SB89: Bill Text

LRB-1830/2

JK/TJD/AJM/ARG:wlj

2017 - 2018 LEGISLATURE

2017 Senate BILL 89

March 2, 2017 - Introduced by Senator Marklein, cosponsored by Representatives Novak, E. Brooks, Ripp, Skowronski and Spiros. Referred to Committee on Revenue, Financial Institutions and Rural Issues.

SB89,2,2 An Act to repeal 74.41 (2) (a); to renumber and amend 71.255 (2) (c), 71.34 (1k) (h), 125.02 (18), 139.11 (4) (a) and 196.025 (6) (d) 2.; to consolidate, renumber and amend 196.025 (6) (d) (intro.) and 1.; to amend 70.52, 71.05 (25) (a) 2., 71.255 (7) (b) 7., 74.41 (2) (intro.), 74.41 (2) (b), 77.51 (5), 77.51 (11d), 77.54 (30) (a) 6., 77.70, 77.76 (3), 77.82 (8), 77.98 (3), 77.98 (4) (a), 125.29 (6), 139.38 (6), 139.82 (6), 177.24 (3) (a), 196.025 (6) (b) 1., 196.025 (6) (b) 2., 196.025 (6) (c) 2., 565.02 (1) (c), 565.02 (2) (d), 565.25 (4) and 565.30 (5); and to create 71.05 (25) (a) 1m., 71.05 (26) (a) 2m., 71.255 (2) (c) 2., 71.255 (2) (c) 3., 71.34 (1k) (h) 1., 71.34 (1k) (h) 2., 74.41 (2) (bm), 77.51 (13) (fm), 77.51 (17g), 77.52 (2m) (am), 77.52 (4), 77.54 (30) (g), 77.54 (64), 125.02 (18) (a) to (h), 139.11 (4) (a) 2., 177.24 (3) (c), 196.025 (6) (cm), 565.01 (6p), 565.17 (1m) and 565.40 (3) of the statutes; relating to: tax administration changes, the police and fire protection fee, defining restaurant for purposes of alcohol beverage regulation, lottery ticket couriers, background investigations of persons associated with the lottery, and providing a criminal penalty.

Analysis by the Legislative Reference Bureau

This bill makes various changes to laws administered by the Department of Revenue.

Taxation

The bill creates a sales and use tax exemption for patient health care records sold to the patient or a person that the patient authorizes to receive the records. The exemption is consistent with a recent Tax Appeals Commission decision. See Cannon & Dunphy, S.C. v. Wisconsin Dept. of Revenue (CCH 401-970).

The bill also provides that tangible personal property transferred by a service provider in conjunction with the sale of a service is not considered incidental to the sale if the seller charges a separate and optional fee for the transferred property.

With regard to the county sales tax, the bill prohibits DOR from acting on any claim for a refund or adjustment of the tax after the end of the year that is four years after the year in which the county enacts an ordinance to repeal the tax.

The bill also replaces an obsolete reference to the definition of “active foreign business income” under the Internal Revenue Code with the actual language of that definition that existed prior to 2011. In addition, the bill modifies the law related to filing informational returns for the payment of wages, salaries, commissions, bonuses, and rent so that the same provisions that apply to individuals and corporations apply to tax-options corporations.

For purposes of claiming a capital gains income tax deferral or exclusion based on investments in a qualified business, the bill defines “investment” as amounts paid to acquire stock or other ownership interest in a partnership, corporation, tax-option corporation, or limited liability company treated as a partnership or corporation.

Under the bill, with regard to the administration of various excise taxes, DOR must publish on its Internet site a list of persons holding valid permits for the sale of cigarettes, tobacco products, and fermented malt beverages.

Finally, the bill makes technical changes related to the property tax assessment roll, filing duplicate paperwork with DOR regarding managed forest land, the charge-back of refunded or rescinded property taxes, the sales and use tax exemption for fuel and electricity consumed in manufacturing, and the administration of the food and beverage taxes imposed by an exposition district.

Unclaimed property

The bill does not require DOR to pay interest to a person who receives the person's previously unclaimed property from the state if that property is a U.S. savings bond. Under current law, DOR pays interest on unclaimed property received by a claimant if the property was interest bearing to the owner on the date that the person holding the property surrendered it to DOR.

Lottery

The bill explicitly prohibits the operation of a ticket courier service to sell Wisconsin lottery tickets. Under the bill, a ticket courier service is a service operated for the purpose of purchasing Wisconsin lottery tickets on behalf of individuals located within or outside Wisconsin and delivering or transmitting those tickets, or electronic images of those tickets, to those individuals as a for-profit, business service. Currently, the Wisconsin Constitution generally prohibits the purchase of Wisconsin lottery tickets or participation in the lottery by use of the telephone, computer, or other electronic, telecommunication, video, or technological aid.

The bill specifies that DOR, with assistance of the Department of Justice, must repeat, every five years, the background investigation of lottery employees, the lottery administrator, and lottery vendors and certain associates of vendors. The bill also allows DOR, with assistance from DOJ, to conduct initial background investigations of any person who may come into contact with sensitive information associated with the lottery and any person who may have access to secured areas and requires DOR, with assistance from DOJ, to repeat the background investigation every five years.

The bill changes from $1,000 to $600 the amount of lottery prize winnings for which the lottery administrator must report the amounts of the winnings for the purpose of determining whether the winner owes taxes or delinquent child support. DOR must withhold the owed taxes or child support from the lottery winnings.

Police and fire protection fee

This bill makes changes to the administration of a fee charged for phone line connections and prepaid wireless telecommunications plans. Under current law, the Public Service Commission charges a communications provider or retailer a fee, known as the police and fire protection fee, for each phone line connection or prepaid wireless telecommunications plan provided by the communications provider or retailer. Current law also provides that the PSC may contract with DOR only for the collection of the fee for prepaid wireless telecommunications plans. The bill allows the PSC to contract with DOR to administer the collection of the fee for each phone line connection. If the PSC contracts with DOR for the collection of the fee, DOR may require communications providers and retailers to register with DOR, conduct audits of communications providers and retailers to ensure compliance with the fee, and collect delinquent fee payments. The bill provides that a communications provider or retailer may request a redetermination of the fee from DOR and may file an objection to that redetermination with the PSC.

Alcohol regulation; restaurants

This bill changes the definition of “restaurant” for purposes relating to the licensing and regulation of alcohol beverage establishments, and makes a change to correspond to this definitional change. Under the bill, a place where meals are prepared or served or sold to the general public may qualify as a restaurant even if this is not the predominant activity at that place.

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.

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:

SB89,1 Section 1. 70.52 of the statutes is amended to read:

SB89,4,14 70.52 Clerks to examine and correct rolls. Each city, village, and town clerk upon receipt of the assessment roll shall carefully examine the roll. The clerk shall correct all double assessments, imperfect descriptions, and other errors apparent upon the face of on the roll, and strike off all correct the value of parcels of real property not liable to taxation. The clerk shall add to the roll any parcel of real property not listed on the assessment roll or item of personal property omitted by the assessors from the roll and immediately notify the assessors of the additions and omissions. The assessors shall immediately view and value the omitted property and certify the valuation to the clerk. The clerk shall enter the valuation upon and property classification on the roll, and the valuation shall be final. To enable the clerk to properly correct defective descriptions, the clerk may request aid, when necessary, from the county surveyor, whose fees for the services rendered shall be paid by the city, village, or town.

SB89,2 Section 2. 71.05 (25) (a) 1m. of the statutes is created to read:

SB89,4,18 71.05 (25) (a) 1m. “Investment” means amounts paid to acquire stock or other ownership interest in a partnership, corporation, tax-option corporation, or limited liability company treated as a partnership or corporation.

SB89,3 Section 3. 71.05 (25) (a) 2. of the statutes is amended to read:

SB89,5,8 71.05 (25) (a) 2. “Qualifying gain" means a long-term capital gain under the Internal Revenue Code realized from the sale of an investment made after December 31, 2010, and held for at least 5 uninterrupted years in a business that for the year of investment and at least 2 of the 4 subsequent years was a qualified Wisconsin business; except that a qualifying gain may not include any amount for which the claimant claimed a subtraction under sub. (24) (b) or any gain described under sub. (26) (b) and may not exceed the fair market value of the investment on the date sold, less the fair market value of the investment on the date acquired.

SB89,4 Section 4. 71.05 (26) (a) 2m. of the statutes is created to read:

SB89,5,12 71.05 (26) (a) 2m. “Investment” means amounts paid to acquire stock or other ownership interest in a partnership, corporation, tax-option corporation, or limited liability company treated as a partnership or corporation.

SB89,5 Section 5. 71.255 (2) (c) of the statutes is renumbered 71.255 (2) (c) 1. and amended to read:

SB89,5,20 71.255 (2) (c) 1. Except as provided in par. (d), if 80 percent or more of a corporation's worldwide income is active foreign business income, as defined in section 861 (c) (1) (B) of the Internal Revenue Code, the income and apportionment factor or factors of the corporation shall not be included in the combined report, but the corporation shall compute and allocate or apportion its income from the unitary business separately.

SB89,6 Section 6. 71.255 (2) (c) 2. of the statutes is created to read:

SB89,6,2 71.255 (2) (c) 2. For purposes of subd. 1., “active foreign business income” means gross income derived from sources outside the United States, as determined in subchapter N of the Internal Revenue Code, including income of a subsidiary corporation, and attributable to the active conduct of a trade or business in a foreign country or in a U.S. possession.

SB89,7 Section 7. 71.255 (2) (c) 3. of the statutes is created to read:

SB89,6,7 71.255 (2) (c) 3. For purposes of subd. 2., a corporation is considered a subsidiary if the parent corporation owns, directly or indirectly, stock with at least 50 percent of the total voting power of the corporation and the stock has a value equal to at least 50 percent of the total value of the stock of the corporation.

SB89,8 Section 8. 71.255 (7) (b) 7. of the statutes is amended to read:

SB89,6,14 71.255 (7) (b) 7. Executing waivers, closing agreements, powers of attorney, and other documents as necessary or required regarding the combined report filed under sub. (2) (a). Any waiver, agreement, power of attorney, or document executed by the designated agent relating to a combined report shall be considered as executed by all members of the combined group, including any corporation not included in the combined report that the department asserts is a member of the combined group.

SB89,9 Section 9. 71.34 (1k) (h) of the statutes is renumbered 71.34 (1k) (h) (intro.) and amended to read:

SB89,6,18 71.34 (1k) (h) (intro.) Section 162 of the internal revenue code Internal Revenue Code (relating to trade or business expenses) is modified so as follows:

SB89,6,21 3. So that payments for wages, salaries, bonuses, interest or other expenses paid to an entertainer or entertainment corporation may be deducted only if the corporation complies with ss. 71.63 (3) (b), 71.64 (4) and (5), and 71.80 (15) (e).

SB89,10 Section 10. 71.34 (1k) (h) 1. of the statutes is created to read:

SB89,7,2 71.34 (1k) (h) 1. So that payments for wages, salaries, commissions, and bonuses of employees and officers may be deducted only if the name, address, and amount paid to each resident of this state to whom compensation of $600 or more has been paid during the taxable year is reported or if the department of revenue is satisfied that failure to report has resulted in no revenue loss to this state.

SB89,11 Section 11. 71.34 (1k) (h) 2. of the statutes is created to read:

SB89,7,6 71.34 (1k) (h) 2. So that payments for rent may be deducted only if the amount paid, together with the names and addresses of the parties to whom rent has been paid, is reported as provided under s. 71.70 (2).

SB89,12 Section 12. 74.41 (2) (intro.) of the statutes is amended to read:

SB89,7,9 74.41 (2) Amount required for submission. (intro.) A tax may be included on a form submitted under sub. (1) only if one all of the following applies apply:

SB89,13 Section 13. 74.41 (2) (a) of the statutes is repealed.

SB89,14 Section 14. 74.41 (2) (b) of the statutes is amended to read:

SB89,7,13 74.41 (2) (b) The tax under sub. (1) for any single description of property in the tax roll for any one year is $500 $250 or more.

SB89,15 Section 15. 74.41 (2) (bm) of the statutes is created to read:

SB89,7,19 74.41 (2) (bm) The tax under sub. (1) was refunded or rescinded for any of the 5 assessment years immediately preceding the year in which the form under sub. (1) is submitted or refunded or rescinded because of a court determination and submitted under sub. (1) no later than one year after the date of the court's determination.

SB89,16 Section 16. 77.51 (5) of the statutes is amended to read:

SB89,8,7 77.51 (5) For purposes of subs. (13) (e) and (f) and (15a) and s. 77.52 (2m), “incidental" means depending upon or appertaining to something else as primary; something necessary, appertaining to, or depending upon another which is termed the principal; or something incidental to the main purpose of the service. Tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) transferred by a service provider in conjunction with the sale of a service is incidental to the service if the purchaser's main purpose or objective is to obtain the service rather than the property, items, or goods, even though the property, items, or goods may be necessary or essential to providing the service. Tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) transferred by a service provider in conjunction with the sale of a service is not incidental to the service if the service provider charges a separate and optional fee for the property, items, or goods.

SB89,17 Section 17. 77.51 (11d) of the statutes is amended to read:

SB89,8,12 77.51 (11d) For purposes of subs. (1ag), (1f), (3pf), and (9p), and (17g) and ss. 77.52 (4), (20), and (21), 77.522, and 77.54 (51), (52), and (60), “product" includes tangible personal property, and items, property, and goods under s. 77.52 (1) (b), (c), and (d), and services.

SB89,18 Section 18. 77.51 (13) (fm) of the statutes is created to read:

SB89,8,15 77.51 (13) (fm) A person selling, performing, or furnishing any service under s. 77.52 (2) (a) 5. or 12. to a service provider described in s. 77.52 (2m) (am).

SB89,19 Section 19. 77.51 (17g) of the statutes is created to read:

SB89,8,18 77.51 (17g) “Separate and optional fee” means a fee charged to receive a distinct and identifiable product, if any of the following applies:

SB89,8,23 (a) The fee is in addition to fees that the seller charges for other distinct and identifiable products sold to the same buyer, the fee is separately set forth on the invoice given by the seller to the buyer, and the seller does not require the buyer to pay the fee if the buyer chooses not to receive the additional distinct and identifiable product for which the fee applies.

SB89,9,5 (b) The seller charges a single amount for multiple distinct and identifiable products and offers the buyer the option of paying a lower amount if the buyer chooses not to receive one or more of the distinct and identifiable products. For purposes of this paragraph, the separate and optional fee is the single amount the seller charges for the multiple distinct and identifiable products less the reduced amount the seller charges to the buyer because the buyer chooses not to receive one or more of the products.

SB89,20 Section 20. 77.52 (2m) (am) of the statutes is created to read:

SB89,9,10 77.52 (2m) (am) A person selling, performing, or furnishing any service in sub. (2) (a) 1., regardless of whether the selling, performing, or furnishing of the service is a retail sale, is the consumer of any services under sub. (2) (a) 5. or 12. purchased by the person for the person's use or for the use of the person's customers.