WBA helped organize a business coalition, that may be the first in the nation, to harmonize federal CARES ACT tax provisions within the state tax code. Read the coalition letter to lawmakers here. Thanks to Senate Majority Leader Scott Fitzgerald and Speaker Robin Vos for including many important tax items in the extraordinary session legislation.
Key Items Include:
Internal Revenue Code Update
Update income and franchise tax references to the Internal Revenue Code (IRC). For tax years beginning after Dec. 31, 2017, create provisions adopting selected provisions in P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES). Under current law, state tax references generally refer to the IRC in effect on Dec. 31, 2017.
Decrease income and franchise taxes by an estimated $4,500,000 in 2019-20 and $47,500,000 in 2020-21, increase such revenues by an estimated $8,200,000 in 2021-22, and decrease revenues by an estimated $300,000 in 2022-23. The fiscal effect is attributable to the following CARES provisions that would be adopted under the bill: (a) special rules for use of retirement funds; (b) partial deduction for charitable contributions; (c) suspension of limitation on certain charitable contributions; (d) telehealth services for high deductible health plans; (e) additional qualified expenses for health savings accounts; (f) payroll protection loan forgiveness exclusion; (g) exclusion for certain employer payments of student loans; and (h) depreciation of qualified improvement property. It should be noted that if the bill did not amend state law to conform with the provision described under "f", state taxes on businesses receiving loan forgiveness would be estimated higher by $114.0 million in 2019-20, $102.0 million in 2020-21, $11.0 million in 2021-22, and a minimal amount thereafter.
Several CARES provisions were automatically adopted for state tax purposes: (a) waiver of required minimum distributions; (b) single employer pension plan deadline extension; and (c) certain pension plans considered defined benefit plans. The bill would further clarify that state law applies to these provisions. However, because these provisions are automatically adopted under state law, the fiscal effect of these provisions is not included in the bill's estimated fiscal effect.
Interest and Penalties Due on Taxes Owed During the Public Health Emergency
Permit the Secretary of the Department of Revenue to waive interest and penalties for persons that owe, but fail to remit, general fund taxes, or taxes or fees that are deposited in the transportation fund, by the filing date if, in the Secretary's determination, that person failed to timely remit those taxes due to the effects of the coronavirus outbreak of 2020. Specify that the Secretary must make this determination on a case-by-case basis. Specify that this provision applies only to general fund taxes, or taxes and fees that are deposited in the transportation fund, with filing dates that fall within, and interest and penalties that accrue during, the public health emergency that was declared by the Governor on March 12, 2020, by Executive Order 72, including any extension of time authorized under a joint resolution by the Legislature. Estimate a minimal reduction in state tax revenues.
Income and Franchise Tax Filing Extension
President Trump declared a national emergency in response to the coronavirus outbreak on March 13, 2020. Following this declaration, the Treasury Department and Internal Revenue Service (IRS) announced on March 21, 2020, that the deadline for filing federal income tax returns is extended from April 15, 2020, to July 15, 2020. The IRS subsequently expanded that guidance on April 9, 2020, to provide that the extension generally applies to all taxpayers with a tax filing due date falling between April 1, 2020, and before July 15, 2020. In addition, taxpayers who make estimated income tax payments that would otherwise be due between April 1, 2020, and before July 15, 2020, can make such payments by July 15 without incurring any interest or penalties, regardless of amounts owed by a taxpayer. A taxpayer need not file any additional forms in order to qualify for this extended due date.
Interest and Penalties on 2020 Property Taxes
For any property taxes payable in 2020 that are due after April 1, 2020, allow local governments, after making a general or case-by-case finding of hardship, to waive any interest charges and penalties for a late installment payment, provided that the full amount of the payment is received on or before Oct. 1, 2020. For any property taxes payable in 2020 that are delinquent after Oct. 1, 2020, interest charges and penalties would begin accruing as of Oct. 1, 2020. Consider any payment received on or before Oct. 1, 2020, or by an installment date after Oct. 1, 2020, to be timely for the purposes of allowing taxpayers to submit a claim to appeal unlawful or excessive taxes.
Require the Wisconsin Economic Development Corporation to submit to the Governor and the chief clerk of each house of the Legislature, no later than June 30, 2020, a report that includes a plan for providing support to the major industries in this state that have been adversely affected by the COVID-19 public health emergency, including tourism, manufacturing, agriculture, construction, retail, and services.
Temporary Suspension of the Unemployment Insurance Waiting Week
Provide that the waiting week requirement under current law would not apply with respect to benefit years that begin after March 12, 2020, and before Feb. 7, 2021. Require the Department of Workforce Development (DWD) to seek the maximum amount of federal reimbursement for benefits that are payable for the first week of a claimant's benefit year as a result of the application of this provision.
Worker's Compensation Benefits for COVID-19 Injuries
Specify that, for the purposes of worker's compensation benefits, an injury to a first responder found to be caused by COVID-19 during the public health emergency declared by the Governor under s. 323.10, on March 12, 2020, by Executive Order 72, and ending 30 days after the termination of the order, is presumed to be caused by the individual's employment. An injury claimed under this provision: (a) must be accompanied by a specific diagnosis by a physician or by a positive COVID-19 test, and; (b) may be rebutted by specific evidence that the injury was caused by exposure to COVID-19 outside of the first responder's work for the employer.
Employee Records During a Public Health Emergency
Provide that during the period covered by a state of emergency related to a public health emergency declared by the Governor, an employer is not required to provide an employee's personnel records within seven working days after an employee makes a request to inspect his or her personnel records, and an employer is not required to provide the inspection at a location reasonably near the employee's place of employment during normal working hours.
Authorize Trust Fund Loans to Municipal Utilities
Allow BCPL to offer loans from the common school fund and other school trust funds to nonprofit municipal utilities during the state of emergency declared by the Governor under Executive Order 72, including any extension granted by the Legislature, and up to 60 days after the emergency declaration expires. Specify BCPL may offer loans to ensure that the utility is able to maintain liquidity during the emergency period, and authorize BCPL to issue loans for amounts and conditions as may be agreed upon by a borrower. Further, specify that the Legislature determines the loans serve a public purpose.