Month: March 2018

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Yesterday, Governor Walker signed Assembly Bill 710, a bill authored by Representative Samantha Kerkman (R-Salem Lakes) that creates criminal penalties for Unemployment Insurance (UI) fraud.

“What started with constituents calling for assistance because they were having trouble filing their UI claims, progressed into an audit of the initial claims processing for Unemployment Insurance benefits,” said Rep. Samantha Kerkman who co-chairs the committee that assigned the audit. “What we did not anticipate discovering was that there are a small percentage of individuals who account for the majority of overpayments, collectively defrauding the system of
millions of dollars annually.”

Now 2017 Wisconsin Act 147, the legislation targets the worst offenders by increasing the penalty based on the amount of the fraud, using the same scale currently in statute for other types of theft. Prior to Act 147, penalties were substantially lower and carried little risk of prosecution.

“I am happy to have worked with the Department of Workforce Development and stakeholders in creating another tool to help deter fraud and aid in recovery of overpayments. Reducing fraud protects the integrity of the UI fund and helps ensure that the unemployment program remains a safety net for those who are out of work,” said Rep. Kerkman.

Unemployment Insurance benefits are funded through payroll taxes paid by Wisconsin employers. The integrity of the Unemployment Insurance program and trust fund contributes to a stable economy and is important to Wisconsin workers who may one day need the safety net the fund provides and to Wisconsin employers who feel the effects of program fraud through higher tax rates.

Facebook said on Wednesday that it is rolling out a new tool to centralize user privacy and security settings following the outcry over its data collection practices.

The company said that users will be able to make changes from a single page instead of having options spread across nearly two dozen screens on different parts of platform. Facebook plans to roll out the change in the coming weeks.

Facebook users will be able to adjust an array of privacy settings on the page for the information that they’ve given the platform, like their interests, and their activity on Facebook, such liking photos and commenting on friends’ statuses.

Users will also be able to more easily see what data can and can’t be shared with apps.

Wisconsin is in the procurement stage of rolling out the NextGen 911 system, which will allow all dispatch centers to get more data from people in an emergency.

NextGen 911 offers more bandwidth to pinpoint almost exactly where the caller is and connects Wisconsin dispatch centers through a shared network.  It will be offered to all of the 109 dispatch centers, but not required. The centers that opt in will be charged monthly, in addition to the initial cost of equipment.

The most recent state budget included $6.7 million for planning the NextGen 911 upgrade. The state is currently waiting on bids from vendors who can create the system. That cost will be included in the 2019 biennium budget.

Governor Walker signed AB 843 into law today at Victor Haen Elementary School in Kaukauna. The bill includes Governor Walker’s $100 million School Safety Plan, which creates a grant program for school districts to enhance school safety resources. Every Wisconsin school is eligible for the grant program.

“Our $100 million School Safety Plan will help ensure that every student, parent, and teacher feels safe at school,” said Governor Walker. “This bill provides important grant funding that will allow districts to invest in safety measures that will help protect against all threats. This will help protect our students and their future.”

Governor Walker’s School Safety Plan:

• Creates an Office of School Safety within the Wisconsin Department of Justice to work with law enforcement and schools to establish best practices for school safety and provide training opportunities and other relevant resources to schools.
• Provides $100 million to fund a new grant program for security upgrades to school buildings and other eligible costs.
• Mandates reporting for any threats of school violence.
• Allows grant funding to implement Trauma-Informed Care and Adverse Childhood Experiences in Schools.
• Strengthens school safety plan requirements by requiring all schools to consult with local law enforcement and conduct on-site assessments of all pupil occupied areas.

Yesterday,  Governor Scott Walker announced Economic Opportunity Zone (EOZ) recommendations throughout the State of Wisconsin covering more than 40 counties in rural, urban, and tribal areas. These zones present an opportunity for private, tax-free investment into areas of economic need, benefiting residents living in the zones and the private investor. EOZs were created in the federal Tax Cuts and Jobs Act of 2017.

“We are excited to embrace Economic Opportunity Zones as a new tool to build on our track record of economic growth,” Governor Walker said. “Right now, more people are employed in our state than ever before in our history, and Wisconsin is at near record lows for unemployment. These recommendations reach communities across our state – urban, rural, and tribal – that are positioned for strong and sustained growth.”

The Economic Opportunity Zones Program is a federal community development tax incentive program which creates an incentive for businesses and community members to invest in designated EOZs. These investments will help communities in designated areas develop, and the return on the investment will have reduced tax liability.

Governor Walker recommended the maximum number of Economic Opportunity Zones: 120 recommendations within 44 counties in rural, urban and tribal areas. These designations were made based on recommendations from an interagency working group comprised of WHEDA, WEDC, DOA, and DCF; public comment; and an independent analysis conducted by a nationally respected consulting firm.

The U.S. Department of the Treasury will make the final selection for EOZs in Wisconsin based on the Governor’s recommendations. These designations represent ten years of potential private investment into these communities.

Thousands of Wisconsinites leave the Badger State every year, taking millions of dollars with them – a bleak trend highlighted by recent Internal Revenue Service data. An average of $463 million left the state annually from 2011 to 2016, according to tax records.

Between 2015 and 2016 alone, 5,185 fewer households filed tax returns in Wisconsin. Total adjusted gross income – all the income that Wisconsinites reported – fell by a shocking $461 million in that year alone. Wisconsinites are leaving in droves, and they’re taking their nest eggs with them.

From 2011 to 2016, more than $2.3 billion left the state of Wisconsin. A net 35,788 people have left in that time, an average of 7,158 fewer Wisconsin tax filers every year.

Census Bureau statistics show where Wisconsinites go when they leave, and where new Wisconsinites came from when they arrive. Overwhelmingly, Badgers are moving to Florida, Arizona, Texas, and Colorado, all states with lower tax burdens than Wisconsin.

The numbers in Texas show a similar story. The majority of new residents are coming from high-tax states with poor fiscal health such as California, Louisiana, Illinois, New York, and New Jersey.

The tax burden isn’t the only reason why people choose to move, but it cannot be ignored. Capital flows to where it is treated best. To welcome new residents to Wisconsin and keep our economy flowing, the state should consider lowering taxes across the board.

The Wisconsin Senate will be taking up a bill that would make a number of changes to the state’s civil-litigation rules.

Assembly Bill 733 would modify the state’s construction statute of repose, which contractors commonly invoke as a defense in certain personal-injury lawsuits. The statute prevents injured plaintiffs from suing over negligent design for an injury that occurred more than 10 years after a project was substantially completed. A provision in AB 773 would shrink that window down to 7 years.

Under the bill, insurers would see a decrease from 12 percent to 7.5 percent in the interest rate they must pay on overdue claims.

The bill would also make changes to the state’s rules involving discovery.  That process can be burdensome and expensive for defendants, and the bill’s proponents say the changes could reduce legal costs for Wisconsin businesses.

The Senate will be taking up the bill at a floor session on Tuesday.

Industry groups are pushing for lawmakers to include changes to the new tax law in the government funding package that is expected to pass this month.

Republicans enacted the tax overhaul at breakneck speed last year, turning it into law in less than two months. Since then, drafting errors in the law have emerged, while other provisions have come under scrutiny for their potential unintended consequences.

Stakeholders want to see changes to the law passed as soon as possible and view the funding omnibus as a prime opportunity. Among those pushing for action are groups in the agriculture and retail sectors.

A top issue with the tax law that stakeholders hope to see addressed involves a provision impacting the agriculture industry. This issue has become known as the “grain glitch.”

The law created a 20-percent deduction for the gross payments that farmers receive from cooperatives. Cooperatives are businesses owned by farmers that perform functions such as buying and marketing their members’ commodities.

The provision was added to the tax law in an effort to address the fact that under the old tax code, co-ops could claim the domestic production deduction, which was repealed under the new law. But the provision had the unintended consequence of creating an incentive for farmers to sell their commodities to cooperatives rather than to private companies.

Stakeholders and lawmakers identified the provision as an issue fairly quickly, and talks about a fix have been taking place among private companies, cooperatives and House and Senate tax writers since January.

The National Council of Farmer Cooperatives (NCFC) and the National Grain and Feed Association (NGFA) issued a joint statement Tuesday afternoon announcing a proposal that they expect to be included in the omnibus. The proposal, whose legislative language was developed by the congressional tax-writing committees, would be retroactive to Jan. 1 and is designed to replicate the benefits co-ops received under the domestic production deduction while also removing tax incentives for farmers to do businesses with companies just because they are co-ops.

Retailers, meanwhile, are hoping to see drafting errors in the tax law fixed.

Under the old tax code, improvements to retail stores and restaurant properties could be written off over 15 years. The authors of the new law intended for the full costs of those improvements to be written off immediately after they are made. But due to a drafting mistake, the law states that those property improvements instead have to be written off over 39 years.

Dave Koenig, vice president for tax at the Retail Industry Leaders Association, said the drafting mistake poses a “cash flow issue” for retailers.

He said the tax bill “clearly was meant to encourage investment,” but until the provision is fixed, it would have the opposite effect.

Retailers also want to see a change made to the effective date of a provision largely barring businesses from carrying back net operating losses to prior years.

Lawmakers wrote in their conference report on the law that the provision applies for taxable years beginning after Dec. 31, 2017, but the actual text of the statute mistakenly said it applies for taxable years ending after Dec. 31, 2017.

Many retailers have fiscal years that end Jan. 31, so for them, the prohibition on net operating loss carry-backs would apply for their fiscal years that just ended. This is essentially a retroactive change, said Bernstein.

She added that the drafting error could be harmful for retailers in bankruptcy, who may have planned using net operating loss carry-backs to help finance their inventory.

The tax law passed Congress through a process called reconciliation that allowed the measure to clear the Senate with a simple majority. But technical changes to the law can’t be passed through reconciliation and instead would have to get 60 votes in the Senate. Republicans only have 51 seats.

Because the changes would need some Democratic votes to pass, stakeholders think it would be best to include them in must-pass legislation such as the government spending bill.