AB44: Bill Text

AB44,7,4 71.22 (3m) "Intangible expenses and costs" includes expenses, losses, and costs for, related to, or directly or indirectly in connection with the direct or indirect acquisition of, use of, maintenance or management of, ownership of, sale of, exchange of, or any other direct or indirect disposition of intangible property to the extent that such expenses, losses, and costs are allowed as deductions or costs to determine federal taxable income under the Internal Revenue Code. For purposes of this subsection, "expenses, losses, and costs" include losses related to or incurred directly or indirectly in connection with factoring transactions and discounting transactions; royalty, patent, technical, and copyright fees; licensing fees; and other similar expenses and costs.

AB44, s. 14 Section 14. 71.22 (9b) of the statutes is created to read:

AB44,7,8 71.22 (9b) "Related entity" means any person related to a taxpayer as provided under section 267, 318, or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year.

AB44, s. 15 Section 15. 71.26 (2) (a) of the statutes is renumbered 71.26 (2) (a) (intro.) and amended to read:

AB44,7,13 71.26 (2) (a) (intro.) Corporations in general. The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus and modified as follows:

AB44,7,14 1. Minus the amount of recapture under s. 71.28 (1di) plus.

AB44,7,15 2. Plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) minus,.

AB44,7,18 3. Minus as provided under s. 71.28 (3) (c) 7., the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit plus.

AB44,7,23 4. Plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), (3n), (3t), and (5b) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus.

AB44,8,2 5. Plus the amount of losses from the sale or other disposition of assets the gain from which would be wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and minus deductions, as computed under the Internal Revenue Code as modified under sub. (3), plus.

AB44,8,6 6. Plus or minus, as appropriate, an amount equal to the difference between the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).

AB44, s. 16 Section 16. 71.26 (2) (a) 6. of the statutes is created to read:

AB44,8,12 71.26 (2) (a) 6. Plus any amount deducted or excluded under the Internal Revenue Code for management and service fees, interest expenses and costs, intangible expenses and costs, and any other expenses and costs directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB44, s. 17 Section 17. 71.34 (1) (j) of the statutes is created to read:

AB44,8,19 71.34 (1) (j) An addition shall be made for any amount deducted or excluded under the Internal Revenue Code for management and service fees, interest expenses and costs, intangible expenses and costs, and any other expenses and costs directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB44, s. 18 Section 18. 71.42 (1p) of the statutes is created to read:

AB44,9,5 71.42 (1p) "Intangible expenses and costs" includes expenses, losses, and costs for, related to, or directly or indirectly in connection with the direct or indirect acquisition of, use of, maintenance or management of, ownership of, sale of, exchange of, or any other direct or indirect disposition of intangible property to the extent that such expenses, losses, and costs are allowed as deductions or costs to determine federal taxable income under the Internal Revenue Code. For purposes of this subsection, "expenses, losses, and costs" include losses related to or incurred directly or indirectly in connection with factoring transactions and discounting transactions; royalty, patent, technical, and copyright fees; licensing fees; and other similar expenses and costs.

AB44, s. 19 Section 19. 71.42 (4m) of the statutes is created to read:

AB44,9,9 71.42 (4m) "Related entity" means any person related to a taxpayer as provided under section 267, 318, or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year.

AB44, s. 20 Section 20. 71.45 (2) (a) 16. of the statutes is created to read:

AB44,9,16 71.45 (2) (a) 16. By adding to federal taxable income any amount deducted or excluded under the Internal Revenue Code for management and service fees, interest expenses and costs, intangible expenses and costs, and any other expenses and costs directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities.

AB44, s. 21 Section 21. 71.738 (3m) of the statutes is created to read:

AB44,9,20 71.738 (3m) "Related entity" means any person related to a taxpayer as provided under section 267, 318, or 1563 of the Internal Revenue Code during all or a portion of the taxpayer's taxable year.

AB44, s. 22 Section 22. 71.80 (23) of the statutes is created to read:

AB44,9,25 71.80 (23) Transactions. (a) Subject to par. (b), if the department asserts the sham transaction doctrine, or any other related tax doctrine, to disallow the tax consequences, as asserted by the taxpayer, of a transaction, the department may allow the tax consequences, as asserted by the taxpayer, of the transaction, if the taxpayer demonstrates by clear and convincing evidence that the transaction had a valid, good faith, business purpose other than tax avoidance and had economic substance apart from any tax benefit asserted by the taxpayer.

AB44,10,9 (b) For all instances in which the department disallows the tax consequences, as asserted by the taxpayer, of a transaction, the department may allow the tax consequences, as asserted by the taxpayer, of the transaction, if the taxpayer demonstrates by clear and convincing evidence that the transaction's nontaxable business purpose, as asserted by the taxpayer, is commensurate with the transaction's tax benefit, as asserted by the taxpayer.

AB44,10,12 (c) The adjustments under ss. 71.05 (6) (a) 21., 71.26 (2) (a) 6., 71.34 (1) (j), and 71.45 (2) (a) 16. shall not apply to any expenses or costs if all of the following apply to the expenses or costs:

AB44,10,14 1. The transaction to which the expenses or costs are related did not have tax avoidance as its principal purpose.

AB44,10,22 2. The related entity to whom the taxpayer paid interest expenses or costs, intangible expenses, or management or service fees during the taxable year directly or indirectly paid, accrued, or incurred such amounts to a person who is not a related entity. For purposes of this subdivision, "interest" means interest on a debt for which the taxpayer is the guarantor, if the interest rate is the market rate in effect at the time of the debt's origination, but excludes interest that is paid in connection with any debt that is incurred to acquire the taxpayer's assets or stock under section 368 of the Internal Revenue Code.

AB44,11,11 3. The related entity was subject to tax on its net income in this state, or any state, U.S. possession, or foreign country; a measure of the tax paid included the interest income, intangible income, or management or service fees received from the taxpayer; and the tax rate applied to the interest income, intangible income, or management or service fees was not less than 3 percentage points below the tax rate that would have applied under s. 71.27. For purposes of this subdivision, "any state, U.S. possession, or foreign country" does not include any state, U.S. possession, or foreign country under the laws of which the taxpayer files or could have elected to file with the related entity, or the related entity files or could have elected to file with another entity, a combined income tax report or return, a consolidated income tax report or return, or any other report or return that is due because of the imposition of a tax that is measured on or by income, if the report of return results in eliminating the tax effects of transactions directly or indirectly between either the taxpayer and the related entity or between the related entity and another entity.

AB44, s. 23 Section 23. 74.09 (3) (b) 3. of the statutes is amended to read:

AB44,11,16 74.09 (3) (b) 3. The tax levied on the property by the school district where the property is located minus the credit under s. 79.10 (4) allocable to the property, for the previous year and the current year, and the percentage change in that net tax between those years.

AB44, s. 24 Section 24. 77.52 (2) (a) 13. of the statutes is created to read:

AB44,11,21 77.52 (2) (a) 13. The furnishing of luxury boxes, sky boxes, and club seats at a sports facility, as defined in s. 167.32 (1) (f), for dues, fees, or other considerations, if the sale of admissions to sporting events at the facility is subject to the tax imposed under this section.

AB44, s. 25 Section 25. 79.10 (1) (b) of the statutes is repealed.

AB44, s. 26 Section 26. 79.10 (1) (e) of the statutes is repealed.

AB44, s. 27 Section 27. 79.10 (1m) (b) of the statutes is amended to read:

AB44,12,3 79.10 (1m) (b) Counties and municipalities shall submit to the department of revenue all data related to the lottery and gaming homeowner's tax credit and requested by the department of revenue.

AB44, s. 28 Section 28. 79.10 (2) of the statutes is amended to read:

AB44,12,12 79.10 (2) Notice to municipalities. On or before December 1 of the year preceding the distribution under sub. (7m) (a), the department of revenue shall notify the clerk of each town, village, and city of the estimated fair market value, as determined under sub. (11), to be used to calculate the lottery and gaming homeowner's tax credit under sub. (5) and of the amount to be distributed to it under sub. (7m) (a) on the following 4th Monday in July. The anticipated receipt of such distribution shall not be taken into consideration in determining the tax rate of the municipality but shall be applied as tax credits.

AB44, s. 29 Section 29. 79.10 (4) of the statutes is repealed.

AB44, s. 30 Section 30. 79.10 (5) of the statutes is amended to read:

AB44,12,21 79.10 (5) Lottery and gaming Homeowner's tax credit. Each municipality shall receive, from the appropriation appropriations under s. 20.835 (3) (bm) and (q), an amount determined by multiplying the school tax rate by the estimated fair market value, not exceeding the value as determined under sub. (11), but not to exceed $60,000, of every principal dwelling that is located in the municipality and for which a claim for the credit under sub. (9) (bm) is made by the owner of the principal dwelling.

AB44, s. 31 Section 31. 79.10 (6m) (a) of the statutes is amended to read:

AB44,13,10 79.10 (6m) (a) Except as provided in pars. (b) and (c), if the department of administration or the department of revenue determines by October 1 of the year of any distribution under subs. (4) and sub. (5) that there was an overpayment or underpayment made in that year's distribution by the department of administration to municipalities, as determined under subs. (4) and sub. (5), because of an error by the department of administration, the department of revenue or any municipality, the overpayment or underpayment shall be corrected as provided in this paragraph. Any overpayment shall be corrected by reducing the subsequent year's distribution, as determined under subs. (4) and sub. (5), by an amount equal to the amount of the overpayment. Any underpayment shall be corrected by increasing the subsequent year's distribution, as determined under subs. (4) and sub. (5), by an amount equal to the amount of the underpayment. Corrections shall be made in the distributions to all municipalities affected by the error. Corrections shall be without interest.

AB44, s. 32 Section 32. 79.10 (7m) (a) of the statutes is repealed.

AB44, s. 33 Section 33. 79.10 (7m) (b) (title) of the statutes is amended to read:

AB44,13,13 79.10 (7m) (b) (title) Lottery and gaming Homeowner's tax credit.

AB44, s. 34 Section 34. 79.10 (7m) (b) 1. of the statutes is amended to read:

AB44,13,18 79.10 (7m) (b) 1. The amount determined under sub. (5) with respect to claims filed for which the town, village, or city has furnished notice under sub. (1m) by March 1 shall be distributed from the appropriation appropriations under s. 20.835 (3) (bm) and (q) by the department of administration on the 4th Monday in March.

AB44, s. 35 Section 35. 79.10 (9) (b) of the statutes is repealed.

AB44, s. 36 Section 36. 79.10 (9) (bm) of the statutes is amended to read:

AB44,14,2 79.10 (9) (bm) Lottery and gaming Homeowner's tax credit. Except as provided in ss. 79.175 and 79.18, a lottery and gaming homeowner's tax credit shall be allocated to every principal dwelling for which a credit is claimed under sub. (10) in an amount determined by multiplying the estimated fair market value of the principal dwelling, not exceeding the value as determined under sub. (11), but not to exceed $60,000, by the school tax rate.

AB44, s. 37 Section 37. 79.10 (9) (c) 1. of the statutes is renumbered 79.10 (9) (c) and amended to read:

AB44,14,8 79.10 (9) (c) The lottery and gaming homeowner's tax credit under par. (bm) shall reduce the property taxes otherwise payable on property that is eligible for that credit and if the property owner completes the information required under sub. (10) (a) or (b).

AB44, s. 38 Section 38. 79.10 (9) (c) 2. of the statutes is repealed.

AB44, s. 39 Section 39. 79.10 (10) (title) of the statutes is amended to read:

AB44,14,11 79.10 (10) (title) Claiming the lottery and gaming homeowner's tax credit.

AB44, s. 40 Section 40. 79.10 (10) (a) of the statutes is amended to read:

AB44,15,2 79.10 (10) (a) Beginning with property taxes levied in 1999 2004, the owner of a principal dwelling may claim the credit under sub. (9) (bm) by applying for the credit on a form prescribed by the department of revenue. A claimant shall attest that, as of the certification date, the claimant is an owner of property and that such property is used by the owner in the manner specified under sub. (1) (dm). The certification date is January 1 of the year in which the property taxes are levied. The claimant shall file the application for the lottery and gaming homeowner's tax credit with the treasurer of the county in which the property is located or, if the property is located in a city that collects taxes under s. 74.87, with the treasurer of the city in which the property is located. Subject to review by the department of revenue, a treasurer who receives a completed application shall direct that the property described in the application be identified on the next tax roll as property for which the owner is entitled to receive a lottery and gaming homeowner's tax credit. A claim that is made under this paragraph is valid for as long as the property is eligible for the credit under sub. (9) (bm).

AB44, s. 41 Section 41. 79.10 (10) (bm) 1. of the statutes is amended to read:

AB44,15,14 79.10 (10) (bm) 1. A person who is eligible for a credit under sub. (9) (bm) but whose property tax bill does not reflect the credit may claim the credit by applying to the treasurer of the taxation district in which the property is located for the credit under par. (a) by January 31 following the issuance of the person's property tax bill. The treasurer shall compute the amount of the credit; subtract the amount of the credit from the person's property tax bill; notify the person of the reduced amount of the property taxes due; issue a refund to the person if the person has paid the property taxes in full; and enter the person's property on the next tax roll as property that qualifies for a lottery and gaming homeowner's tax credit. Claims made under this subdivision are valid for as long as the property is eligible for the credit under sub. (9) (bm).

AB44, s. 42 Section 42. 79.10 (10) (bm) 2. of the statutes is amended to read:

AB44,16,2 79.10 (10) (bm) 2. A person who may apply for a credit under subd. 1. but who does not timely apply for the credit under subd. 1. may apply to the department of revenue no later than October 1 following the issuance of the person's property tax bill. Subject to review by the department, the department shall compute the amount of the credit; issue a check to the person in the amount of the credit; and notify the treasurer of the county in which the person's property is located or the treasurer of the taxation district in which the person's property is located, if the taxation district collects taxes under s. 74.87. The treasurer shall enter the person's property on the next tax roll as property that qualifies for a lottery and gaming homeowner's tax credit. Claims made under this subdivision are valid for as long as the property is eligible for the credit under sub. (9) (bm).

AB44, s. 43 Section 43. 79.10 (11) (title) of the statutes is amended to read:

AB44,16,5 79.10 (11) (title) Lottery and gaming Homeowner's tax credit estimated fair market value.

AB44, s. 44 Section 44. 79.10 (11) (b) of the statutes is amended to read:

AB44,16,20 79.10 (11) (b) Before October 16, the department of administration shall determine the total funds available for distribution under the lottery and gaming homeowner's tax credit in the following year and shall inform the joint committee on finance of that total. Total funds available for distribution shall be $469,305,000 from s. 20.835 (3) (bm) plus all moneys projected to be transferred to the lottery fund under ss. 20.455 (2) (g) and 20.505 (8) (am), (g), and (jm) and all existing and projected lottery proceeds and interest for the fiscal year of the distribution, less the amount estimated to be expended under ss. 20.455 (2) (r), 20.566 (2) (r), and 20.835 (2) (q) and less the required reserve under s. 20.003 (5). The joint committee on finance may revise the total amount to be distributed if it does so at a meeting that takes place before November 1. If the joint committee on finance does not schedule a meeting to take place before November 1, the total determined by the department of administration shall be the total amount estimated to be distributed under the lottery and gaming homeowner's tax credit in the following year.

AB44, s. 45 Section 45. 79.10 (11) (c) of the statutes is amended to read:

AB44,17,3 79.10 (11) (c) Before November 1, the department of administration shall inform the department of revenue of the total amount available for distribution under the lottery and gaming homeowner's tax credit in the following year. Before December 1, the department of revenue shall calculate, to the nearest $100, the estimated fair market value necessary to distribute the total amount available for distribution under the lottery and gaming homeowner's tax credit in the following year.

AB44, s. 46 Section 46. 79.11 (3) (b) of the statutes is amended to read:

AB44,17,8 79.11 (3) (b) Notwithstanding ss. 74.11 (2) (b) and 74.12 (2) (b), the lottery and gaming homeowner's tax credit shall be deducted in its entirety from the first installment. This paragraph does not apply to the payment of taxes in installments under s. 74.87.

AB44, s. 47 Section 47. 79.14 of the statutes is repealed.

AB44, s. 48 Section 48. 565.02 (7) of the statutes is amended to read:

AB44,18,2 565.02 (7) Not later than March 1 of each year, the department shall submit to the joint committee on finance a report that includes an estimate for that fiscal year and for the subsequent fiscal year of the gross revenues from the sale of lottery tickets and lottery shares, the total amount paid as prizes and the prize payout ratio for each type of lottery game offered, and an evaluation of the effect of prize payout ratios of lottery games on lottery sales, lottery operating costs and on maximizing the revenue available for the lottery and gaming property homeowner's tax credit. If, within 14 working days after the date on which the committee receives the report, the cochairpersons of the committee notify the department that the committee has scheduled a meeting for the purpose of reviewing the department's proposed prize payouts, the department may proceed with its plans for the prize payouts for the subsequent fiscal year only upon approval of the plans by the committee. If the cochairpersons of the committee do not notify the department within 14 working days after the date on which the committee receives the report that the committee has scheduled a meeting for the purpose of reviewing the department's proposed prize payouts, the department's plans for the prize payouts for the subsequent fiscal year are considered approved by the committee.

AB44, s. 49 Section 49. Nonstatutory provisions.

AB44,18,10 (1) Homeowner's tax credit. An application for the lottery and gaming credit under section 79.10 (10) of the statutes, 2003 stats., shall be considered to be an application for the homeowner's tax credit under section 79.10 (10) of the statutes, as affected by this act, and any valid claim for the lottery and gaming credit under section 79.10 (10) of the statutes, 2003 stats., shall be considered to be a valid claim for the homeowner's tax credit under section 79.10 (10) of the statutes, as affected by this act.

AB44, s. 50 Section 50. Initial applicability.

AB44,18,16 (1) Homeowner's tax credit. The treatment of sections 20.566 (2) (am) and (r), 20.835 (3) (b), (bm), (q), and (s), 41.41 (10) (c) 1., 74.09 (3) (b) 3., 79.10 (1) (b) and (e), (1m) (b), (2), (4), (5), (6m) (a), (7m) (a) and (b) (title) and 1., (9) (b), (bm), and (c) 1. and 2., (10) (title) and (a), (bm) 1. and 2., and (11) (title), (b), and (c), 79.11 (3) (b), 79.14, and 565.02 (7) of the statutes first applies to property taxes levied in 2005.

AB44,18,18 (2) Computers. The treatment of section 70.11 (39) of the statutes first applies to the property tax assessments as of January 1, 2005.

AB44,18,20 (3) School property income tax credit. The treatment of section 71.07 (9) (b) 5. of the statutes first applies to taxable years beginning on January 1, 2005.

AB44,18,25 (4) Related entities. The treatment of sections 71.01 (5p) and (9b), 71.05 (6) (a) 21., 71.22 (3m) and (9b), 71.34 (1) (j), 71.42 (1p) and (4m), 71.45 (2) (a) 16., 71.738 (3m), and 71.80 (23) of the statutes, the renumbering and amendment of section 71.26 (2) (a), and the creation of section 71.26 (2) (a) 6. of the statutes first apply to taxable years beginning on January 1, 2005.

AB44,19,2 (5) Luxury boxes. The treatment of sections 77.52 (2) (a) 13. of the statutes first applies to transactions entered into on the effective date of this subsection.

AB44,19,3 (End)