LRBs0022/1
JK:cdc
2021 - 2022 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 3,
TO ASSEMBLY BILL 2
February 16, 2021 - Offered by Representative Wittke.
AB2-ASA3,2,18
1An Act to repeal 71.01 (6) (c), (d), (e), (f), (g), (h) and (i), 71.05 (1) (ae), 71.05 (6)
2(b) 17. and 18., 71.05 (6) (b) 20., 36., 37., 39., 40. and 41., 71.22 (4) (c), (d), (e),
3(f), (g), (h) and (i), 71.22 (4m) (c), (d), (e), (f), (g), (h) and (i), 71.26 (2) (b) 3., 4.,
45., 6., 7., 8. and 9., 71.34 (1g) (c), (d), (e), (f), (g), (h) and (i), 71.42 (2) (c), (d), (e),
5(f), (g), (h) and (i), 77.51 (13gm) (a) 1. and 2., 77.51 (13gm) (d) 1. and 77.51 (13gm)
6(d) 3. and 4.;
to renumber and amend 71.05 (6) (b) 4., 71.26 (3) (ag), 71.76 and
777.51 (13gm) (a) (intro.);
to amend 48.561 (3) (a) 3., 48.561 (3) (b), 59.25 (3) (i),
866.0602 (3) (h) 2. a., 66.0602 (6) (a), 66.0602 (6) (b), 66.1105 (6m) (d) 4., 70.46
9(4), 70.855 (4) (b), 70.995 (8) (c) 1., 70.995 (8) (d), 70.995 (14) (b), 71.01 (6) (k)
103., 71.01 (6) (L) 1., 71.01 (6) (L) 3., 71.01 (6) (L) 4., 71.05 (1) (am), 71.05 (1) (an),
1171.05 (6) (b) 19. c., 71.05 (6) (b) 19. d., 71.07 (5) (a) 15., 71.07 (9m) (h), 71.22 (4)
12(k) 3., 71.22 (4) (L) 1., 71.22 (4) (L) 3., 71.22 (4) (L) 4., 71.22 (4m) (k) 3., 71.22
13(4m) (L) 1., 71.22 (4m) (L) 3., 71.22 (4m) (L) 4., 71.26 (2) (b) 10. d., 71.26 (2) (b)
111. d., 71.26 (2) (b) 12. a., 71.26 (2) (b) 12. d., 71.26 (2) (b) 12. e., 71.26 (3) (L),
271.28 (6) (h), 71.34 (1g) (k) 3., 71.34 (1g) (L) 1., 71.34 (1g) (L) 3., 71.34 (1g) (L)
34., 71.42 (2) (k) 3., 71.42 (2) (L) 1., 71.42 (2) (L) 3., 71.42 (2) (L) 5., 71.47 (6) (h),
471.55 (10), 71.77 (7) (b), 71.83 (1) (a) 6., 71.98 (3), 73.0305, 73.09 (4) (c), 73.09
5(5), 74.315 (1), 74.315 (2), 74.315 (3), 76.04 (1), 76.07 (1), 76.075, 76.13 (1), 76.13
6(3), 76.28 (4) (b), 76.28 (11), 76.39 (4) (d), 76.48 (5), 77.51 (13gm) (b), 77.51
7(13gm) (c), 77.51 (13gm) (d) 2., 77.51 (13gm) (d) 5., 77.52 (2m) (b), 77.54 (6) (am)
82., 77.54 (9a) (f), 77.54 (9m), 79.02 (1), 79.02 (2) (b), 79.02 (3) (a), 79.02 (3) (e),
979.035 (6), 79.035 (7) (b), 79.05 (1) (am) and 79.05 (2m); and
to create 70.11 (4)
10(b) 3., 71.01 (6) (j) 3. m., 71.01 (6) (j) 3. n., 71.01 (6) (m), 71.01 (7g), 71.05 (1) (h),
1171.05 (6) (b) 4. a. to c., 71.05 (6) (b) 19. cm., 71.05 (6) (b) 19. dm., 71.05 (6) (b) 54.,
1271.22 (4) (j) 3. m., 71.22 (4) (j) 3. n., 71.22 (4) (m), 71.22 (4m) (j) 3. m., 71.22 (4m)
13(j) 3. n., 71.22 (4m) (m), 71.22 (5g), 71.26 (2) (b) 13., 71.26 (2) (b) 14., 71.26 (3)
14(ag) 2., 71.34 (1g) (j) 3. m., 71.34 (1g) (j) 3. n., 71.34 (1g) (m), 71.34 (1k) (af), 71.34
15(1u), 71.42 (2) (j) 3. m., 71.42 (2) (j) 3. n., 71.42 (2) (m), 71.42 (2p), 71.45 (1) (d),
1671,45 (2) (a) 22., 71.52 (1g), 71.76 (2), 74.315 (1m) and 77.61 (5) (b) 8m. of the
17statutes;
relating to: various changes to the laws administered and enforced
18by the Department of Revenue.
Analysis by the Legislative Reference Bureau
This bill makes changes to the laws administered and enforced by the
Department of Revenue.
shared revenue
Reimbursement amounts
Under current law, the state reduces the shared revenue payments to counties
and municipalities for various purposes, including for the collection of penalties and
the reimbursement for other amounts. However, current law is not consistent with
regard to which components of shared revenue are reduced for these purposes. This
bill provides that all such reductions are from the payment of all shared revenue
components that the counties and municipalities receive on the fourth Monday in
July and the third Monday in November.
Expenditure restraint payments
Under current law, counties and municipalities receive 15 percent of their
shared revenue payments on the fourth Monday in July and the remainder on the
third Monday in November, except that municipalities receive the entire amount of
their payment under the expenditure restraint program on the fourth Monday in
July. The bill allows municipalities to receive their entire expenditure restraint
payment before the fourth Monday in July, upon certification by DOR.
Under current law, the inflation factor used to compute a municipality's
expenditure restraint payment is a percentage equal to the average annual
percentage change in the U.S. consumer price index for all urban consumers, U.S.
city average, as determined by the U.S. Department of Labor, for the 12 months
ending on September 30. The bill modifies the consumer price index provision so that
it is for the 12 months ending on August 31.
property
Omitted property
Current law requires a taxation district clerk to annually submit to DOR a
listing of the taxes on property omitted from assessment in any of the previous two
years that are to be included in the next assessment. However, the clerk reports the
omitted taxes only if those taxes exceed $5,000. The bill modifies that $5,000
threshold so that the clerk reports the omitted taxes that are $250 or more for any
single description of property. The bill also provides that the clerk may not list an
omitted tax that was levied on property within a tax incremental district unless the
current value of the district is lower than the tax incremental base.
Objections
Current law requires a person who files an objection to the assessment of the
person's manufacturing property to pay a $45 fee. The bill increases the filing fee to
$200.
License fees
Current law imposes license fees instead of property taxes on certain public
utilities. The fees are based, generally, on the value of a utility's property. Utilities
that are subject to the fees include light, heat, and power companies, pipeline
companies, and railroad companies. Each such company, other than a railroad
company, must file a report with DOR on or before May 1 of each year. DOR
determines the value of the company's property on or before September 15. A
railroad company must file its report on or before April 15 and its value is determined
on or before August 1. The bill changes the filing and determination dates for a
railroad company so that those dates are the same as those for other public utilities.
The bill also decreases the interest rate paid on refunds of license fees paid by
public utilities from 9 percent to 3 percent.
Board of review
Current law requires that at least one member of the board of review attend
DOR training within the two-year period beginning on the date of the board's first
meeting. The bill requires one member of the board of review to complete the training
each year.
Assessor certification
Current law requires a person applying for an assessor certification
examination to submit a $20 fee with the application. A person applying for a
renewal of an assessor certification pays a $20 recertification fee with the
application. The bill allows DOR to determine the amount of the fee for an assessor
certification examination on the basis of DOR's estimate of the actual cost to
administer and grade the examination, but the fee may not exceed $75. The bill also
allows DOR to determine the recertification fee.
Levy limit; joint fire departments
The property tax levy limit under current law does not apply to the amount that
a city, village, or town levies to pay for charges assessed by a joint fire department
or joint emergency medical services district if the current year increase in such
charges is equal to or less than the percentage change in the U.S. consumer price
index for all urban consumers, U.S. city average, as determined by the U.S.
Department of Labor, for the 12 months ending on September 30 of the year of the
levy, plus 2 percent. The bill modifies the consumer price index provision so that it
is for the 12 months ending on August 31 of the year of the levy.
Leasing property owned by a church or religious organization
Current law provides a property tax exemption for property owned by
educational associations and institutions, benevolent associations, churches,
religious associations, and certain nonprofit entities licensed by the Department of
Health Services. Leasing such property does not render the property taxable as long
as the lessor uses the leasehold income for maintenance or construction debt
retirement of the leased property. However, current law allows some leased property
to retain its exemption regardless of how the leasehold income is used. For example,
leasing a part of property that is owned and operated by a licensed nonprofit entity
as residential housing does not render the property taxable, regardless of how the
lessor uses the leasehold income.
Under this bill, leasing all or part of any property owned by a church or religious
organization to an educational association or institution that is also exempt from
taxation does not render the property taxable, regardless of how the lessor uses the
leasehold income.
INCOME tax
Allocations from the coronavirus relief fund
This bill excludes from taxable income all income received in the form of
allocations issued by this state with moneys received from the coronavirus relief fund
to be used for economic support, including broadband expansion, lodging industry
grants, supplemental child care grants, grants to small businesses, a rental
assistance program, and a farm support program.
Disability income subtraction
Current law allows an individual with less than $20,200 of federal adjusted
gross income to claim a disability income subtraction on the individual's state tax
return, if the individual is under 65 years of age and retired on disability, and, when
the individual retired, was permanently and totally disabled. For a married couple
filing a joint return, each spouse may claim the credit if they meet the criteria and
their combined income is less than $25,400. The bill replaces an obsolete reference
to the federal Internal Revenue Code with the language used to determine the
claimant's eligibility that existed under the obsolete reference.
Homestead credit
Under current law, an individual who is under the age of 62 and who does not
have a disability must have earned income in order to claim the homestead credit.
However, current law does not define earned income for purposes of claiming the
credit. The bill defines “earned income” for purposes of claiming the homestead
credit as wages, salaries, tips, and other employee compensation that may be
included in federal adjusted gross income for the taxable year, plus the amount of net
earnings from self-employment.
Current law also requires individuals who wish to claim the homestead credit
to add certain disqualified losses to homestead income in order to determine
eligibility to claim the credit. However, the requirement does not apply to an
individual whose primary income is from farming and whose farming operation
generates less than $250,000 in the year to which the claim relates. The bill clarifies
that an individual's primary income is from farming if the individual's gross income
from farming for the year in which the claim relates is greater than 50 percent of the
individual's total gross income from all sources for that year.
Final audit determinations
Under current law, a taxpayer who receives a final audit determination from
DOR has 90 days to report to DOR any changes or corrections related to that
determination. The bill increases the time for providing that report to 180 days.
Historic rehabilitation credit
The bill modifies the procedure for transferring the historic rehabilitation tax
credit so that the person transferring the credit may file a claim for more than one
taxable year.
Internal Revenue Code
The bill adopts for state income and franchise tax purposes various provisions
of the federal Internal Revenue Code, including provisions of the Consolidated
Appropriations Act of 2020 related to the earned income tax credit, the paycheck
protection program, the economic injury disaster loan program, payment assistance
for certain loan programs, and grants to shuttered venue operators.
Medical care insurance subtraction
The bill eliminates obsolete provisions related to the medical care insurance
subtraction for self-employed persons.
Payments from a retirement plan
Under current law, payments or distributions of $5,000 or less received each
year by an individual from a qualified retirement plan is exempt from income tax if
the individual is at least 65 years of age and has income of less than $15,000 if single
or filing a tax return as head of household or less than $30,000 if married. The bill
changes the exemption to a subtraction that the taxpayer can choose not to claim if
not claiming the subtraction would result in the taxpayer receiving a greater
homestead credit.
Sales tax
University of Wisconsin Hospitals and Clinics Authority
This bill provides a sales and use tax exemption for tangible personal property
sold to a construction contractor who transfers the property to the University of
Wisconsin Hospitals and Clinics Authority as part of constructing a facility for the
authority in this state. A similar exemption applies under current law to property
sold to a contractor who transfers the property to a local unit of government,
technical college district, or institution or campus of the University of Wisconsin
System. Under current law, a sale of tangible personal property directly to the
University of Wisconsin Hospitals and Clinics Authority is exempt from the sales
and use tax, but the exemption does not apply to a contractor who purchases tangible
personal property on the authority's behalf.
Property transferred with services
Current law provides that persons providing landscaping, printing,
fabricating, processing, or photographic services or performing services to tangible
personal property may purchase for resale, without paying the sales tax, items that
the person will transfer to a customer in conjunction with providing a service that
is subject to the sales tax. The bill provides that the exemption applies regardless
of whether the service is taxable.
Nonprofit organizations
The bill modifies the sales and use tax exemption for churches, religious
organizations, and certain nonprofit organizations to conform with DOR's current
practice with regard to the administration of the exemption. The bill provides that
the exemption applies to organizations that are exempt from federal taxation under
section
501 (c) (3) of the Internal Revenue Code and have received a determination
letter for the Internal Revenue Service. The bill also provides that the exemption
applies to churches and religious organizations that meet the requirements of
section
501 (c) (3) of the Internal Revenue Code, but are not required to apply for or
obtain tax-exempt status from the IRS.
Out-of-state retailer
Under current law, an out-of-state retailer that has annual gross sales into this
state in excess of $100,000 or 200 or more annual separate sales transactions into
this state must register with DOR and collect the sales tax on those sales and
transactions. The determination of the annual gross sales and transactions is based
on the retailer's taxable year for federal income tax purposes.
Under the bill, an out-of-state retailer that has annual gross sales into this
state in excess of $100,000 in the previous or current calendar year must register
with DOR and collect the sales tax on those sales.
Disclosure to state auditor
The bill allows the state auditor and Legislative Audit Bureau to examine sales
and use tax returns and related documents to the extent necessary for the LAB to
carry out its duties.
Other