SECTION 8. Tax 14.01(7)(a)1. to 4. and (b) are created to read:
Tax 14.01(7)(a)1. The “intent to defeat or evade" provision under s. 71.77(3), Stats.
2. The “extension agreement" provision under s. 71.77(5), Stats.
3. The “six-year" provision under s. 71.77(7)(a), Stats.
4. The “federal change" provisions under s. 71.77(7)(b), Stats.
(b) Under s. 71.75(7), Stats., the department shall act on a claim for homestead credit within one year after it receives the claim, or the credit shall be allowed even if incorrect, unless the claimant has agreed in writing to an extension of the one-year time period. Within the one-year period, prior to allowing the credit, the claimed credit may be reduced. However, under s. 71.74(8)(a), Stats., if the date of acting on an amended claim is later than the last date for adjusting an original claim as provided in par. (a), the credit may not be reduced to an amount less than the credit allowed on the original claim, and after allowing the credit on the amended claim no further reduction of the credit may be made.
Example: Claimant A timely files a 1995 claim for homestead credit and receives a homestead credit of $500. On November 1, 2001, Claimant A files an amended 1995 claim for homestead credit claiming a revised 1995 credit of $700. Upon review of the file, the department determines that Claimant A's correct homestead credit for 1995 is $300 rather than the $500 allowed on the original claim or the $700 claimed on the amended claim.
Since the amended 1995 homestead credit claim will be acted on after April 15, 2000, the last date for adjusting an original 1995 claim, the department must act on the amended claim by November 1, 2002. Prior to that date the department may notify Claimant A that no additional credit is allowable for 1995. However, the $200 of excessive credit allowed on the original claim, the difference between the $500 allowed and the correct credit of $300, may not be recovered by the department.
SECTION 9. Tax 14.01(8) is amended to read:
Tax 14.01(8)(title) INTEREST AND PENALTIES ON INCORRECT CLAIMS. (a) Excessive claims. Excessive Under s. 71.82(1)(c), Stats., excessive homestead credit amounts, not the result of negligence or fraudulent intent, that have been paid or credited shall be subject to interest as provided by s. 71.82(1)(c), Stats. The interest shall be imposed from the date on which the excessive amount was paid or credited, but not earlier than from December 31 of the year following the year to which the claim relates, to the date on which the amount when subsequently assessed will become delinquent if unpaid. If unpaid by the due date shown on the notice of adjustments to the homestead credit claim, the amount due, including interest, shall be subject to delinquent interest at the rate provided by s. 71.82(2)(a), Stats. at 12% per year from the deadline for filing the claim. Assessments to collect excessive homestead credit amounts payable before the deadline for filing the claim may not include interest charges.
(b) Understated claims. Under s. 71.55(4), Stats., the department may not pay interest on any homestead credit, including any additional credit, refund, or payment allowed as the result of the review of a homestead credit claim or an amended claim.
Note to Revisor: Replace the 2 notes at the end of Tax 14.01 with the following:
Note: Blank forms for filing a homestead credit claim, rent certificates and instructions for claiming the credit may be obtained at any department office throughout the state or by writing to Wisconsin Department of Revenue, P.O. Box 8903, Madison, WI 53708-8903.
Note: Section Tax 14.01 interprets ss. 71.03(6m), 71.51 to 71.55, 71.74(8)(a), 71.75(2) and (7), 71.77(2) and 71.82(1)(c), Stats.
SECTION 10. Tax 14.02(2)(c) is repealed.
Note to Revisor: 1) Insert the following note at the end of sub. (2)(b):
Note: Requests for a determination under par. (b) should be addressed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.
2) Replace the example at the end of sub. (4) with the following:
Example: A household owns and occupies a homestead in Wisconsin from January 1 to April 30, and then establishes a homestead in a rented dwelling in Wisconsin with no heat furnished for the remainder of the calendar year. The annual property taxes accrued on the owned homestead equaled $1,800 and gross rent paid for the last 8 months of the year totaled $2,800.
The property taxes and rent allowable for homestead credit purposes equals $1,300, consisting of four-twelfths of the $1,800 of property taxes accrued, or $600, plus 25% of the gross rent of $2,800, or $700 of rent constituting property taxes accrued.
SECTION 11. Tax 14.02(5), (9), (10) and (11) are amended to read:
Tax 14.02(5) HOUSEHOLD OCCUPYING MORE THAN ONE DWELLING AT THE SAME TIME. Under s. 71.52(2), Stats., “gross rent" is rental paid for the right of occupancy of a homestead, and under s. 71.52(7), Stats., “property taxes accrued" are property taxes levied on the homestead of a household. Since a homestead is the principal dwelling of a household, if a household pays gross rent or property taxes accrued on 2 dwellings occupied concurrently by a the household are not allowable. The, a claimant may claim only the rent or property taxes pertaining to the principal dwelling.
Note to Revisor: Replace example 2 at the end of sub. (5) with the following:
2) A claimant moves from one apartment to another and pays rent for both apartments for a two-month period.
(9) PERSON CLAIMING A FARMLAND PRESERVATION CREDIT. Under s. 71.58(1)(b), Stats., a person is not eligible for a homestead credit if the person qualifies for and claims a farmland preservation credit for the same year to which a homestead credit claim relates. However, if a person who has claimed a farmland preservation credit withdraws the claim, the person is no longer ineligible to receive a homestead credit because of the filing of a farmland preservation credit claim. Withdrawal of the farmland preservation credit claim shall be in writing and should be mailed to the Wisconsin Department of Revenue, Post Office Box 8906, Madison, WI 53708. A homestead credit claim filed after the withdrawal of a farmland preservation credit claim shall be filed by the normal due date deadline for filing a homestead credit claim or the department shall disallow the claim.
Note to Revisor: Replace the example at the end of sub. (9) with the following example and add the following note:
Example: A 1997 homestead credit claim filed after the withdrawal of a 1997 farmland preservation credit claim must be filed on or before April 15, 2002.
Note: A written withdrawal of a farmland preservation credit claim should be mailed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.
(10) PERSON CLAIMED AS A DEPENDENT. Under s. 71.53(2)(d), Stats., a person does not qualify for a homestead credit if the person is claimed as a dependent for federal income tax purposes during the year to which the claim relates, unless the person claiming a homestead credit is 62 years of age or older as of December 31 of the claim year. However, a person is not disqualified if the person any of the following apply:
(a) Is The person is improperly claimed as a dependent on a federal income tax return;.
(b) Qualifies The person qualifies to be claimed as a dependent on a federal income tax return but is not claimed;or
.
(c) Is The person is properly claimed as a dependent on a federal income tax return but on a later amended federal income tax return is not so claimed.
(11) DECEASED CLAIMANT. Under s. 71.53(1)(b), Stats., a claimant person must be alive at the time a homestead credit claim is filed. A claim completed and signed but not filed until after a claimant's person's death shall be denied.
Note to Revisor: Remove the “1)" from the first note at the end of Tax 14.02, and replace the second note with the following:
Note: Section Tax 14.02 interprets ss. 71.52(1), (2) and (7), 71.53(1)(b) and (c) and (2)(d) and 71.58(1)(b), Stats.
SECTION 12. Tax 14.03(2)(intro.) is created to read:
Tax 14.03(2)(intro.) DEFINITIONS. In this section:
SECTION 13. Tax 14.03(3)(a), (b) and (c)2. and (4)(b)(intro.) and 2. are amended to read:
Tax 14.03(3)(a) Under s. 71.52(5), Stats., a deduction of $250 is allowed for each of the claimant's dependents, as defined in s. 152 of the internal revenue code, who have the same principal abode as the claimant for more than 6 months during the calendar year to which a claim for homestead credit relates. A claimant may multiply the number of dependents with the same principal abode for more than 6 months by $250, and subtract the result from the total of the income items, to arrive at household income.
Note to Revisor: Replace the example at the end of sub. (3)(a) with the following:
Example: A claimant and the claimant's spouse claim 3 dependents on their 1997 federal income tax return, and all 3 dependents have the same principal abode as the claimant for the entire year. Household income items include Wisconsin adjusted gross income of $10,500, depreciation of $1,500 and unemployment insurance of $500.
Total household income is $11,750, consisting of the total of the income items listed, $12,500, minus the dependent deduction of $750, which is $250 times 3 dependents.
(b) A dependent is considered to have the same principal abode as the claimant during temporary absences from the claimant's homestead for reasons such as school attendance, illness, vacations, business commitments, or military service.
(c)2. The dependent is adopted by the claimant, is placed with the claimant for adoption, or becomes the stepchild of the claimant, and the dependent has the same principal abode as the claimant from that time to the end of that calendar year.
(4)(b)(intro.) The following amounts to the extent not included in Wisconsin adjusted gross income, or deducted in determining Wisconsin adjusted gross income:
2. Support money Court-ordered support payments, including support for dependents under ch. 49, Stats.
SECTION 14. Tax 14.03(4)(b)3. is repealed and recreated to read:
Tax 14.03(4)(b)3. Cash public assistance and county relief, including the following:
a. Aid to families with dependent children, or “AFDC."
b. Wisconsin works, or “W-2" payments.
c. Non-legally responsible relative, or “NLRR" AFDC payments or kinship care payments under s. 48.57, Stats. These are payments received as a relative other than a parent, for caring for a dependent child in the claimant's homestead.
d. Cash benefits paid by counties under s. 59.53(21), Stats.
e. Reimbursement from a governmental agency for amounts originally paid for by the recipient, not including cash reimbursements for home energy assistance or for services under Title XX of the federal social security act and community options program, or “COP" payments under s. 46.27, Stats.
f. Adoption assistance payments under Title IV-E of the federal social security act or from another state, or payments by the Wisconsin department of health and family services under s. 48.975, Stats., to adoptive parents of children having special needs as described in s. HSS 50.03(1)(b).
g. Veterans administration payments for reimbursement of services purchased by the recipient.
h. Federal housing and urban development, or “H.U.D." payments for housing.
i. Disaster relief grants under the federal disaster relief act of 1974.
SECTION 15. Tax 14.03(4)(b)5.(intro.) and a. are amended to read:
Tax 14.03(4)(b)5.(intro.) All Except as provided in subd. 3.e., all payments received for the benefit of a claimant or a member of the claimant's household under the federal social security act, including:
a. All federal social security retirement, disability, or survivorship benefits.
Note to Revisor: Replace the example at the end of sub. (4)(b)4. with the following:
Example: Gross amount of a pension. A claimant was entitled to a pension of $8,000 during the year but received only $5,600 after $2,400 was withheld by the payor for payment of health insurance premiums for the claimant. Of the $8,000 pension, $2,000 was a return of the claimant's contribution.
The gross pension of $8,000 must be included in income.
SECTION 16. Tax 14.03(4)(b)5.e. is created to read:
Tax 14.03(4)(b)5.e. Supplemental security income - exceptional needs, or “SSI-E" payments under s. 49.77(3s), Stats.
SECTION 17. Tax 14.03(4)(b)7., 11., 12., 14., 15. and 20. are amended to read:
Tax 14.03(4)(b)7. Payments made to surviving widows, widowers or parents of war veterans by the United States, but not including insurance proceeds received by beneficiaries of National Service Life Insurance.
11. Scholarship and fellowship gifts, grants, or income and other educational grants, not including student loans.
12. Unemployment compensation insurance, including railroad unemployment compensation.
14. Capital gains not included in Wisconsin adjusted gross income, but not including a gain on the sale of a personal residence deferred under s. 1034 of the internal revenue code or a nonrecognized gain from an involuntary conversion under s. 1033 of the internal revenue code.
15. A gain on the sale of a personal residence excluded under s. 121 of the internal revenue code, which is the once-in-a-lifetime exclusion for a qualifying sale by a person age 55 or older. A gain on the sale of a personal residence which would be reportable under the installment sale method if taxable may be reported either in full in the year of sale or each year as payments are received.
20. Income of an a Native American Indian which is nontaxable under ch. 71, Stats.
SECTION 18. Tax 14.03(4)(b)23.(intro.) and a. to i. are renumbered Tax 14.03(4)(c)(intro.) and 1. to 9. and as renumbered Tax 14.03(4)(c)(intro.) and 6. are amended to read:
Tax 14.03(4)(c)(intro.) The following items deducted in determining Wisconsin adjusted gross income, including items deducted in arriving at partnership, limited liability company and tax-option “S" corporation income or losses reported as a part of Wisconsin adjusted gross income:
6. Contributions to individual retirement accounts under s. 219 of the internal revenue code, including contributions to individual retirement arrangements, or “IRA's," “
IRAs," savings incentive match plans for employes, or “SIMPLEs" and simplified employe pension plans, or “SEP's." “SEPs."
SECTION 19. Tax 14.03(5) is repealed and recreated to read:
Tax 14.03(5) EXCLUSIONS FROM INCOME. (a) Under s. 71.52(6), Stats., income does not include the following:
1. Amounts described in sub. (4)(b)1., 3.e., 7., 11. and 14. as not being includable.
2. Gifts from natural persons, including voluntary support payments.
3. Relief in kind by a governmental agency, including surplus food, food stamps and payments directly to a supplier of goods or services, such as medical care, food, clothing and residential energy.
4. The nontaxable portions of lump sum insurance proceeds received:
a. For a recipient's disability or loss of limb.
b. By a beneficiary of a decedent's life insurance policy.
c. From the surrender of any portion of an insurance policy that does not constitute a personal endowment insurance policy or an annuity contract purchased by the recipient.
5. Wisconsin homestead credit amounts received.
6. Social security or SSI payments received on behalf of a claimant's children or the children of the claimant's household.
7. Pension, annuity or other retirement plan payments rolled over from one retirement plan to another.
8. Tax-free exchanges of insurance contracts under s. 1035 of the internal revenue code.
9. Crime victim compensation payments under ch. 949, Stats.
