Section Tax 8.001: Update to reflect that all returns are electronically filed
Section Tax 8.22: Update to reflect permits are posted online
Section Tax 9.001: Update to reflect that all returns are electronically filed
Section Tax 14.05: Repeal example which is incorrectly listed under exempt housing (applies to non-arm's length rental transactions)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: Upon review of the administrative code, as it relates to income, franchise, and excise taxes for purposes of the JCRAR report submitted on March 26, 2019, certain sections were identified as needing updating or repeal. 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 Olson at (608) 266-8253 or jennifer.olson@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 the date on which the public hearing on this proposed rule is conducted. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Jen Olson
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
SECTION 1. Tax 1.10 (title) is amended to read:
Tax 1.10 Depository bank requirements for estimated tax vouchers, sales and use tax returns, and withholding, motor fuel, general aviation fuel and special fuel alternate fuels tax deposit reports.
SECTION 2. 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, fiduciary, partnership, estate, sales and use, county sales and use, withholding, motor fuel, general aviation fuel, special fuel alternate fuels, 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 3. Tax 1.11 (3) (d) 2. is renumbered Tax 1.11 (3) (d) 2. b. and amended to read:
Tax 1.11 (3) (d) 2. b. The department may allow the examination of information requested and the information may be examined and used solely for the proceeding or investigation for which it is requested if a district attorney requests examination of a tax or tax credit information relating to a person, the district attorney specifies in writing the purpose for each requested examination, identifies the requestor, and the person to whom the information relates, the statutory or other authority showing the duties of the office, and the relation of the purpose to the duties of the office.
SECTION 4. Tax 1.11 (3) (d) 2. and a. are created to read:
Tax 1.11 (3) (d) 2. If the department allows examination of information under subd. 1. then all of the following apply:
a. The department may make disclosure on its own motion if the department has referred the case to a district attorney.
SECTION 5. Tax 1.11 (3) (d) 3., 4., and 5. are created to read:
Tax 1.11 (3) (d) 3. Such information may be examined for use in preparation for any administrative or judicial proceeding or an investigation which may result in such proceeding pertaining to the enforcement of a specifically designated state criminal statute not involving tax administration to which this state or a governmental subdivision thereof is a party. Such information may be used solely for the proceeding or investigation for which it is requested.
4. If a district attorney petitions a court of record in this state for an order allowing the examination and the court issues an order after finding all of the following, the department may allow an examination of information under subd. 3:
a. There is reasonable cause to believe, based on information believed to be reliable, that a specific criminal act has been committed;
b. There is reason to believe that such information is probative evidence of a matter in issue related to the commission of the criminal act; and
c. The information sought to be examined cannot reasonably be obtained from any other source, unless it is determined that, notwithstanding the reasonable availability of the information from another source, the information constitutes the most probative evidence of a matter in issue relating to the commission of such criminal act.
5. The department may deny access and shall certify the reason therefor to the court if the department determines the examination of information under subd. 4. would identify a confidential informant or seriously impair a civil or criminal tax investigation.
SECTION 6. Tax 1.11 (3) (f) 2. c. is repealed.
SECTION 7. Tax 1.11 (3) (g) 1. is amended to read:
1. The person serves a copy of the court order signed by a judge of a court of record on the custodian of files to produce a return or claim in open court in a court action pending before the judge.
SECTION 8. Tax 1.11 (4) (b) is repealed.
SECTION 9. Tax 1.11 (4) (c) and (5) (b) are amended to read:
Tax 1.11 (4) (c) Legislative fiscal bureau. Employees of the legislative fiscal bureau, to the extent the department deems the examination necessary to perform their duties under contracts or agreements between the department of revenue and the legislative fiscal bureau relating to the review and analysis of tax policy and state revenue collections, may examine tax returns under the provisions specified in sub. (2), except state and county sales and use tax returns.
(5) (b) The information required to be submitted to the department under sub. (5) (a) shall be submitted on forms provided by the department and shall be open to inspection by the public for a period of 2 years from the date the information is filed with the department. If a public officer, the attorney general or a district attorney responsible for enforcement of the criminal laws, in the statement required under sub. (3), declares that a return is being examined for the purpose of a criminal investigation, the department shall accept that declaration as prima facie evidence of the fact that making the knowledge public would result in harm to the public interest which outweighs any benefit that would result from making it public, and the department shall not make the knowledge public for a period of 30 days from the date of filing the statement.
SECTION 10. Tax 1.13 (1) (b) is amended to read:
Tax 1.13 (b) The power of attorney requirement applies to income, franchise, alternative minimum, withholding, sales and use, county sales and use, estate, motor fuel, general aviation fuel, special fuel alternate fuels, 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.
SECTION 11. Tax 2.04 (2) (intro) is amended to read:
Tax 2.04 (2) (intro) Compensation for services. Under ss. 71.65 (2), 71.71 (2), 71.715 (2), 71.72 and 71.80 (20), Stats., all persons carrying on activities within this state, whether taxable or not under ch. 71, Stats., are required to file with the department, on federal form W−2 or 1099−R, or on Wisconsin form 9b or other forms approved by the department, a statement of certain payments made within the preceding calendar year. As provided in sub. (6), the department may require such statement be filed electronically. For individuals who are residents of Wisconsin, the statement shall set forth the salaries, wages, bonuses, commissions, annuities, pensions, retirement pay, fees, or other remuneration paid for services whether subject to withholding or not. For individuals who are nonresidents, the statement shall include all payments for the performance of personal services in Wisconsin, whether subject to withholding or not, except retirement plan distributions identified in s. Tax 3.085 as being exempt from Wisconsin income tax. A copy of federal form 1099 may be filed in lieu of Wisconsin form 9b. The following shall also apply with respect to compensation for services: SECTION 12. Tax 2.07 (2) (d) and (e) (Note) are repealed.
SECTION 13. Tax 2.10 (1) is amended to read:
Tax 2.10 (1) Individuals and fiduciaries. At the time of filing Wisconsin income tax returns by individuals and fiduciaries, a complete copy of the federal income tax return for the same taxable year, including all schedules, statements, documents and computations which affect the computation of Wisconsin income, credits or penalties, shall be included and filed with the Wisconsin return. Copies of the short form federal returns 1040A and 1040EZ are not required to be filed if a Wisconsin form 1A or WI− Z is being filed for the same taxable year. If the federal form is filed electronically, a copy of the electronic material as contained in replicas of the official forms or on forms designated by the electronic filer shall be included and filed with the Wisconsin return.
SECTION 14. Tax 2.105 (4) (a) 1. f. (Note), (5) (c) 4. (Example 1) and (Example 2), and (6) (a) (Example) are amended to read:
Tax 2.105 (4) (a) 1. f. Note: Decisions of the U.S. tax court and other courts ordinarily become final as follows:
a. If no appeal is made of a U.S. tax court decision, it becomes final upon expiration of a period of 90 days after the decision is entered. Decisions in unappealable cases involving deficiencies of $10,000 $50,000 or less heard by the U.S. tax court under section 7463 of the Internal Revenue Code become final 90 days after they are entered. b. Appealed decisions of the U.S. tax court become final as set forth in section 7481 of the Internal Revenue Code. c. A decision of a U.S. district court normally becomes final if not appealed to the U.S. court of appeals within 60 days of the judgment, decree or order.
d. A decision of the U.S. court of claims or the U.S. court of appeals normally becomes final unless an appeal or a petition for certiorari is filed with the U.S. supreme court within 90 days of the judgment or decree.
e. A decision of the U.S. supreme court is normally final upon the expiration of a period of 25 days from the date the decision is rendered, if a motion for reconsideration or rehearing is not filed within that time.
(5) (c) 4. Examples: 1) Federal adjustments were made to an individual’s 1989 2013 calendar− year basis federal income tax return; the adjustments became final on June 1, 1994 2018. On August 15, 1994 2018, within 90 days after the adjustments became final, the department received the taxpayer’s report of the adjustments. Although the 4−year period provided by s. 71.77 (2), Stats., for making adjustments to the 1989 2013 Wisconsin return expired on April 15, 1994 2018, the department had until November 13, 1994 2018, 90 days after the date the department received a report of the adjustments, to give notice of an assessment to the taxpayer. 2) An individual filed an amended 1993 2015 calendar−year basis New York return on June 1, 1994 2016. An amended Wisconsin return, reflecting the changes on the amended New York return, was filed with the department on July 12, 1994 2016. Under the 4−year assessment period in s. 71.77 (2), Stats., the department has 4 years from April 15, 1994 2016, the due date of the 1993 2015 return, in which to notify the taxpayer of any assessment relating to the changes on the amended New York return. (6) (a) Example: An individual taxpayer filed a 1993 2015 calendar−year basis Wisconsin income tax return on April 15, 1994 2016. The internal revenue service made adjustments to the 1993 2015 federal income tax return which the taxpayer did not report to the department within 90 days after the adjustments became final. The internal revenue service reports these adjustments to the department under the exchange of information agreement between the two agencies on May 1, 1996 2018. The department may issue an assessment for the adjustments any time on or before May 1, 2000 2022.
SECTION 15. Tax 2.105 (6) (b) and (Example) are repealed.
SECTION 16. Tax 2.12 (4) (b) 2. (Example 1), (Example 2), and (Example 3), 3. a. (Example 1), (Example 2), (Example 3), (Example 4), and (Example 5), and (5) (a) are amended to read:
Tax 2.12 (4) (b) 2. Examples: 1) Taxpayer A files an amended 2000 2016 return to claim additional business expenses. The department allows only a portion of the claimed additional expenses, based on a difference in interpretation of the law. A notice of refund is issued March 1, 2003 2019. The taxpayer does not file a petition for redetermination. In December 2003 2019, the taxpayer files another amended return claiming the same additional business deductions as those disallowed in the prior notice of refund. The taxpayer is not entitled to a refund on the claim for refund. The March 1, 2003 2019, notice of refund is final.
2) Taxpayer B files an amended 2000 2016 return to claim additional business expenses. The department disallows a portion of the claimed additional expenses, due to lack of substantiation of the expenses as requested in a letter to the taxpayer. A notice of refund is issued March 1, 2003 2019. The taxpayer does not file a petition for redetermination. In December 2003 2019, the taxpayer submits adequate substantiation to support the full deduction. The deduction is not allowed and no additional refund will be issued. Since no petition for redetermination was filed for the March 1, 2003 2019, notice of refund, that notice is final.
3) Taxpayer C files a timely 1998 2017 return claiming a refund of earned income credit and excess income tax withheld. During the processing of the return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. The taxpayer does not respond to the request for additional information. A notice of refund is issued in July 1999 2018, to refund the excess income tax withheld only. The taxpayer does not file a petition for redetermination. The taxpayer files a timely 1999 2018 return claiming a refund of earned income credit and excess income tax withheld. During the processing of this return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. This letter requests the same information that was requested for the processing of the 1998 2017 return. The taxpayer submits the additional information needed for both the 1998 2017 and 1999 2018 returns. Since the taxpayer did not submit a petition for redetermination for the 1998 2017 notice of refund, that notice is final. A notice of refund for the earned income credit is issued for 1999 2018 only.
3. a. Examples: 1) Taxpayer D files a timely 2000 2015 return. The department completes an office audit of this return by issuing a notice of refund dated March 30, 2005 2020. The notice of refund allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.
2) Taxpayer E files timely 2000 2015 and 2001 2016 returns. The department completes an audit of the returns and issues a notice of refund dated March 30, 2005 2020. The notice of refund allows an additional itemized deduction credit for each year but also disallows a portion of the claimed business expenses for each year, with the net result being a refund for each year. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.
3) Taxpayer F files a timely 2000 2010 return on April 15, 2001 2011. The department completes an office audit of this return by issuing a notice of additional tax due dated March 30, 2005 2015. The notice of additional tax due allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2009 2019, to file a claim for refund for the disallowed business expenses.
4) Taxpayer G files timely 2000 2010 and 2001 2011 returns. The department completes an office audit of these returns by issuing a notice of refund dated March 30, 2005 2015. The notice of refund allows an additional itemized deduction credit resulting in a refund for 2000 2010 and disallows a portion of the claimed business expenses for an assessment for 2001 2011, with the net result being a refund for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2009 2019, to file a claim for refund for the disallowed business expenses for the year 2001 2011.
5) Taxpayer H files timely 2000 2010 and 2001 2011 returns. The department completes an office audit of these returns by issuing a notice of additional tax due dated March 30, 2005 2015. The notice of additional tax due allows an additional itemized deduction credit resulting in a refund for 2000 2010 and disallows a portion of the claimed business expenses resulting in an assessment for 2001 2011, with the net result being an assessment for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2009 2019, to file a claim for refund for the disallowed business expenses for the year 2001 2011.
(5) (a) Beginning on or after January 1, 2015, except as provided in par. (b) or (c), a claim for refund shall be filed on the same form as the original form, in the manner prescribed in sub. (6).
SECTION 17. Tax 2.12 (5) (b) is repealed.
SECTION 18. Tax 2.12 (5) (c) is amended to read:
Tax 2.12 (5) (c) The department may prescribe a special form for taxpayers to use in claiming a refund, to address a specific tax issue. In this situation, the special form may be used in lieu of the amended form prescribed in par. (a) or (b).
SECTION 19. Tax 2.88 (5) (Note 2) and (Note 3) are repealed.
SECTION 20. Tax 2.89 (8) (b) 3. (Note) is amended to read:
Tax 2.89 (8) (b) 3. Note: After the end of the taxable year, persons other than corporations shall use schedule Schedule U and corporations shall use form 4U Form U to determine whether they have made sufficient estimated tax payments. Taxpayers with short taxable years shall adjust the computations on those forms as provided in this section.
SECTION 21. Tax 2.955 (5) (Example) is amended to read:
Tax 2.955 (5) Example: A Wisconsin resident receives income of $4,000 in 2016 2018 from rental property located in Iowa. The person files a 2016 2018 declaration of estimated tax of $200 with Iowa, with $150 of estimated tax payments being made in 2016 2018 and the fourth quarter payment of $50 being made in January 2017 2019. The Iowa income of $4,000 is reported as income on the 2016 2018 Iowa and Wisconsin returns. The 1992 2018 Iowa income tax return shows the following:
Iowa Rental Income | $4,000 |
Estimated Tax Payments | 200 |
The taxpayer may claim a credit for net income tax paid to other states of $185 on the 2016 2018 Wisconsin return, even though a part of the tax was paid in 2017 2019.
