Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB387 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 387
5	5	September 1, 2023 - Introduced by Representatives GOEBEN, HURD, ALLEN,
6	6	BINSFELD, BRANDTJEN, EDMING, GREEN, GUNDRUM, GUSTAFSON, KRUG,
7	7	MAGNAFICI, MAXEY, O'CONNOR, PENTERMAN, PETERSEN, PETRYK, PLUMER,
8	8	RODRIGUEZ, ROZAR, SCHMIDT, STEFFEN, SUMMERFIELD, SWEARINGEN, TRANEL,
9	9	VANDERMEER and ARMSTRONG, cosponsored by Senators QUINN and
10	10	CABRAL-GUEVARA. Referred to Committee on Ways and Means. Referred to
11	11	Joint Survey Committee on Tax Exemptions.
12	12	*AUTHORS SUBJECT TO CHANGE*
13	13	AN ACT to amend 16.705 (1b) (d) and 16.71 (5r); and to create 71.05 (6) (a) 30.,
14	14	71.05 (6) (b) 57. and 224.55 of the statutes; relating to: creating a child care
15	15	reimbursement account program, providing an income tax subtraction for
16	16	certain contributions to a child care reimbursement account, and granting
17	17	rule-making authority.
18	18	Analysis by the Legislative Reference Bureau
19	19	This bill requires the Department of Financial Institutions to establish a child
20	20	care reimbursement account program under which a parent or other legal guardian
21	21	may create a tax-advantaged account to pay qualifying expenses of a qualifying
22	22	child. A “qualifying child” is a dependent who is less than 13 years of age.
23	23	“Qualifying expenses” are, with limitations, expenses for the care of a qualifying
24	24	child or household services incurred to enable the parent or legal guardian to be
25	25	gainfully employed.
26	26	Under the bill, after a parent or legal guardian (account owner) of a qualifying
27	27	child has established a child care reimbursement account (account), any person, with
28	28	the account owner's permission, may contribute to the account, but the maximum
29	29	total contribution per account per calendar year is $10,000. Persons may deduct
30	30	contributions to an account for state income tax purposes. A person may not
31	31	establish an account if the person or the person's spouse participates in an
32	32	employer-sponsored dependent care assistance program that for federal income tax
33	33	purposes excludes any amount of income used to pay dependent care expenses. Only
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40	40	ASSEMBLY BILL 387
41	41	an account owner may withdraw funds held in an account, and the account owner
42	42	may withdraw these funds only to pay for the qualifying expenses of a qualifying
43	43	child. Generally, if funds contributed to an account are not expended for qualifying
44	44	expenses in the calendar year they were contributed, the funds are forfeited.
45	45	The bill requires DFI to contract with a vendor to administer the program. The
46	46	program vendor may charge fees to account owners to cover the cost of administering
47	47	the program and may retain any unused contributions that are forfeited at the end
48	48	of the year. The contract between DFI and the vendor must require the vendor, upon
49	49	request, to provide information to the Department of Revenue for purposes of
50	50	verifying account contributions and withdrawals.
51	51	Because this bill relates to an exemption from state or local taxes, it may be
52	52	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
53	53	as an appendix to the bill.
54	54	For further information see the state fiscal estimate, which will be printed as
55	55	an appendix to this bill.
56	56	The people of the state of Wisconsin, represented in senate and assembly, do
57	57	enact as follows:
58	58	SECTION 1. 16.705 (1b) (d) of the statutes is amended to read:
59	59	16.705 (1b) (d) The department of financial institutions under s. 224.51 or
60	60	224.55.
61	61	SECTION 2. 16.71 (5r) of the statutes is amended to read:
62	62	16.71 (5r) The department shall delegate authority to the department of
63	63	financial institutions to enter into vendor contracts under s. 224.51 and to enter into
64	64	vendor contracts under s. 224.55 (3).
65	65	SECTION 3. 71.05 (6) (a) 30. of the statutes is created to read:
66	66	71.05 (6) (a) 30. For taxable years beginning after December 31, 2023, any
67	67	amount distributed during the taxable year from a child care reimbursement
68	68	account established under s. 224.55 that was not used to pay for a qualifying expense,
69	69	as defined in s. 224.55 (1) (d), except that this subdivision applies only to amounts
70	70	for which a subtraction was made under par. (b) 57.
71	71	SECTION 4. 71.05 (6) (b) 57. of the statutes is created to read:
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88	88	SECTION 4
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90	90	71.05 (6) (b) 57. a. For taxable years beginning after December 31, 2023, an
91	91	amount equal to a contribution made during the taxable year to a child care
92	92	reimbursement account established under s. 224.55.
93	93	b. The total of the subtraction made under this subdivision and any deduction
94	94	under section 162 of the Internal Revenue Code for contributions to a child care
95	95	reimbursement account established under s. 224.55 may not exceed an amount equal
96	96	to $10,000 in a taxable year, or $5,000 for an account owned by a person who is
97	97	married and files separately.
98	98	c. No subtraction may be made under this subdivision for an amount
99	99	distributed from a child care reimbursement account established under s. 224.55 and
100	100	used to claim a credit under section 21 of the Internal Revenue Code.
101	101	SECTION 5. 224.55 of the statutes is created to read:
102	102	224.55 Child care reimbursement accounts. (1) DEFINITIONS. In this
103	103	section:
104	104	(a) “Account owner” means the parent or legal guardian of a qualifying child
105	105	who has established a child care reimbursement account under this section.
106	106	(b) “Child care reimbursement account” means an account established under
107	107	this section.
108	108	(c) “Qualifying child” has the meaning given for “qualifying individual” under
109	109	section 21 (b) (1) (A) of the Internal Revenue Code.
110	110	(d) “Qualifying expenses” has the meaning given for “employment-related
111	111	expenses” under section 21 (b) (2) of the Internal Revenue Code.
112	112	(2) PROGRAM. (a) The department shall establish a child care reimbursement
113	113	account program. The program shall allow a parent or other legal guardian with a
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139	139	SECTION 5 ASSEMBLY BILL 387
140	140	qualifying child to establish a child care reimbursement account from which
141	141	qualifying expenses are paid.
142	142	(b) Any person, with the account owner's permission, may contribute to a child
143	143	care reimbursement account. The maximum contribution that may be made to such
144	144	an account in a calendar year is $10,000.
145	145	(c) Subject to par. (e), only an account owner may withdraw funds held in a child
146	146	care reimbursement account, and the account owner may withdraw these funds only
147	147	to pay for the qualifying expenses of a qualifying child.
148	148	(d) Subject to par. (e), any funds contributed to a child care reimbursement
149	149	account during a calendar year that are not expended for qualifying expenses
150	150	incurred by December 31 of that year are forfeited to the program vendor under sub.
151	151	(3) (a).
152	152	(e) If a qualifying child's death results in there being no qualifying child for a
153	153	child care reimbursement account, all of the following apply:
154	154	1. The account owner may direct the vendor to distribute the balance of the
155	155	child care reimbursement account, including principal and earnings, to those
156	156	persons who contributed to the account in proportion to their contributions, except
157	157	that contributions made by the account owner's employer shall not be so distributed.
158	158	2. If the vendor required the account owner to make an advance commitment
159	159	of contributions for the calendar year in which the death occurs, the account owner
160	160	may rescind this commitment and halt future contributions to the account.
161	161	(f) No person may establish a child care reimbursement account or contribute
162	162	to the person's child care reimbursement account if, for the same taxable year, any
163	163	amount is excluded from the income of the person or the person's spouse under
164	164	section 129 of the Internal Revenue Code.
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192	192	SECTION 5
193	193	ASSEMBLY BILL 387
194	194	(3) PROGRAM VENDOR. (a) The department shall contract with a vendor to
195	195	administer the program under this section. The program vendor may charge fees to
196	196	account owners to cover the cost of administering the program and may retain any
197	197	funds forfeited under sub. (2) (d).
198	198	(b) The department shall determine the factors to be considered in selecting a
199	199	vendor to administer the child care reimbursement account program. Using the
200	200	process under s. 16.75 (2m), the department shall solicit from nongovernmental
201	201	persons competitive sealed proposals to serve as vendor of the program. The
202	202	department shall select the vendor on the basis of factors determined by the
203	203	department and shall enter into a contract with the vendor.
204	204	(c) The contract between the department and the vendor under this subsection
205	205	shall require the vendor, upon request, to provide information to the department of
206	206	revenue for purposes of verifying contributions and withdrawals from child care
207	207	reimbursement accounts.
208	208	(4) RULES. The department may promulgate rules to implement and
209	209	administer this section.
210	210	SECTION 6.0Effective date.
211	211	(1) This act takes effect on the first day of the 7th month beginning after
212	212	publication.
213	213	(END)
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