Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB426 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 SENATE BILL 426
5	5	September 8, 2023 - Introduced by Senators QUINN, BALLWEG and CABRAL-GUEVARA,
6	6	cosponsored by Representatives GOEBEN, ALLEN, ARMSTRONG, BINSFELD,
7	7	BRANDTJEN, EDMING, GREEN, GUNDRUM, GUSTAFSON, HURD, KRUG, MAGNAFICI,
8	8	MAXEY, O'CONNOR, PENTERMAN, PETERSEN, PETRYK, PLUMER, RODRIGUEZ, ROZAR,
9	9	SCHMIDT, STEFFEN, SUMMERFIELD, SWEARINGEN, TRANEL, VANDERMEER and
10	10	WICHGERS. Referred to Committee on Mental Health, Substance Abuse
11	11	Prevention, Children and Families.
12	12	AN ACT to amend 16.705 (1b) (d) and 16.71 (5r); and to create 71.05 (6) (a) 30.,
13	13	71.05 (6) (b) 57. and 224.55 of the statutes; relating to: creating a child care
14	14	reimbursement account program, providing an income tax subtraction for
15	15	certain contributions to a child care reimbursement account, and granting
16	16	rule-making authority.
17	17	Analysis by the Legislative Reference Bureau
18	18	This bill requires the Department of Financial Institutions to establish a child
19	19	care reimbursement account program under which a parent or other legal guardian
20	20	may create a tax-advantaged account to pay qualifying expenses of a qualifying
21	21	child. A “qualifying child” is a dependent who is less than 13 years of age.
22	22	“Qualifying expenses” are, with limitations, expenses for the care of a qualifying
23	23	child or household services incurred to enable the parent or legal guardian to be
24	24	gainfully employed.
25	25	Under the bill, after a parent or legal guardian (account owner) of a qualifying
26	26	child has established a child care reimbursement account (account), any person, with
27	27	the account owner's permission, may contribute to the account, but the maximum
28	28	total contribution per account per calendar year is $10,000. Persons may deduct
29	29	contributions to an account for state income tax purposes. A person may not
30	30	establish an account if the person or the person's spouse participates in an
31	31	employer-sponsored dependent care assistance program that for federal income tax
32	32	purposes excludes any amount of income used to pay dependent care expenses. Only
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37	37	5 - 2 -2023 - 2024 Legislature LRB-4243/2
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39	39	SENATE BILL 426
40	40	an account owner may withdraw funds held in an account, and the account owner
41	41	may withdraw these funds only to pay for the qualifying expenses of a qualifying
42	42	child. Generally, if funds contributed to an account are not expended for qualifying
43	43	expenses in the calendar year they were contributed, the funds are forfeited.
44	44	The bill requires DFI to contract with a vendor to administer the program. The
45	45	program vendor may charge fees to account owners to cover the cost of administering
46	46	the program and may retain any unused contributions that are forfeited at the end
47	47	of the year. The contract between DFI and the vendor must require the vendor, upon
48	48	request, to provide information to the Department of Revenue for purposes of
49	49	verifying account contributions and withdrawals.
50	50	Because this bill relates to an exemption from state or local taxes, it may be
51	51	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
52	52	as an appendix to the bill.
53	53	For further information see the state fiscal estimate, which will be printed as
54	54	an appendix to this bill.
55	55	The people of the state of Wisconsin, represented in senate and assembly, do
56	56	enact as follows:
57	57	SECTION 1. 16.705 (1b) (d) of the statutes is amended to read:
58	58	16.705 (1b) (d) The department of financial institutions under s. 224.51 or
59	59	224.55.
60	60	SECTION 2. 16.71 (5r) of the statutes is amended to read:
61	61	16.71 (5r) The department shall delegate authority to the department of
62	62	financial institutions to enter into vendor contracts under s. 224.51 and to enter into
63	63	vendor contracts under s. 224.55 (3).
64	64	SECTION 3. 71.05 (6) (a) 30. of the statutes is created to read:
65	65	71.05 (6) (a) 30. For taxable years beginning after December 31, 2023, any
66	66	amount distributed during the taxable year from a child care reimbursement
67	67	account established under s. 224.55 that was not used to pay for a qualifying expense,
68	68	as defined in s. 224.55 (1) (d), except that this subdivision applies only to amounts
69	69	for which a subtraction was made under par. (b) 57.
70	70	SECTION 4. 71.05 (6) (b) 57. of the statutes is created to read:
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87	87	SECTION 4
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89	89	71.05 (6) (b) 57. a. For taxable years beginning after December 31, 2023, an
90	90	amount equal to a contribution made during the taxable year to a child care
91	91	reimbursement account established under s. 224.55.
92	92	b. The total of the subtraction made under this subdivision and any deduction
93	93	under section 162 of the Internal Revenue Code for contributions to a child care
94	94	reimbursement account established under s. 224.55 may not exceed an amount equal
95	95	to $10,000 in a taxable year, or $5,000 for an account owned by a person who is
96	96	married and files separately.
97	97	c. No subtraction may be made under this subdivision for an amount
98	98	distributed from a child care reimbursement account established under s. 224.55 and
99	99	used to claim a credit under section 21 of the Internal Revenue Code.
100	100	SECTION 5. 224.55 of the statutes is created to read:
101	101	224.55 Child care reimbursement accounts. (1) DEFINITIONS. In this
102	102	section:
103	103	(a) “Account owner” means the parent or legal guardian of a qualifying child
104	104	who has established a child care reimbursement account under this section.
105	105	(b) “Child care reimbursement account” means an account established under
106	106	this section.
107	107	(c) “Qualifying child” has the meaning given for “qualifying individual” under
108	108	section 21 (b) (1) (A) of the Internal Revenue Code.
109	109	(d) “Qualifying expenses” has the meaning given for “employment-related
110	110	expenses” under section 21 (b) (2) of the Internal Revenue Code.
111	111	(2) PROGRAM. (a) The department shall establish a child care reimbursement
112	112	account program. The program shall allow a parent or other legal guardian with a
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138	138	SECTION 5 SENATE BILL 426
139	139	qualifying child to establish a child care reimbursement account from which
140	140	qualifying expenses are paid.
141	141	(b) Any person, with the account owner's permission, may contribute to a child
142	142	care reimbursement account. The maximum contribution that may be made to such
143	143	an account in a calendar year is $10,000.
144	144	(c) Subject to par. (e), only an account owner may withdraw funds held in a child
145	145	care reimbursement account, and the account owner may withdraw these funds only
146	146	to pay for the qualifying expenses of a qualifying child.
147	147	(d) Subject to par. (e), any funds contributed to a child care reimbursement
148	148	account during a calendar year that are not expended for qualifying expenses
149	149	incurred by December 31 of that year are forfeited to the program vendor under sub.
150	150	(3) (a).
151	151	(e) If a qualifying child's death results in there being no qualifying child for a
152	152	child care reimbursement account, all of the following apply:
153	153	1. The account owner may direct the vendor to distribute the balance of the
154	154	child care reimbursement account, including principal and earnings, to those
155	155	persons who contributed to the account in proportion to their contributions, except
156	156	that contributions made by the account owner's employer shall not be so distributed.
157	157	2. If the vendor required the account owner to make an advance commitment
158	158	of contributions for the calendar year in which the death occurs, the account owner
159	159	may rescind this commitment and halt future contributions to the account.
160	160	(f) No person may establish a child care reimbursement account or contribute
161	161	to the person's child care reimbursement account if, for the same taxable year, any
162	162	amount is excluded from the income of the person or the person's spouse under
163	163	section 129 of the Internal Revenue Code.
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191	191	SECTION 5
192	192	SENATE BILL 426
193	193	(3) PROGRAM VENDOR. (a) The department shall contract with a vendor to
194	194	administer the program under this section. The program vendor may charge fees to
195	195	account owners to cover the cost of administering the program and may retain any
196	196	funds forfeited under sub. (2) (d).
197	197	(b) The department shall determine the factors to be considered in selecting a
198	198	vendor to administer the child care reimbursement account program. Using the
199	199	process under s. 16.75 (2m), the department shall solicit from nongovernmental
200	200	persons competitive sealed proposals to serve as vendor of the program. The
201	201	department shall select the vendor on the basis of factors determined by the
202	202	department and shall enter into a contract with the vendor.
203	203	(c) The contract between the department and the vendor under this subsection
204	204	shall require the vendor, upon request, to provide information to the department of
205	205	revenue for purposes of verifying contributions and withdrawals from child care
206	206	reimbursement accounts.
207	207	(4) RULES. The department may promulgate rules to implement and
208	208	administer this section.
209	209	SECTION 6.0Effective date.
210	210	(1) This act takes effect on the first day of the 7th month beginning after
211	211	publication.
212	212	(END)
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