Amendment SA5-AB56

SENATE AMENDMENT 5, TO ASSEMBLY BILL 56

June 26, 2019 - Offered by Senators Ringhand, Schachtner, Shilling, Hansen, Bewley, Risser, Carpenter, Wirch, L. Taylor, Erpenbach, Smith, Larson, Miller and Johnson.

AB56-SA5,1,2 At the locations indicated, amend the bill, as shown by assembly substitute amendment 1, as follows:

AB56-SA5,1,3 1. Page 376, line 7: after that line insert:

AB56-SA5,1,4 “ Section 827m. 70.03 (1) of the statutes is amended to read:

AB56-SA5,2,4 70.03 (1) In chs. 70 to 76, 78, and 79, “real property," “real estate," and “land" include not only the land itself but all buildings and , fixtures, improvements thereon, and all fixtures and, leases, rights, and privileges appertaining thereto, including assets that cannot be taxed separately as real property, but are inextricably intertwined with the real property, enable the real property to achieve its highest and best use, and are transferable to future owners, except as provided in sub. (2) and except that for the purpose of time-share property, as defined in s. 707.02 (32), real property does not include recurrent exclusive use and occupancy on a periodic basis or other rights, including, but not limited to, membership rights, vacation services, and club memberships. In this subsection, “lease” means a right in real estate that is related primarily to the property and not to the labor, skill, or business acumen of the property owner or tenant. In this subsection, “highest and best use” has the meaning given in s. 70.32 (1).”.

AB56-SA5,2,5 2. Page 376, line 20: after that line insert:

AB56-SA5,2,6 “ Section 829m. 70.32 (1) of the statutes is amended to read:

AB56-SA5,3,2 70.32 (1) Real property shall be valued by the assessor in the manner specified in the Wisconsin property assessment manual provided under s. 73.03 (2a) at its highest and best use from actual view or from the best information that the assessor can practicably obtain, at the full value which could ordinarily be obtained therefor at private sale. In determining the value, the assessor shall consider recent arm's-length sales of the property to be assessed if according to professionally acceptable appraisal practices those sales conform to recent arm's-length sales of reasonably comparable property; recent arm's-length sales of reasonably comparable property; and all factors that, according to professionally acceptable appraisal practices, affect the value of the property to be assessed. In this subsection, “arm's-length sale" means a sale between a willing buyer and willing seller, neither being under compulsion to buy or sell and each being familiar with the attributes of the property sold. In this subsection, “highest and best use" means the specific use of the property as of the current assessment date or a higher use to which the property can be expected to be put before the next assessment date, if the use is legally permissible, physically possible, not highly speculative, and financially feasible and provides the highest net return. When the current use of a property is the highest and best use of that property, value in the current use equals full market value. In this subsection, “legally permissible” does not include a conditional use that has not been granted as of the assessment date.

AB56-SA5,830m Section 830m. 70.32 (1b) of the statutes is created to read:

AB56-SA5,3,12 70.32 (1b) In determining the value of real property under sub. (1), the assessor shall consider, as part of the valuation under sub. (1), any lease provisions and actual rent pertaining to a property and affecting its value, including the lease provisions and rent associated with a sale and leaseback of the property, if all such lease provisions and rent are the result of an arm's-length transaction involving persons who are not related, as provided under section 267 of the Internal Revenue Code for the year of the transaction. In this subsection, an “arm's-length transaction" means an agreement between willing parties, neither being under compulsion to act and each being familiar with the attributes of the property.

AB56-SA5,831m Section 831m. 70.32 (1d) of the statutes is created to read:

AB56-SA5,3,16 70.32 (1d) (a) To determine the value of property using generally accepted appraisal methods, the assessor shall consider all of the following as comparable to the property being assessed:

AB56-SA5,3,19 1. Sales or rentals of properties exhibiting the same or a similar highest and best use, as defined in sub. (1), with placement in the same real estate market segment.

AB56-SA5,3,24 2. Sales or rentals of properties that are similar to the property being assessed with regard to age, condition, use, type of construction, location, design, physical features, and economic characteristics, including similarities in occupancy and the potential to generate rental income. For purposes of this subdivision, such properties may be found locally, regionally, or nationally.

AB56-SA5,4,2 (b) For purposes of par. (a), a property is not comparable if any of the following applies:

AB56-SA5,4,6 1. At or before the time of sale, the seller places any deed restriction on the property that changes the highest and best use, as defined in sub. (1), of the property, or prohibits competition, so that it no longer qualifies as a comparable property under par. (a) 1. or 2. and the property being assessed lacks such a restriction.

AB56-SA5,4,11 2. The property is dark property and the property being assessed is not dark property. In this subdivision, “dark property” means property that is vacant or unoccupied beyond the normal period for property in the same real estate market segment. For purposes of this subdivision, what is considered vacant or unoccupied beyond the normal period may vary depending on the property location.

AB56-SA5,4,17 (c) For purposes of par. (a), “real estate market segment” means a pool of potential buyers and sellers that typically buy or sell properties similar to the property being assessed, including potential buyers who are investors or owner-occupants. For purposes of this paragraph, and depending on the type of property being assessed, the pool of potential buyers and sellers may be found locally, regionally, nationally, or internationally.

AB56-SA5,4,19 (d) The department of revenue shall assist local assessors with implementing and applying this subsection.”.

AB56-SA5,4,20 3. Page 378, line 14: after that line insert:

AB56-SA5,4,21 “ Section 868f. 71.05 (6) (b) 43. d. of the statutes is amended to read:

AB56-SA5,4,24 71.05 (6) (b) 43. d. For taxable years beginning after December 31, 2013, and before January 1, 2020, up to $3,000 if the claimant has one qualified individual and up to $6,000 if the claimant has more than one qualified individual.”.

AB56-SA5,5,1 4. Page 379, line 13: after that line insert:

AB56-SA5,5,2 “ Section 883c. 71.07 (5me) of the statutes is created to read:

AB56-SA5,5,4 71.07 (5me) Family and individual reinvestment credit. (a) Definitions. In this subsection:

AB56-SA5,5,6 1. “Claimant" means an individual who is eligible to claim the credit under this subsection.

AB56-SA5,5,8 2. “Household" means a claimant and an individual related to the claimant as husband or wife.

AB56-SA5,5,10 3. “Net tax liability" means a claimant's income tax liability after he or she completes the computations for nonrefundable credits listed in s. 71.10 (4) (a) to (gy).

AB56-SA5,5,14 (b) Filing claims. For taxable years beginning after December 31, 2018, and subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, one of the following amounts:

AB56-SA5,5,17 1. If the claimant is single or files as a head of household and his or her adjusted gross income is less than $80,000 in the year to which the claim relates, the greater of $100 or an amount equal to 10 percent of his or her net tax liability.

AB56-SA5,5,20 2. If the claimant is single or files as a head of household and his or her adjusted gross income is at least $80,000 but less than $100,000 in the year to which the claim relates, an amount that is calculated as follows:

AB56-SA5,5,23 a. Calculate the value of a fraction, the denominator of which is $20,000 and the numerator of which is the difference between the claimant's adjusted gross income and $80,000.

AB56-SA5,5,24 b. Subtract from 1.0 the amount that is calculated under subd. 2. a.

AB56-SA5,6,1 c. Multiply the amount that is calculated under subd. 2. b. by 10 percent.

AB56-SA5,6,3 d. Multiply the amount of the claimant's net income tax liability by the amount that is calculated under subd. 2. c.

AB56-SA5,6,7 3. If the claimant is married and filing jointly and the sum of the claimant's adjusted gross income and his or her spouse's adjusted gross income is less than $125,000 in the year to which the claim relates, the greater of $50 or an amount equal to 10 percent of the married couple's net tax liability.

AB56-SA5,6,11 4. If the claimant is married and filing jointly and the sum of the claimant's adjusted gross income and his or her spouse's adjusted gross income is at least $125,000 but less than $150,000 in the year to which the claim relates, an amount that is calculated as follows:

AB56-SA5,6,14 a. Calculate the value of a fraction, the denominator of which is $25,000 and the numerator of which is the difference between the married couple's adjusted gross income and $125,000.

AB56-SA5,6,15 b. Subtract from 1.0 the amount that is calculated under subd. 4. a.

AB56-SA5,6,16 c. Multiply the amount that is calculated under subd. 4. b. by 10 percent.

AB56-SA5,6,18 d. Multiply the amount of the married couple's net income tax liability by the amount that is calculated under subd. 4. c.

AB56-SA5,6,21 5. If the claimant is married and filing separately and his or her adjusted gross income is less than $62,500 in the year to which the claim relates, the greater of $25 or an amount equal to 10 percent of his or her net tax liability.

AB56-SA5,6,24 6. If the claimant is married and filing separately and his or her adjusted gross income is at least $62,500 but less than $75,000 in the year to which the claim relates, an amount that is calculated as follows:

AB56-SA5,7,3 a. Calculate the value of a fraction, the denominator of which is $12,500 and the numerator of which is the difference between the claimant's adjusted gross income and $75,000.

AB56-SA5,7,4 b. Subtract from 1.0 the amount that is calculated under subd. 6. a.

AB56-SA5,7,5 c. Multiply the amount that is calculated under subd. 6. b. by 10 percent.

AB56-SA5,7,7 d. Multiply the amount of the claimant's net income tax liability by the amount that is calculated under subd. 6. c.

AB56-SA5,7,9 (c) Limitations. 1. No credit may be allowed under this subsection unless it is claimed within the period under s. 71.75 (2).

AB56-SA5,7,11 2. Part-year residents and nonresidents of this state are not eligible for the credit under this subsection.

AB56-SA5,7,13 3. Except as provided in subd. 4., only one credit per household is allowed each year.

AB56-SA5,7,17 4. If a married couple files separately, each spouse may claim the credit calculated under par. (b) 5. or 6., except a married person living apart from the other spouse and treated as single under section 7703 (b) of the Internal Revenue Code may claim the credit under par. (b) 1. or 2.

AB56-SA5,7,19 5. The credit under this subsection may not be claimed by a person who may be claimed as a dependent on the individual income tax return of another taxpayer.

AB56-SA5,7,24 (d) Administration. The department of revenue may enforce the credit under this subsection and may take any action, conduct any proceeding, and proceed as it is authorized in respect to taxes under this chapter. The income tax provisions in this chapter relating to assessments, refunds, appeals, collection, interest, and penalties apply to the credit under this subsection.

AB56-SA5,884m Section 884m. 71.07 (8m) of the statutes is created to read:

AB56-SA5,8,2 71.07 (8m) Additional household and dependent care expenses tax credit. (a) Definitions. In this subsection:

AB56-SA5,8,5 1. “Claimant" means an individual who is eligible for and claims the household and dependent care expenses tax credit for the taxable year to which the claim under this subsection relates.

AB56-SA5,8,7 2. “Household and dependent care expenses tax credit" means the tax credit under section 21 of the Internal Revenue Code.

AB56-SA5,8,13 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 50 percent of the amount of the household and dependent care expenses tax credit that the claimant claimed on his or her federal income tax return for the taxable year to which the claim under this subsection relates.

AB56-SA5,8,15 (c) Limitations. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB56-SA5,8,18 2. No credit may be allowed under this subsection for a taxable year covering a period of less than 12 months, except for a taxable year closed by reason of the death of the taxpayer.

AB56-SA5,8,20 3. The credit under this subsection may not be claimed by either a part-year resident or a nonresident of this state.

AB56-SA5,8,22 4. The credit under this subsection may be claimed for taxable years beginning after December 31, 2019.

AB56-SA5,8,24 5. A claimant who claims the credit under this subsection is subject to the special rules in 26 USC 21 (e) (2) and (4).

AB56-SA5,9,2 (d) Administration. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB56-SA5,886g Section 886g. 71.10 (4) (cs) of the statutes is created to read:

AB56-SA5,9,5 71.10 (4) (cs) Additional household and dependent care expenses tax credit under s. 71.07 (8m).

AB56-SA5,886m Section 886m. 71.10 (4) (gye) of the statutes is created to read:

AB56-SA5,9,8 71.10 (4) (gye) Family and individual reinvestment credit under s. 71.07 (5me).”.

AB56-SA5,9,9 5. Page 506, line 8: after that line insert:

AB56-SA5,9,11 “(1p) Real property tax assessments. The treatment of ss. 70.03 (1) and 70.32 (1), (1b), and (1d) first applies to the property tax assessments as of January 1, 2020.”.

AB56-SA5,9,12 (End)