damage aid to cover part of the repair or replacement cost. This bill expands DOT's flood damage aid program to a disaster damage aid program. Under the bill, a "disaster" is defined as any of the following: 1) a severe storm, flood, fire, tornado, mudslide, or other natural event external to a highway; 2) the sudden failure of a major element or segment of the highway system due to a cause that is external to a highway; or 3) an event or recurring damage caused by any governmental unit or person acting under the direction or approval of, or permit issued by, any governmental unit and in response to an event described in item 1) or 2). The bill also prohibits DOT from paying disaster damage aid in excess of $1,000,000, in connection with disaster damage resulting from a single disaster, unless the governor approves the payment of aid.

Under current law, beginning July 1, 2014, DOT must maintain an inventory of completed designs for highway projects under the major highway projects program and the reconditioning, reconstruction, and resurfacing projects program. Under this bill, the estimated costs of the inventory of projects for each program must be not less than 20 percent of the annual amount of funding provided to each program.

This bill repeals a provision of current law that prohibits a southeast Wisconsin freeway rehabilitation project from adding vehicle lanes on I 94 adjacent to Wood National Cemetery.

Drivers and motor vehicles

Current law includes certain regulation of motor carriers engaged in interstate commerce. This bill imposes the same regulation on motor carriers engaged in intrastate commerce.

This bill increases the per pound of excess weight forfeiture rates that are imposed for unlawfully operating vehicles exceeding weight limits without a permit.

This bill also increases the penalty for a second conviction for violating weight limits while transporting raw forest products.

Transportation aids

Under current law, DOT provides state aid payments from the transportation fund to local public bodies in urban areas served by mass transit systems to assist the local public bodies with the expenses of operating those systems. This bill changes the funding source for those aids from the transportation fund to the general fund beginning on July 1, 2014.

Rail and air transportation

This bill increases the authorized general obligation bonding limit to $216,500,000 to acquire railroad property and provide grants and loans for railroad property acquisition and improvement.

Other transportation

This bill requires DOT to administer a surveying reference station system that consists of monuments that are used to generate latitude, longitude, and elevation data; reference stations that continuously transmit global positioning system data to a system server; and the system server, which receives and processes the data received from the reference stations. The bill also permits DOT to charge a fee to persons who access the system in an amount to be established by rule. All access fees received by DOT are appropriated for system maintenance and operation costs.

Under current law, a person who is convicted of certain violations relating to operating a vehicle while intoxicated must pay a driver improvement surcharge of $365 in addition to any applicable forfeiture or fine, assessments, and costs. A portion of the money collected from this surcharge is provided to DOT for chemical testing training and services provided by the state traffic patrol. Under this bill, driver improvement surcharge money is no longer provided to DOT for the chemical testing training and services provided by the state traffic patrol. The training and services are instead funded from the transportation fund.

This bill increases the authorized general obligation bonding limit to $87,500,000 to provide grants for harbor improvements.

Veterans

Current law imposes certain state residency requirements that apply to veterans and widows, widowers, and parents of living and deceased veterans who are seeking admission to veterans homes operated by the state. Also, under current law, DVA administers a priority system for admissions into a veteran home. Under the system, veterans have first priority, spouses have second priority, surviving spouses have third priority, and parents of veterans have fourth priority.

This bill eliminates all residency requirements, but gives priority to residents over nonresidents. The bill establishes a priority system within each of the four priority levels described above. Under the system, state residents who have resided in the state for more than six continuous months before the date of application have first priority, other state residents have second priority, and nonresidents have third priority.

Current law imposes certain state residency requirements on veterans and members of the U.S. armed forces for burial in a state veterans cemetery. This bill expands eligibility for burial in a state veterans cemetery to include anyone who is a resident of a state veterans home. The bill also requires DVA to maintain a waiting list for each cemetery and to give priority to state residents over nonresidents.

Current law imposes certain state residency requirements for a veteran to receive assistance based on the veteran's homelessness, incarceration, or other circumstances established by DVA. Such a veteran may be eligible for assistance from DVA only if the veteran is a resident of and living in Wisconsin at the time the veteran applies for assistance. The bill eliminates those residency requirements.

The bill directs DVA to pay $500,000 in fiscal year 2013-14 to VETransfer, Inc. (VETransfer), an organization that provides training and other assistance to veterans engaged in entrepreneurship. The bill requires VETransfer to use those moneys to make grants to Wisconsin veterans or their businesses to cover costs associated with the start-up of veteran-owned businesses in Wisconsin and to provide entrepreneurial training and related services to Wisconsin veterans. VETransfer must repay to the state any moneys not used by June 30, 2017, but DVA may extend that deadline.

The bill authorizes DVA to grant up to $50,000 annually to the Wisconsin department of the American Legion for the operation of Camp American Legion located in the town of Lake Tomahawk.

The bill modifies the amount of annual payments that DVA must make to certain federally recognized state veterans organizations in Wisconsin based on the amount a state veterans organization pays each year to its employees who provide certain services to veterans in Wisconsin.

Under current law, DVA is required to pay $100,000 annually to the Wisconsin department of the Disabled American Veterans for the provision of transportation services to veterans. The bill increases that amount to $120,000.

Under current law, DVA may make annual grants of up to $8,500 to American Indian tribes or bands for the improvement of a tribe's or band's services to veterans. The bill increases that authorization to up to $15,000 for each grant DVA makes to an American Indian tribe or band.

The bill establishes a tuition reimbursement program for veterans enrolled in the College of Menominee Nation or Lac Courte Oreilles Ojibwa Community College (tribal colleges). Under the bill, subject to certain limitations, DVA is generally required to reimburse a veteran for up to 120 credits of tribal college tuition if the veteran applies to DVA for reimbursement, is enrolled as a member of a federally recognized American Indian tribe or band in Wisconsin, and satisfies the bill's other eligibility requirements.

Under current law, the Board of Veterans Affairs (board) may approve or veto plans or modifications for established state veterans memorials and make recommendations for future memorials. This bill restricts the board's authority only to proposals for plans or modifications of memorials for which DVA has estimated that the costs will exceed $25,000.

Under current law, each nursing home is required to pay the state an assessment of not more than $170 per bed, per month. The assessment revenue is deposited in the MA trust fund and is generally expended for MA services for which the federal government contributes a share of the costs. Current law exempts Wisconsin veterans homes from having to pay the assessment for the 2011-13 fiscal biennium. This bill makes the exemption permanent.

Under current law, DVA employs commandants for the administration of veterans homes. Among other duties, a commandant may receive, disburse, and account for the personal funds of a resident of the veterans home the commandant oversees. Under the bill, the secretary of DVA or the secretary's designee may also receive, disburse, and account for the funds of a veterans home resident.

Under current law, documents that are evidence of service in the United States armed forces and that are in the possession of DVA may be disclosed only to veterans or their duly authorized representatives. Under current law, a "duly authorized representative" is a person who has written authorization from a veteran to act on his or her behalf, a guardian if the veteran has been adjudicated incompetent, or a legal representative if the veteran is deceased. A spouse or adult child of a veteran or a parent of an unmarried veteran may be also be considered a duly authorized representative of the veteran if there is no written authorization, guardian, or legal representative. This bill expands this list of relatives to include an adult sibling of a veteran.

Under current law, DWD administers the federal Disabled Veterans' Outreach Program, under which DWD employs specialists to provide services to meet the employment needs of eligible veterans, and the federal Local Veterans' Employment Representative Program, under which DWD employs representatives to facilitate employment, training, and placement services for veterans. This bill requires DWD and DVA, jointly, to prepare and submit to the secretary of the federal Department of Labor (secretary) a plan to transfer administration of those programs from DWD to DVA. If the secretary approves the plan, responsibility for administration of those programs is transferred from DWD to DVA.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

Because this bill relates to public employee retirement or pensions, it may be referred to the Joint Survey Committee on Retirement Systems for a report to be printed as an appendix to the bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB40,1 Section 1. 5.05 (2m) (c) 6. b. of the statutes is amended to read:

AB40,56,8 5.05 (2m) (c) 6. b. The board shall enter into a written contract with any individual who is retained as special counsel setting forth the terms of the engagement. The contract shall set forth the compensation to be paid such counsel by the state. The contract shall be executed on behalf of the state by the board's legal counsel, who shall file the contract in the office of the secretary of state. The compensation shall be charged to the appropriation under s. 20.455 (1) (b) 20.505 (1) (d).

AB40,2 Section 2. 13.106 (1) (intro.) of the statutes is repealed.

AB40,3 Section 3. 13.106 (1) (a), (b), (c), (d) and (e) of the statutes are renumbered 13.106 (3) (ac), (ag), (aL), (ap) and (at).

AB40,4 Section 4. 13.106 (3) (intro.) of the statutes is amended to read:

AB40,56,17 13.106 (3) (intro.) By October 15 of each even-numbered year, the Medical College of Wisconsin and the University of Wisconsin-Madison Medical School shall submit a report to the governor, the joint committee on finance, and to the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2), that provides information on all of the following:

AB40,5 Section 5. 13.106 (3) (a) of the statutes is renumbered 13.106 (3) (ax).

AB40,6 Section 6. 13.106 (4) of the statutes is created to read:

AB40,56,25 13.106 (4) (a) In this subsection, "rural or underserved urban medicine program" includes the Wisconsin Academy for Rural Medicine, the Training in Urban Medicine and Public Health program, any community medical education program of the Medical College of Wisconsin, and any other rural or underserved urban medicine program established after the effective date of this paragraph .... [LRB inserts date].

AB40,57,4 (b) By October 15 of each year, the Medical College of Wisconsin and the University of Wisconsin-Madison Medical School shall submit an annual report to the governor and to the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2) that provides information on all of the following: