Governor Scott Walker's budget includes massive increases in spending on both the University of Wisconsin System and K-12 education. It also contains individual income and property tax decreases. However, there are several sections that could increase taxes on businesses in Wisconsin that you should be aware of.
- Captive Insurance Companies: The Department of Revenue is proposing to add income of captive insurance companies to the parent company. This is essentially an expansion of combined reporting from the Doyle years. This may not impact captives that report income at the federal level.
- Net Business Loss Carryforwards: This proposal in the budget with require the claim on NBL be within 4 years of reporting the loss. Similar change already exists for pass through entities. The goal appears to be to federalize the language, but more changes are needed to match completely.
- Private Label Credit Card Delay: 2013 Wisconsin Act 229 expanded the law regarding return adjustments to include certain bad debts associated with private label and dual purpose credit cards. Act 229 permitted a seller to claim a deduction on its sales tax return for the amount of any bad debt that the seller or a lender, as defined below, writes off as uncollectible and that is eligible to be deducted as a bad debt for federal income tax purposes. If the seller or lender subsequently collects in whole or in part any bad debt for which a deduction has been claimed, the seller must include the amount collected in its sales tax return for the period in which the debt was collected. The implementation of this act was delayed in the previous budget and again is proposed for delay.
- Sunsetting of Tax Credits: Any new tax credits implemented after December 31st, 2016 would automatically sunset after 7 years. While this will not affect any current tax credits, it could impact future credits you may utilize and account for in future planning.