The Wisconsin Department of Revenue proposes an order to: repeal Tax 2.02 (4) (a) 4., (9), and (10) (b); amend Tax 1.11 (2) and (5) (a) 2., 1.13 (1) (b) and (4) (b), 2.02 (10) (a), 2.12 (5) (a) and (b), 2.31 (1) (Note), 2.39 (3) (a) 1. and (b) 1. and (c) 1. and (d) and (d) (Note), 2.475 (title) and (1) and (1) (Note) and (2) and (2) (b) (Note) and (4) (Note), 2.955 (3) (a), 3.01 (7) (b) 1., 3.05 (3), and 9.69 (5) (intro.); and create Tax 1.11 (4) (cm) and (gm), 2.02 (12) (Note 5), 2.955 (4) (e) and (f), and 3.095 (4) (a) 22.; relating to income, franchise, and excise tax provisions.
The scope statement for this rule, SS 082-16, was approved by the Governor on September 13, 2016, published in Register No. 729B on September 26, 2016, and approved by the Secretary of Revenue on October 14, 2016. Analysis by the Department of Revenue
Statutes interpreted: ss. 71.02, 71.04 (1) (a), (4), and (8) (c), 71.05 (1) (c) 6p., (2), (6) (a) 1., (6) (b) 1. and 47m., 71.07 (7), 71.25 (6) and (10) (c), 71.255 (7), 71.26 (1) (h), 71.45 (1) (c), 71.64 (8), 71.75, 71.78, 71.80 (23) (a) 3. b., 139.82, and 995.12 (2) and (4), Stats. Explanation of agency authority: Section 71.05 (6) (b) 47m., Stats., provides that the department may promulgate rules in order to carry out this subdivision. Section 71.25 (10) (c), Stats., provides that the department may establish rules relating to the apportionment of net business income for railroads. Sections 71.26 (h) and 71.45 (1) (c), Stats., provide that the department shall promulgate rules in order to administer the job creation deduction. Under s. 71.80 (1) (c), Stats., the department may make such regulations as it shall deem necessary in order to carry out chapter 71 of the Wisconsin Statutes, relating to income and franchise taxes. This provision applies to the revision of ss. Tax 2.02, 2.12, 2.955, and 3.05. Sections 139.38 (1) and 139.82 (1) and (3), Stats., provide the records of cigarette manufacturers and tobacco products manufacturers, respectively, shall be kept in a manner and method prescribed by the department. These provisions apply to the revision of s. Tax 9.69 (5) (intro.). Section 227.11 (2) (a), Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute...” Related statute or rule: There are no other applicable statutes or rules.
Plain language analysis: The rule (1) reflects various law changes, (2) clarifies a rule, and (3) corrects errors in current rule provisions.
· Revise ss. Tax 1.11 and 1.13 to remove reference to gift and inheritance tax pursuant to the repeal of the tax in 1987 Wis. Act 27. Revise the special situations of who may examine tax returns to include persons who have a material interest in property subject to a tax warrant, as provided by 2015 Wis. Act 216, and for the State Auditor and the employees of the legislative audit bureau as provided by 2013 Wisconsin Act 8. · Revise ss. Tax 2.02, 2.31, and 2.955 to reflect there is no longer a reciprocity agreement between Wisconsin and Minnesota. · Revise s. Tax 2.12 to reflect that, for taxable years beginning on or after January 1, 2015, Form 1X is no longer available to file a claim for refund. · Amend s. Tax 2.955 to clarify that, under s. 71.07 (7), Stats., a partner in a partnership or member of a limited liability company treated as a partnership who is a resident of Wisconsin may claim the credit for taxes paid to other states. Summary of, and comparison with, existing or proposed federal regulation:
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states: The department is not aware of a similar rule in an adjacent state.
Summary of factual data and analytical methodologies: 2013 Wisconsin Act 8 and 2015 Wisconsin Acts 55, 60, and 216 have made changes to Wisconsin's income, franchise, and excise tax laws. The department has created this proposed rule order to reflect these statutory changes, as well as provide needed clarification and correction as described above. No other data was used in the preparation of this proposed rule order or this analysis. Analysis and supporting documents used to determine effect on small business: This rule order makes changes to reflect current law and current department policy. It makes no policy or other changes having an effect on small business.
Anticipated costs incurred by private sector: This proposed rule does not have a fiscal effect on the private sector.
Effect on small business: This proposed rule does not affect small business.
Agency contact person: Please contact Jen Chadwick at (608) 266-8253 or jennifer.chadwick@wisconsin.gov, if you have any questions regarding this proposed rule. Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below no later than Tuesday, April 25, 2017. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jen Chadwick
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
.
SECTION 1. Tax 1.11 (2) is amended to read:
Tax 1.11 (2) General. The provisions of ss. 70.375 (2) (b), 71.78, 72.06, 77.61 (5), 77.76 (3), 77.79, 78.80 (3) and (4), 139.11 (4), 139.38 (6) and 139.82 (6), Stats., apply to the examination of mining net proceeds, income, franchise, gift, fiduciary, partnership, inheritance, estate, sales and use, county sales and use, withholding, motor fuel, general aviation fuel, special fuel, fermented malt beverage, distilled spirits and wine, cigarette and tobacco product tax returns and tax credit claims. No person may examine or receive information from a tax return or tax credit claim unless specifically authorized to do so by the appropriate statute. SECTION 2. Tax 1.11 (4) (cm) and (gm) are created to read:
Tax 1.11 (4) (cm) Legislative audit bureau. The state auditor and the employees of the legislative audit bureau, to the extent necessary for the bureau to carry out its duties under s. 13.94, Stats., may examine tax returns under the provisions specified in sub. (2). (gm) Material interest in property subject to a tax warrant. Any person, or authorized agent of any person, who provides satisfactory evidence to the department, as determined by the department, that the person has a material interest, or intends to obtain a material interest, in a property that is subject to a tax warrant filed by the department under s. 71.91 (5), Stats., may not examine tax returns of the persons subject to the tax warrant, but may obtain the outstanding liability secured by the tax warrant. SECTION 3. Tax 1.11 (5) (a) 2. is amended to read:
Tax 1.11 (5) (a) 2. The type of tax return or tax credit claim, such as mining net proceeds, income, franchise, gift, homestead credit, or sales and use tax.
SECTION 4. Tax 1.13 (1) (b) and (4) (b) are amended to read:
Tax 1.13 (1) (b) The power of attorney requirement applies to income, franchise, alternative minimum, withholding, gift, sales and use, county sales and use, inheritance, estate, motor fuel, general aviation fuel, special fuel, fermented malt beverage, intoxicating liquor, cigarette and tobacco products tax matters of individuals, partnerships and corporations, including (S) corporations, and homestead and farmland preservation credit matters.
(4) (b) Use of the Wisconsin power of attorney form is not mandatory. However, the department prefers that this form or another similar form be used. The Wisconsin power of attorney form or substitute form shall clearly express the scope of the authority granted the taxpayer’s representative, the Wisconsin tax matters, e.g., income, sales, or gift tax, franchise tax, covered and the tax year or period to which it relates.
SECTION 5. Tax 2.02 (4) (a) 4. and (9) are repealed.
SECTION 6. Tax 2.02 (10) (a) is amended to read:
Tax 2.02 (10) (a) Nonresident persons, other than residents of Minnesota, employed in Wisconsin and residing in a state with which Wisconsin has reciprocity shall file form W−220, “Nonresident Employee’s Withholding Reciprocity Declaration,” with their Wisconsin employers to be exempt from withholding of Wisconsin income taxes. Upon receipt of this form, Wisconsin employers may not withhold Wisconsin income tax from Wisconsin personal service income of the employee.
SECTION 7. Tax 2.02 (10) (b) is repealed.
SECTION 8. Tax 2.02 (12) (Note 5) is created to read:
