SB631: Bill Text

January 22, 2016 - Introduced by Senators Marklein, Olsen and Petrowski, cosponsored by Representatives Craig, Ballweg, Gannon, Horlacher, Katsma, Kremer, Murphy, A. Ott and Tranel. Referred to Committee on Revenue, Financial Institutions, and Rural Issues.

SB631,2,22 An Act to repeal 202.02 (5), 202.02 (6) (d), 202.025 (title), 202.025 (1) (title), 202.025 (2) and (3) (title), 202.025 (3) (b), 202.03 (title), 202.035 (title), (1) and (2) (intro.), 202.04 (title), 202.05, 202.055 (title), 202.06 (1) (title), 202.095 (title), 202.12 (1) (b) 1. and 2., 202.12 (1) (c) and (d), 202.12 (2), 202.12 (3) (a) 1., 2., 3. and 4., 202.12 (3) (am), 202.12 (3) (c), 202.12 (4), 202.13 (1) (b) 1., 202.13 (1) (c) and (d), 202.14 (1) (b) 1., 202.14 (1) (c) and (d), 202.14 (3) (a), (b), (c), (d), (e) and (f), 202.14 (4) (b), (c) and (d), 202.14 (5) (title), 202.155 (3) (intro.), 202.155 (3) (b), 202.22 (2) (a), (b), (c), (d) and (e), 202.22 (4) (c), 202.22 (7) (a), 202.22 (8) and 202.26 (1) and (3); to renumber 202.02 (1), 202.02 (2), 202.055 (2), 202.06 (1), 202.07 (1), 202.07 (2), 202.07 (4), 202.09, 202.155 (1) (c) and 202.155 (3) (c); to renumber and amend 202.02 (title), 202.02 (3), 202.02 (4), 202.02 (6) (a), 202.02 (6) (b), 202.02 (6) (c), 202.02 (6) (e), 202.02 (7), 202.025 (1) (a), 202.025 (1) (b), 202.025 (3) (a) 1., 202.025 (3) (a) 2., 202.03, 202.035 (2) (a), 202.035 (2) (b), 202.04, 202.055 (1), 202.055 (3), 202.06 (2), 202.07 (3), 202.08, 202.095, 202.12 (1) (b) 3., 202.12 (3) (a) (intro.), 202.12 (8), 202.13 (1) (b) 3., 202.14 (1) (b) 3., 202.14 (3) (intro.), 202.14 (5), 202.155 (title), 202.155 (1) (intro.), 202.155 (1) (a), 202.155 (1) (b), 202.155 (2), 202.155 (3) (a) and 202.155 (4); to consolidate, renumber and amend 202.26 (intro.) and (2); to amend 202.06 (3), 202.11 (5) (intro.), 202.11 (7) (d), 202.11 (10), 202.12 (1) (title), 202.12 (1) (b) 2g., 202.12 (1) (b) 2r., 202.12 (3) (title), 202.12 (3) (b), 202.12 (3) (bm), 202.12 (5) (a) 3., 202.12 (5) (b), 202.13 (1) (b) 2., 202.13 (2), 202.13 (4) (a), 202.14 (1) (b) 2., 202.14 (2), 202.14 (4) (a), 202.14 (7), 202.16 (1) (intro.), 202.16 (1) (g), 202.17 (1), 202.17 (4) (a), 202.18 (1) (b), 202.21 (1), 202.22 (2) (intro.), 202.22 (4) (title), (a) and (b), 202.22 (5) (a), 202.22 (5) (d), 202.22 (6), 202.22 (7) (b), 202.22 (7) (c), 202.22 (9) (am), 202.23 (1) and 202.23 (2); to repeal and recreate 202.07 (title), 202.12 (1) (b) (intro.), 202.12 (7), 202.13 (1) (b) (intro.) and 202.14 (1) (b) (intro.); and to create 202.01 (1m), 202.021 (title), (1) (title) and (a), (2) (title), (bn), (c) and (d), (3) (title) and (c), and (4) (title) and (a) (intro.), 1. and 4., 202.031 (5) (a) and (6), 202.06 (2) (d), (f) and (g), 202.12 (1) (e), 202.12 (3) (d), 202.12 (5) (a) 9., 202.12 (6m) (a) 3., 202.12 (6m) (d), 202.12 (8) (b) and (c), 202.13 (1) (e), 202.13 (2m), 202.13 (4) (d), 202.14 (1) (e), 202.14 (2m), 202.14 (4) (e), 202.14 (11) (title), (a), (c), (d) and (f), 202.16 (1) (h), (i), (j), (k) and (L), 202.22 (3) and 227.01 (13) (yx) of the statutes; relating to: registration and other requirements for charitable organizations, professional fund-raisers, fund-raising counsel, and professional employer organizations and modifying rules promulgated by the Department of Financial Institutions.

Analysis by the Legislative Reference Bureau

This bill makes various changes relating to registration, reporting, and other requirements applicable to charitable organizations, persons involved with solicitations on behalf of charitable organizations, and professional employer organizations. The bill modifies many of the administrative procedures by which the Department of Financial Institutions (DFI) regulates charitable organizations, persons involved with solicitations on behalf of charitable organizations, and professional employer organizations.

Charitable organizations, professional fund-raisers, and fund-raising counsel

Under current law, subject to exceptions, DFI regulates the following, and the following must be registered with DFI: a charitable organization that solicits, or has solicited on its behalf, contributions in this state (charitable organization); a person who, for compensation, solicits, or employs or engages others who are paid to solicit, contributions in this state for a charitable organization (professional fund-raiser); and a person who, for compensation, plans or manages, or advises or prepares material with respect to, solicitations in this state for a charitable organization, but who does not make solicitations or employ or engage others to make solicitations, and who has custody of contributions solicited for a charitable organization (fund-raising counsel).

This bill makes numerous changes relating to DFI's regulation of charitable organizations, professional fund-raisers, and fund-raising counsel, including all of the following:

1. The bill modifies DFI's application procedures and requirements for initial or renewal registration with DFI as a charitable organization, professional fund-raiser, or fund-raising counsel, as well as certain post-registration requirements.

2. The bill increases, from $5,000 to $25,000, subject to adjustment for inflation, the amount of annual contributions a charitable organization may receive without being required to register with DFI if other conditions are satisfied.

3. The bill modifies requirements for financial information included with an application for registration as a charitable organization. Current law requires the applicant to submit to DFI an annual financial report if the charitable organization received annual contributions of more than $5,000 but not more than $100,000 and an audited financial statement if the charitable organization received annual contributions of more than $100,000. The bill requires initial registration applications to include a reviewed financial statement if the charitable organization received annual contributions of more than $300,000 but not more than $500,000 and an audited financial statement if the charitable organization received annual contributions of more than $500,000, with these amounts subject to adjustment for inflation. The reviewed and audited financial statements must be prepared in accordance with generally accepted accounting principles (GAAP). The reviewed financial statement must include a review of the financial statement by an independent certified public accountant (CPA), and the audited financial statement must include the opinion of an independent CPA.

4. The bill modifies the requirements for charitable organizations' annual reporting to DFI. Under the bill, a charitable organization must file an annual report with DFI, in a form prescribed by DFI, rather than an annual financial report as under current law. The bill also eliminates certain content requirements for the report. The bill increases, from $200,000 to $300,000, subject to adjustment for inflation, the contribution threshold that triggers a requirement that a charitable organization annually file with DFI a financial statement prepared in accordance with GAAP and reviewed by an independent CPA. The bill also increases, from $400,000 to $500,000, subject to adjustment for inflation, the contribution threshold that triggers a requirement that the financial statement be audited and include the opinion of an independent CPA. Under the bill, the financial statement or audited financial statement is in addition to the charitable organization's annual report, not in lieu of its annual financial report as under current law, and the bill extends the filing deadline for the financial statement. The bill also creates a process by which DFI may waive the financial statement filing requirement and eliminates an exception to the current law requirement that a charitable organization file an annual financial report.

5. The bill requires fund-raising counsel and professional fund-raisers to file an annual report with DFI, in a form prescribed by DFI.

6. The bill requires a charitable organization for which a fund-raising counsel or professional fund-raiser performs services to take certain actions, which include ensuring that the fund-raising counsel or professional fund-raiser is registered with DFI or is not required to be registered, contracting in writing with the fund-raising counsel or professional fund-raiser, retaining certain documentation, and satisfying certain financial institution account requirements.

7. The bill modifies content requirements for the required contract between a charitable organization and a professional fund-raiser.

8. The bill modifies content requirements for a solicitation notice required to be filed by a professional fund-raiser before performing services for a charitable organization, eliminating specific requirements and instead providing DFI with discretion over the contents of the notice.

9. The bill modifies disclosure requirements related to requests made by professional fund-raisers, or by persons who solicit but are not professional fund-raisers or their employees (unpaid solicitors), for contributions on behalf of charitable organizations and creates an exception to disclosure requirements if the charitable organization is not required to be registered with DFI or has obtained a disclosure exemption. The bill eliminates the requirement that DFI specify by rule criteria for this disclosure exemption, instead allowing DFI to prescribe forms and procedures without rule making, and changes the definition of an unpaid solicitor to expressly exclude bona fide employees of professional fund-raisers.

10. The bill shifts the requirement for retaining certain accounting records from the charitable organization receiving the records to the fund-raising counsel or professional fund-raiser generating the records, and requires the records to be made available to DFI upon DFI's request.

11. The bill modifies a provision relating to prohibited acts in the planning, management, or execution of a solicitation or charitable sales promotion so that the provision applies more specifically to a charitable organization, fund-raising counsel, or professional fund-raiser, rather than to a "person," but also applies more broadly to the conduct of the affairs of the charitable organization, fund-raising counsel, or professional fund-raiser, not solely to the planning, management, or execution of a solicitation or charitable sales promotion. The bill also adds certain acts to the list of prohibited acts, including acts related to misrepresenting the tax-deductible status of contributions, misrepresenting a person's prior contributions or a person's prior agreement to make a contribution, or failing to apply contributions consistently with the solicitation.

12. The bill allows DFI to adjust, without rule making, certain threshold dollar amounts related to registration or reporting, but creates a passive review process with the Joint Committee for Review of Administrative Rules for these adjustments.

13. The bill makes changes to DFI's rules relating to charitable organizations, professional fund-raisers, and fund-raising counsel, which changes correspond to statutory changes.

Professional employer organizations

Under current law, a person engaged in the business of contracting to provide to its clients a nontemporary, ongoing employee workforce, paid by the person from its own account (professional employer organization), but not including a temporary help agency or temporary help company, must be registered with DFI. This bill makes changes relating to DFI's regulation of professional employer organizations, including all of the following:

1. The bill modifies DFI's application procedures and requirements for initial or renewal registration with DFI as a professional employer organization, as well as certain post-registration requirements.

2. The bill modifies provisions related to the financial capability requirements for professional employer organizations, which under current law may be satisfied by maintaining working capital of at least $100,000 or, as an alternative, maintaining a bond, certificate of deposit, escrow account, or irrevocable letter of credit in at least a specified amount. The bill eliminates an exception to the $100,000 working capital requirement and provides that the only alternative to meeting this working capital requirement is to maintain a bond.

3. The bill eliminates a requirement that DFI's alternative registration process for professional employer organizations be specified by DFI rule, and makes the alternative registration process permissive rather than mandatory.

4. The bill eliminates a requirement that DFI maintain on its Internet site a list of all professional employer organizations, but requires DFI to make this list available on request.

Other changes

The bill makes other changes applicable to charitable organizations, professional fund-raisers, fund-raising counsel, and professional employer organizations, including all of the following:

1. The bill eliminates a provision that allows an individual, if the individual must provide to DFI his or her social security number, telephone number, street address, or e-mail address (personal identifier) in connection with a registration, to opt out of disclosure of the individual's personal identifier in any list that contains personal identifiers of at least ten individuals and that DFI furnishes to other persons.

2. The bill eliminates a requirement that DFI cooperate with certain other state agencies to develop and maintain a computer linkup to provide access to registration information.

For further information see the state 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:

SB631,1 Section 1. 202.01 (1m) of the statutes is created to read:

SB631,6,3 202.01 (1m) "Application" includes an application for initial registration and an application for renewal of a registration.

SB631,2 Section 2. 202.02 (title) of the statutes is renumbered 202.031 (title) and amended to read:

SB631,6,6 202.031 (title) General duties and powers.

SB631,3 Section 3. 202.02 (1) of the statutes is renumbered 202.07 (2m).

SB631,4 Section 4. 202.02 (2) of the statutes is renumbered 202.031 (1).

SB631,5 Section 5. 202.02 (3) of the statutes is renumbered 202.031 (2), and 202.031 (2) (b), as renumbered, is amended to read:

SB631,6,13 202.031 (2) (b) Post a notice in a conspicuous place in the registrant's office or place of business, or on the registrant's Internet site, describing the procedures for filing a complaint against the registrant.

SB631,6 Section 6. 202.02 (4) of the statutes is renumbered 202.021 (1) (b) and amended to read:

SB631,7,2 202.021 (1) (b) 1. The department shall require each applicant to provide his or her social security number with the applicant's application for a registration or registration renewal, or, if the applicant is not an individual, the department shall require the applicant to provide its federal employer identification number.

SB631,7,8 2. If an applicant is an individual who does not have a social security number, the applicant shall submit a statement to the department made or subscribed under oath that the applicant does not have a social security number. The department of children and families shall prescribe the form of the statement. A registration issued in reliance upon a false statement submitted under this paragraph subdivision is invalid.

SB631,7,13 3. The department may not disclose a social security number obtained under par. (a) subd. 1. to any person except the department of children and families to administer s. 49.22, the department of revenue to request certifications under s. 73.0301 and administer state taxes, and the department of workforce development to request certifications under s. 108.227.

SB631,7 Section 7. 202.02 (5) of the statutes is repealed.

SB631,8 Section 8. 202.02 (6) (a) of the statutes is renumbered 202.021 (2) (a) and amended to read:

SB631,8,2 202.021 (2) (a) The department may conduct an investigation of the applicant, including the applicant's members, officers, trustees, and directors, to determine whether an the applicant satisfies any all of the eligibility requirements specified for the registration, including whether the applicant does not have. The investigation may include determining whether any of the applicant's members, officers, trustees, or directors has an arrest or conviction record. In conducting an investigation under this paragraph, the department may require an applicant to provide any information that is necessary for the investigation, except that, for an investigation of an arrest or conviction record, the department shall comply with the requirements under par. (d).

SB631,9 Section 9. 202.02 (6) (b) of the statutes is renumbered 202.031 (3) and amended to read:

SB631,8,8 202.031 (3) A registrant, or a registrant's officer, director, trustee, or member, who is convicted of a felony or misdemeanor anywhere shall send a notice of the conviction by 1st class mail to the department within 48 hours after the entry of the judgment of conviction.

SB631,10 Section 10. 202.02 (6) (c) of the statutes is renumbered 202.07 (1m) (b) and amended to read:

SB631,8,15 202.07 (1m) (b) The department may investigate whether an applicant or a registrant, or an officer, director, trustee, or member of a registrant, has been charged with or convicted of a crime. In conducting this investigation, the department may require a person for whom the department conducts an investigation to provide any information that is necessary for the investigation.

SB631,11 Section 11. 202.02 (6) (d) of the statutes is repealed.

SB631,12 Section 12. 202.02 (6) (e) of the statutes is renumbered 202.021 (2) (b) and amended to read:

SB631,8,22 202.021 (2) (b) The If an officer, director, or member of an applicant has been convicted or has an arrest or conviction record, the department shall may charge an applicant the fees, costs, or other expenses the department incurs for conducting an investigation under this subsection.

SB631,13 Section 13. 202.02 (7) of the statutes is renumbered 202.021 (1) (c) and amended to read:

SB631,9,3 202.021 (1) (c) The department may require the electronic submission of an application for registration or registration renewal or any other document or information that may be submitted to the department under this chapter.

SB631,14 Section 14. 202.021 (title), (1) (title) and (a), (2) (title), (bn), (c) and (d), (3) (title) and (c), and (4) (title) and (a) (intro.), 1. and 4. of the statutes are created to read:

SB631,9,12 202.021 (title) Registration. (1) (title) Applications for registration. (a) Applicants for registration under this chapter shall apply to the department, on forms and in the manner prescribed by the department. Forms prescribed by the department under this paragraph may contain any content or requirement that the department, in its discretion, determines necessary and these forms may be modified or updated as necessary by the department to carry out the purposes of this chapter.

SB631,9,13 (2) (title) Completion of registration process.

SB631,9,16 (bn) Subject to ss. 111.321, 111.322, and 111.335, the department may deny or limit the registration of an applicant or registrant that has a member, officer, trustee, or director who has been convicted of a felony or misdemeanor.

SB631,9,18 (c) Except as provided in sub. (4), the department shall, after its review of an application, issue a certificate of registration to the applicant.

SB631,9,19 (d) A registration issued under this chapter is not assignable or transferable.

SB631,9,20 (3) (title) Renewal of registration.

SB631,9,24 (c) 1. A registrant may apply to renew its registration by submitting to the department an application, fees, and any financial statement required by s. 202.22. For the renewal application to be timely, the renewal fee and application must be received by the department on or before the registration's expiration date.

SB631,10,4 2. Subject to subd. 4., a registrant whose renewal fee and completed application are not received by the department on or before the registration's expiration date, but are received within 60 days after the expiration date, must pay the late fee determined by the department under s. 202.041.

SB631,10,7 3. A registrant whose renewal fee and completed application are not received by the department within 60 days after the expiration date of the registration must submit an application for a new registration.

SB631,10,12 4. After the expiration date, a registrant that is required to renew its registration may not continue to conduct the activity for which the registration is required unless the registrant's certificate has been renewed by the department or the registrant has paid the renewal fee and filed a completed renewal application on or before the registration's expiration date.

SB631,10,14 (4) (title) Denial of application. (a) (intro.) The department may not issue or renew a registration under this chapter if any of the following applies:

SB631,10,18 1. The applicant has failed to submit a complete application to the department. Before denying an incomplete application, the department shall notify the applicant of any deficiencies in the application and give the applicant a reasonable amount of time to resolve the deficiencies.

SB631,10,20 4. The department is not satisfied that the applicant or registrant will comply with this chapter and any rules promulgated under this chapter.

SB631,15 Section 15. 202.025 (title) of the statutes is repealed.

SB631,16 Section 16. 202.025 (1) (title) of the statutes is repealed.

SB631,17 Section 17. 202.025 (1) (a) of the statutes is renumbered 202.021 (3) (a) and amended to read:

SB631,11,3 202.021 (3) (a) The department shall give a notice of renewal to each registrant at least 30 days before the renewal expiration date of the registration. The department may give that notice by electronic transmission.

SB631,18 Section 18. 202.025 (1) (b) of the statutes is renumbered 202.021 (3) (b) and amended to read:

SB631,11,10 202.021 (3) (b) Failure to receive a notice of renewal is not a defense in any disciplinary proceeding against a registrant or in any proceeding against a former registrant for practicing without a registration. Failure to receive a notice of renewal does not relieve a registrant from the obligation to pay a penalty for late renewal under sub. (2) par. (c).

SB631,19 Section 19. 202.025 (2) and (3) (title) of the statutes are repealed.

SB631,20 Section 20. 202.025 (3) (a) 1. of the statutes is renumbered 202.021 (4) (a) 2. and amended to read:

SB631,11,17 202.021 (4) (a) 2. Notwithstanding ss. 202.12 to 202.14 and 202.23, if the The department determines that an the applicant for registration or registration renewal has failed to comply with any applicable requirement for the issuance or renewal, or that of registration.

SB631,11,21 3. The department determines that the denial of an the application for registration or registration renewal is necessary to protect the public health, safety, or welfare, the department may summarily deny the application for registration or registration renewal.

SB631,21 Section 21. 202.025 (3) (a) 2. of the statutes is renumbered 202.021 (4) (b) and amended to read:

SB631,12,4 202.021 (4) (b) If the department denies an application for registration or registration renewal under subd. par. (a) 1., 2., 3., or 4., the department shall provide the applicant with a notice of denial that states the facts or conduct giving rise to the denial and states that the applicant may, within 30 days after the date stated on the notice of denial, file a written request with the department for the department to review the denial at a hearing.

SB631,22 Section 22. 202.025 (3) (b) of the statutes is repealed.

SB631,23 Section 23. 202.03 (title) of the statutes is repealed.

SB631,24 Section 24. 202.03 of the statutes is renumbered 202.021 (4) (a) 5. and amended to read: