WIB Joins Coalition to Back Construction Sales Tax Simplification Legislation
Last Wednesday, WIB joined with eighteen other Wisconsin-based advocacy organizations to ask state lawmakers to support legislation that would simplify Wisconsin’s construction sales tax law.
By way of background, construction contracts often require a contractor to sell products which are subject to the state’s sales tax and real property construction activities which are sales tax exempt. For contractors, this tax law scenario is a paperwork nightmare as they must discern who is responsible for paying the sales tax on products used in construction project.
In 2013, state lawmakers tried to address this problem by creating an exemption from the sales and use tax for certain sales subject to the tax when sold as part of a lump sum contract. A “lump sum contract” is defined as a contract to perform real property construction activities and to provide taxable goods or services and for which the contractor quotes the charge for labor, services of subcontractors, and the taxable items as one price, including a contract for which the contractor itemizes such charges as part of the schedule of values or similar document.
If the total sales price of all taxable items is less than 10% of the total amount of the lump sum contract, an exemption would apply to the sales price of the taxable items that are sold by the contractor to the purchaser.
This tax code change cleared up some of the confusion, but contractors were still struggling to comply with Wisconsin’s construction sales tax law. Under the new legislation:
- The sales and use tax exemption is expanded to apply to all construction contracts involving real property construction activities if the total sales price of the taxable products is less than 10% of the total contract price. If the exemption applies, the contractor is the consumer of, and pays the sales tax on, the products;
- If the prime contract qualifies for the exemption, the exemption applies to all subcontracts entered into with respect to the real property construction activities;
- If the exemption applies to a subcontract, the subcontractor is the consumer of, and pays the sales tax on, the products; and
- Extends the sales and use tax exemption to products purchased by a subcontractor for eventual resale to the tax-exempt entity.
Wisconsin’s construction sales tax law is overly cumbersome and complicated for contractors and subcontractors. Tax code simplification is an ongoing priority for WIB and this modest change in the state’s construction sales tax law will ease the compliance burden on contractors and subcontractors.
Governor Creates Steering Committee on Autonomous Vehicles
All the major automobile manufacturers and two of the world’s largest computer software companies – Microsoft and Intel – are spending vast sums of money to bring self-driving vehicles to market. In turn, policymakers are moving quickly to develop a regulatory framework for the safe operation of autonomous vehicles on the road.
Last September, the National Highway Transportation Safety Administration (NHTSA) – the federal government agency with regulatory authority over the operation of vehicles on interstate highways – established a Federal Automated Vehicles Policy. This plan:
- Establishes vehicle performance guidance for the design, development and testing of autonomous vehicles prior to commercial sale or operation on public roads; and
- Provides model policies for states to carry out their transportation-related responsibilities – vehicle licensing and registration, traffic laws and enforcement, and motor vehicle insurance and liability laws.
Last week, Governor Walker announced the creation of the Steering Committee on Autonomous and Connected Vehicle Testing and Deployment to advise lawmakers on how to best advance the testing and operation of automated vehicles in Wisconsin. He has directed the Committee to:
- Identify all agencies of the State of Wisconsin with pertinent jurisdiction to support the testing and deployment of automated and connected vehicles.
- Coordinate with the identified agencies and discuss how best to administer the testing and study of autonomous and connected vehicles on roads in relation to issues such as vehicle registration, licensing, insurance, traffic regulations, equipment standards, and vehicle owner or operator responsibilities and liabilities under current law;
- Review existing state statutes and administrative code and identify specific laws or rules that impede the testing and deployment of automated and connected vehicles on roads;
- Identify roads for designation as special corridors for automated and connected vehicle testing or operation innovation; and
- Identify strategic partnerships to leverage the social, economic, and environmental benefits of automated and connected vehicle technology.
Wisconsin Department of Transportation (DOT) Secretary David Ross will serve as the Chair of the Steering Committee. The DOT, with assistance from other state agencies, has been directed to submit a final report containing the Steering Committee’s findings and recommendations to the Governor no later than June 30, 2018. We will be monitoring the activities of this committee.
State Legislators ask Congressional Delegation for Assistance to Revise Phosphorus Standards
Recently, 31 members of the Wisconsin State Legislature sent a letter to Wisconsin’s Congressional Delegation asking for their assistance to revise Wisconsin’s phosphorus standards under the federal Clean Water Act.
By way of background, in 2010, the Wisconsin Department of Natural Resources Board (NRB) authorized the State of Wisconsin to participate in the federal Gulf Hypoxia Action Plan – a plan to reduce pollution that flows into Mississippi River and eventually into the Gulf of Mexico. In conjunction with this authorization, the NRB set numeric standards for phosphorus discharge into Wisconsin waterways at 0.075 parts per million – the strictest standard in the nation. This threshold was not based on any science or cost-benefit analysis.
Compliance with these new strict limits is particularly costly for so-called “point sources” of phosphorus pollution – paper mills, milk\food processing plants; and municipal wastewater treatment facilities. To address this compliance burden, the federal Environmental Protection Agency (EPA) recently granted the State of Wisconsin a variance which delays the enforcement of the phosphorus limit for a period of time.
Even so, this variance does not address the concerns of municipal wastewater treatment facilities. For example, the cheapest option available to the Village of Benton (Iowa County) to comply with the phosphorus discharge limit is chemical treatment of the wastewater at a cost of $1.97 million. These costs would be passed along to utility customers in the form of higher water utility bills – $75.05 per month. Similar compliance cost scenarios exist in small communities throughout Wisconsin.
In their letter to the Wisconsin Congressional Delegation, these state lawmakers are asking for assistance to:
“allow Wisconsin to revise the standards we set as part of the Clean Water Act to set reasonable goals that will improve phosphorus levels in our waterways with realistic expectations based on real data and our achievements over the last seven years.”
From our perspective, this is a reasonable request. We are hopeful that Wisconsin’s Congressional Delegation will work with the EPA to address this problem.