SB30: Bill Text

Under this bill, for homestead tax credit claims filed in 2018 and thereafter, claims may no longer be filed under current law by an individual who is not disabled or by an individual under the age of 62. The bill creates a new method to calculate the homestead tax credit for such individuals, based on the current law provisions, except able-bodied individuals and those under the age of 62 must have some earned income in the year to which the claim relates. Under the bill, the credit is calculated based on the lesser of 20 percent of the claimant's earned income in the taxable year, or the claimant's property taxes or rent constituting property taxes accrued in that year on the claimant's homestead.

Beginning with claims filed in 2018, this bill indexes for inflation two of the homestead tax credit formula factors, maximum income and income threshold, but only for claimants who are disabled or age 62 or older.

Under this bill, eligibility to claim the EITC and the homestead tax credit is limited for certain high-wage earners who have investment or business losses in excess of $15,000 in the year to which the claim relates. The limitation created in the bill does not apply to a farmer whose primary income is from farming and whose farming generates less than $250,000 in gross receipts.

Under this bill, for a married couple that files a joint income tax return, both spouses must be full-year residents of this state to be eligible to claim the working families tax credit.

This bill exempts from individual income taxation interest earned on bonds issued by WHEFA.

This bill clarifies that, when a taxpayer calculates the itemized deductions credit, the definition of Internal Revenue Code does not include adjustments made under the federal alternative minimum tax. The bill also modifies the calculation of the itemized deductions credit for nonresidents of this state by increasing the amount of the standard deduction that may be used by a nonresident to determine the claimable level of itemized deductions.

This bill changes the due date for a partnership, limited liability company, corporation, or tax-option corporation to file a state income or franchise tax return so that the return is due on the same date that the entity's federal income tax return is due. The bill also provides that a corporation that is required to pay periodic installments of estimated Wisconsin income or franchise tax must pay the first installment of the tax on or before the 15th day of the fourth month of the corporation's taxable year, except that, if the corporation's taxable year begins in April, the first installment must be paid in the third month of the corporation's taxable year. Under current law, the first installment for all corporations is due on the 15th day of the third month of the corporation's taxable year.

This bill also changes the due date for a partnership, limited liability company, tax-option corporation, estate, or trust (pass-through entity) to file a withholding tax return for amounts withheld from income of the pass-through entity that are distributable to a nonresident partner, member, shareholder, or beneficiary. Under the bill, a pass-through entity's withholding tax return is due on the same date that the pass-through entity's federal income tax return is due.

Under current law, if a pass-through entity underpays estimated withholding tax, the pass-through entity must pay interest on the amount of the underpayment for the period of the underpayment. This bill provides that no interest must be paid if the secretary of revenue determines that because of casualty, disaster, or other unusual circumstances it is not equitable to impose interest.

This bill provides that a taxpayer may not carry forward a net operating or a net business loss to offset future income of the taxpayer unless the taxpayer filed a tax return to claim the loss within four years after the due date for filing the tax return for the taxable year in which the loss was incurred. Additionally, the bill provides that a taxpayer that is allowed to carry back the loss to offset income in prior years may only do so if the taxpayer files a tax return to claim the carry-back within four years after the due date for filing the tax return for the taxable year to which the loss is carried back.

This bill makes various changes to the requirements for when and how certain information related to income and franchise taxes must be filed with DOR. The bill requires that a taxpayer that files ten or more wage statements or ten or more of any one type of information return with DOR must file those statements or returns electronically. Under current law, the electronic filing requirement applies to a taxpayer that files 50 or more statements or returns.

This bill provides that a person who must file the following information returns with DOR must file those returns no later than January 31 of the year following the year to which the return applies:

1. A return describing nonwage payments made by a resident of this state or a nonresident carrying on activities within this state in a calendar year in the amount of $600 or more for services performed within this state by an individual.

2. A return describing royalties or rents deducted in determining the taxable income of a person that is not a corporation, except that the return need only describe royalties of $600 or more paid during the taxable year to an individual who is a resident of this state and rents of $600 or more paid during the taxable year to an individual for property that is located in this state.

Under current law, the deadline to file those information returns with DOR is March 15 for corporations and February 28 for all other persons.

This bill also requires that a resident of this state or a nonresident carrying on activities within this state must file an information return with DOR that describes wages paid in a calendar year that were not subject to withholding in this state for any of the following services:

1. Services performed within this state by an individual who is not a resident of this state.

2. Services performed by an individual who is a resident of this state, regardless of where the services are performed.

The deadline to file that return is the same as for the other information returns described above.

Under this bill, if an employer applies for an extension and shows good cause why an extension should be granted, DOR may grant a 30-day extension for the employer to file those information returns. Under current law, DOR may grant a 60-day extension.

Current law allows an individual to claim an income tax deduction for the capital gain realized from an investment in a qualified Wisconsin business. A business may register with DOR as a qualified Wisconsin business if it has at least two full-time employees in this state and its payroll compensation to employees in this state is equal to at least 50 percent of its total payroll compensation.

This bill provides that, for purposes of registering with DOR, an employee of a professional employer organization or a professional employer group who is performing services for a client is considered an employee solely of the client. Under current law, a professional employer organization is any person contracting with a client to provide the client with an ongoing employee workforce. A professional employer group is two or more professional employer organizations controlled by the same person.

Currently, a corporation engaged in a unitary business with one or more corporations must report to DOR its share of income from the unitary business in the amount determined by the combined report filed by the agent of all such corporations. This requirement, however, does not apply to a corporation if all its income is exempt from state taxation. Under this bill, the reporting requirement applies to a captive insurance company even if its income is exempt from taxation. A “captive insurance company" is defined in the bill as a corporation that insures the risks primarily of itself or persons to which it is related.

This bill allows DOR to recover all or part of any tax credit allocated by WEDC for which WEDC has revoked its allocation. The bill also prohibits DOR and DOA from paying interest on refunds issued for the jobs tax credit, enterprise zone jobs credit, and business development credit. In addition, the bill prohibits DOR from issuing an income tax refund to an employed individual before March 1 unless both the individual and the individual's employer have filed all required returns and forms with DOR.

This bill modifies current law so that the income and franchise tax is imposed on the gross receipts from services relating to tangible personal property delivered to customers in this state and purchased by individuals who are physically present in this state at the time the services are received.

This bill prohibits a taxpayer from claiming both the manufacturing and agriculture credit and the other state credit on the same income.

Property taxation

This bill eliminates the forestation state property tax. Proceeds from the tax are paid into the conservation fund and used to acquire, preserve, and develop the forests of the state. The tax rate is 0.1697 mills for each dollar of the assessed value of the property of the state as determined by DOR. The bill provides that in each fiscal year an amount equal to 0.1697 mills for each dollar of the assessed value of the property of the state is transferred from the general fund to the conservation fund to be used for the same purpose as the tax.

This bill increases from $853,000,000 to $940,000,000 the amount appropriated for the school levy property tax credit, beginning with payments made in 2018. The bill also allows a municipality to pass an ordinance to have DOA distribute the amounts of the school levy, lottery and gaming, and first dollar property tax credits directly to the municipality rather than to the county, if the total amount of the credits in any year is at least $3,000,000. DOA would continue to distribute the amounts in this manner until the municipality repeals the ordinance or until the total amount of the credits in any year is less than $3,000,000. Under current law, the municipality must approve the distribution in each year in which the total amount of the credits is at least $3,000,000.

Other taxation

Under this bill, with regard to any income tax or franchise tax credit, deduction, or exemption that takes effect after December 31, 2016, no new claims for such a credit, deduction, or exemption may be filed more than seven years after the provision's initial applicability. In addition, the bill prohibits a person from claiming any sales and use tax, excise tax, or occupational tax exemption or credit more than seven years after the provision's effective date, unless the exemption is necessary to comply with the multistate sales and use tax agreement.

This bill provides that, with regard to a single-owner entity that is disregarded as a separate entity for federal tax purposes, any notice that DOR sends to the owner or to the entity is considered a notice sent to both and both are liable for any amounts due as specified in the notice. The bill applies to all laws administered by DOR.

Under this bill, for the two-day period beginning on the first Saturday in August and ending on the following Sunday, the sales of the following items are exempt from the sales tax and the use tax:

1. An item of clothing, not including clothing accessories, if the sales price of any single item is no more than $75.

2. A computer purchased by the consumer for the consumer's personal use, if the sales price of the computer is no more than $750.

3. School computer supplies, if the sales price of any single item is no more than $250.

4. School supplies, if the sales price of any single item is no more than $75.

The bill provides, however, that the exemption does not apply after 2018.

Under current law, there is a sales and use tax exemption for occasional sales of property, items, goods, and services. “Occasional sales” is defined to include isolated and sporadic sales of property, items, goods, and services where the infrequency supports the inference that the seller is not pursuing a full-time or part-time vocation, occupation, or business. This bill modifies the definition of occasional sales to provide a presumption that a seller who sells less than $2,000 of property, items, goods, and services during a calendar year is not pursuing a full-time or part-time vocation, occupation, or business.

This bill creates an exemption from the state sales and use tax for certain frozen foods manufactured by a retailer at the retailer's off-site manufacturing facility. Under current law, the sale of food and food ingredients is generally exempt from the sales and use tax, but most prepared foods are excluded from that exemption. Under current law, “prepared food” includes, among other things, two or more food ingredients mixed or combined by a retailer for sale as a single item. The bill creates a sales and use tax exemption for prepared food sold by a retailer that meets all of the following conditions:

1. The prepared food is manufactured by the retailer in a building assessed for property tax purposes as manufacturing property or that would be assessed as manufacturing property if the building was located in this state.

2. The retailer makes no retail sales of prepared food at the building in which the prepared food is manufactured.

3. The retailer freezes the prepared food prior to its sale.

4. The retailer sells the prepared food at retail in a frozen state.

5. The prepared food is not sold with eating utensils that are provided by the retailer.

6. The prepared food is not candy, soft drinks, or dietary supplements.

This bill expands the sales and use tax exemption for property, items, and services (products) sold in connection with real property construction activities as part of a lump sum contract to all construction contracts. Under current law, there is a sales and use tax exemption for products sold by a contractor as part of a lump sum contract for real property construction activities if the total sales price attributable to the taxable products is less than 10 percent of the total contract price. Under the bill, the exemption is expanded to apply to all construction contracts involving real property construction activities if the total sales price of the taxable products is less than 10 percent of the total contract price. If the exemption applies, the contractor is the consumer of, and pays the sales tax on, the products.

This bill also provides that, if the prime contract qualifies for the exemption, the exemption applies to all subcontracts entered into with respect to the real property construction activities. If the exemption applies to a subcontract, the subcontractor is the consumer of, and pays the sales tax on, the products. Under current law, if a construction contract is between a contractor and a tax-exempt entity, the contractor may purchase, without tax for resale to the tax-exempt entity, any products that will be sold by the contractor to the tax-exempt entity as part of a construction contract. The bill extends that sales and use tax exemption to products purchased by a subcontractor for eventual resale to the tax-exempt entity.

This bill provides that a seller who continues to collect sales tax erroneously on a product after receiving two or more written notices from DOR indicating that the product is not taxable is entitled to an adjustment or a refund of the tax collected only if the seller returns the tax and related interest to the buyers or to DOR if the buyers cannot be located. A seller who fails to submit the tax and interest within the 90-day period is subject to a penalty equal to 25 percent of the tax and interest or, in the case of fraud, a penalty equal to the tax and interest. The penalty provided in the bill is the same as the penalty under current law for other instances when a seller claims an adjustment or a refund of sales tax, but fails to submit the tax and interest to the buyer or to DOR.

Current law requires a state agency to enter into an agreement with DOR to have DOR collect debts owed to the agency that are more than 90 days past due, except under certain circumstances. This bill requires an agency to exclude certain debts from collection if the agency receives written notice from DOA or DOR identifying the specific debts for exclusion.

Transportation

Highways

This bill allows general obligation bonding in an amount not exceeding $449,738,300 under one of the provisions authorizing bonding for DOT to fund state highway rehabilitation projects.

Under current law, the Building Commission may issue revenue bonds for major highway projects and transportation administrative facilities in a principal amount that may not exceed $3,931,472,900. This bill increases the revenue bond limit to $4,096,634,600.

Under current law, highway improvement projects undertaken by DOT must be executed by contract based on bids, with limited exceptions. This bill authorizes DOT, for no more than three highway improvement projects, to enter into contracts using a construction manager-general contractor process. Under this process, the department contracts with a provider of construction services to supervise the design work for the project and, subject to an acceptable proposal, contracts with the provider of construction services for construction of the project.

Under current law, state, federal, and local appropriations authorize DOT expenditures for the installation, replacement, or rehabilitation of traffic control signals and intelligent transportation systems. Under current law, no money from these appropriations may be encumbered after June 30, 2019. This bill extends the date after which no money from each appropriation may be encumbered to June 30, 2021.

Drivers and motor vehicles

Under current law, at least 30 days prior to the expiration of a motor vehicle's registration, DOT must mail to the last-known address of the registrant a notice of the date upon which the registration must be renewed and an application form for renewal of registration. Under this bill, DOT may provide these materials by electronic mail.

Currently, at least 30 days prior to the expiration of a special identification card for a person with a disability that limits or impairs the ability to walk, DOT must mail to the last-known address of the cardholder a renewal application. Under this bill, DOT may provide this application by electronic mail.

Also under current law, no person may operate or knowingly permit the operation of a motor vehicle if the registration for that vehicle is suspended, revoked or canceled. It is a defense to an alleged violation of this provision that the person did not know, and had no reason to know, that the registration was suspended, revoked, or canceled at the time of the violation. However, refusal to accept or failure to receive an order of suspension, revocation, or cancellation mailed by DOT to the person's last-known address is not a defense to a violation of this provision. This bill provides that a refusal to accept or failure to receive an order of suspension, revocation, or cancellation provided by DOT by electronic mail to the person's last-known electronic mail address is also not a defense.

Currently, DOT is required to notify certain motor vehicle owners by mail that an emissions inspection must be performed. Under this bill, if the vehicle owner desires, DOT may notify these owners by electronic means.

This bill increases the penalty for generic inattentive driving and for composing or sending an electronic text or electronic mail message while driving to a forfeiture of not less than $40 nor more than $400.

Under current law, anyone wishing to transport certain radiological materials on a highway must first obtain a permit from DOT. DOT must charge a fee of $1,800 for this permit. Moneys collected from the issuance of these permits are deposited in the general fund and appropriated for providing escort services for the carriers of radiological materials. Under this bill, moneys collected from the issuance of these permits are deposited in the transportation fund.

Transportation aids

Under current law, DOT makes aid payments to counties based on a share-of-costs formula and to municipalities based on the greater of a share-of-costs formula or an aid rate per mile. Under this bill, the aid rate per mile is increased to $2,389. The bill also increases the maximum amount of aid that may be paid to counties under the program to $111,093,800 and increases the maximum amount of aid that may be paid to municipalities under the program to $348,639,300.

Under current law, DOT administers the Local Roads Improvement Program (LRIP) to assist political subdivisions in improving seriously deteriorating local roads by reimbursing political subdivisions for certain improvements. LRIP includes an entitlement component and a discretionary component. Under the entitlement component, DOT distributes an appropriated amount to political subdivisions according to statutorily prescribed allocation percentages. Under the discretionary component, DOT allocates funds in fiscal year 2016-17 and each fiscal year thereafter as follows: $5,127,000 to fund eligible county trunk highway improvements, $5,732,500 to fund eligible town road improvements, and $976,500 to fund eligible municipal street improvements.

This bill increases DOT's allocations for the discretionary component of LRIP for fiscal year 2017-18 and each fiscal year thereafter as follows: $5,500,000 to fund eligible county trunk highway improvements, $6,000,000 to fund eligible town road improvements, and $5,000,000 to fund eligible municipal street improvements.

Currently under LRIP, DOT may reimburse a political subdivision for up to 50 percent of the eligible costs of a completed improvement. Under this bill, DOT may reimburse a political subdivision for up to 50 percent of the eligible costs of an improvement funded under the entitlement component and up to 60 percent of the eligible costs of an improvement funded under the discretionary component.

Rail and air transportation

Under current law, the state may contract up to $238,300,000 in public debt for DOT to acquire railroad property and to provide grants and loans for railroad property acquisition and improvement. This bill increases this authorized general obligation bonding limit for these purposes to $250,300,000.

Other transportation

Under this bill, beginning on June 30, 2020, the secretary of administration must annually transfer from the petroleum inspection fund to the transportation fund the unencumbered balance of the petroleum inspection fund, less a reserve amount.

This bill also transfers $24,000,000 from the petroleum inspection fund to the transportation fund in each year of the fiscal biennium.

This bill also allows general obligation bonding in an amount not exceeding $120,000,000 for DOT to provide grants for harbor improvements.

veterans

This bill increases the maximum that a federally recognized state veterans organization may receive under a certain grant program administered by DVA from $70,000 to $100,000. The bill also removes the current law requirement that grants that are provided by DVA to counties to improve services for veterans are provided solely on a reimbursable basis.

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.

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

SB30,1 Section 1 . 13.0963 of the statutes is created to read:

SB30,50,4 13.0963 Review of bills creating occupational licenses. (1) Definition. In this section, “license” includes any permit, certificate, approval, registration, charter or similar form of permission.

SB30,51,6 (2) Report on bills creating occupational licenses. (a) If any bill that is introduced in either house of the legislature creates a requirement that an individual obtain a license in order to engage in a particular profession or occupation or a requirement that a license be obtained in order for a particular type of business to be owned or operated, the department of administration shall prepare and issue an occupational license report on the bill within 30 business days after it is introduced. The department shall request information from any individual or business that the department considers likely to be affected by the proposed licensure requirement and shall request a statement or analysis from the agency that would be required to administer the licensure requirement. Individuals, businesses, and agencies shall comply with requests by the department for information that is reasonably necessary for the department to prepare the report. To the greatest extent possible, reports under this section shall be based on the information obtained by the department from individuals, businesses, and agencies under this paragraph.

SB30,51,10 (b) A bill that requires a report by the department of administration under this section shall have that requirement noted on its jacket when the jacket is prepared. When a bill that requires a report under this section is introduced, the legislative reference bureau shall submit a copy of the bill to the department of administration.

SB30,51,17 (c) The report prepared under this section shall be printed as an appendix to the applicable bill and shall be distributed in the same manner as amendments. The report shall be distributed before any vote is taken on the bill by either house of the legislature if the bill is not referred to a standing committee, or before any public hearing is held before any standing committee or, if no public hearing is held, before any vote is taken by the committee. The department of administration shall also publish the report on its Internet site.

SB30,51,19 (3) Findings to be contained in the report. The department of administration shall include all of the following in a report prepared under sub. (2):

SB30,51,23 (a) An evaluation of whether the unregulated practice of the profession, occupation, or business can clearly harm or endanger the health, safety, or welfare of the public, and whether the potential for the harm is recognizable and not remote or speculative.

SB30,51,25 (b) An evaluation of whether the public can reasonably be expected to benefit from the requirement for the license.

SB30,52,2 (c) An evaluation of whether the public can be effectively protected by any means other than requiring a license.