The repeal of the Wisconsin personal property tax took place on June 20, 2023, with the signing of a revenue reform bill by Wisconsin Governor Tony Evers (AB245, 2023 Wisconsin Act 12). This repeal goes into effect on January 1, 2024, and essentially eliminates the Personal Property Tax return filing requirements for most Wisconsin businesses.
Effects on the Filing of Manufacturing Real Property Returns
While personal property tax returns are no longer required, those businesses that had applied for and/or had been approved as a manufacturer will be required to continue filing a standard manufacturing property report form annually for each real estate parcel to the Wisconsin Department of Revenue (WDOR). We are still waiting for clarification to know what these filings will look like. In the past, the filings required were the Manufacturing Personal Property Returns (MP) and Manufacturing Real Property returns (MR).
The property that will be assessed for manufacturing will continue to be reviewed by the WDOR. But Sec. 70.995(5) makes one change: all property is included, “except property not contiguous with or located within 1,000 feet of the parcel on which the production processes occurs.”
Previously, leasehold improvements and other improvements could have been assessed as real or personal property. However, Sec. 70.17(3) states, “Beginning with the property tax assessments as of January 1, 2024, buildings, improvements, and fixtures on leased lands, exempt lands, and forest croplands, shall be assessed as real property.” Based on the repeal of personal property taxes, this distinction will become more critical and may need to be reviewed if these assets were treated as personal property in the past.
The bill also mentions that those buildings, improvements and fixtures, if leased to anyone other than the landowner or if on exempt land, the assessor may create a separate tax parcel for those items to be assessed as real property to the owner of those buildings, improvements, and fixtures.
Manufacturing and Agricultural Credit
The WDOR continues to receive and review applications for manufacturing classification. If a property has already been assigned the manufacturing classification, there is no need to reapply.
While the application for applying for manufacturing status remains the same, the timing of filing the application has changed. In the past, a taxpayer had to apply by March 1st to qualify for the manufacturing credit in the current year. Now however, the taxpayers have until July 1st to qualify for the manufacturing credit. This means, that as long as the company files by mid-year in the current year for 2024, they will be eligible to be classified as a manufacturer in 2024 and receive the credit on their 2024 tax return.
The Act continues to clarify that if all the company’s manufacturing activities occur only in Wisconsin, a reduction of the credit is not required, even if a portion of the real property of the business is not assessed as manufacturing.
Manufacturers will still have an annual filing requirement that now could include property once assessed as “personal” property. The report(s) that will be required to be filed by manufacturers for each of their real estate parcels is still being developed by the Wisconsin Department of Revenue.