Amendment ASA2-AB250

ASSEMBLY SUBSTITUTE AMENDMENT 2, TO ASSEMBLY BILL 250

January 25, 2022 - Offered by Representative Spiros.

AB250-ASA2,2,2 An Act to renumber 565.02 (8) (e); to renumber and amend 125.02 (6), 134.65 (1), 134.65 (1m) and 565.02 (8) (f); to amend 40.02 (48) (am) 19., 40.02 (48) (c), 71.78 (1), 71.78 (4) (b), 71.78 (5), 71.78 (6), 72.06, 73.031, 77.61 (5) (b) 2., 77.61 (5) (c), 77.61 (5) (d), 78.80 (3), 125.04 (3) (h), 125.04 (4), 134.65 (title), 134.65 (1r), 134.65 (4), 134.65 (5m), 134.65 (8), 134.66 (1) (g), 139.11 (4) (a) (intro.), 139.38 (6), 139.44 (2), 139.44 (8) (a), 139.44 (8) (b) and (c), 139.82 (6), 230.36 (1m) (b) 2. (intro.), 230.36 (2m) (a) 9., 565.17 (5) (a), 565.40 (title), 565.50 (2), 565.50 (3) and 946.82 (4); and to create 71.78 (1g), 71.78 (4) (v), 71.83 (6), 73.03 (51b), 77.61 (5) (am), 77.61 (5) (b) 15., 125.02 (1c), 125.02 (6) (b), 125.04 (8m), 125.09 (8), 125.12 (7), 134.65 (1a), 134.65 (1g), 134.65 (1m) (a) 1., 2. and 3., 134.65 (1m) (b), 134.65 (2m), 134.65 (3m), 139.44 (2m), 139.44 (8) (am), 139.44 (8) (d), 565.01 (6c), 565.02 (9) (intro.), 565.17 (5) (d), 565.40 (4), 565.50 (2m) and 565.50 (4) of the statutes; relating to: Department of Revenue enforcement and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill makes the following changes related to the Department of Revenue's enforcement and administration of the laws under its purview:

License to sell cigarettes or tobacco products

The bill creates requirements relating to retail licenses to sell cigarettes or tobacco products.

Under current law, a person must obtain an annual license from the person's city, village, or town (municipality) before selling cigarettes or tobacco products. Under the bill, DOR must create an application form for such licenses. The form must include the applicant's history relevant to the applicant's fitness to hold a license; the kind of retailer license for which the applicant is applying; the premises where cigarettes or tobacco products will be sold or stored; if the applicant is a corporation, the identity of the corporate officers and agent; if the applicant is a limited liability company, the identity of the company members or managers and agent; the applicant's trade name, if any; whether the applicant will sell, exchange, barter, dispose of, or give away the cigarette or tobacco products over the counter or in a vending machine, or both; and any other information required by DOR.

The bill requires an applicant for a retail license to sell cigarettes or tobacco products to use the form created by DOR. An applicant must also sign the application and notify the municipality of any changes in information to the application within 30 days of the change. In addition, the bill requires the municipality to keep all submitted applications for at least four years.

Under the bill, a retail license to sell cigarettes or tobacco may be issued only if the applicant has not been a habitual law offender or been convicted of a felony, unless pardoned; the applicant has submitted the proof required by DOR under current law relating to the collection of sales and use tax; and the applicant is at least 21 years old. If the applicant is a business entity that has been convicted of a crime, the business entity may not receive a retail license unless it has terminated its relationship with the individuals whose actions directly contributed to the conviction.

The bill also requires municipalities that issue retail licenses to sell cigarettes or tobacco to submit a list annually to DOR with a list of those licenses and certain information relating to the licenses and licensees, which DOR must post on its Internet site.

Finally, the bill requires a licensee to place the licensee's retail license in a frame with a transparent front and to conspicuously display the license at all times in the room or place where the licensed activity takes place.

License to sell electronic vaping devices

This bill requires a person who sells electronic vaping devices to obtain a cigarette and tobacco products retailer license. Specifically, the bill requires a retailer who sells or offers for sale electronic vaping devices to obtain an annual license from the clerk of the city, village, or town where the retailer is located. The bill defines an “electronic vaping device” as a device that may be used to deliver any aerosolized or vaporized liquid or other substance for inhalation, regardless of whether the liquid or other substance contains nicotine.

Definition of fermented malt beverages

The bill expands the definition of fermented malt beverages.

Under current law, alcohol beverages that do not meet the definition of fermented malt beverages are considered intoxicating liquor. Fermented malt beverages are defined as any beverage made by the alcohol fermentation of an infusion in potable water of barley malt and hops, with or without unmalted grains or decorticated and degerminated grains or sugar containing 0.5 percent or more of alcohol by volume.

This bill expands the definition of a fermented malt beverage to include any beverage that is recognized under federal regulations as beer, except sake or similar products.

Publishing a list of retail licenses

The bill requires DOR to publish a list of retail licensees on DOR's Internet site.

Under current law, DOR issues alcohol beverage permits, and municipalities issue alcohol beverage licenses. Each municipality must annually provide DOR with a list of the municipality's retail licensees, including name, address, and type of license. The bill requires DOR to publish this list on DOR's Internet site.

Criminal history search fee

The bill requires an applicant for an alcohol beverages permit issued by DOR to pay to DOR the criminal history search fee associated with the application.

Under current law, DOR may not issue an alcohol beverages permit to an applicant that has a disqualifying criminal record. The Department of Justice charges a fee for a criminal history search. This bill requires the permit applicant to pay this criminal history search fee incurred by DOR.

Tax return information disclosure

The bill authorizes employees of DOR and DOJ to disclose tax return information under certain circumstances.

Under the bill, DOR employees may, in connection with their official duties, disclose tax return information to the extent that the disclosure is necessary to obtain information for the enforcement of Wisconsin's tax laws. The disclosure must be strictly limited to, and used solely for the purposes of, obtaining information necessary for an audit, collection, inspection, or investigation by the DOR employee.

The bill authorizes DOJ employees to disclose, in connection with their official duties, the tax return information they are authorized to access under current law to a law enforcement investigator participating in a DOJ investigation. The disclosure must be strictly limited to, and used solely for the purposes of, obtaining information necessary for a DOJ investigation.

The bill also specifies that federal and Wisconsin grand juries are authorized to access tax return information upon DOR's receipt of a grand jury subpoena.

Lottery

Under current law, no employee of the Lottery Division of DOR may purchase a lottery ticket or lottery share. The bill allows such an employee to purchase a lottery ticket or a lottery share, if the purchase is made on behalf of the Lottery Division of DOR as part of an official lottery investigation.

Also under current law, if a person alters or forges a lottery ticket, or utters or transfers an altered or forged lottery ticket, the person is guilty of a Class I felony. The bill adds that if a person counterfeits or illegally obtains a lottery ticket, or utters or transfers a counterfeit or illegally obtained lottery ticket, the person is also guilty of a Class I felony. The bill also provides that any person who claims a lottery prize from a winning lottery ticket or share and then transfers the same winning lottery ticket or share to another person is guilty of a Class I felony.

Under current law, a person who possesses an altered or forged lottery ticket or share with intent to defraud is guilty of a misdemeanor, subject to a fine of not more than $10,000 or imprisonment for not more than nine months or both. The bill adds that a person who possesses a counterfeit, illegally obtained, or previously redeemed lottery ticket is also guilty of a misdemeanor, subject to a fine of not more than $10,000 or imprisonment for not more than nine months or both.

Under current law, lottery winnings are subject to withholdings for state taxes, child support, spousal support, maintenance or family support, assessments, fines, restitution, and surcharges. Under the bill, if a person transfers a winning lottery ticket to another person or claims a lottery prize from a transferred ticket with the intent to avoid these withholdings, the person is guilty of a misdemeanor, subject to a fine of not more than $10,000 or imprisonment for not more than nine months or both.

Finally, the bill provides the special agents of DOR with all necessary police and peace officer powers to prevent and enforce violations of the lottery law, including the power to make an arrest under conditions set forth under current law for a law enforcement officer to make an arrest. Under current law, a law enforcement officer may arrest a person if the officer has a warrant for the person's arrest or has reasonable grounds to believe that this state or another state has issued a warrant for the person's arrest. In addition, a law enforcement officer may arrest a person if the officer has reasonable grounds to believe that the person is committing or has committed a crime.

Possession of alcohol vapor devices

The bill prohibits a person from using, possessing, or selling an alcohol vapor device, which is a device that turns an alcohol beverage into a vapor or mist to be inhaled.

Penalties for evading excise taxes and unlawful possession of cigarettes

The bill increases the penalties for evading the excise taxes imposed on cigarettes, tobacco products, and electronic vaping devices.

Under current law, a person who attempts to evade these taxes, or who aids in or abets the evasion or attempted evasion of these taxes, may be fined not more than $10,000 or imprisoned for not more than nine months, or both.

Under the bill, a person who evades or attempts to evade these taxes, or who aids in or abets the evasion or attempted evasion of these taxes, is guilty of the following:

1. A Class A misdemeanor if the amount of the tax is no more than $2,500.

2. A Class I felony if the amount of the tax is more than $2,500, but no more than $5,000.

3. A Class H felony if the amount of the tax is more than $5,000, but no more than $10,000.

4. A Class G felony if the amount of the tax is more than $10,000, but no more than $100,000.

5. A Class F felony if the amount of tax is more than $100,000.

The bill also increases the penalties for the unlawful possession of cigarettes.

Under current law, a person who unlawfully possesses up to 6,000 cigarettes is subject to a fine of not more than $200 or imprisonment for not more than six months, or both. A person who unlawfully possesses more than 6,000 cigarettes but no more than 36,000 cigarettes is subject to a fine of not more than $1,000 or imprisonment for not more than one year in county jail, or both. A person who unlawfully possesses more than 36,000 cigarettes is guilty of a Class I felony.

Under the bill, the penalties are increased as follows:

1. A person who unlawfully possesses no more than 200 cigarettes may be fined not more than $200 or imprisoned for not more than six months, or both.

2. A person who unlawfully possesses more than 200 cigarettes but no more than 3,000 cigarettes may be fined not more than $1,000 or imprisoned for not more than one year, or both.

3. A person who unlawfully possesses more than 3,000 cigarettes but no more than 5,000 cigarettes is guilty of a Class I felony.

4. A person who unlawfully possesses more than 5,000 cigarettes but no more than 10,000 cigarettes is guilty of a Class H felony.

5. A person who unlawfully possesses more than 10,000 cigarettes is guilty of a Class F felony.

The bill also amends the definition of “racketeering activity" for purposes of the Wisconsin Organized Crime Control Act to include the attempt, conspiracy to commit, or commission of the felonies created under the bill related to evading excise taxes and unlawful possession of cigarettes.

Alcohol beverage permit reapplication

The bill provides that, if DOR refuses to issue, refuses to renew, or revokes an alcohol beverages permit, the applicant or permit holder may not reapply to DOR for the permit for a period of six months.

Notice of change filed by alcohol beverage licensee or permittee

Under current law, within ten days of any change in a fact set out in an application for a license or permit to sell alcohol beverages, the licensee or permittee must file with the issuing municipality or DOR, as applicable, a written description of the changed fact. This bill extends the deadline for this filing from ten days to 30 days.

Sales suppression devices and phantomware

Under the bill, any person who creates, designs, manufactures, sells, purchases, leases, installs, updates, repairs, services, transfers, uses, or possesses in this state phantomware or an automated sales suppression device, unless for a legitimate purpose, is guilty of a Class D felony. The bill also authorizes DOR to revoke any permit, license, or certificate issued by DOR for up to 10 years for violating this prohibition.

Under the bill, an “automated sales suppression device” is a software program that falsifies the electronic records of electronic cash registers and other point-of-sale systems. The bill defines “phantomware” as a programming option embedded in the operating system of an electronic cash register, or hardwired into an electronic cash register, that can be used to create a virtual second electronic cash register or eliminate or manipulate transaction records. Automated sales suppression devices and phantomware are typically used to evade the payment of taxes.

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

AB250-ASA2,1 Section 1. 40.02 (48) (am) 19. of the statutes is amended to read:

AB250-ASA2,6,3 40.02 (48) (am) 19. An excise tax investigator A special agent employed by the department of revenue who is authorized to act under s. 73.031.

AB250-ASA2,2 Section 2. 40.02 (48) (c) of the statutes is amended to read:

AB250-ASA2,7,4 40.02 (48) (c) In s. 40.65, “protective occupation participant" means a participating employee who is a police officer, fire fighter, an individual determined by a participating employer under par. (a) or (bm) to be a protective occupation participant, county undersheriff, deputy sheriff, state probation and parole officer, county traffic police officer, conservation warden, state forest ranger, field conservation employee of the department of natural resources who is subject to call for forest fire control or warden duty, member of the state traffic patrol, state motor vehicle inspector, University of Wisconsin System full-time police officer, guard or any other employee whose principal duties are supervision and discipline of inmates at a state penal institution, excise tax investigator special agent employed by the department of revenue who is authorized to act under s. 73.031, person employed under s. 60.553 (1), 61.66 (1), or 62.13 (2e) (a), or special criminal investigation agent employed by the department of justice.

AB250-ASA2,3 Section 3. 71.78 (1) of the statutes is amended to read:

AB250-ASA2,7,23 71.78 (1) Divulging information. Except as provided in subs. (1g), (4), (4m) and (10), no person may divulge or circulate or offer to obtain, divulge, or circulate any information derived from an income, franchise, withholding, fiduciary, partnership, or limited liability company tax return or tax credit claim, including information which may be furnished by the department as provided in this section. This subsection does not prohibit publication by any newspaper of information lawfully derived from such returns or claims for purposes of argument or prohibit any public speaker from referring to such information in any address. This subsection does not prohibit the department from publishing statistics classified so as not to disclose the identity of particular returns, or claims or reports and the items thereof. This subsection does not prohibit employees or agents of the department of revenue from offering or submitting any return, including joint returns of a spouse or former spouse, separate returns of a spouse, individual returns of a spouse or former spouse, and combined individual income tax returns, or from offering or submitting any claim, schedule, exhibit, writing, or audit report or a copy of, and any information derived from, any of those documents as evidence into the record of any contested matter involving the department in proceedings or litigation on state tax matters if, in the department's judgment, that evidence has reasonable probative value.

AB250-ASA2,4 Section 4. 71.78 (1g) of the statutes is created to read:

AB250-ASA2,8,7 71.78 (1g) Permissible disclosure by department employees. An employee of the department may, in connection with the employee's official duties, disclose information derived from a return or claim specified in sub. (1) to the extent that the disclosure is necessary to obtain information for the enforcement of the tax laws of this state. The information that may be disclosed under this subsection shall be strictly limited to, and used solely for the purposes of, obtaining information necessary for an audit, collection, inspection, or investigation by the employee.

AB250-ASA2,5 Section 5. 71.78 (4) (b) of the statutes is amended to read:

AB250-ASA2,8,15 71.78 (4) (b) The attorney general and department of justice employees. A department of justice employee may, in connection with the employee's official duties, disclose information obtained from the department under this paragraph to a law enforcement investigator participating in a department of justice investigation of suspected criminal conduct. The information that may be disclosed under this paragraph shall be strictly limited to, and used solely for the purposes of, obtaining information necessary for a department of justice investigation.

AB250-ASA2,6 Section 6. 71.78 (4) (v) of the statutes is created to read:

AB250-ASA2,8,18 71.78 (4) (v) A federal grand jury or grand jury of this state, upon receipt by the department of a grand jury subpoena.

AB250-ASA2,7 Section 7. 71.78 (5) of the statutes is amended to read:

AB250-ASA2,8,24 71.78 (5) Agreement with department. Copies of returns and claims specified in sub. (1) and related schedules, exhibits, writings or audit reports shall not be furnished to the persons listed under sub. (4), except persons under sub. (4) (e), (k), (n), (o) and, (q), and (v) or under an agreement between the department of revenue and another agency of government.

AB250-ASA2,8 Section 8. 71.78 (6) of the statutes is amended to read:

AB250-ASA2,9,5 71.78 (6) Restriction on use of information. The use of information obtained under sub. (4) or (5) is restricted to the discharge of duties imposed upon the persons by law or by the duties of their office or by order of a court as provided under sub. (4) (f) or (v).

AB250-ASA2,9 Section 9. 71.83 (6) of the statutes is created to read:

AB250-ASA2,9,8 71.83 (6) Automated sales suppression devices and phantomware. (a) Definitions. In this subsection:

AB250-ASA2,9,11 1. “Automated sales suppression device" means a software program that falsifies the electronic records, including transaction data and transaction reports, of electronic cash registers and other point-of-sale systems.

AB250-ASA2,9,15 2. “Electronic cash register" means a device that keeps a register or supporting documents by means of an electronic device or computer system designed to record transaction data for the purpose of computing, compiling, or processing retail sales transaction data or transaction reports.