SECTION 26. Tax 14.05(3)(b) is repealed.
SECTION 27. Tax 14.05(3)(c) and (d) are renumbered Tax 14.05(3)(b) and (c) and as renumbered Tax 14.05(3)(b) is amended to read:
Tax 14.05(3)(b) Property taxes accrued on a claimant's homestead not owned by the claimant or a member of the claimant's household, which are paid by the claimant on behalf of an owner who does not reside in the homestead and who does not claim property taxes accrued under s. 71.54(2)(c)2., Stats., shall be considered gross rent.
SECTION 28. Tax 14.05(4)(a), (b), (c) and (e) are amended to read:
Tax 14.05(4)(a) Except as provided in pars. (e) and (f), if a claimant claims rent constituting property taxes accrued the claimant and the landlord shall complete Wisconsin department of revenue form I-017, “Rent Certificate," and the claimant shall submit it with Schedule schedule H. The department is not precluded from requesting additional documentation to verify rent paid in cases it deems appropriate.
(b) If a claimant rents pays rent for more than one homestead during a year, a separate rent certificate shall be completed for each homestead for which the claimant wishes to claim a homestead credit, and the claimant shall submit all rent certificates together with a single Schedule schedule H.
(c) Landlords A landlord shall determine the reasonable value of food, medical services, and other personal services such as laundry, transportation, counseling, grooming, recreational, and therapeutic services provided to the a claimant in addition to occupancy rights and shall subtract those amounts from total rent indicated on the rent certificate, to determine rent paid for occupancy. If heat is included in the cost of the rent, landlords shall fill in the rent paid for occupancy on the line of the rent certificate so designated, or if heat is not included, they shall fill in the rent paid for occupancy on that designated line The landlord shall also indicate whether heat was included or not included in the rent by checking the appropriate box on the rent certificate.
(e) If a claimant is unable to obtain a rent certificate from a landlord, proper rent receipts, money order receipts, cancelled checks, or cancelled share drafts substantiating amounts paid shall be acceptable evidence of gross rent paid. The claimant shall
attach a statement to the homestead credit claim giving the name and address of the landlord, the address of the homestead for which credit is claimed, an explanation of the inability of the claimant to obtain a rent certificate, a list of food, medical services, and other personal services as described in par. (c) provided by the landlord, and a statement as to whether heat was included in the rent paid to the landlord, as evidence of rent constituting property taxes accrued. also include a rent certificate on which all lines except the signature line have been filled in, or a statement providing the same information as that requested on the rent certificate. The statement or rent certificate shall indicate whether heat was included in the rent, and whether food or services as described in par. (c) were provided and if so the estimated value of the food and services provided. The statement or top portion of the rent certificate should be marked with a comment such as “Landlord Refuses to Sign."
SECTION 29. Tax 14.05(5) is repealed and recreated to read:
Tax 14.05(5) EFFECT OF RELIEF AND OTHER PUBLIC ASSISTANCE. (a) Under s. 71.54(2)(a), Stats., rent constituting property taxes accrued shall be reduced by one-twelfth for each month or portion of a month for which the claimant received either $400 or more of county relief under s. 59.53(21), Stats., or any amount of aid to families with dependent children, or “AFDC" under s. 49.19, Stats., Wisconsin works payments for community service jobs or transitional placements under s. 49.147(4) or (5), Stats., or Wisconsin works payments as a caretaker of a newborn child under s. 49.148(1m), Stats. However, rent constituting property taxes accrued need not be reduced if the assistance consists solely of foster care payments under s. 49.19(10)(a), Stats., non-legally responsible relative, or “NLRR" AFDC payments or kinship care payments.
(b) County relief and other cash public assistance payments that are repaid by the claimant in the same calendar year in which they are received are not considered payments for purposes of computing the one-twelfth reduction of rent constituting property taxes accrued as required by par. (a).
SECTION 30. Tax 14.05(7), (8)(a), (b), (c) and (d)(intro.), 1., 2. and 3., (9)(a), (12) and (13)(title) are amended to read:
Tax 14.05(7) NON-ARM'S LENGTH RENTAL. Section Under s. 71.55(8), Stats., provides “
In any case in which if a homestead is rented by a person from another person under circumstances deemed by the department of revenue to be not at arm's length, it may, with the aid of its property tax bureau, determine rent constituting property taxes accrued as at arm's length, and, for purposes of this subchapter, such determination shall be final.". The department may determine rent constituting property taxes accrued as at arm's length make this determination when the amount claimed is in excess of fair rental value. However, since under s. 71.52(2), Stats., “gross rent" is limited to rental actually paid, the department may not increase the rent constituting property taxes accrued to arm's length rental if the rent paid was at less than fair rental value.
Note to Revisor: Replace the example at the end of sub. (7) with the following:
Example: A claimant files a claim with a rent certificate showing rent paid for occupancy of $7,200, or $600 per month. Investigation by the Department of Revenue discloses the rent is too high for the locality and dwelling involved, and the landlord is financially dependent on others for support and is related to the claimant. The department determines that the fair rental value of the claimant's homestead for the year of the claim was $300 per month, or $3,600 for the year. No utilities, food or services were furnished by the landlord.
Allowable rent constituting property taxes accrued is $900, which is 25% of $3,600.
(8)(a) Under s. 71.53(2)(e), Stats., no claim for homestead credit may be allowed if a claimant resided for the entire calendar year to which the claim relates in housing which was exempt from taxation under ch. 70, Stats., other than housing for which payments in lieu of taxes are made under s. 66.40(22), Stats., except as provided under s. 71.54(2)(c)2., Stats. Under s. 71.54(2)(c)2., Stats., if a claimant moves to tax-exempt housing, a claim for homestead credit may be allowed based on upon property taxes accrued on the claimant's former homestead under certain conditions. Those conditions are explained in s. Tax 14.04(3)(e).
(b) Under s. ss. 71.53(2)(e) and 71.54(2)(c)1., Stats., if a claimant resided for part of the calendar year to which a claim for homestead credit relates, in a homestead which was either subject to taxation under ch. 70, Stats., or exempt from taxation under ch. 70, Stats., but for which payment payments in lieu of taxes was were made under s. 66.40(22), Stats., the property taxes accrued or rent constituting property taxes accrued or both on for that homestead are allowed for that part portion of the year.
(c) Payments required to be made in lieu of taxes made under s. 66.40(22), Stats., as provided in par. pars. (a) and (b), are made by most facilities that are licensed with the state of Wisconsin as “housing authorities." Rent paid to those housing authorities may be used to determine gross rent and rent constituting property taxes accrued. However, other types of exempted housing which make payments in lieu of taxes do not make the payments under s. 66.40(22), Stats., and therefore rent paid to those types of exempted housing may not be used to determine gross rent and rent constituting property taxes accrued.
(d)(intro.) Examples of other types of exempted
Types of tax-exempt housing other than housing authorities include:
1. Federal low income low-income housing under the H.U.D. housing and urban development, or “H.U.D." program;.
2. Student dormitories owned by nonprofit educational institutions;.
3. Housing units of religious organizations; and
.
(9)(a) Claimants Persons sharing living expenses for a rented homestead with one or more joint occupants age 18 or older and, who are otherwise eligible for the homestead credit and who are not members of the claimant's same household, shall each be entitled to claim a portion of the rent paid for occupancy of the homestead. However, the total claims of the joint occupants for rent paid for occupancy may not exceed 100% of the rent paid to the landlord for occupancy, as shown on the rent certificate. The amount of rent paid for occupancy shall be the ratio which the contribution of the claimant or claimant's household to the cost of shared living expenses, such as rent, food, utilities, and supplies, bears to the total cost of the shared living expenses.
Note to Revisor: Replace the example at the end of sub. (9)(a) with the following:
Example: X, Y and Z are 3 unrelated joint occupants of a rental unit who share expenses as follows:
Living Expenses
|
X
|
Y
|
Z
|
Total
|
Rent for occupancy
|
$5,400
|
--
|
--
|
$5,400
|
Food
|
--
|
$1,350
|
$1,350
|
$2,700
|
Utilities
|
--
|
$ 900
|
--
|
$ 900
|
Total living expenses
|
$5,400
|
$2,250
|
$1,350
|
$9,000
|
% of total
|
60%
|
25%
|
15%
|
100%
|
Since X paid 60% of the shared living expenses, X's share of rent paid for occupancy is 60% of $5,400, or $3,240. Likewise, rent paid for occupancy for Y is 25% of $5,400, or $1,350, and for Z it is 15% of $5,400, or $810. Total rent paid for occupancy for all 3 claimants is $5,400, as shown on the rent for occupancy line.
(12) SHARECROPPERS. “Rent constituting property taxes accrued" of a person sharing the costs or proceeds or both from the operations of a farm with the owner of the farm property in consideration for use of the homestead, land, machinery, or equipment equals 25% of the owner's share of the net proceeds applicable to occupancy of the homestead, or 20% if heat is included in the cost of the rent.
Note to Revisor: Replace the example at the end of sub. (12) with the following:
Example: A sharecropper resides on and operates a 120 acre dairy farm. The landlord and the sharecropper share equally the gross receipts from crop sales, $10,000, the gross milk receipts, $40,000, and the cost of seed and feed, $20,000. The landlord furnishes the land, buildings and machinery, for which annual allowable depreciation is $6,000. The landlord pays for the heat. In this situation, rent constituting property taxes accrued for the sharecropper equals 20% of the owner's share of the proceeds less the value of the nonoccupancy items furnished by the landlord, as follows:
Landlord's share of crop receipts
|
$5,000
|
|
Landlord's share of milk receipts
|
$20,000
|
$25,000
|
Less nonoccupancy items furnished by landlord:
Landlord's share of seed and feed
Depreciation of buildings not including the dwelling, and machinery
|
$10,000
$ 6,000
|
$16,000
|
Gross rent
|
|
$ 9,000
x 20%
|
Rent constituting taxes accrued
|
|
$1,800
|
(13)(title) LOW INCOME LOW-INCOME HOUSING.
SECTION 31. Tax 14.05(13)(a)(intro.) and (b) are renumbered Tax 14.05(13)(b) and (c) and as renumbered Tax 14.05(13)(b) is amended to read:
Tax 14.05(13)(b) If a A landlord receives may receive both payments from a claimant and subsidy payments from a governmental agency and applies them toward rental of a homestead, and if the application of the for rental of the claimant's homestead. If the allocation of the subsidy payments to food, medical services, and or other personal services as described in sub. (2)(a) s. 71.52(2), Stats., furnished by the landlord is not specified under the terms of an agreement with the paying
governmental agency, the portion of the rent paid for occupancy eligible for the homestead credit may be computed as follows:
shall be the total rent paid for occupancy multiplied by a fraction, the numerator of which is the amount paid by the claimant and the denominator of which is the total amount paid including governmental subsidies.
Note to Revisor: Replace the example at the end of sub. (13)(a) before renumbering with the following example at the end of sub. (13)(b) as renumbered:
Example: A total of $5,400 is paid to a claimant's landlord for the year on behalf of the claimant, $1,800 by the claimant and $3,600 by a governmental agency. The value of food provided is $600 and no services are provided.
Qualifying rent paid for occupancy is $1,600, computed as follows: $4,800 x [$1,800 ÷ $5,400]. The $4,800 is the total amount paid, $5,400, less the $600 for food. The $1,800 is the amount the claimant paid and the $5,400 is the total amount paid.
SECTION 32. Tax 14.05(13)(a)1., 2. and 3. are repealed.
SECTION 33. Tax 14.05(13)(a) is created to read:
Tax 14.05(13)(a) Indirect payments of rent, such as a subsidy payment from a governmental agency for low-income housing, are not includable in determining gross rent.
SECTION 34. Tax 14.05(14)(a)1. and 2. are amended to read:
Tax 14.05(14)(a)1. A standard rate of $40
$100 per week but not more than the actual rent paid.
2. The percentage of building occupancy expenses method as computed in the example at the end of this subsection. Under this method, the ratio that a nursing home's or a long-term care facility's building occupancy expenses for a year bears to gross income received in that year, both directly from residents and indirectly from governmental aid, is determined. This ratio is applied to a resident's total direct payments for a year for which a homestead credit claim is filed, yielding the portion of the payments constituting rent paid for occupancy. This ratio shall be determined from the most recent income and expense data available at the time a rent certificate is prepared, preferably using data from the same year for which the homestead credit is claimed. The building occupancy expenses claimed shall be limited to the expenses attributable to real estate and furnishings only, such as property taxes, interest, lease or rent expenses, depreciation, upkeep and repairs and utilities.
Note to Revisor: Insert the following example at the end of sub. (14)(a)2.:
Example: The following format may be used to compute a resident's rent paid for occupancy; the worksheet is filled in as an example of how to compute the percentage:
1. Building occupancy expenses - real estate and furnishings only:
a. Property taxes $ 30,000
b. Interest 70,000
c. Lease or rent expenses 10,000
d. Depreciation 60,000
e. Upkeep and repairs 10,000
f. Utilities 20,000
g. Total building occupancy expenses $ 200,000
2. Gross income, including indirect payments $1,600,000
3. Line 1.g divided by line 2 equals the percentage rate 12.5%
The percentage rate determined above is to be multiplied by the total rent collected as entered on the rent certificate prepared for a resident filing a homestead credit claim, and the amount so determined is to be entered on the rent certificate as rent paid for occupancy. Assuming a resident's total direct payments for the year were $36,000, rent paid for occupancy would be $4,500, which is 12.5% of $36,000.
SECTION 35. Tax 14.05(14)(b) is renumbered Tax 14.05(14)(b)1.
SECTION 36. Tax 14.05(14)(b)2. is created to read:
Tax 14.05(14)(b)2. A person living in a nursing home who received medical assistance under s. 49.45, Stats., during the year to which the claim relates but is not receiving the medical assistance at the time of filing a homestead credit claim may claim the homestead credit if otherwise eligible. In this situation, amounts paid by medical assistance are not includable in determining rent paid for occupancy.
Note to Revisor: 1) Remove the example at the end of sub. (14)(c).
2) Remove the “1)" from the first note at the end of Tax 14.05.
3) Remove notes 2 and 3 at the end of Tax 14.05.
4) Insert the following 4 notes at the end of Tax 14.05:
Note: Section Tax 14.05 interprets ss. 71.52(2) and (8), 71.53(2)(e) and (f), 71.54(2)(a) and (c) and 71.55(2) and (8), Stats.
Note: Section 71.54(2)(a)(intro.), Stats., was amended by 1995 Wis. Act 27, effective July 28, 1995, to reference “relief from any county under s. 59.07(154)," Stats. (s. 59.07(154), Stats., was renumbered s. 59.53(21), Stats., by 1995 Wis. Act 201, effective September 1, 1996). Section 71.54(2)(a)(intro.), Stats., was again amended, by 1995 Wis. Act 289, effective July 1, 1996, to provide for a one-twelfth reduction of rent constituting property taxes accrued for months a claimant received Wisconsin works under s. 49.147(4) or (5), Stats. Prior to the enactment of 1995 Wis. Acts 27 and 289, the county relief reference was to “general relief from any municipality or county," and there was no reference to Wisconsin works because that program did not exist.
Note: Section 71.54(2)(a)(intro.), Stats., was amended by 1999 Wis. Act 9, effective for 2000 homestead credit claims filed in calendar year 2001 and thereafter, to require a one-twelfth reduction of rent constituting property taxes accrued for months a claimant received Wisconsin works payments as a caretaker of a newborn child under s. 49.148(1m), Stats. Under the statutes in effect immediately prior to the enactment of 1999 Wis. Act 9, the reduction was not required for receipt of those payments.
Note: The standard rate of $100 per week for rent paid for occupancy by residents of nursing homes or long-term care facilities became effective with rent paid for calendar year 2000. For rent paid for calendar years 1999 and prior, the standard rate was $40 per week.
SECTION 37. Tax 14.06(title), (1) and (3)(c)(intro.) are amended to read:
Tax 14.06(title) Marriage, separation, or divorce during a claim year.
(1) PURPOSE. This section describes the qualifications for a homestead credit and the computation of household income, property taxes accrued, and rent constituting property taxes accrued of a claimant who becomes married or divorced during the year to which a homestead credit claim relates or whose spouse occupies a separate dwelling for any part of a claim year.
Note to Revisor: Replace the example at the end of sub. (2)(c) with the following:
Example: X marries Y on September 1, and they decide that X is to be the claimant. Prior to the marriage, X pays gross rent of $250 per month and Y pays gross rent of $350 per month. They pay gross rent of $500 per month for their jointly occupied apartment after the marriage. Heat is not included at any of the dwellings. X's income is $4,000 prior to the marriage, and X's services and property generate marital property income of $2,000 after the marriage. Y's income is $10,000 prior to the marriage, and Y's services and property generate marital property income of $5,000 after the marriage. There are no dependents.
In this situation, household income reportable by X is $11,000, consisting of X's $4,000 of income prior to the marriage plus the $7,000 income of both X and Y after the marriage. Rent constituting property taxes accrued which may be claimed by X is $1,000, which is 25% of the sum of X's rent of $250 per month for 8 months, or $2,000, and 4 months rent at $500 per month after the marriage, or $2,000, totaling $4,000 for the year. Since Y is not the claimant, Y's rent of $350 per month and income of $10,000 for the 8 months prior to the marriage are not considered in computing the homestead credit.
(3)(c)(intro.) In the event a husband and wife occupy separate dwellings or become divorced during a claim year, household income is determined under s. 71.52(5), Stats., under Wisconsin income tax law, and under marital property law as provided in ch. 766, Stats., except that marital property law does not apply if one of the spouses is not domiciled in Wisconsin during the period of time they occupy separate dwellings. Household income shall be determined as follows:
Note to Revisor: 1) Remove the “1)" from the first note at the end of Tax 14.06.
2) Replace note 2 at the end of Tax 14.06 with the following:
Note: Throughout s. Tax 14.06, it has been assumed that a dissolved marriage was dissolved by a decree of divorce. Under s. 766.01(7), Stats., the dissolution of a marriage may also be by annulment or decree of invalidity, or by entry of a decree of legal separation or separate maintenance. The computation of household income, property taxes accrued and rent constituting property taxes accrued is the same under any of these types of dissolutions.
3) Remove note 3 at the end of Tax 14.06.
4) Insert the following note at the end of Tax 14.06:
Note: Section Tax 14.06 interprets ss. 71.52(5), (7) and (8) and 71.53(1)(c), Stats.
Initial Regulatory Flexibility Analysis
This proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
The proposed rule order would increase the “standard rate" used to determine rent paid by nursing home residents for purposes of the Homestead credit from $40 per week to $100 per week. The effect of this change would be to increase, for any nursing home resident using the standard rate in the Homestead calculation, the credit received by $499. It is not known how many nursing home residents claim the Homestead credit, nor how many of them use the standard rate, instead of some other means of determining rent, in the Homestead calculation. Therefore, the fiscal effect of this rule change is not known. However, Homestead is limited to low-income persons and the credit is not allowed to nursing home residents who receive Medicaid; these restrictions make it unlikely that the number of persons affected by this rule change is more than 1,000. Thus, it is believed this rule will increase Homestead expenditures by less than $500,000.
Other changes in this proposed rule would update language and provisions relating to public assistance, gains from the sale of homes and the imposition of interest; would reflect proper filing and adjustment procedures, and deadlines; and would conform style and language to Legislative Council Rules Clearinghouse standards. These other changes have no fiscal effect.
Notice of Hearing
Workforce Development
Notice is hereby given that pursuant to ss. 103.66 and 104.04, Stats., the Department of Workforce Development proposes to hold a public hearing to consider the repeal and recreation of s. DWD 272.085 and the creation of s. DWD 270.085, relating to student worklike activities that do not constitute employment.
