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LRBs0340/1
MES:wlj/amn/emw
January 2018 Special Session
2017 - 2018 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO ASSEMBLY BILL 5
February 15, 2018 - Offered by Representatives Riemer, Hebl, Kolste, Barca,
Genrich, Vruwink, Meyers, Kessler, Brostoff, Crowley and Spreitzer.
AB5-ASA1,1,5 1An Act to amend 71.07 (9e) (aj) (intro.); and to create 20.835 (2) (ff), 71.07 (9e)
2(ak) and 73.03 (73) of the statutes; relating to: creating a pilot program, and
3authorizing a permanent program, for making periodic payments to eligible
4recipients of the earned income tax credit, changing the rate of that credit,
5granting rule-making authority, and making an appropriation.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB5-ASA1,1 6Section 1 . 20.835 (2) (ff) of the statutes is created to read:
AB5-ASA1,1,87 20.835 (2) (ff) Earned income tax credit; periodic payments. A sum sufficient
8to make the payments described under s. 73.03 (73) (c) 2. and 3.
AB5-ASA1,2 9Section 2 . 71.07 (9e) (aj) (intro.) of the statutes is amended to read:
AB5-ASA1,2,310 71.07 (9e) (aj) (intro.) For taxable years beginning after December 31, 2010,
11and before January 1, 2018, an individual may credit against the tax imposed under

1s. 71.02 an amount equal to one of the following percentages of the federal basic
2earned income credit for which the person is eligible for the taxable year under
3section 32 (b) (1) (A) to (C) of the Internal Revenue Code:
AB5-ASA1,3 4Section 3 . 71.07 (9e) (ak) of the statutes is created to read:
AB5-ASA1,2,85 71.07 (9e) (ak) For taxable years beginning after December 31, 2017, an
6individual may credit against the tax imposed under s. 71.02 an amount equal to 34
7percent of the federal basic earned income credit for which the person is eligible for
8the taxable year under section 32 (b) (1) of the Internal Revenue Code.
AB5-ASA1,4 9Section 4 . 73.03 (73) of the statutes is created to read:
AB5-ASA1,2,1110 73.03 (73) To work with the Internal Revenue Service to undertake a pilot
11program that accomplishes all of the following:
AB5-ASA1,2,2212 (a) Assists the department in a 2-year pilot program to study the effect, on the
13financial stability of earned income tax credit recipients, of making monthly or
14quarterly payments to eligible claimants of the amounts such claimants would
15otherwise be eligible to claim under the federal earned income tax credit under
16section 32 of the Internal Revenue Code. The pilot program shall be for taxable years
17beginning after December 31, 2018, and before January 1, 2021. If the Internal
18Revenue Service agrees to assist with the pilot program, the Internal Revenue
19Service and the department shall enter into an agreement describing the
20responsibilities and duties of each party. If the Internal Revenue Service and the
21department are unable to reach an agreement on how the pilot program will operate,
22this subsection does not apply and may not be enforced.
AB5-ASA1,3,1023 (b) Under the pilot program, the Internal Revenue Service would determine the
24amount of earned income tax credit that could likely be claimed by between 400 and
251,200 randomly selected residents of Wisconsin for taxable year 2019 and taxable

1year 2020, based on criteria selected by the Internal Revenue Service. The
2department and the Internal Revenue Service shall make every effort to ensure that
3each individual or married couple selected will be eligible to claim the credit for those
4taxable years, and that the credit amount for which he or she will likely be eligible
5will be in excess of $600 each year. Each individual or married couple selected may
6decline to participate in the pilot program. At the beginning of each taxable year, the
7Internal Revenue Service would forward to the department 50 percent of the total
8amount of payments those 400 to 1,200 claimants would likely be eligible to claim
9for that taxable year, specifying the amounts allotted to each claimant. The
10department shall deposit such amounts in the general fund.
AB5-ASA1,3,1711 (c) 1. Under the pilot program, the department would develop a method to
12divide the 400 to 1,200 likely claimants into 2 test groups of 200 to 600 claimants
13each, a method to disperse the federal credit amount to each claimant on a periodic
14basis, and a method to evaluate the financial and other effects on claimants of
15receiving periodic payments. The methods developed by the department under this
16subdivision shall be created in consultation with a time-limited advisory panel
17appointed by the secretary of revenue.
AB5-ASA1,4,318 2. For the first test group, based on the amount of federal and state earned
19income tax credit that each claimant would likely be eligible to receive based on his
20or her estimated taxable year 2019 and 2020 income tax returns, each claimant
21would receive one-eleventh of 50 percent of his or her likely total federal credit
22amount each month except for the month following the month in which the claimant
23receives the credit claimed on his or her tax return, from the department, from the
24general fund, except that the maximum total amount that each claimant could
25receive under this subdivision, annually, would be one-half of his or her likely total

1credit amount. Any excess amount of federal and state credit for which the claimant
2is eligible could be claimed for that taxable year on his or her federal income tax
3return, under s. 71.07 (9e), or under the terms of the agreement under par. (a).
AB5-ASA1,4,144 3. For the 2nd test group, based on the amount of federal and state earned
5income tax credit that each claimant would likely be eligible to receive based on his
6or her estimated taxable year 2019 and 2020 income tax returns, each claimant
7would receive one-third of 50 percent of his or her likely total federal credit amount
8for 3 calendar quarters except for the calendar quarter following the quarter in which
9the claimant receives the credit claimed on his or her tax return, from the
10department, from the general fund, except that the maximum total amount that each
11claimant could receive under this subdivision, annually, would be one-half of his or
12her likely credit amount. Any excess amount of federal and state credit for which the
13claimant is eligible could be claimed for that taxable year on his or her federal income
14tax return, under s. 71.07 (9e), or under the terms of the agreement under par. (a).
AB5-ASA1,4,1915 4. The department would also establish a 3rd test group of 200 to 600 claimants
16who are likely to be eligible to claim the earned income tax credit for taxable years
172019 and 2020, who will receive their earned income tax credit after filing their
18individual income tax returns, and compare their financial stability to that of the
19other test groups, as described under par. (f).
AB5-ASA1,4,2120 (d) For taxable years 2019 and 2020, the participants in each of the 3 test
21groups would remain the same, to the greatest extent possible.
AB5-ASA1,4,2422 (e) The department may develop policies and promulgate rules to ensure that
23members of each test group are able to continue to claim the credit under s. 71.07 (9e)
24to the extent that they are eligible to do so.
AB5-ASA1,5,15
1(f) The department shall develop and implement a method to study the effect
2of receiving earned income tax credits, through periodic payments, on the financial
3stability and non-economic circumstances of the members of each test group,
4compared to members of their own test group and the other test groups, and shall
5prepare a written report of its findings. The study shall be based on criteria selected
6by the department, in consultation with the advisory panel appointed by the
7secretary of revenue under par. (c) 1., and shall include data from official government
8sources and survey information regarding employment, earnings, income, child
9support payments, and other financial measures and non-financial indicators of the
10participating individuals and families. The department may determine the effect of
11this pilot program on the financial stability of the participants by whatever metrics
12the department considers appropriate, including interviews with participants,
13analysis of changes in income, credit scores, and surveys. The department may also
14provide a method for participants to report to the department changes in their
15income throughout the year, in an effort to prevent overpayments.
AB5-ASA1,5,2116 (g) No later than January 1, 2022, and the filing of income tax returns by the
173rd test group described under par. (c) 4., the department shall submit the report
18described under par. (f) to the appropriate standing committees of the legislature
19under s. 13.172 (3) and to the governor. The report shall also make recommendations
20to the legislature on suggested changes to the earned income tax credit, based on the
21study conducted by the department under par. (f).
AB5-ASA1,6,322 (h) 1. Subject to subd. 2., for taxable years beginning after December 31, 2022,
23and based on the report described under par. (f) finding that the pilot program was
24beneficial to a majority of claimants who were in the periodic payment test groups,
25the department shall make the pilot program described under par. (b) permanent

1and applicable, on a voluntary basis, to all eligible claimants of the earned income
2tax credit under s. 71.07 (9e) (aj), based on the specifications described under pars.
3(b) and (c) 2. and 3.
AB5-ASA1,6,94 2. Subdivision 1. does not apply unless the Internal Revenue Service and the
5department enter into an agreement describing the responsibilities and duties of
6each party and an agreement on how the permanent program will operate. If the
7Internal Revenue Service and the department are unable to reach an agreement on
8how the permanent program will operate, subd. 1. does not apply and may not be
9enforced.
AB5-ASA1,6,1010 (End)
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