AB439: Bill Text

Income and franchise taxes

Under current law, spouses that file a joint income tax return are both liable for the payment of any tax related to that return. However, DOR may relieve a person of any tax liability related to a joint return, in a manner specified by the Internal Revenue Code and adopted by this state. Generally, DOR may relieve a person of any tax liability related to a joint return if the person's spouse did not notify the person of any tax liability or understatement of taxes related to the joint return. This bill corrects an outdated reference to the sections of the Internal Revenue Code that relate to a spouse's tax liability for a joint income tax return. The bill also requires a spouse to apply for relief from tax liability within two years from the date on which DOR begins collection activities on the spouse's tax liability or within two years from the effective date of the provision, whichever is later.

Under current law, an employer is required to deduct and withhold state income taxes from an employee's pay and to deposit those taxes with DOR on a quarterly basis. An employer must also file a tax withholding report with DOR on a monthly, quarterly, or annual basis. Under current law, DOR cannot grant an employer an extension for filing such a report. Before 1999, DOR could grant a 30-day extension for filing a withholding report to an employer who showed good cause for granting that extension. This bill restores the prior law that allowed DOR to grant such an extension.

Sales and use taxes

Under current law, a retailer is required to use a bracket system, as determined by DOR, to compute the sales or use taxes that the retailer must collect from the sale of goods and services. Under this bill, a retailer may also use a straight mathematical computation, under rules promulgated by DOR, to compute the sales or use taxes that the retailer must collect from the sale of goods and services.

Under current law, if a seller makes a claim for a refund of sales taxes or use taxes and the claim is honored, the seller is required to pass along the refund and related interest to the buyers and to submit to DOR the portion of the refund that could not be passed on, along with a penalty. Under current law, if a seller receives a sales or use tax refund as the result of an audit, the seller is not required to submit the refund and related interest to the buyers. Also, a seller is not required to submit to the buyers sales or use taxes that are collected erroneously.

This bill requires a seller who receives any refund of sales or use taxes, or who collects sales or use taxes erroneously, to submit such a refund or taxes to the buyer, or to DOR if the buyer cannot be located, within 90 days after receiving a refund or after discovering that the seller has collected taxes erroneously. Any portion of a refund or taxes not submitted to the buyer, or to DOR if the buyer cannot be located, within that 90 days must be submitted to DOR, along with a penalty.

Other taxation

Under current law, a taxpayer may round dollar amounts on an income or franchise tax return to the nearest whole dollar. This bill permits DOR to require a taxpayer round dollar amounts to the nearest whole dollar on an income or franchise tax return. This bill also permits DOR to require that a taxpayer round dollar amounts to the nearest whole dollar on tax returns or tax reports related to sales and use taxes, estate taxes, fuel taxes, cigarette and tobacco product taxes, alcohol taxes, food and beverage taxes, premier resort area taxes, rental car fees, and dry cleaning fees.

Under current law, an estate tax is imposed on the transfer of all property in this state that is subject to the federal estate tax. The estate tax is equal to the credit allowed for the state estate tax against the federal estate tax imposed on the transfer of the property. The bill clarifies that the estate tax is equal to the credit allowed for the state estate tax against the federal estate tax imposed on the transfer of the property, regardless of whether the taxpayer claims the credit.

Under current law, an estate tax that is not paid on the date on which it is due is subject to interest at the rate of 12% a year from the date of the decedent's death. Under the bill, DOR or the circuit court that has jurisdiction over matters related to the estate may waive the interest imposed on any additional estate taxes that arise from the discovery of property omitted in the inventory of the estate's total assets or in the original tax determination, if due diligence was exercised in determining the assets.

Under current law, generally, a tax-related document or payment that DOR must receive by a specified date is timely received, if the document or payment is mailed in a properly addressed envelope; the sender pays the postage; the envelope is postmarked on the day that the document or payment is due; and the document or payment is received within five days from the date on which the document or payment is due.

Under this bill, mailing a tax-related document or payment includes using a delivery service that has been approved by the Internal Revenue Service, for federal tax purposes.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this 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:

AB439, s. 1 Section 1. 50.14 (4) of the statutes is amended to read:

AB439,4,4 50.14 (4) Sections 77.59 (1) to (5) (5m), (6) (intro.), (a) and (c) and (7) to (10), 77.60 (1) to (7), (9) and (10), 77.61 (9) and (12) to (14) and 77.62, as they apply to the taxes under subch. III of ch. 77, apply to the assessment under this section.

AB439, s. 2 Section 2. 71.10 (6) (a) of the statutes is amended to read:

AB439,4,11 71.10 (6) (a) Joint returns. Persons filing a joint return are jointly and severally liable for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter applicable to the return. A person shall be relieved of liability in regard to a joint return in the manner specified in section 6013 (e) 6015 (a) to (d) and (f) of the internal revenue code, notwithstanding the amount or percentage of the understatement Internal Revenue Code.

AB439, s. 3 Section 3. 71.10 (6) (b) of the statutes is amended to read:

AB439,5,6 71.10 (6) (b) Separate returns. A spouse filing a separate return may be relieved of liability for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter with regard to unreported marital property income in the manner specified in section 66 (c) of the internal revenue code Internal Revenue Code. The department may not apply ch. 766 in assessing a taxpayer with respect to marital property income the taxpayer did not report if that taxpayer failed to notify the taxpayer's spouse about the amount and nature of the income before the due date, including extensions, for filing the return for the taxable year in which the income was derived. The department shall include all of that marital property income in the gross income of the taxpayer and exclude all of that marital property income from the gross income of the taxpayer's spouse.

AB439, s. 4 Section 4. 71.10 (6) (e) of the statutes is created to read:

AB439,5,12 71.10 (6) (e) Application for relief. A person who seeks relief from liability under par. (a) or (b) shall apply for relief with the department, on a form prescribed by the department, within 2 years after the date on which the department first begins collection activities after the effective date of this paragraph .... [revisor inserts date].

AB439, s. 5 Section 5. 71.10 (6m) (a) of the statutes is amended to read:

AB439,5,25 71.10 (6m) (a) A formerly married or remarried person filing a return for a period during which the person was married may be relieved of liability for the tax, interest, penalties, fees, additions to tax and additional assessments under this chapter for unreported marital property income from that period as if the person were a spouse under section 66 (c) of the internal revenue code Internal Revenue Code. The department may not apply ch. 766 in assessing the former spouse of the person with respect to marital property income that the former spouse did not report if that former spouse failed to notify the person about the amount and nature of the income before the due date, including extensions, for filing the return for the taxable year during which the income was derived. The department shall include all of that marital property income in the gross income of the former spouse and exclude all of that marital property income from the gross income of the person.

AB439, s. 6 Section 6. 71.10 (6m) (c) of the statutes is created to read:

AB439,6,3 71.10 (6m) (c) A person who seeks relief from liability under par. (a) shall apply for relief with the department as provided under sub. (6) (e).

AB439, s. 7 Section 7. 71.65 (5) (a) 1. of the statutes is amended to read:

AB439,6,6 71.65 (5) (a) 1. Thirty days for filing a wage statement under sub. (1) or an annual withholding report under sub. (3) (a) or (d).

AB439, s. 8 Section 8. 71.80 (18) of the statutes is amended to read:

AB439,6,20 71.80 (18) Timely filing defined. Documents and payments required or permitted by this chapter that are mailed shall be considered furnished, reported, filed or made on time, if mailed in a properly addressed envelope, with postage duly prepaid, which envelope is postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, before midnight of the date prescribed for such furnishing, reporting, filing or making, provided such document or payment is actually received by the department or at the destination that the department or the department of administration prescribes within 5 days of such prescribed date. Documents and payments that are not mailed are timely if they are received on or before the due date by the department or at the destination that the department or the department of administration prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 9 Section 9. 71.80 (19) (a) of the statutes is amended to read:

AB439,7,2 71.80 (19) (a) With At the request of the department, with respect to any amount required to be shown on a form prescribed for any return, statement or other document required by this chapter, if the amount of such item is other than a whole dollar amount the fractional part of a dollar shall be disregarded unless it amounts to 50 cents or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased to the next whole dollar.

AB439, s. 10 Section 10. 71.80 (19) (b) of the statutes is repealed.

AB439, s. 11 Section 11. 71.80 (19) (c) of the statutes is amended to read:

AB439,7,9 71.80 (19) (c) Inapplicability to computation of amount. Paragraph Except at the request of the department, par. (a) does not apply to items which must be taken into account in making the computations necessary to determine the total amount required to be shown on a form, statement or other document but applies only to such final amount.

AB439, s. 12 Section 12. 72.02 of the statutes is amended to read:

AB439,7,20 72.02 Estate tax imposed. An estate tax is imposed upon the transfer of all property that is subject to a federal estate tax and that has a taxable situs in this state. The tax imposed is equal to the credit allowed or allowable for state death taxes against the federal estate tax as finally determined. If only a portion of a decedent's property has a taxable situs in this state, the tax imposed is the amount obtained by multiplying the federal credit allowed or allowable for state death taxes by a fraction the numerator of which is the value of the decedent's estate that has a taxable situs in this state and the denominator of which is the total value of the property in the estate that qualifies for the federal credit allowed or allowable for state death taxes.

AB439, s. 13 Section 13. 72.23 of the statutes is renumbered 72.23 (1).

AB439, s. 14 Section 14. 72.23 (2) of the statutes is created to read:

AB439,8,2 72.23 (2) The department or circuit court may waive interest on any additional tax arising from the discovery of property omitted in the inventory of total assets or in the original tax determination, if due diligence was exercised in determining the assets.

AB439, s. 15 Section 15. 72.30 (1m) of the statutes is created to read:

AB439,8,5 72.30 (1m) Whole dollar amounts. Section 71.80 (19), as it applies to a tax return filed under ch. 71, applies to a tax return filed under sub. (1).

AB439, s. 16 Section 16. 73.01 (4) (a) of the statutes is amended to read:

AB439,8,24 73.01 (4) (a) Subject to the provisions for judicial review contained in s. 73.015, the commission shall be the final authority for the hearing and determination of all questions of law and fact arising under sub. (5) and s. 72.86 (4), 1985 stats., and ss. 70.11 (21), 70.38 (4) (a), 70.397, 70.64 and 70.995 (8), s. 76.38 (12) (a), 1993 stats., ss. 76.39 (4) (c), 76.48 (6), 76.91, 77.26 (3), 77.59 (5m) and (6) (b), 78.01, 78.22, 78.40, 78.555, 139.02, 139.03, 139.06, 139.31, 139.315, 139.33, 139.76, 139.78, 341.405 and 341.45, subch. XIV of ch. 71 and subch. VII of ch. 77. Whenever with respect to a pending appeal there is filed with the commission a stipulation signed by the department of revenue and the adverse party, under s. 73.03 (25), or the department of transportation and the adverse party agreeing to an affirmance, modification or reversal of the department of revenue's or department of transportation's position with respect to some or all of the issues raised in the appeal, the commission shall enter an order affirming or modifying in whole or in part, or canceling the assessment appealed from, or allowing in whole or in part or denying the petitioner's refund claim, as the case may be, pursuant to and in accordance with the stipulation filed. No responsibility shall devolve upon the commission, respecting the signing of an order of dismissal as to any pending appeal settled by the department of revenue or the department of transportation without the approval of the commission.

AB439, s. 17 Section 17. 73.13 of the statutes is created to read:

AB439,9,1 73.13 Reducing nondelinquent taxes. (1) In this section:

AB439,9,2 (a) "Department" means the department of revenue.

AB439,9,4 (b) "Tax" means an amount that is owed to this state under s. 66.0615 (1m) (f) 3. or ch. 71, 72, 76, 77, 78, or 139, and that is not delinquent.

AB439,9,11 (2) (a) A taxpayer may petition the department to reduce the taxpayer's taxes, including the costs, penalties, and interest related to the taxpayer's taxes. The petition shall set forth a sworn statement of the taxpayer and shall be in a form that the department prescribes. The department may examine the taxpayer under oath about the petition and may require the taxpayer to provide the department with financial statements and any other information requested by the department that is related to the petition.

AB439,9,21 (b) If the department determines that the taxpayer is unable to pay the taxes, costs, penalties, and interest in full, the department shall determine the amount that the taxpayer is able to pay and shall enter an order reducing the taxes in accordance with the department's determination. The order shall provide that the order is effective only if the reduced taxes are paid within 10 days from the date on which the order is issued. The department or its collection agents, upon receipt of the order, shall accept payment in accordance with the order. Upon payment of the reduced taxes, the department shall credit the unpaid portion of the principal amount of the taxes and record the unpaid amount of costs, penalties, and interest accrued to the date of the order.

AB439,9,25 (c) If within 3 years of the date of the order under par. (b) the department ascertains that the taxpayer has an income or owns property sufficient to enable the taxpayer to pay the unpaid portion of the principal amount of the taxes due, including the costs, penalties, and interest recorded under par. (b), the department shall reopen the order under par. (b) and order the taxpayer to pay in full the unpaid portion of the principal amount of the taxes due, including the costs, penalties, and interest recorded under par. (b). Before the entry of the order for payment, the department shall send a written notice to the taxpayer, by certified mail, advising the taxpayer of the department's intention to reopen the order under par. (b) and fixing a time and place for the appearance of the taxpayer, if the taxpayer desires a hearing. If the department determines that the taxpayer is able to pay the unpaid portion of the principal amount of the taxes due, including the costs, penalties, and interest recorded under par. (b), the department shall enter the order for payment in full. The unpaid portion of the principal amount of the taxes due, including the costs, penalties, and interest recorded under par. (b), shall be due and payable immediately upon entry of the order for payment in full and shall thereafter be subject to the interest under s. 71.82 (2), as that subsection applies to delinquent income and franchise taxes under s. 71.82, and to the delinquent account fee under s. 73.03 (33m).

AB439, s. 18 Section 18. 77.58 (3) (c) of the statutes is created to read:

AB439,10,18 77.58 (3) (c) Section 71.80 (19), as it applies to a tax return filed under ch. 71, applies to a tax return filed under this section.

AB439, s. 19 Section 19. 77.59 (4) (c) of the statutes is renumbered 77.59 (5m) and amended to read:

AB439,11,7 77.59 (5m) A seller who receives a refund under par. (a) or (b) of taxes that the seller has collected from buyers, who collects taxes erroneously from buyers, or who is entitled to a refund that is offset under sub. (5), shall return submit the taxes and related interest to the buyers from whom the taxes were collected. The, or to the department if the seller cannot locate the buyers, within 90 days after the date of the refund, after the date of the offset, or after discovering that the seller has collected taxes erroneously from the buyers. If the seller does not submit the taxes and related interest to the department or the buyers within that period, the seller shall return submit to the department any part of a refund or taxes that the seller does not return submit to a buyer or to the department along with a penalty of 25% of the amount not returned or submitted or, in the case of fraud, a penalty equal to the amount not returned in the case of fraud submitted.

AB439, s. 20 Section 20. 77.59 (5) of the statutes is amended to read:

AB439,11,17 77.59 (5) The department may offset the amount of any refund for a period, together with interest on the refund, against deficiencies for another period, and against penalties and interest on the deficiencies, or against any amount of whatever kind, due and owing on the books of the department from the person claiming who is entitled to the refund. If the refund is to be paid to a buyer, the department may also set off amounts in the manner in which it sets off income tax and franchise tax refunds under s. 71.93 and may set off amounts for child support or maintenance or both in the manner in which it sets off income taxes under ss. 49.855 and 71.93 (3), (6) and (7).

AB439, s. 21 Section 21. 77.61 (3) of the statutes is amended to read:

AB439,11,25 77.61 (3) The department shall provide A retailer shall use either a bracket system to be used by retailers in collecting or a straight mathematical computation, under rules promulgated by the department, to determine the amount of the tax that the retailer may collect from their the retailer's customers, but the use of such brackets either a bracket system or a straight mathematical computation shall not relieve the retailer from liability for payment of the full amount of the tax levied by ss. 77.51 to 77.62.

AB439, s. 22 Section 22. 77.61 (14) of the statutes is amended to read:

AB439,12,12 77.61 (14) Documents and payments required or permitted under this subchapter that are mailed are timely furnished, filed or made if they are mailed in a properly addressed envelope with the postage duly prepaid, if the envelope is postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, before midnight of the due date and if the document or payment is received by the department, or at the destination that the department prescribes, within 5 days after the prescribed date. Documents and payments that are not mailed are timely if they are received on or before the due date by the department or at the destination that the department designates. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 23 Section 23. 77.9941 (4) of the statutes is amended to read:

AB439,12,17 77.9941 (4) Sections 77.72 (1), (2) (a) and (3) (a), 77.73, 77.74, 77.75, 77.76 (1), (2) and (4), 77.77 (1) and (2), 77.785 (1) and 77.79, as they apply to the taxes under subch. V, apply to the tax under this subchapter. Section 77.58 (3) (c), as it applies to the taxes under subch. III, applies to the tax under this subchapter.

AB439, s. 24 Section 24. 77.9964 (2) of the statutes is amended to read:

AB439,12,24 77.9964 (2) Except as provided in s. 77.9961 (4), sections ss. 71.74 (1) to (3), (7) and (9), 71.75 (1), (2), (6), (7), (9) and (10), 71.77 (1) and (4) to (8), 71.78 (1) to (4) and (5) to (8), 71.80 (1) (a) and (b), (4) to (6), (8) to (12), (14), and (17) and (18) to (19), 71.82 (1) and (2) (a) and (b), 71.83 (1) (a) 1. and 2. and (b) 1., 2. and 6., (2) (a) 1. to 3. and (b) 1. to 3. and (3), 71.87, 71.88, 71.89, 71.90, 71.91 (1) (a), (2) and (4) to (6) and 71.93, as they apply to the taxes under ch. 71, apply to the fees under this subchapter.

AB439, s. 25 Section 25. 78.22 (4) of the statutes is amended to read:

AB439,13,11 78.22 (4) Late filing fee. Any person who fails to file a motor vehicle fuel floor tax return when due shall pay a late filing fee of $10. A return that is mailed is filed in time if it is mailed in a properly addressed envelope with 1st class postage duly prepaid and the envelope is officially postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, on the date due and the return is actually received by the department or at the destination that the department prescribes within 5 days of the due date. A return that is not mailed is timely if it is received on or before the due date by the department or at the destination that the department prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 26 Section 26. 78.39 (5d) of the statutes is created to read:

AB439,13,13 78.39 (5d) "Pay" has the meaning given in s. 78.005 (13b).

AB439, s. 27 Section 27. 78.39 (5m) of the statutes is created to read:

AB439,13,15 78.39 (5m) "Sign" has the meaning given in s. 78.005 (13r).

AB439, s. 28 Section 28. 78.68 (10) of the statutes is amended to read:

AB439,13,21 78.68 (10) Except as provided in ss. 78.19, 78.20 (2) and 78.75 (1m) (b), s. 71.75 (2), (4) to (7) and (10), as it applies to the taxes under ch. 71, applies to the taxes under this chapter. Section 71.74 (13), as it applies to refunds of the taxes under ch. 71, applies to the refund of the taxes under this chapter and s. 71.80 (19), as it applies to tax returns filed under ch. 71, applies to returns filed under this chapter.

AB439, s. 29 Section 29. 139.03 (2x) (d) of the statutes is amended to read:

AB439,14,8 139.03 (2x) (d) Late filing fee. Any person who fails to file a floor tax return when due shall pay a late filing fee of $10. A return that is mailed shall be considered filed in time if it is mailed in a properly addressed envelope with 1st class postage duly prepaid, if the envelope is officially postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, on the date due and if the return is actually received by the department or at the destination that the department prescribes within 5 days of the due date. A return that is not mailed is timely if it is received on or before the due date by the department or at the destination that the department prescribes. For purposes of this paragraph, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 30 Section 30. 139.05 (2a) of the statutes is amended to read:

AB439,14,21 139.05 (2a) The payments and returns under subs. (1) and (2) that are mailed are furnished, filed or made on time, and payments therein referred to are timely, if mailed in a properly addressed envelope, with first class postage duly prepaid, which envelope is officially postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, before midnight on the date prescribed for such furnishing, filing or making of such payment, provided such statement, return or payment is actually received by the secretary of revenue or at the destination that the department prescribes within 5 days of the prescribed date. Payments and returns that are not mailed are timely if they are received on or before the due date by the department or at the destination that the department prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 31 Section 31. 139.11 (2r) of the statutes is created to read:

AB439,14,24 139.11 (2r) Whole dollar amounts. Section 71.80 (19), as it applies to a tax return filed under ch. 71, applies to a report filed under this subchapter.

AB439, s. 32 Section 32. 139.315 (4) of the statutes is amended to read:

AB439,15,10 139.315 (4) Late filing fee. Any person who fails to file a cigarette inventory tax return when due shall pay a late filing fee of $10. A return that is mailed is timely if it is mailed in a properly addressed envelope with 1st class postage prepaid, if the envelope is postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, on the due date and if the return is actually received by the department or at the destination that the department prescribes within 5 days of the due date. A return that is not mailed is timely if it is received on or before the due date by the department or at the destination that the department prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 33 Section 33. 139.38 (2r) of the statutes is created to read:

AB439,15,13 139.38 (2r) Section 71.80 (19), as it applies to a tax return filed under ch. 71, applies to a report filed under this subchapter.

AB439, s. 34 Section 34. 139.38 (5) of the statutes is amended to read:

AB439,15,25 139.38 (5) If any permittee fails to file a report when due the permittee shall be required to pay a late filing fee of $10. A report that is mailed is filed in time if it is mailed in a properly addressed envelope with first class postage duly prepaid, which envelope is officially postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, on the date due, and if the report is actually received by the secretary or at the destination that the department prescribes within 5 days of the due date. A report that is not mailed is timely if it is received on or before the due date by the secretary or at the destination that the department prescribes. For purposes of this subsection, "mailed" includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

AB439, s. 35 Section 35. 139.75 (9m) of the statutes is created to read: