A sales tax exemption for road-building equipment; increasing the income tax withholding threshold for nonresidents; modifying the certification requirement for a qualified opportunity fund; prohibiting certain lottery games; and extending the capital gains exclusion to family members who inherit certain farms organized as a partnership or limited liability company. (FE)

Withholding thresholds Under current law, generally, every employer must, at the time of paying an employee, withhold from the employee's wages attributable to this state an amount determined pursuant to the withholding tables prepared by the Department of Revenue in order to pay for state and federal taxes and other obligations and benefits. However, an employer is not required to withhold amounts from an employee who is not a resident of this state if the total amount of the annual wages attributable to this state paid by the employer to that employee is less than $1,500.

In addition, a pass-through entity, such as a partnership or limited liability company, is not required to withhold amounts paid to a partner, member, shareholder, or beneficiary if the total annual wages attributable to this state paid to that partner, member, shareholder, or beneficiary is less than $1,000.

The bill increases the withholding thresholds for nonresident employees so that no withholding is required for nonresident employees if the total amount of annual wages attributable to this state is less than $2,000.

Qualified opportunity funds Current law allows a taxpayer, for state tax purposes, to claim a capital gains exclusion equal to the gain excluded from federal gross income in the taxable year for an investment held in a Wisconsin qualified opportunity fund for a specified minimum period, typically five to seven years. A “Wisconsin qualified opportunity fund” is a fund that holds at least 90 percent of its assets in qualified opportunity zone property in this state, as determined under federal law. Current state law requires a Wisconsin qualified opportunity fund to certify to its investors and DOR that the fund qualifies as a WQOF no later than January 31 following the close of the fund's taxable year. Under the bill, the certification must be made to investors and DOR no later than the due date, including extensions, of the fund's corresponding income or franchise tax return. The bill also requires a WQOF to make the certification in the form and manner prescribed by DOR.

Lottery games Under current law, the administrator of the Lottery Division of DOR determines the particular features of and procedures for each lottery game offered.

Current law requires that the features and procedures be in written form and accessible to the public and include the name and theme of the game, the price of the lottery tickets, the frequency of drawings, and the prize structure, including the number and value of the prizes. The bill eliminates the requirement for estimating the amounts of prizes and the odds of a particular lottery ticket or lottery share winning each prize when the prize or odds are dependent on the number of participants in the game or drawing.

Under current law, a person who holds a winning lottery ticket or lottery share may claim a prize within 180 days after the drawing or other selection in which the prize is won. A person who holds a winning ticket or share for an instant game or scratch-off game may claim a prize within 180 days after the game's end date, as determined by the administrator. Under the bill, the administrator may determine a shorter period for which to claim a winning lottery ticket or lottery share in a multijurisdictional lottery secondary or subsequent chance drawing or game.

Farm assets Current law provides a capital gains income tax exclusion for assets used in farming that are held more than one year and sold or transferred to persons who are related to the seller. Under current law, “assets used in farming” includes shares in a corporation or trust engaged in farming, if it has no more than 15 shareholders or beneficiaries, it has no more than two classes of shares, and all its shareholders or beneficiaries are natural persons. Under the bill, “assets used in farming” also includes ownership interest in a partnership or limited liability company, if the partnership or limited liability company has 15 or fewer partners or members and all partners or members are natural persons.

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.