GOVERNMENT AFFAIRS
WILL WISCONSIN FINALLY REPEAL STATE’S OLDEST MAIN STREET TAX? The stage has been set in ongoing state budget deliberations for Wisconsin lawmakers and the Evers Administration to support repealing one of our state’s oldest Main Street business taxes known as the Personal Property Tax (PPT). The Legislature is scheduled to vote to repeal the tax and send a bill to the Governor for his signature, but Gov. Evers has not indicated if he will sign the bill. A combination of a Second District Court of Appeals decision and a recent revelation that the state will end its fiscal year with an “unprecedented” surplus in revenues from tax collections makes a very compelling case that the Legislature may vote to finally put an end to this outdated, small business tax. IIAW has prioritized on behalf of its membership advocating for the outright repeal of the PPT. In 2015, IIAW teamed up with multiple other statewide organizations, now at 49 members, to form an advocacy group called the Coalition to Repeal the Personal Property Tax. The coalition is represented by nearly every business sector in the state with the sole purpose to end the PPT. Wisconsin’s personal property tax is one of our state’s oldest taxes and has been a part of the general property tax code since Wisconsin became a state in 1848. Early on, the PPT included taxes on everything everyone owned or used. However, over the many years of its existence most kinds of personal property have been exempted including personal household possessions, certain farm and manufacturing property, and property owned and used by a growing list of carved out organizations such as 30 30| | JULY JULY2021 2021 | |
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the YMCA, fraternal societies and hospitals to name a few. Under current law, personal property includes all goods, wares, merchandise, chattels and effects of any nature or description having any mercantile value and not included in the term “real property”, excluding personal possessions reserved for personal use. For purposes of the business personal property tax, this includes the actual physical items used in the daily operation of a business, including furniture, fixtures, machinery, equipment, electronics, leased equipment, supplies, signs, boats and all remodeling costs not paid for by a landlord. Over the lifespan of the PPT, the Legislature created a myriad of exemptions that have resulted in nonuniformity, frequent tax audits and costly litigation, especially for smaller employers. Certain businesses are subject to paying the tax and others are not, as well as some kinds of equipment are taxed in one municipality, but not in another. For many Main Street businesses, complying with the recordkeeping costs associated with the tax can be more expensive than the tax itself. And all of Wisconsin’s neighboring states such as Minnesota, Iowa, Illinois and Michigan have repealed their personal property tax laws. The Second District Court of Appeals ruled recently that taxpayers must go to the Wisconsin Tax Appeals Commission before bringing a challenge to a state court alleging the state Department of Revenue (DOR) has issued an unpromulgated rule. The underlying issues in the lawsuit, Wisconsin Property Tax Consultants & WMC v. Department of Revenue, are whether the DOR’s interpretation of the personal property tax exemption on machinery, tools, and patterns,
