The independent review organizations are certified by the commissioner's designee to conduct independent reviews in the state and several are small businesses. The additional cost for complying with this rule is no different for an independent review organization cost for complying with the federal law. Further, if there is additional cost it will be primarily borne by large insurers who are required to pay for the cost of an independent review, not the independent review organizations. The proposed rule places few additional requirements on the independent review organizations and in clarifying what is and is not eligible for reviews, the costs incurred will be limited.
Private Sector Fiscal Analysis
This rule change will have no significant effect on the private sector regulated by OCI.
Effect on Small Business
This rule will have little or no effect on small businesses.
Initial regulatory flexibility analysis
Notice is hereby further given that pursuant to s.
227.114
, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:
a.
Types of small businesses affected:
Independent review organizations.
b.
Description of reporting and bookkeeping procedures required:
None beyond those currently required.
c.
Description of professional skills required:
None beyond those currently required.
Notice is hereby further given that pursuant to s.
227.14 (2g)
, Stats., the proposed rule may have an economic impact on small businesses.
OCI small business regulatory coordinator
The OCI small business coordinator is Louie Cornelius and may be reached at phone number (608) 264-8113 or at email address
Louie.Cornelius@wisconsin.gov
.
Agency Contact Person
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the Web site at:
http://oci.wi.gov/ocirules.htm
or by contacting Inger Williams, OCI Services Section, at:
Phone: (608) 264-8110
Address: 125 South Webster St – 2
nd
Floor, Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
The Proposed Rule Changes Are:
SECTION 1. Repeal EmR 1117.
SECTION 2. These changes first apply to claims occurring on or after January 1, 2012.
SECTION 3. This chapter may be enforced under ss.
601.41
,
601.64
,
601.65
,
628.10
, Stats., or ch.
645
, Stats., or any other enforcement provision of chs.
600
to
646
, Stats
.
SECTION 4. These emergency rule changes will take effect on December 29, 2011, as provided in s.
227.24 (1) (c)
, Stats.
Notice of Hearing
Revenue
NOTICE IS HEREBY GIVEN THAT, pursuant to section
227.11 (2) (a)
, Stats., the Department of Revenue will hold a public hearing to consider permanent rules creating section
Tax 11.10
, relating to wind, solar, and certain gas powered products.
Hearing Information
The hearing will be held:
Date:
Friday, January 27, 2012
Time:
1:00 P.M.
Location:
State Revenue Building
Events Room
2135 Rimrock Rd.
Madison, WI 53713
Handicap access is available at the hearing location.
Appearances at the Hearing and Submittal of Written Comments
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person listed below no later than
February 3, 2012
, and will be given the same consideration as testimony presented at the hearing.
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Telephone: (608) 266-8253
Analysis Prepared by the Department of Revenue
Statutes interpreted
Statutory authority
Explanation of agency authority
Section
227.11 (2) (a)
, Stats., provides that each agency may promulgate rules interpreting the provisions of any statute enforced or administered by it, if the agency considers it necessary to effectuate the purpose of the statute.
Related statute or rule
Section
Tax 11.68 (4)
,
(5)
, and
(6)
provide information on the determination of the classification of property, including products defined and exemplified in this rule, after installation.
Plain language analysis
This rule defines the term "product" as it applies to the sales and use tax exemption under s.
77.54 (56)
, Stats., provides examples of items that are and are not considered products, and clarifies the exemption requirements and scope.
Summary of, and comparison with, existing or proposed federal regulation
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
Comparison with rules in adjacent states
Minnesota and Iowa have sales and use tax exemptions relating to equipment involved in converting wind or solar energy into electricity or heat, Michigan and Illinois do not.
Minnesota
M. S. 297A.67. Subd.29,
Solar energy products.
A solar energy system, as defined in section 216C.06, subdivision 17, is exempt.
M. S. 297A.68.Subd.12,
Wind energy conversion systems.
Wind energy conversion systems, as defined in section 216C.06, subdivision 12, that are used as an electric power source are exempt, and the materials used to manufacture, install, construct, repair, or replace them are exempt.
Minnesota has no rules pertaining to these statutes.
Iowa
Iowa Code sec. 423.3.54, The sales price from the sale of wind energy conversion property to be used as an electric power source and the sale of the materials used to manufacture, install, or construct wind energy conversion property used or to be used as an electric power source.
For purposes of this subsection,
"wind energy conversion property"
means any device, including, but not limited to, a wind charger, windmill, wind turbine, tower and electrical equipment, pad mount transformers, power lines, and substation, which converts wind energy to a form of usable energy.
Iowa Code sec. 423.3.90,
The sales price from the sale of solar energy equipment. For purposes of this subsection, "solar energy equipment" means equipment that is primarily used to collect and convert incident solar radiation into thermal, mechanical, or electrical energy or equipment that is primarily used to transform such converted solar energy to a storage point or to a point of use.
Iowa has a rule (
701—230.7(423)
) relating to the statutory exemption for "wind energy conversion property." However, the rule merely reiterates the statutory language and does not interpret the statute.
Summary of factual data and analytical methodologies
In reviewing the language of s.
77.54 (56)
, Stats., the department concluded that in order to administer the sales and use tax exemption being created, it needs to promulgate rules interpreting and clarifying the underlying statutory provisions.
Analysis and supporting documents used to determine effect on small business
As explained above, this rule is created to administer changes in Wisconsin's sales and use tax laws. As the rule itself does not impose any significant financial or other compliance burden, the department has determined that it does not have a significant effect on small business.
Anticipated costs incurred by private sector
This rule does not have a significant fiscal effect on the private sector.
Effect on Small Business
This rule does not have a significant effect on small business.
Agency Contact Person
Place where comments are to be submitted and deadline for submission
Comments may be submitted to the contact person shown below no later than one week after the public hearing on this rule is conducted. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Text of Proposed Rule
SECTION 1.
Tax 11.10 is created to read:
Tax 11.10 Wind, solar, and certain gas powered products.
(1)
General.
Section
77.54 (56)
, Stats., provides a sales and use tax exemption for the following:
(a) The sales price from the sale of and the storage, use, or other consumption of a product whose power source is wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural waste, if the product produces at least 200 watts of alternating current or 600 British thermal units per day, except that the exemption does not apply to an uninterruptible power source that is designed primarily for computers.
(b) Except for the sale of electricity or energy that is exempt from taxation under s.
77.54 (30)
, Stats., the sales price from the sale of and the storage, use, or other consumption of electricity or energy produced by a product described in par. (a).
(2)
Definition.
In this section and in s.
77.54 (56)
, Stats., "product" means tangible personal property that converts wind energy, direct radiant energy received from the sun, or gas generated from the anaerobic digestion of animal manure and other agricultural waste into alternating current electricity or heat.
(3)
Items which are products.
Products include the following items described in sub. (2):
(a) Wind turbine generators, including blade assembly and tower.
(b) Gas powered electric generators.
(c) Gas fueled furnaces, space heaters, and water heaters.
(d) Photovoltaic cells, modules, and arrays, including tracking equipment that maintains optimal orientation to the sun.
(e) Solar thermal collectors.
(f) Inverters used to transform direct current produced by an item described in sub. (2) into alternating current, including property used to convey the direct current from the product to the inverter.
(g) Hardware required for installation of an item described in pars. (a) to (f).
(4)
Items which are not products.
Items which are not products include the following:
(a) Tangible personal property that consumes electricity or heat produced by an item described in sub. (2).
Example:
A refrigerator that consumes electricity produced by a wind turbine generator is not itself a product whose power source is wind energy.
(b) A foundation for an item described in sub. (2).
Example:
A solar tracking device that holds an array of photovoltaic cells is installed onto a concrete foundation. The concrete foundation is not a product whose power source is direct radiant energy received from the sun.
(c) Except as provided in sub. (3) (f), property necessary to convey, transfer, or alter electricity or heat generated by an item described in sub. (2).
(d) Tangible personal property used to store electricity or heat produced by an item described in sub. (2).
Example 1)
A tank that stores hot water heated by a solar collector is not itself a product whose power source is direct radiant energy received from the sun.
Example 2)
Batteries used to store electricity produced by a wind turbine generator or photovoltaic cells are not themselves products whose power source is wind energy or direct radiant energy received from the sun.
(5)
Exemption for products.
(a) For purposes of the exemption under sub. (1) (a), a product that produces direct current shall be considered to produce alternating current if the direct current is modified to alternating current prior to the direct current being stored, used, consumed, or sold by the producer.
Example 1)
An array of photovoltaic cells produces direct current. All of the current produced by the array is transferred directly to an inverter. The alternating current from the inverter is then either used to power equipment or it is sold to a utility. The photovoltaic array is considered to meet the requirement that it be a product that produces alternating current.
Example 2)
A wind turbine generator produces direct current. The current is used to charge batteries. When needed, the batteries supply direct current to an inverter, producing alternating current used to power various devices. The direct current generator does not qualify for exemption since the direct current is being stored by the producer prior to changing it to alternating current.
(b) In order to qualify for the exemption under sub. (1) (a), a product using gas as a power source shall use gas from the anaerobic digestion of animal manure and other agricultural waste exclusively as its power source. A product that uses other fuels such as natural gas, propane, or gas generated from a landfill does not qualify for exemption.
(c) Products that qualify for the exemption under sub. (1) (a) include the following:
1. An alternating current wind turbine generator rated by the manufacturer to produce at least 200 watts of alternating current with a wind speed of 25 miles per hour.
2. A direct current wind turbine generator that is rated by the manufacturer to produce at least 250 watts of direct current at a wind speed of 25 miles per hour and produces alternating current as described in par. (a).
Example:
A direct current wind turbine generator is rated by the manufacturer to produce at least 250 watts of direct current with a wind speed of 25 miles per hour. The generator is connected to an inverter that modifies the direct current to alternating current prior to the direct current being stored, used, consumed, or sold by the producer. The generator, inverter, and the property used to convey the direct current from the generator to the inverter qualify for exemption.
3. A direct current wind turbine generator that produces alternating current as described in par. (a) of at least 200 watts as measured at the inverter under normal operating conditions with a wind speed of no more than 25 miles per hour.
4. A solar thermal collector with an output rating of at least 600 British thermal units per day, as determined by the Solar Rating and Certification Corporation, that is normally in service every day throughout the year.
5. A photovoltaic cell, module, or array with a standard test condition output rating of at least 250 watts of direct current that produces alternating current as described in par. (a).
6. A direct current gas powered generator that meets the requirement in par. (b) and produces alternating current as described in par. (a) of at least 200 watts as measured at the inverter when producing direct current under its normal operating conditions.
7. A gas fueled furnace, space heater, or water heater that meets the requirement in par. (b) and can be expected to consume gas in an amount equivalent to at least 600 British thermal units per day throughout the year.
Example:
Gas generated by the anaerobic digestion of animal manure or agricultural waste is used solely as the power source for a space heater and a water heater. Both products, when in use, produce over 600 British thermal units per day. The water heater is used every day of the year while the space heater is used only during the months of October through April. The water heater qualifies for exemption, the space heater does not.
(d) The exemption under sub. (1) (a) may be claimed by the consumer of the product who purchases the product as tangible personal property. A contractor who will purchase, furnish, and install a product which will become real property when installed is the consumer of the product, and may provide its supplier with a properly completed exemption certificate, claiming the product is exempt under s.
77.54 (56)
, Stats. A contractor who will furnish and install a product that will remain tangible personal property when installed may purchase a product without tax for resale. The purchaser may then issue the contractor an exemption certificate, claiming the product is exempt under s.
77.54 (56) (a)
, Stats.
Note:
See s.
Tax 11.68 (4)
,
(5)
, and
(6)
for information on the determination of the classification of property after installation.
(6)
Exemption for energy produced by a product.
(a) The exemption under sub. (1) (b) applies to a direct sale from the producer of electricity or energy to the consumer of the same electricity or energy where all of the following apply:
1. The electricity or energy is produced by a product that qualifies for exemption under sub. (1) (a).
2. The sale does not qualify for exemption under s.
77.54 (30)
, Stats.
Note:
Section
77.54 (30) (a)
, Stats., provides an exemption, in part, for electricity sold during November through April for residential use, fuel and electricity sold for use in farming, and fuel and electricity consumed in manufacturing tangible personal property in Wisconsin.
(b) The exemption under sub. (1) (b) does not apply to electricity or energy which is first purchased for resale from the producer and is then sold in a subsequent retail sale, unless the person making the retail sale is able to account for the quantity of electricity or energy that qualifies for exemption under s.
77.54 (56) (b)
, Stats., and is able to identify the person to whom such electricity or heat is sold.
Example:
Electricity that would otherwise qualify for exemption under s.
77.54 (56) (b)
, Stats., is commingled in a distribution network with electricity that is not produced by a product whose power source is wind energy, direct radiant energy received from the sun, or gas generated from anaerobic digestion of animal manure and other agricultural wastes. It is not possible to determine to whom, or in what amount, the electricity that qualifies for exemption is sold. A purchaser of this electricity will not be able to provide an exemption certificate to a utility and properly claim what portion of the electricity it has purchased is exempt pursuant to s.
77.54 (56) (b)
, Stats., nor is it possible for a utility to know what portion of the electricity purchased by the consumer was from eligible sources.
(c) The exemption under sub. (1) (b) does not apply to the sale of, or the storage, use or other consumption of gas produced by the anaerobic digestion of animal manure or other agricultural wastes unless such gas is produced by a product described in sub. (1) (a).
ADMINISTRATIVE RULES
FISCAL ESTIMATE
AND ECONOMIC IMPACT ANALYSIS
|
Type of Estimate and Analysis
|
X
Original Updated Corrected
|
Administrative Rule Chapter, Title and Number
|
Section Tax 11.10: Wind, solar, and certain gas powered products
|
Subject
|
Sales and use tax exemption for certain energy-producing wind, solar, and gas powered products and the electricity or energy they produce
|
Fund Sources Affected
|
Chapter 20 , Stats. Appropriations Affected
|
GPR FED PRO PRS SEG SEG-S
|
|
Fiscal Effect of Implementing the Rule
|
X
No Fiscal Effect
Indeterminate
|
Increase Existing Revenues
Decrease Existing Revenues
|
Increase Costs
Could Absorb Within Agency's Budget
Decrease Costs
|
The Rule Will Impact the Following (Check All That Apply)
|
State's Economy
Local Government Units
|
Specific Businesses/Sectors
Public Utility Rate Payers
|
Would Implementation and Compliance Costs Be Greater Than $20 million?
Yes
X
No
|
Policy Problem Addressed by the Rule
|
The rule does not create or revise policy, other than to reflect a statutory change.
|
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
|
The statutory change to which this rule pertains created a state economic impact equal to the estimated state fiscal effect (described in the attached fiscal estimate form). The rule itself does not create any further impact or implementation and compliance costs, except that, by providing clarifications and examples, may reduce the costs that businesses and individuals would otherwise incur to comply with the new statute.
The majority of comments submitted in response to the department's solicitation expressed general support or opposition, and did not address economic impact. Comments that addressed economic impact did so generally and were directed at the underlying statutory exemption. No comments related directly to implementation and compliance costs or indicated the proposed rule would adversely affect in a material way the economy, a sector of the economy, productivity, jobs, or the overall economic competitiveness of Wisconsin. As such, the comments received provide support to the above conclusion that the rule itself does not create any further economic impact beyond the statutory change to which it pertains.
|
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
|
Clarifications and guidance provided by administrative rules may lower the compliance costs for businesses, local governmental units, and individuals.
If the rule is not implemented, Chapter Tax 11 will be incomplete in that it will not reflect current law.
|
Long Range Implications of Implementing the Rule
|
No long-range implications are anticipated.
|
Compare With Approaches Being Used by Federal Government
|
N/A
|
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota
)
|
Michigan and Illinois do not have related statutory provisions. Minnesota has related statutory provisions, but does not have rules pertaining to those statutes. Iowa has related statutory provisions and rules pertaining to those statutes. However, Iowa's rules merely reiterate the statutes and do not interpret them.
|
Assumptions Used in Arriving at Fiscal Estimate:
2007 Wisconsin Act 20
adopted an exemption (under s.77.54 (56)) for certain products whose power source is wind energy, direct radiant energy from the sun, or gas generated from the digestion of animal manure and other agricultural waste. The exemption also applies to electricity and energy produced by the exempt products.
The proposed rule modifies Chapter
TAX 11
to reflect the law changes, improve clarity, and add examples to illustrate the tax treatment of certain items under the exemptions under s.77.54 (56).
The proposed rule includes:
•
A definition for "product" as described in the exemption under s.77.54 (56);
•
Examples of items that are considered "products" under the exemption; and
•
Clarification that the exemption does not apply to electricity or energy which is purchased for resale and is then sold in a retail sale unless the retailer is able to account for the quantity of electricity or energy that qualifies for the exemption and is able to identify the person to whom the electricity or energy is sold.
As specified in the rule, examples of products that become exempt from sales and use tax effective July 1, 2011 under the statutory change include certain wind turbine generators, photovoltaic cells, anaerobic gas powered turbines, and certain other products.
The fiscal effect of the exemptions under s.77.54 (56) have already been reflected under general fund condition statements subsequent to
2007 Act 20
and
2009 Act 29
(where, under both acts, the annual sales tax loss of the exemptions was estimated at $1.3 million annually). Since the fiscal impact of the statutory change has already been reflected, the proposed rule has no fiscal effect.
Notice of Proposed Rulemaking
Without Public Hearing
Technical College System
The Wisconsin Technical College System Board submitted the following proposed rule amendment to the Legislative Council Rules Clearinghouse on December 23, 2011. The proposed order revises section
TCS 6.05
, relating to procurement. A public hearing is not required as the proposed rule amendment brings the existing rule into conformity with cost minimums established in
2011 Wisconsin Act 32
.
Analysis Prepared by the Wisconsin Technical College System Board
Statutes interpreted
Wis. Stats. section 38.04.
Statutory authority
Wis. Stats. sections 38.04 and 38.12.
Explanation of statutory authority
Section
38.04 (14) (a)
, Stats., authorizes the technical college system board to promulgate rules applicable to all district boards, establishing general district policies related to procurement and contracts to provide services.
Related statute or rule
Plain language analysis
2011 Wisconsin Act 32
raised procurement cost minimums for various procurement requirements for state agencies in ch.
16
, Stats. The proposed rule amendments are limited to increasing current procurement cost minimums for technical college districts to align with the minimums outlined for state agencies in Ch.
16
, Stats.
Summary of, and comparison with, existing or proposed federal regulations
Not applicable.
Comparison with rules in adjacent states
Not applicable.
Summary of factual data and analytical methodologies
Not applicable.
Analysis and supporting documents used to determine effect on small business or in preparation of economic impact report
Not applicable.
Effect on Small Business
None.
Final Regulatory Flexibility Analysis
Not applicable.
Fiscal Estimate
The functions required by these rules can be absorbed within existing staff. Therefore, there is no fiscal effect on the agency.
Agency Contact Person
Morna Foy, Vice President, Wisconsin Technical College System, 4622 University Avenue, P.O. Box 7874, Madison, Wisconsin 53707-7874, telephone (608) 266-2449, e-mail
morna.foy@wtcsystem.edu
.
Place Where Comments Are to be Submitted and Deadline for Submission
Comments may be submitted to the contact person noted above. The deadline for comments is
February 15, 2012
.
A public hearing and notice are not required under s.
227.16 (2) (b)
, Stats., as the proposed rule amendment will align the cost minimums for procurement requirements of the Wisconsin Technical College System with the policies and cost minimums established by the Legislature and the Governor for state agency procurements in
2011 Wisconsin Act 32
.
Text of Rule
(c)
Competitive bids
. Require that all procurements where the total cost exceeds
$25,000
$50,000
and public construction under ss.
38.18
and
62.15 (1)
,
(11)
and
(14)
, Stats., where the total cost exceeds
$10,000
$25,000
be accomplished through the use of competitive bids except as provided by pars. (d), (e), and (i).
(f)
Solicitation of written quotes.
Except as provided under pars. (d), (e) and (i), require that all procurements where the total cost equals or exceeds
$10,000
$25,000
and does not exceed
$25,000
$50,000
be accomplished through the solicitation of written quotations from a minimum of 3 contractors or proposed contractors.
(g)
Procurements less
that $10,000
than
$25,000
. Establish a procedure for all procurements where the total cost is less than
$10,000
$25,000
.
(j)
Records required.
Require that records be created and retained for all procurements where the total cost equals or exceeds
$10,000
$25,000
. These records shall include:
1. The rationale for the method of procurement.
2. The rationale for selection or rejection of any contractor or proposed contractor.
3. The basis for cost or price.
