CR 17-019 Rule Text

PROPOSED ORDER OF THE DEPARTMENT OF REVENUE REPEALING, RENUMBERING, RENUMBERING AND AMENDING, AMENDING, REPEALING AND RECREATING, AND CREATING RULES

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.

Statutory authority: ss. 71.05 (6) (b) 47m., 71.25 (10) (c), 71.26 (h), 71.45 (1) (c), 71.80 (1) (c), 139.38 (1), 139.82 (1), and 227.11 (2) (a), 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.

· Revise ss. Tax 2.39 and 2.475 to remove reference to sleeping car companies as provided by 2015 Wis. Act 216.

· 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.

· Correct a reference in s. Tax 3.01 (7) (b) 1.

· Revise s. Tax 3.05 to reflect the repeal by 2015 Wis. Act 55 of the job creation deduction under ss. 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats., for taxable years beginning on or after January 1, 2015.

· Create s. Tax 3.095 (4) (a) 22. to reflect an exemption under s. 71.05 (1) (c) 6p., Stats., as created by 2015 Wis. Act 60, for interest received on bonds or notes issued by a sponsoring municipality to assist a local exposition district created under subch. II of ch. 229, Stats.

· Amend s. Tax 9.69 (5) (intro.) to be consistent with s. 995.12 (2) and (4), Stats., which require records be kept for 5 years.

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 [phone] or [e-mail], 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