AB942: Bill Text

AB942, s. 6 Section 6. 71.26 (1) (a) of the statutes is amended to read:

AB942,9,6 71.26 (1) (a) Certain corporations. Income of corporations organized under ch. 185, except income of a cooperative sickness care association organized under s. 185.981, or of a service insurance corporation organized under ch. 613, that is derived from a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3), or operating under subch. I of ch. 616 which are bona fide cooperatives operated without pecuniary profit to any shareholder or member, or operated on a cooperative plan pursuant to which they determine and distribute their proceeds in substantial compliance with s. 185.45, and the income, except the unrelated business taxable income as defined in section 512 of the internal revenue code and except income that is derived from a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3), of all religious, scientific, educational, benevolent or other corporations or associations of individuals not organized or conducted for pecuniary profit. This paragraph does not apply to the income of savings banks, mutual loan corporations or savings and loan associations. This paragraph does not apply to income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin. This paragraph applies to the income of credit unions except to the income of any credit union that is derived from public deposits for any taxable year in which the credit union is approved as a public depository under ch. 34 and acts as a depository of state or local funds under s. 186.113 (20). For purposes of this paragraph, the income of a credit union that is derived from public deposits is the product of the credit union's gross annual income for the taxable year multiplied by a fraction, the numerator of which is the average monthly balance of public deposits in the credit union during the taxable year, and the denominator of which is the average monthly balance of all deposits in the credit union during the taxable year.

AB942, s. 7 Section 7. 71.362 (1) of the statutes is amended to read:

AB942,9,13 71.362 (1) All tax-option items of nonresident individuals, nonresident estates and nonresident trusts derived from a tax-option corporation not requiring apportionment under sub. (2) shall follow the situs of the business of the corporation from which they are derived, except that all income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin shall be allocated to this state.

AB942, s. 8 Section 8. 71.362 (2) of the statutes is amended to read:

AB942,9,25 71.362 (2) Nonresident individuals, nonresident estates and nonresident trusts deriving income from a tax-option corporation which is engaged in business within and without this state shall be taxed only on the income of the corporation derived from business transacted and property located in this state and losses and other items of the corporation deductible by such shareholders shall be limited to their proportionate share of the Wisconsin loss or other item, except that all income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin shall be allocated to this state. For purposes of this subsection, all intangible income of tax-option corporations passed through to shareholders is business income that follows the situs of the business, except that all income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin shall be allocated to this state.

AB942, s. 9 Section 9. 71.43 (1) of the statutes is amended to read:

AB942,10,13 71.43 (1) Income tax. For the purpose of raising revenue for the state and the counties, cities, villages and towns, there shall be assessed, levied, collected and paid a tax as provided under this chapter on all Wisconsin net incomes of corporations which are not subject to the franchise tax under sub. (2) and which own property within this state or; whose business within this state during the taxable year, except as provided under s. 71.23 (3), consists exclusively of foreign commerce, interstate commerce, or both, or that buy or sell lottery prizes if the winning tickets were originally bought in Wisconsin; except as exempted under ss. 71.26 (1) and 71.45 (1). This section shall not be construed to prevent or affect the correction of errors or omissions in the assessments of income for former years under s. 71.74 (1) and (2).

AB942, s. 10 Section 10. 71.43 (2) of the statutes is amended to read:

AB942,11,10 71.43 (2) Franchise tax on corporations. For the privilege of exercising its franchise, buying or selling lottery prizes if the winning tickets were originally bought in Wisconsin or doing business in this state in a corporate capacity, except as provided under s. 71.23 (3), every domestic or foreign corporation, except corporations specified in ss. 71.26 (1) and 71.45 (1), shall annually pay a franchise tax according to or measured by its entire Wisconsin net income of the preceding taxable year at the rates set forth in s. 71.46 (2). In addition, except as provided in ss. 71.23 (3), 71.26 (1) and 71.45 (1), a corporation that ceases doing business in this state shall pay a special franchise tax according to or measured by its entire Wisconsin net income for the taxable year during which the corporation ceases doing business in this state at the rate under s. 71.46 (2). Every corporation organized under the laws of this state shall be deemed to be residing within this state for the purposes of this franchise tax. All provisions of this chapter and ch. 73 relating to income taxation of corporations shall apply to franchise taxes imposed under this subsection, unless the context requires otherwise. The tax imposed by this subsection on insurance companies subject to taxation under this chapter shall be based on Wisconsin net income computed under s. 71.45, and no other provision of this chapter relating to computation of taxable income for other corporations shall apply to such insurance companies. All other provisions of this chapter shall apply to insurance companies subject to taxation under this chapter unless the context clearly requires otherwise.

AB942, s. 11 Section 11. 71.45 (1) of the statutes is amended to read:

AB942,12,5 71.45 (1) Exempt and excludable income. There shall be exempt from taxation under this subchapter income of insurers exempt from federal income taxation pursuant to section 501 (c) (15) of the internal revenue code, town mutuals organized under or subject to ch. 612, foreign insurers, and domestic insurers engaged exclusively in life insurance business, domestic insurers insuring against financial loss by reason of nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real estate and corporations organized under ch. 185, but not including income of cooperative sickness care associations organized under s. 185.981, or of a service insurance corporation organized under ch. 613, that is derived from a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3), or operating under subch. I of ch. 616 which are bona fide cooperatives operated without pecuniary profit to any shareholder or member, or operated on a cooperative plan pursuant to which they determine and distribute their proceeds in substantial compliance with s. 185.45. This subsection does not apply to income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin.

AB942, s. 12 Section 12. 71.45 (2) (a) 15. of the statutes is created to read:

AB942,12,9 71.45 (2) (a) 15. By subtracting from federal taxable income all income that is realized from the purchase and subsequent sale or redemption of lottery prizes that is treated as nonapprotionable income under sub. (3r).

AB942, s. 13 Section 13. 71.45 (3r) of the statutes is created to read:

AB942,12,13 71.45 (3r) Allocation of certain proceeds. All income that is realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin shall be allocated to this state.

AB942, s. 14 Section 14. 71.46 (3) of the statutes is amended to read:

AB942,12,21 71.46 (3) The tax imposed under this subchapter on each domestic insurer on or measured by its entire net income attributable to lines of insurance in this state may not exceed 2% of the gross premiums, as defined in s. 76.62, received during the taxable year by the insurer on all policies on those lines of insurance if the subject of that insurance was resident, located or to be performed in this state plus 7.9% of the income realized from the purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin.

AB942, s. 15 Section 15. 71.67 (4) (a) of the statutes, as affected by 1997 Wisconsin Act 27, is amended to read:

AB942,13,4 71.67 (4) (a) The administrator of the lottery division in the department under ch. 565 shall withhold from any lottery prize of $2,000 or more an amount determined by multiplying the amount of the prize by the highest rate applicable to individuals under s. 71.06 (1) or (1m) the person who claims the prize. The administrator shall deposit the amounts withheld, on a monthly basis, as would an employer depositing under s. 71.65 (3) (a).

AB942, s. 16 Section 16. 565.02 (2) (e) of the statutes is created to read:

AB942,13,9 565.02 (2) (e) If requested by a lottery prize winner to provide a certification that lists the amounts of the lottery prize payments, if any, that the administrator is required to withhold under ss. 565.30 (4), (5) and (5m) and 565.37 (5r), the administrator shall provide the certification.

AB942, s. 17 Section 17. 565.30 (5) of the statutes, as affected by 1997 Wisconsin Act 27, is amended to read:

AB942,14,10 565.30 (5) Withholding of delinquent state taxes, child support or debts owed the state. The administrator shall report the name, address and social security number of each winner of a lottery prize equal to or greater than $1,000 and each person to whom a lottery prize equal to or greater than $1,000 has been assigned to the department of revenue to determine whether the payee or assignee of the prize is delinquent in the payment of state taxes under ch. 71, 72, 76, 77, 78 or 139 or in court-ordered payment of child support or has a debt owing to the state. Upon receipt of a report under this subsection, the department of revenue shall first ascertain based on certifications by the department of workforce development under s. 49.855 (2) whether any person named in the report is currently delinquent in court-ordered payment of child support and shall next certify to the administrator whether any person named in the report is delinquent in court-ordered payment of child support or payment of state taxes under ch. 71, 72, 76, 77, 78 or 139.Upon this certification by the department of revenue or upon court order the administrator shall withhold the certified amount and send it to the department of revenue for remittance to the appropriate agency or person. At the time of remittance, the department of revenue shall charge its administrative expenses to the state agency that has received the remittance. The administrative expenses received by the department of revenue shall be credited to the appropriation under s. 20.566 (1) (h). In instances in which the payee or assignee of the prize is delinquent both in payments for state taxes and in court-ordered payments of child support, or is delinquent in one or both of these payments and has a debt owing to the state, the amount remitted to the appropriate agency or person shall be in proportion to the prize amount as is the delinquency or debt owed by the payee or assignee.

AB942, s. 18 Section 18. 565.30 (5) of the statutes, as affected by 1997 Wisconsin Act .... (this act), is repealed and recreated to read:

AB942,15,12 565.30 (5) Withholding of delinquent state taxes, child support or debts owed the state. The administrator shall report the name, address and social security number of each winner of a lottery prize equal to or greater than $1,000 and each person to whom a lottery prize equal to or greater than $1,000 has been assigned to the department of revenue to determine whether the payee or assignee of the prize is delinquent in the payment of state taxes under ch. 71, 72, 76, 77, 78 or 139 or in court-ordered payment of child support or has a debt owing to the state. Upon receipt of a report under this subsection, the department of revenue shall first ascertain based on certifications by the department of workforce development or its designee under s. 49.855 (1) whether any person named in the report is currently delinquent in court-ordered payment of child support and shall next certify to the administrator whether any person named in the report is delinquent in court-ordered payment of child support or payment of state taxes under ch. 71, 72, 76, 77, 78 or 139. Upon this certification by the department of revenue or upon court order the administrator shall withhold the certified amount and send it to the department of revenue for remittance to the appropriate agency or person. At the time of remittance, the department of revenue shall charge its administrative expenses to the state agency that has received the remittance. The administrative expenses received by the department of revenue shall be credited to the appropriation under s. 20.566 (1) (h). In instances in which the payee or assignee of the prize is delinquent both in payments for state taxes and in court-ordered payments of child support, or is delinquent in one or both of these payments and has a debt owing to the state, the amount remitted to the appropriate agency or person shall be in proportion to the prize amount as is the delinquency or debt owed by the payee.

AB942, s. 19 Section 19. 565.30 (5m) of the statutes, as affected by 1997 Wisconsin Act 35, is renumbered 565.30 (5m) (a) and amended to read:

AB942,16,2 565.30 (5m) (a) The administrator shall report to the department of workforce development the name, address and social security number of each winner of a lottery prize that is payable in instalments and the name, address and social security number or federal income tax number of the person who has been assigned a lottery prize that is payable in instalments. Upon receipt of the report, the department of workforce development shall certify to the administrator whether any payee or assignee named in the report is obligated to provide child support, spousal support, maintenance or family support under s. 767.02 (1) (f) or (g), 767.10, 767.23, 767.25, 767.26, 767.261, 767.465 (2m), 767.51 (3) or 948.22 (7) or ch. 769 and the amount required to be withheld from the lottery prize under s. 767.265. The Subject to par. (b), the administrator shall withhold the certified amount from each payment made to the winner or assignee and shall remit the certified amount to the department of workforce development.

AB942, s. 20 Section 20. 565.30 (5m) (b) of the statutes is created to read:

AB942,16,8 565.30 (5m) (b) The administrator may not withhold from any payment to an assignee of a lottery prize any child support, spousal support, maintenance or family support specified in par. (a) that is owed by a winner of a lottery prize, nor may the administrator withhold from any payment to a winner any child support, spousal support maintenance or family support that is owed by an assignee.

AB942, s. 21 Section 21. 565.30 (5t) of the statutes is created to read:

AB942,16,12 565.30 (5t) Use of lottery prize as security for loan. (a) Definition. In this subsection, "prize winner" means a person who has won a lottery prize and any other person who is authorized by law to use a lottery prize as security for a loan.

AB942,16,15 (b) Security for a loan. A prize winner may use a lottery prize or part of a lottery prize as security for a loan only pursuant to a court order issued under this subsection.

AB942,16,22 (c) Judicial process for using lottery prizes as security for loans. Any prize winner who intends to use part or all of a lottery prize as security for a loan shall petition the circuit court of the county in which the prize winner resides or the circuit court of Dane County for a court order confirming the use of a lottery prize as security for a loan. The circuit court of the county in which the prize winner resides or the circuit court of Dane County shall issue an order confirming the use of a lottery prize as security for a loan only if all of the following occur:

AB942,16,23 1. The prize winner is represented by independent legal counsel.

AB942,16,25 2. A copy of the contract that provides for using any part of the lottery prize as security for the loan is attached to the petition.

AB942,17,4 3. The contract is executed by the prize winner, is subject to the laws of this state and provides that the prize winner has the right to cancel the contract until midnight of the 3rd business day after the date on which the prize winner entered into the contract.

AB942,17,8 4. The prize winner attests, by sworn affidavit, that he or she is of sound mind, is not acting under duress and acknowledges that the state will not make any of the lottery prize payments or parts of lottery prize payments to the prize winner that are being used as security for the loan in the event the prize winner defaults on the loan.

AB942,17,11 5. The prize winner, by sworn affidavit, provides the court with an accounting of all claims to, or judgments, liens, security interests, garnishments, assignments or attachments against, all or any part of the lottery prize payments.

AB942,17,15 6. The prize winner provides the court a certification from the administrator that lists the amounts of the lottery prize payments, if any, that the administrator is required to withhold for the prize winner under subs. (4), (5) and (5m) and s. 565.37 (5r).

AB942,17,18 7. The part of the lottery prize that is being used as security for the loan does not include the amounts of any withholdings specified under subs. (4), (5) and (5m) and s. 565.37 (5r).

AB942,17,24 8. The court determines that the interest rate on the loan does not exceed the weekly prime rate for the week prior to the date on which the court received a copy of the contract, as reported by the federal reserve board in federal reserve statistical release H. 15, plus 6%. In making the calculation under this subdivision, the court shall subtract from the compensation received by the individual or organization making the loan any required fees or other costs charged the prize winner.

AB942,18,2 (d) Contents of court order. A court order issued under par. (c) shall include all of the following:

AB942,18,3 1. The name of the prize winner.

AB942,18,6 2. The prize winner's social security number if the prize winner is an individual, or federal income tax identification number if the prize winner is an organization.

AB942,18,8 3. The name of the individual or organization that is making the loan to the prize winner.

AB942,18,10 4. The social security number of the individual or the federal income tax identification number of the organization that is making the loan to the prize winner.

AB942,18,13 5. If an individual is making the loan to the prize winner, the citizenship of the individual. If the individual is not a citizen of the United States of America, the order shall include the individual's resident alien number.

AB942,18,21 (e) Administration. Upon receipt of a court order issued under par. (c), the individual or organization making the loan shall provide a certified copy of the court order to the administrator. The administrator shall acknowledge receipt of the court order in writing to the individual or organization making the loan and shall make all lottery prize payments according to the terms specified in the court order. The administrator may charge an initial processing fee, in an amount determined by rule, to cover any costs associated with processing the lottery prize payments in accordance with the terms specified in the court order.

AB942, s. 22 Section 22. 565.30 (6) of the statutes is repealed and recreated to read:

AB942,18,25 565.30 (6) Voluntary assignment of lottery prize. (a) Definition. In this subsection, "assignor" means a lottery prizewinner or a person who has the right to assign all or part of a lottery prize.

AB942,19,3 (b) Voluntary assignment. An assignor may make a voluntary assignment of a lottery prize or part of a lottery prize only pursuant to a court order issued under this subsection.

AB942,19,9 (c) Judicial process for assignment. Any assignor who intends to voluntarily assign part or all of a lottery prize to any individual or organization shall petition the circuit court of the county in which the assignor resides or the circuit court of Dane County for a court order confirming the assignment. The circuit court of the county in which the assignor resides or the circuit court of Dane County shall issue an order confirming the assignment only if all of the following occur:

AB942,19,10 1. The assignor is represented by independent legal counsel.

AB942,19,11 2. A copy of the assignment is attached to the petition.

AB942,19,13 3. The assignment is in writing, is executed by the assignor and is subject to the laws of this state.

AB942,19,16 3m. The contract for the assignment provides that the assignor has the right to cancel the contract until midnight of the 3rd business day after the date on which the assignor entered into the contract.

AB942,19,20 3r. The contract for the assignment provides that the assignor, from the proceeds received from the individual or organization to whom part or all of the lottery prized is assigned, agrees to pay in full any delinquent payments that may be owed by the assignor under subs. (4), (5) and (5m) and s. 565.37 (5r).

AB942,19,23 4. The assignor attests, by sworn affidavit, that he or she is of sound mind, is not acting under duress and acknowledges that the state will not make any of the assigned lottery prize payments or parts of lottery prize payments to the assignor.

AB942,20,3 5. The assignor, by sworn affidavit, provides the court with an accounting of all claims to, or judgments, liens, security interests, garnishments, assignments or attachments against, all or any part of the lottery prize payments.

AB942,20,5 6. The assignment does not include the amounts of any withholdings specified under sub. (4), (5) or (5m) or s. 565.37 (5r).

AB942,20,8 7. The assignor provides the court a certification from the administrator that lists the amounts of the lottery prize payments, if any, that the administrator is required to withhold for the assignor under subs. (4), (5) and (5m) and s. 565.37 (5r).

AB942,20,16 8. The payment that the assignor will receive as compensation for the assignment is at least equal to the present value of the assigned lottery prize payments, discounted at a rate no greater than the weekly prime rate for the week prior to the date on which the court received a copy of the assignment, as reported by the federal reserve board in federal reserve statistical release H. 15, plus 6%. In making the calculation under this subdivision, the court shall subtract from the compensation received by the assignor any required fees or other costs charged the assignor.

AB942,20,20 9. The individual or organization to whom part or all of the lottery prized is assigned specifies in an affidavit that the individual or organization agrees to report and pay any state income or franchise tax that is owed on any income or gain realized from the purchase and subsequent sale or redemption of any lottery prize.

AB942,20,22 (d) Contents of court order. A court order issued under par. (c) shall include all of the following:

AB942,20,24 1. The name of the prizewinner or the name of the assignor, if different from the prizewinner.

AB942,21,2 2. The assignor's social security number if the assignor is an individual, or federal income tax identification number if the assignor is an organization.

AB942,21,4 3. The name of the individual or organization to whom part or all of the lottery prize is assigned.

AB942,21,7 4. The social security number of the individual or the federal income tax identification number of the organization to whom part or all of the lottery prize is assigned.

AB942,21,10 5. If part or all of the lottery prize is assigned to an individual, the citizenship of the individual. If the individual is not a citizen of the United States of America, the order shall include the individual's resident alien number.

AB942,21,12 6. The number of assigned lottery prize payments and the dates on which the assigned lottery prize payments are to be paid.

AB942,21,14 7. The gross amount of each of the lottery prize payments that are subject to withholding for tax purposes and that are assigned.

AB942,21,23 (e) Administration of lottery prize assignment. Upon receipt of a court order issued under par. (c), the individual or organization to whom the lottery prized is assigned shall provide a certified copy of the court order to the administrator. The administrator shall acknowledge receipt of the court order in writing to the individual or organization to whom the lottery prized is assigned and shall make all lottery prize payments according to the terms specified in the court order. The administrator may charge an initial processing fee, in an amount determined by rule, to cover any costs associated with processing the lottery prize payments in accordance with the terms specified in the court order.

AB942, s. 23 Section 23. 565.37 (5r) of the statutes is renumbered 565.37 (5r) (a) and amended to read:

AB942,22,14 565.37 (5r) (a) If the administrator receives a notice of the assignment of lottery prizes under s. 973.05 (4) (b), he or she shall periodically determine if the person subject to the assignment is a winner or assignee of a lottery prize that is payable in instalments. If the administrator determines that a person subject to an assignment of lottery prizes under s. 973.05 (4) (b) is a winner or assignee of a lottery prize that is payable in instalments, the administrator, subject to par. (b), shall withhold the amount of the judgment that is the basis of the assignment from the next instalment payment. The administrator shall submit the withheld amount to the court that issued the assignment. The administrator shall notify the winner or assignee of the reason that the amount is withheld from the lottery prize. If the initial instalment payment is insufficient to pay the judgment, the administrator shall withhold and submit to the court an amount from any additional instalment payments until the judgment is paid in full or until the court notifies the administrator that the judgment is paid and the assignment is no longer in effect.

AB942, s. 24 Section 24. 565.37 (5r) (b) of the statutes is created to read:

AB942,22,19 565.37 (5r) (b) The administrator may not withhold from any payment to an assignee of a lottery prize the amount specified in par. (a) that is owed by a winner of a lottery prize, nor may the administrator withhold from any payment to a winner the amount specified in par. (a) that is owed by an assignee.

AB942, s. 25 Section 25. Initial applicability; revenue.

AB942,22,24 (1) Situs of income. The treatment of sections 71.04 (1) (a) and (9), 71.23 (1) and (2), 71.25 (5) (b), 71.26 (1) (a), 71.362 (1) and (2), 71.43 (1) and (2), 71.45 (1), (2) (a) 15. and (3r), 71.46 (3) and 71.67 (4) (a) of the statutes first applies to taxable years beginning on January 1, 1998.

AB942, s. 26 Section 26. Effective dates. This act takes effect on the day after publication, except as follows:

AB942,23,5 (1) The repeal and recreation of section 565.30 (5) of the statutes takes effect on October 1, 1999, or the date stated in the Wisconsin Administrative Register under section 767.29 (1) (f) of the statutes, whichever is earlier.

AB942,23,6 (End)