Wisconsin Set to Conform with Most Stimulus Law Tax Changes

Wisconsin on Wednesday adopted omnibus legislation to address the Covid-19 pandemic, including language that brings the state’s tax code into conformity with several features of the federal coronavirus response law.

Gov. Tony Evers (D) signed A.B. 1038 soon after it passed the Senate, saying in a statement that it was “finally a step in the right direction, but there is much more work to be done.”

The bill assists taxpayers during the public health crisis by conforming to new federal rules that: exempt certain retirement account distributions from tax; permit deductions for certain charitable contributions; permit loan forgiveness on a tax-free basis under the federal small business loan program; and, exclude from income student loan payments made by an employers to qualified employees.

The bill does not address a provision in the stimulus (Public Law 116-136) that temporarily relaxes the business interest expense deduction limit under tax code Section 163(j) of the 2017 tax law. Wisconsin decoupled from that provision in 2018, said Jay Baehman, a tax consultant in the Appleton, Wis. office of Grant Thornton LLP.

• Additionally, the bill grants the Department of Revenue authority to waive interest and penalties in cases where a taxpayer fails to timely remit taxes due to the pandemic.
• A.B. 1038 won unanimous support in the Senate on Wednesday. It passed the Assembly on Tuesday by a vote of 97-2.
• Evers said he would sign A.B. 1038 but noted the measure “falls short of what is needed to address the magnitude and gravity of what our state is facing.”