Internal Revenue Code updates; federal tax law changes, coronavirus

This bill makes a number of changes to conform Wisconsin's tax law to federal tax law changes enacted in March 2020 in response to the coronavirus outbreak. The bill includes the following changes:

1. Exempts from otherwise applicable penalties certain taxable year 2020 distributions from a retirement account qualified under the Internal Revenue Code, and exempts from income taxation these distributions subject to a number of conditions.

2. Creates additional deductions, for taxable year 2020, for certain individual charitable contributions, and suspends the limitations on certain individual and corporate charitable deductions. The suspension of limitations applies to contributions made in calendar year 2020 only, although certain amounts donated in 2020 may be carried forward to future years.

3. Clarifies that an individual's health insurance plan is still treated as a high deductible plan even if it fails to provide a deductible for telehealth and other remote care services.

4. Conforms state law to federal law regarding the treatment of paycheck protection loans to businesses and employees under the small business administration's loan guarantee program for the period of time from February 15, 2020, through June 30, 2020. A portion of the loans may be forgiven on a tax-free basis under certain conditions.

5. Provides an exclusion from income for certain student loan principal and interest payments made by an employer on behalf of an employee, subject to the same current law cap of $5,250 in payments for qualified educational expenses made on behalf of an employee by an employer. This provision applies to payments made from March 28, 2020, through December 31, 2020.

6. Corrects a drafting error in the federal Tax Cuts and Jobs Act of 2017 to provide a 15-year recovery period for qualified improvement property.

Authority to waive interest and penalties for general fund and transportation fund taxes

This bill authorizes the secretary of revenue to waive, for any person who fails to remit general fund taxes or transportation fund taxes and fees by their due date, the interest and penalties that accrue during the period covered by the COVID-19 public health emergency if the due date falls within that period and the secretary determines that the person's failure is due to the effects of the COVID-19 pandemic.

Interest on late property tax payments

Under current law, a late installment payment of property taxes is subject to interest and penalties, with the interest accruing from February 1 of the year in which the taxes are due. Under this bill, for property taxes payable in 2020, after making a general or case-by-case finding of hardship, a municipality may provide that an installment payment due after April 1, 2020, that is received after its due date will not accrue interest or penalties if the total amount due is received on or before October 1, 2020. Interest and penalties will accrue from October 1, 2020, for any property taxes payable in 2020 that are delinquent after October 1, 2020.

Claims for recovery of unlawful taxes and excessive assessments

Current law allows a person to file a claim to recover the unlawful imposition of property taxes or a claim for the excessive assessment of property taxes. However, no person may file a claim for recovery of unlawful taxes or excessive assessment unless the person has paid his or her property taxes on time. The bill provides that this restriction does not apply to taxes due and payable in 2020 if paid by October 1, 2020, or by any installment date for which taxes are due after October 1, 2020.

Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report.

This proposal may contain a health insurance mandate requiring a social and financial impact report under s. 601.423, stats.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

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

SB932,1 Section 1 . 13.101 (4) of the statutes is amended to read:

SB932,19,16 13.101 (4) The committee may transfer between appropriations and programs if the committee finds that unnecessary duplication of functions can be eliminated, more efficient and effective methods for performing programs will result or legislative intent will be more effectively carried out because of such transfer, if legislative intent will not be changed as the result of such transfer and the purposes for which the transfer is requested have been authorized or directed by the legislature. The authority to transfer between appropriations includes the authority to transfer between 2 fiscal years of the same biennium, between 2 appropriations of the same agency and between an appropriation of one agency and an appropriation of a different agency. No transfer between appropriations or programs may be made to offset deficiencies arising from the lack of adequate expenditure controls by a department, board, institution, commission or agency. The Except as provided in sub. (4d), the authority to transfer between appropriations shall not include the authority to transfer from sum sufficient appropriations as defined under s. 20.001 (3) (d) to other types of appropriations.

SB932,2 Section 2 . 13.101 (4d) of the statutes is created to read:

SB932,20,5 13.101 (4d) During the public health emergency declared on March 12, 2020, by executive order 72, and for a period of 90 days after termination of the emergency, the committee may transfer under sub. (4) an amount not to exceed $75,000,000 from sum sufficient appropriations, as defined under s. 20.001 (3) (d), to be used for expenditures related to the emergency.

SB932,3 Section 3 . 20.866 (2) (xm) of the statutes is amended to read:

SB932,20,18 20.866 (2) (xm) Building commission; refunding tax-supported and self-amortizing general obligation debt. From the capital improvement fund, a sum sufficient to refund the whole or any part of any unpaid indebtedness used to finance tax-supported or self-amortizing facilities. In addition to the amount that may be contracted under par. (xe), the state may contract public debt in an amount not to exceed $6,785,000,000 $7,510,000,000 for this purpose. Such indebtedness shall be construed to include any premium and interest payable with respect thereto. Debt incurred by this paragraph shall be repaid under the appropriations providing for the retirement of public debt incurred for tax-supported and self-amortizing facilities in proportional amounts to the purposes for which the debt was refinanced. No moneys may be expended under this paragraph unless the true interest costs to the state can be reduced by the expenditure.

SB932,4 Section 4 . 40.22 (1) of the statutes is amended to read:

SB932,20,24 40.22 (1) Except as otherwise provided in sub. (2) and s. 40.26 (6), each employee currently in the service of, and receiving earnings from, a state agency or other participating employer shall be included within the provisions of the Wisconsin retirement system as a participating employee of that state agency or participating employer.