News of the Day

On Friday, the Internal Revenue Service issued Announcement 2021-7 PDF clarifying that the purchase of personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.

The amounts paid for personal protective equipment are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).

For more information on determining what is deductible, see Can I Deduct My Medical and Dental Expenses? and Publication 502, Medical and Dental Expenses.

Gov. Tony Evers signed off Wednesday on the Ho-Chunk Nation’s plans to open a casino and entertainment complex in Beloit, hailing the project as job creator that will help the region recover from the economic damage of the COVID-19 pandemic.

Wisconsin residents saw some of the slowest personal income growth of any state in the country in 2020, according to data released Wednesday by the U.S. Bureau of Economic Analysis.

State personal income increased 4.4% from 2019 in Wisconsin, which ranks 46^th in the country. On a per capita basis, Wisconsin personal income increased 4.3%, which ranks 42^nd in the country. Per capita personal income in Wisconsin last year was $55,487 compared to $59,729 nationally. Nationally, personal income was up 6.1% and 5.8% on a per capita basis.

Total wages and salaries paid in Wisconsin last year dropped 0.5%, which ranks 32^nd in the country. Nationally, wages and salaries increased 0.2%, led by more than 5% increased in Idaho and Utah.

Wisconsin’s manufacturing sector was particularly hard hit when it came to wages with a $993 million or 3.4% decline. A drop of nearly $1.1 billion in durable goods manufacturing wages was only partially offset by a $104 million gain in nondurable goods.

The decline in manufacturing wages in Wisconsin ranks 31^st in the country while the durable goods manufacturing wage decline ranked 34^th. Nationally, manufacturing wages were down 2.6% and wages in the durable goods sector were off 4.3%

Accommodation and food service was hit hard too in Wisconsin with wages down $577 million or 12.3%. Arts, entertainment and recreation wages in the state declined 13.4% or nearly $204 million.

On the positive side, the construction sector in Wisconsin saw a $380 million or 4.6% increase in wages and salaries last year. Finance and insurance wages in the state were up 3.5% or nearly $371 million. Wages in the information sector of Wisconsin were up 5% or nearly $200 million.

Strong February housing sales pushed what are typically the three slowest months of the year into record territory, according to the most recent analysis of the existing home market by the Wisconsin REALTORS^® Association (WRA). February 2021 sales increased 5.5% compared to February 2020, which was the last month before the recession began. Inventories continued to be very tight, which has led to a sustained period of very strong price appreciation. The median price rose to $215,000 in February, which is 13.2% higher than 12 months earlier. In fact, median prices have grown at an annual rate of 9.7% or higher each month since July of last year.

This is the strongest seller’s market on record, and it pushed prices up sharply in February,” said WRA President & CEO Michael Theo. The inventory problem shows no sign of abating. The state had just 2.1 months of available supply in February, which is the second straight month of record-low inventory levels. “Every price range of homes, every region of the state, and every type of county, from the most urban to the most rural, have very strong seller’s markets,” said Theo.

“One bright spot has been the new construction market,” said Theo. A review of Wisconsin single-family permit data compiled by the U.S. Census Bureau shows an increase of 13.7% in 2020 compared to 2019, and housing permits were up 19% in January compared to 12 months earlier. The number of permits is a reliable predictor of housing starts. “Most buyers who build a new home are trading up from an existing home, so the strong seller’s market is helping to fuel the new home market,” said Theo. Since the average time from a housing start to completion is 7.4 months in the Midwest, the increased permit activity in 2020 should help mitigate the supply problem in 2021. “We still need to see more inventory of existing homes, but this is a good sign going into the peak sales season,” he said.

On Thursday, the Public Service Commission of Wisconsin (PSC) voted unanimously to allow utilities to move forward with disconnection of service for nonpayment at the end of the annual winter moratorium on disconnections on April 15, 2021. The move comes following a moratorium preventing utilities from disconnection for nonpayment during the ongoing COVID-19 pandemic.

The PSC required utilities that seek to disconnect residential service to file disconnection plans with the Commission if they were planning to disconnect customers after April 15. 254 electric, natural gas, and water utilities submitted disconnection plans by February 15, 2021. Utilities
reported that an anticipated 93,263 residential customers and 4,810 non-residential customers would be subject to disconnection by April 2021. Utilities are required to offer a Down Payment Agreement (DPA) for customers who cannot pay an outstanding bill in full.

To avoid disconnection, customers who have fallen behind on payments are encouraged first to contact their utility to set up a payment plan. If customers are having difficulty paying their energy bills, they may be eligible for assistance from the Wisconsin Home Energy Assistance Program (WHEAP). To apply on line go to energybenefit.wi.gov or to find out where to apply in person or by phone, go to http://homeenergyplus.wi.gov/ or call 1-866-HEATWIS.

The Internal Revenue Service (IRS) issued news release yesterday indicating that the federal income tax filing and payment due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. The IRS will provide formal guidance in the coming days.

As a result, the Wisconsin individual income tax return filing and payment due dates are extended to May 17, 2021. Wisconsin law provides for an extension of time and waiver of interest and penalties when the IRS extends filing deadlines during a presidentially-declared disaster.

“This has been a hard year for everyone. People are still trying to catch up financially and emotionally. Extending the tax deadline to May 17 should help make things a bit easier for those who need the extra time,” said Department of Revenue Secretary Peter Barca.

• Individuals do not have to file any extension forms to be eligible for this new due date.

• Interest and late filing fees will apply beginning May 18, 2021.

• No underpayment interest will apply for failure to make quarterly estimated individual income tax payments for the 2020 tax year.

• This relief is solely for 2020 individual income tax returns and payments that are normally due on due April 15, 2021.

This relief does not apply to 2021 estimated tax payments for individuals, the first payment of which is due April 15, 2021, or to any other returns or tax payments due to the Department of Revenue.

The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. The IRS will be providing formal guidance in the coming days.

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until October 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

The federal tax filing deadline postponement to May 17, 2021, only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details.

Paying for your meal would be different, and potentially more expensive, under a plan being pushed by Democrats at the Wisconsin Capitol.

State Sen. Chris Larson, D-Milwaukee, and Rep. Francesca Hong, D-Madison, introduced legislation on Monday to end the state’s tipped minimum wage.

“A livable wage is non-negotiable in our state,” Hong said in a statement. “It is our moral duty to ensure that our neighbors can provide for themselves and their loved ones. A good first step in ensuring dignity for working-class Wisconsinites is to eliminate the tipped minimum wage.”

Servers, bartenders, and others who get tips in the state’s restaurants can make as little as $2.33, compared to the $7.25 for non-tipped employees. Many restaurants and stores pay far more than the minimum wage.

Larson said ending the tipped minimum wage, and ending tips, would be more fair for some people who work in restaurants.

The Wisconsin Restaurant Association last month said there was a conversation to be had about the minimum wage, but now is not the time to start talking about raising another cost for restaurants that have been struggling.

“Now is not the time to raise the minimum wage or eliminate the tip credit. Restaurants are experiencing the worst economic downturn in history during the COVID-19 pandemic. Some restaurants will not see an economic recovery until 2023, or later,” the Association said in a statement. “The restaurant industry needs time to recover, but at the same time, the Wisconsin Restaurant Association and its members are ready to have a conversation about a balanced way to address wage levels in the foodservice industry and the unique impact any change would have on the economic recovery of its employees and restaurant operators.”

On February 26, 2021, the U.S. Departments of Health Services, Labor, and the Treasury jointly issued guidance clarifying coverage requirements for diagnostic COVID-19 testing.

The additional guidance was provided in the form of frequently asked questions (FAQs).  The new FAQs respond to questions regarding use of medical screening criteria, location of testing sites, and coverage for asymptomatic individuals. Specifically, the FAQs provide the following guidance:

• Insurers cannot require the presence of symptoms or a recent known or suspected exposure or use medical screening criteria to deny a claim for COVID-19 diagnostic testing.
• Insurers must cover the test without cost sharing (including deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements.
• Insurers must assume that the receipt of the COVID-19 test reflects an “individual clinical assessment” when an individual seeks and receives a COVID-19 diagnostic test or is referred for a COVID-19 diagnostic test from a health care provider including individuals who are asymptomatic or without known or suspected exposure.
• Insurers are required to cover COVID-19 diagnostic tests provided through state or locally administered testing sites, including “drive-through” testing sites when the purpose of the testing is for individualized diagnosis.
• Insurers are required to cover COVID-19 diagnostic tests including point-of-care or “rapid” tests provided the test meets one of the criteria established in the FFCRA section 6001 (a) (1), as amended by section 3201 of the CARES Act.