JR4 AB1: Bill Text Engrossed

LRB-4262/1

PG/MES/JK:all:kf

January 2014 Special Session

2013 - 2014 LEGISLATURE

Engrossed Assembly BILL 1

February 13, 2014 - Printed by direction of Senate Chief Clerk.

AB1-engrossed,2,5 An Act to repeal 38.16 (3) (b); to renumber 71.05 (8) (b), 71.10 (4) (cr), 71.10 (4) (dr) and 71.10 (4) (er); to amend 38.16 (title), 38.16 (3) (a) 2., 38.16 (3) (be), 38.16 (3) (bg) 2., 38.16 (3) (br) 1., 38.16 (3) (br) 2., 38.16 (3) (c) (intro.), 38.16 (3) (c) 1., 38.16 (3) (c) 3., 38.16 (3) (c) 4., 38.16 (3) (d), 71.05 (6) (b) 47. am., 71.05 (6) (b) 47. b., 71.05 (6) (b) 47. c., 71.06 (1q) (a), 71.06 (2) (i) 1., 71.06 (2) (j) 1., 71.07 (4k) (b) 1., 71.07 (5m) (a) 4., 71.07 (5n) (b) (intro.), 71.07 (9r) (a), 71.08 (1) (intro.), 71.08 (1) (intro.), 71.26 (4) (a), 71.28 (9s) (d) 3., 71.45 (4) (a), 71.47 (9s) (d) 3., 71.52 (6), 71.98 (3), 77.54 (61) (intro.), (a) and (b) and 238.16 (3) (intro.); and to create 20.292 (1) (dp), 38.16 (3) (a) 1m., 38.16 (3) (a) 2w., 38.16 (4), 71.05 (6) (b) 47. dm., 71.05 (8) (b) 2., 71.05 (8) (c), 71.07 (5i) (c) 3., 71.28 (5i) (c) 3., 71.47 (5i) (c) 3., 77.54 (9d) and 77.54 (61) (c) of the statutes; relating to: reducing the lowest individual income tax rate; providing technical college property tax relief aid; establishing a technical college district revenue limit; the carry-back of net operating losses; a sales and use tax exemption for building materials that become a part of certain facilities; the sales and use tax exemption for commercial printing; the jobs tax credit; the electronic medical records credit; the manufacturing and agriculture credit; the research credit; the state historic rehabilitation credit; the relocated business credit; and making an appropriation.

Analysis by the Legislative Reference Bureau

Engrossment information:

The text of Engrossed January 2014 Special Session Assembly Bill 1 consists of the following documents adopted in the assembly on February 11, 2014: the bill as affected by Assembly Amendments 2, 3, and 4 and Assembly Amendment 1 to Assembly Amendment 4.

Content of Engrossed January 2014 Special Session Assembly Bill 1:

Individual Income tax rates

Under current law, there are four income tax brackets for single individuals, certain fiduciaries, heads of households, and married persons. The brackets are indexed for inflation. The rate of taxation under current law for the lowest bracket for single individuals, certain fiduciaries, heads of households, and married persons is 4.40 percent of taxable income; the rate for the second bracket is 5.84 percent; the rate for the third bracket is 6.27 percent; and the rate for the highest bracket is 7.65 percent. Before applying bracket indexing, the four brackets for individuals, certain fiduciaries, and heads of households, to which the above rates apply, are as follows: taxable income from $0 to $7,500; taxable income exceeding $7,500 but not exceeding $15,000; taxable income exceeding $15,000 but not exceeding $225,000; and taxable income exceeding $225,000.

This rate and bracket structure first applies to taxable year 2013, and was enacted in 2013 Wisconsin Act 20, the state budget bill.

For taxable years beginning after December 31, 2013, this bill lowers the rate of taxation for the lowest tax bracket. Under the bill, the rate of taxation for the lowest bracket for single individuals, certain fiduciaries, heads of households, and married persons is 4.0 percent of taxable income.

technical college system

This bill provides property tax relief aid to technical college districts, distributed annually to each district on the basis of its equalized value as compared to the equalized value of all technical college districts as of January 2014. The first distribution is in February 2015.

The bill eliminates the current limit on a technical college district's tax levy and imposes, instead, a revenue limit. Under the bill, with certain exceptions, a district board's revenue (defined as the sum of its tax levy for operations and the amount of property tax relief aid it receives) in the 2014-15 school year or any school year thereafter may not exceed its revenue in the previous school year increased by the district's valuation factor, which is the percentage change in the district's equalized value due to new construction, less improvements removed.

net operating losses

Under current law, for income tax purposes, under certain circumstances, a taxpayer may claim a Wisconsin net operating loss against Wisconsin taxable income of the two years preceding the year in which the taxpayer sustained the loss. This bill clarifies that a taxpayer need not make an offset against Wisconsin modified taxable income of the two years preceding the loss, if the taxpayer chooses not to carry back the net operating loss to the two years preceding the loss.

Under current law, corporations and insurers may offset against their Wisconsin net business income any Wisconsin net business loss sustained in any of the 15 preceding taxable years. Under the bill, corporations and insurers may offset against their Wisconsin net business income any Wisconsin net business loss sustained in any of the 20 preceding taxable years.

DEPLETION

Under current law, the provisions of the federal Internal Revenue Code used for computing depreciation, depletion, and amortization for state income and franchise tax purposes are the provisions of the federal Internal Revenue Code in effect on January 1, 2014. Under the bill, the provisions of the federal Internal Revenue Code used for computing depletion are the provisions of the federal Internal Revenue Code in effect for the year in which the property is placed in service.

SALES TAX

Under current law, municipalities, school districts, and certain nonprofit organizations are exempt from paying the sales tax and the use tax on purchases of tangible personal property. To receive the sales tax or use tax exemption, the municipality, school district, or nonprofit organization must purchase the tangible personal property. A construction contractor hired by the municipality, school district, or nonprofit organization may not receive the exemption for property purchased by the contractor to be used for a municipality, school district, or nonprofit organization construction project.

Under this bill, the sale of tangible personal property that becomes a component of a facility in this state that is owned by a municipality or nonprofit organization is exempt from the sales tax and the use tax. The exemption applies to tangible personal property purchased by a construction contractor who transfers the property to the municipality or nonprofit organization as part of constructing the facility.

tax credits

Under current law, a person may claim the jobs tax credit if the Wisconsin Economic Development Corporation certifies the person to receive the tax credit, the person increases net employment in the person's business, and the person provides certain wages or job training to its full-time employees. This bill specifies that to be eligible for the jobs tax credit a person must increase net employment in the person's business in this state. Therefore, under the bill, a person may qualify for the jobs tax credit by relocating existing jobs to this state even if the number of individuals the person's business employs nationwide does not increase. Similarly, under the bill, a person does not qualify for the jobs tax credit by increasing the number of individuals the person's business employs nationwide if the number of individuals the person's business employs in this state does not increase.

Under current law, for income and franchise tax purposes, a taxpayer may not claim a relocated business deduction or tax credit for taxable years beginning after December 31, 2013. Under this bill, a taxpayer who is first eligible to claim a relocated business deduction or tax credit for a taxable year beginning after December 31, 2012, and before January 1, 2014, may claim the deduction or credit in the following taxable year.

The bill also provides that the manufacturing and agriculture credit, the research credit, and the state historic rehabilitation credit may be claimed against the alternative minimum tax.

Finally, the bill makes technical changes to the electronic medical records tax credit and to the sales and use tax exemption for tangible personal property used in commercial printing.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1-engrossed,1 Section 1. 20.292 (1) (dp) of the statutes is created to read:

AB1-engrossed,4,4 20.292 (1) (dp) Property tax relief aid. A sum sufficient equal to the amount necessary to distribute the property tax relief aid to technical college districts under s. 38.16 (4).

AB1-engrossed,2 Section 2. 38.16 (title) of the statutes is amended to read:

AB1-engrossed,4,6 38.16 (title) District tax levy; revenue limit; property tax relief aid.

AB1-engrossed,3 Section 3. 38.16 (3) (a) 1m. of the statutes is created to read:

AB1-engrossed,4,9 38.16 (3) (a) 1m. "Equalized value" excludes the value of tax incremental districts.

AB1-engrossed,4 Section 4. 38.16 (3) (a) 2. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,4,13 38.16 (3) (a) 2. "Excess levy revenue" means the amount by which a district board's tax levy revenue exceeds the limit under this subsection.

AB1-engrossed,5 Section 5. 38.16 (3) (a) 2w. of the statutes is created to read:

AB1-engrossed,5,3 38.16 (3) (a) 2w. "Revenue" means the sum of the tax levy and property tax relief aid under sub. (4).

AB1-engrossed,6 Section 6. 38.16 (3) (b) of the statutes is repealed.

AB1-engrossed,7 Section 7. 38.16 (3) (be) of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,5,10 38.16 (3) (be) Notwithstanding sub. (1), no district board may increase its tax levy revenue in 2013 the 2014-15 school year or in any school year thereafter by a percentage that exceeds the district's valuation factor, except as provided in pars. (bg) and (br).

AB1-engrossed,8 Section 8. 38.16 (3) (bg) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,5,20 38.16 (3) (bg) 2. If a district board's allowable levy revenue under this subsection in 2013 the 2014-15 school year, or any school year thereafter, is greater than its actual levy revenue in that school year, the limit otherwise applicable to the district board under this subsection in the succeeding school year is increased by the difference between the prior school year's allowable levy revenue and the prior school year's actual levy revenue, as determined by the department of revenue, up to a maximum increase of 0.5 percent of the actual levy revenue in that prior school year, if the district board approves the increase by a three-fourths vote.

AB1-engrossed,9 Section 9. 38.16 (3) (br) 1. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,6,10 38.16 (3) (br) 1. If a district board wishes to exceed the limit otherwise applicable to the district under this subsection, it shall adopt a resolution supporting inclusion in the final district budget of an amount equal to the proposed excess levy revenue. The resolution shall be filed as provided in s. 8.37. Within 10 days after adopting the resolution, the district board shall notify the board of the scheduled date of the referendum and submit a copy of the resolution to the board. The district board shall call a special referendum for the purpose of submitting the resolution to the electors of the district for approval or rejection. In lieu of a special referendum, the district board may specify that the referendum be held at the next succeeding spring primary or election or partisan primary or general election, if such election is to be held not sooner than 70 days after the filing of the resolution of the district board. The district board shall certify the results of the referendum to the board within 10 days after the referendum is held.

AB1-engrossed,10 Section 10. 38.16 (3) (br) 2. of the statutes is amended to read:

AB1-engrossed,6,16 38.16 (3) (br) 2. The district board shall publish type A, B, C, D, and E notices of the referendum under s. 10.01 (2). Notwithstanding s. 10.01 (2) (a), the type A notice shall include a statement of the amount of the excess levy revenue specified in subd. 1. and a copy of the resolution under subd. 1. Section 5.01 (1) applies in the event of failure to comply with the notice requirements of this subdivision.

AB1-engrossed,11 Section 11. 38.16 (3) (c) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,6,21 38.16 (3) (c) (intro.) Except as provided in par. (d), if the board determines that a district board imposed an excess levy exceeded its limit under this subsection, the board shall do all of the following:

AB1-engrossed,12 Section 12. 38.16 (3) (c) 1. of the statutes is amended to read:

AB1-engrossed,6,25 38.16 (3) (c) 1. Reduce the amount of state aid payments to the district board in the school year in which the district board imposed the excess levy exceeded its limit by an amount equal to the amount of the excess levy revenue.

AB1-engrossed,13 Section 13. 38.16 (3) (c) 3. of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

AB1-engrossed,7,5 38.16 (3) (c) 3. Ensure that the amount of the excess levy revenue is not included in determining the limit under this subsection for the district board for the following year.

AB1-engrossed,14 Section 14. 38.16 (3) (c) 4. of the statutes is amended to read:

AB1-engrossed,7,10 38.16 (3) (c) 4. Ensure that, if a district board's excess levy revenue exceeds the amount of state aid that may be reduced under subd. 1., the excess amount is subtracted from state aid payments in the following years until the total amount of the excess levy revenue is subtracted from the state aid payments.

AB1-engrossed,15 Section 15. 38.16 (3) (d) of the statutes is amended to read:

AB1-engrossed,7,15 38.16 (3) (d) The department may issue a finding that a district board is not liable for a penalty that would otherwise be imposed under par. (c) if the department determines that the district board's excess levy revenue is caused by one of the following clerical errors:

AB1-engrossed,7,19 1. The department, through mistake or inadvertence, has assessed to any county or taxation district, in the current year or in the previous year, a greater or lesser valuation for any year than should have been assessed, causing the district board's levy to be erroneous in a way that directly causes an excess levy revenue.

AB1-engrossed,7,22 2. A taxation district clerk or a county clerk, through mistake or inadvertence in preparing or delivering the tax roll, causes a district board's levy to be erroneous in a way that directly causes an excess levy revenue.

AB1-engrossed,16 Section 16. 38.16 (4) of the statutes is created to read: