Tax 2.65 Note Note: Send requests to change the combined group's designated agent and notifications of successor designated agents to: Corporation Processing Unit, Wisconsin Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908.
Tax 2.65(2)(d) (d) Continuity of agency for prior years. The designated agent of a combined group for a prior taxable year shall continue to act as the designated agent for that taxable year unless the designated agent ceases to exist, in which case par. (c) 3. applies, or the designated agent submits a written request to the department for another combined group member to act as designated agent, and the department grants the request.
Tax 2.65 Note Note: Send requests to change the combined group's designated agent and notifications of successor designated agents to: Corporation Processing Unit, Wisconsin Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908. However, if the request relates to prior taxable years that are under audit, the designated agent may submit the written request to the department's representative that has notified the designated agent of the audit.
Tax 2.65(2)(e) (e) Designated agent for purposes of resolving disputes over combined group membership. If the department determines that one or more corporations are members of a combined group and no combined return was filed, the group of corporations the department asserts is a combined group may appoint a member of that group as the designated agent solely for purposes of contesting the department's determination. The appointment of a designated agent under this paragraph may not be construed as a concession by either the corporations or the department regarding the existence of a combined group or the proper composition of a combined group.
Tax 2.65(3) (3) Scope and limitations of agency.
Tax 2.65(3)(a) (a) Duties of designated agent. The designated agent is generally required to act on behalf of the combined group in its own name in all matters relating to the combined return. This includes performing the following duties:
Tax 2.65(3)(a)1. 1. Filing the combined return, including the reporting of any separate entity items attributable to combined group members.
Tax 2.65(3)(a)2. 2. Filing any extension of time to file the combined return.
Tax 2.65(3)(a)3. 3. Filing any amended combined returns or claims for refunds or credits relating to the combined return, including any separate entity items attributable to combined group members.
Tax 2.65(3)(a)4. 4. Sending and receiving all correspondence with the department regarding the combined return, except that if correspondence relates to separate entity items or a payment made by another member of the combined group as provided in s. Tax 2.66 (2), the department may send the correspondence to that other member or the designated agent, or both.
Tax 2.65(3)(a)5. 5. Remitting taxes applicable to the combined return, including estimated taxes, except as otherwise provided in s. Tax 2.66.
Tax 2.65(3)(a)6. 6. Participating on behalf of the group in any investigation or hearing by the department regarding the combined return, including producing all information requested and filing any appeal. Unless provided otherwise in writing, any appeal filed by the designated agent relating to the combined return shall be considered filed by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members the combined group.
Tax 2.65(3)(a)7. 7. Executing waivers, closing agreements, powers of attorney, and other documents relating to the combined return. Unless the department and taxpayer agree otherwise in writing, any waiver, closing agreement, power of attorney, or other document executed by the designated agent relating to the combined return shall be considered executed by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members of the combined group.
Tax 2.65(3)(a)8. 8. Receiving assessment notices regarding the combined return. Subject to par. (f), a notice received by the designated agent is considered received by all members of the combined group, including any corporations that were not included in the combined return but which the department asserts are members the combined group. If a notice relates to separate entity items that are attributable to a combined group member other than the designated agent, the designated agent may submit a written request to the department to reissue the notice or a portion of the amount of the notice to the combined group member responsible for the separate entity items. The designated agent shall submit the written request on or before the due date shown on the notice.
Tax 2.65 Note Note: Send written requests to reissue notices relating to separate entity items to: Wisconsin Department of Revenue, Mail Stop 5-257, P.O. Box 8906, Madison, WI 53708-8906.
Tax 2.65(3)(a)9. 9. Receiving any refunds relating to the combined return.
Tax 2.65(3)(b) (b) Exclusivity. Except as provided in this paragraph, no person other than the designated agent shall have authority to act for or represent itself or the combined group regarding the duties listed in par. (a). A combined group member, or a corporation which the taxpayer asserts is a combined group member, may assume any of the duties listed in par. (a) under any of the following conditions:
Tax 2.65(3)(b)1. 1. By election of the designated agent or the applicable combined group member, a combined group member may perform any of the duties listed in par. (a) to the extent those duties relate to separate entity items. This may include the filing of a separate return to report the member's separate entity items, subject to the requirements of par. (c).
Tax 2.65(3)(b)2. 2. A combined group member may make estimated payments on its own behalf to the extent allowed in s. Tax 2.66 (2).
Tax 2.65(3)(b)3. 3. If a combined return was filed, the department may allow any corporation which it asserts should be added to or eliminated from the combined group to represent itself after receipt of a written request from the corporation. However, that corporation shall still be bound by any action taken by the designated agent before the corporation's request to represent itself has been accepted by the department.
Tax 2.65 Note Note: A corporation that wishes to represent itself should submit the written request to the department's representative that has notified the corporation of the department's assertion.
Tax 2.65(3)(c) (c) Reporting of separate entity items. If a combined group member chooses to file a separate Wisconsin return to report its separate entity items rather than having the designated agent include them in the combined return in the manner described in s. Tax 2.67 (2) (d) 3., the member shall consider the totality of its share of items from the combined return plus its separate entity items for purposes of applying any limitations, so that its total net tax plus economic development surcharge does not differ from the amount that would have been due if the separate entity items had been included in the combined return. The combined group member shall submit a copy of the combined return with its separate return.
Tax 2.65(3)(d) (d) Unauthorized acts. The department is not bound by unauthorized acts made with respect to a combined return by a corporation that is not the designated agent. The department may choose to receive the benefits or assume the obligations of unauthorized acts, in which case the department is bound only if it takes affirmative steps to expressly manifest its intent to receive the benefits or assume the obligations of the acts.
Tax 2.65(3)(e) (e) Failure to act. If the designated agent is unable or unwilling to fulfill its obligations with respect to the combined return, is unresponsive, or has not been identified to the department, the department may appoint a new designated agent, or it may deal directly with any member of the combined group in respect to its share of the combined return items in which case each member shall have full authority to act for itself.
Tax 2.65(3)(f) (f) Joint and several liability. Under s. 71.255 (1) (n), Stats., the members of a combined group shall be jointly and severally liable for the combined tax, penalty, and interest attributable to the combined unitary income, net of any loss carryforwards and credits applied. This paragraph does not apply to any tax, interest, or penalty attributable to separate entity items. Although the department may send correspondence, notices, refunds, assessments, or other documents relating to any combined group member's separate entity items to the designated agent, and the designated agent may choose to pay any tax, interest, or penalty on behalf of a combined group member, the tax, interest, or penalty attributable to separate entity items is ultimately the responsibility of the combined group member or members to which the separate entity items are attributable.
Tax 2.65(3)(g) (g) Confidentiality provisions. The designated agent is an agent under s. 71.78 (4) (e), Stats. Therefore, the department may provide information relating to any member of the combined group to the designated agent, including information relating to the member's separate entity items.
Tax 2.65 Note Note: This section interprets s. 71.255 (7), Stats.
Tax 2.65 History History: EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-011: am. (3) (c) Register July 2012 No. 670, eff. 8-1-12.
Tax 2.65 Annotation Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.66 for more information on combined estimated tax requirements. See s. Tax 2.67 for more information on combined returns.
Tax 2.66 Tax 2.66 Combined estimated tax payments.
Tax 2.66(1)(1)Scope. In general, s. 71.255 (7) (b) 5., Stats., provides that only the designated agent of a combined group may make estimated tax payments applicable to a combined return. This section provides exceptions to the general rule, explains the estimated tax requirements, and provides rules for applying estimated payments and overpayments.
Tax 2.66(2) (2) Separate estimated payments.
Tax 2.66(2)(a) (a) When separate estimated payments are allowed. Although the designated agent is always authorized to make estimated payments on behalf of any and all of its combined group members, a combined group member other than the designated agent may make estimated payments on its own behalf if any of the following apply:
Tax 2.66(2)(a)1. 1. For the first taxable year for which a combined group files a combined return, any member of the group may make estimated payments on its own behalf.
Tax 2.66(2)(a)2. 2. For the first taxable year for which a corporation is a member of a combined group, that corporation may make estimated payments on its own behalf.
Tax 2.66(2)(a)3. 3. Any combined group member may make estimated payments on its own behalf to the extent those payments relate to separate entity items.
Tax 2.66(2)(b) (b) Reporting of separate estimated payments. If a combined group member other than the designated agent makes separate estimated payments and applies those payments to the combined return, the designated agent shall notify the department of those payments on a department-prescribed form filed with the combined return. This notification authorizes the department to apply the separate estimated payments to the combined return.
Tax 2.66(3) (3) Determination of required estimated payments.
Tax 2.66(3)(a) (a) General. If a combined return is filed, the amount of any addition to tax under s. 71.84 (2), Stats., shall be computed as if the combined group were one corporation. “Tax shown on the return" and “tax for the taxable year" as defined in s. 71.29 (1) (b), Stats., have the same meaning with respect to a combined return as to a separate return.
Tax 2.66(3)(b) (b) Computation of thresholds. Since, as provided in par. (a), “tax shown on the return" has the same meaning with respect to a combined return as to a separate return, the amounts of the following thresholds are the same regardless of the number of combined group members included in the combined return:
Tax 2.66(3)(b)1. 1. Section 71.29 (7), Stats., which provides that no interest on underpayment is required if the tax shown on the return for the taxable year is less than $500.
Tax 2.66(3)(b)2. 2. Section 71.29 (9), Stats., which provides that for corporations that have Wisconsin net incomes of less than $250,000 and whose preceding taxable year was a 12-month taxable year, estimated payments may be based on the lesser of 90 percent of tax shown on the return for the current taxable year or the tax shown on the return for the preceding year.
Tax 2.66(3)(c) (c) Effect of separate entity items. The amount of net income and tax shown on a combined return includes net income and tax attributable to separate entity items. If the combined return includes separate entity items of a corporation that would otherwise be a combined group member except that it has no items that are subject to combination under the water's edge rules of s. Tax 2.61 (4), the corporation is considered a combined group member for purposes of determining required estimated payments.
Tax 2.66 Note Example: Combined Group AB consists of Member A and Member B. Group AB filed a combined return for calendar year 2010. The 2010 return includes $30,000 of net tax attributable to Member A's items and $20,000 attributable to Member B's items, including $5,000 attributable to B's separate entity items. The 2010 combined return also includes $10,000 of net tax from the separate entity items of Corporation C, which would be a combined group member except that none of its items are subject to combination under the water's edge rules. If Group AB is not eligible to base its estimated taxes on its 2009 net tax under the provisions of par. (b), Group AB's required estimated tax payments for purposes of its 2010 combined return are $54,000 (= ($30,000 + $20,000 + $10,000) x 90%).
Tax 2.66(3)(d) (d) Annualized income installment method. For purposes of the annualized income installment method provided in s. 71.29 (9) (c) and (10) (c), Stats., the previous year's apportionment percentage for a combined group equals the sum of the combined group members' modified sales factor numerators as determined under s. Tax 2.61 (7) (a) for the combined group's preceding taxable year, divided by the combined group's modified sales factor denominator as determined under s. Tax 2.61 (7) (b) for the combined group's preceding taxable year.
Tax 2.66(3)(e) (e) Change in membership. For purposes of applying par. (a) and except as provided in par. (f), the combined group's “tax shown on the return" for the current taxable year or the preceding taxable year is the tax shown on the combined return for the applicable year, without regard to corporations that have joined or left the group.
Tax 2.66 Note Example: Group JK files a combined return for the calendar year 2009. During 2010, Member J acquires L and L becomes a member of the combined group. If the group qualifies to determine its estimated tax obligations for 2010 based on its preceding year's tax liability, its preceding year's tax liability only includes the tax shown on Group JK's 2009 combined return; it does not include any tax liability from L's 2009 separate return.
Tax 2.66(3)(f) (f) First combined return year. The following rules apply to the computation of required estimated payments for the first year that a combined group files a combined return:
Tax 2.66(3)(f)1. 1. If the total of the combined group's Wisconsin net income reported on the combined return is less than $250,000, the required estimated payments may be based on the sum of the members' tax shown on their Wisconsin returns for the preceding year as provided by s. 71.29 (9) (a) 2., Stats., but only if all combined group members filed a Wisconsin return which covered a full 12 months in the preceding taxable year. If a member was included in the combined return of another combined group in the preceding taxable year, its tax shown on the return for that year is the tax attributable to the sum of its share of combined unitary income and income from separate entity items reported on that return.
Tax 2.66(3)(f)2. 2. If one or more combined group members did not file a Wisconsin return which covered 12 months in the preceding taxable year, the combined group shall base its required estimated payments on 90 percent of the tax shown on the combined return as provided under s. 71.29 (9) (a) 1. or (10) (b), Stats., as applicable.
Tax 2.66(3)(f)3. 3. The previous year's apportionment percentage for purposes of the annualized income installment method equals the sum of the current combined group members' apportionment factor numerators from their returns for the preceding taxable year, divided by the sum of the apportionment factor denominators from their returns for the preceding taxable year. If a member was included in the combined return of another combined group in the preceding taxable year, its apportionment percentage for this purpose is its modified sales factor numerator for that taxable year as determined under s. Tax 2.61 (7) (a), divided by its separate company denominator for that taxable year as determined under s. Tax 2.61 (7) (b).
Tax 2.66(3)(f)4. 4. For purposes of subds. 1. to 3., if a combined group member has a taxable year different than the combined group's taxable year, the member's preceding taxable year is its taxable year most recently ended before the first day of the combined group's taxable year.
Tax 2.66(4) (4) Rules for applying estimated payments and overpayments.
Tax 2.66(4)(a)(a) Separate returns filed in year following combined return year. If a combined group terminates and the former members properly file separate returns in the subsequent year, any combined estimated payments made for that year shall be credited against the separate tax liabilities of the former members of the combined group in the manner allocated by the designated agent. The designated agent shall notify the department of the manner in which the payments are to be allocated. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return.
Tax 2.66(4)(b) (b) Combined estimated payments but no combined return. If combined estimated payments are made for a taxable year but no combined return is filed for that year or for the previous year, the estimated payment shall only be credited to the corporation that made the payment.
Tax 2.66(4)(c) (c) Overpayments.
Tax 2.66(4)(c)1.1. If a combined group member has a credit for an overpayment of taxes from a prior taxable year when it was not a combined group member, the member may, through its designated agent, authorize the department to apply some or all of the credit against the total tax liability reported on the combined return. To carry out this authorization, the designated agent shall file a department-prescribed form with the combined return to notify the department of the amount to be applied. Alternatively, the member may file a claim for refund of the overpayment, in which case the overpayment shall be refunded to that member.
Tax 2.66(4)(c)2. 2. If a corporation leaves a combined group that has an overpayment of taxes carried over from a prior combined return year, the designated agent may allocate a portion of that overpayment to the former member. The designated agent shall notify the department of the amount to be allocated to the former member. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return.
Tax 2.66(4)(d) (d) Erroneous combined estimated payments. If a designated agent makes estimated payments on the erroneous premise that a corporation is an eligible member of the combined group, and discovers the error prior to the time the combined group and the corporation file their respective returns, the designated agent may allocate some or all of the combined estimated payments to the corporation. The designated agent shall notify the department of the amount to be allocated. The designated agent may make this notification in correspondence to the department unless the department prescribes a specific form for this purpose, in which case the prescribed form shall be used. In either case, the notification shall be submitted to the department separately from any return. The combined group and the corporation shall each compute their addition to tax under s. 71.84 (2), Stats., as if the estimated payments allocated to the corporation had actually been paid by it rather than by the combined group.
Tax 2.66(4)(e) (e) Erroneous separate estimated payments. If a corporation makes separate estimated payments on the erroneous premise that it is not a combined group member, the following rules apply:
Tax 2.66(4)(e)1. 1. If the corporation discovers the error prior to the time the designated agent files the combined return for the taxable year, and the corporation has not filed a separate return for the period that should have been included in that combined return or otherwise received a refund of the separate estimated payments, the corporation may apply the separate estimated payments to the combined return. The designated agent shall report the separate estimated payments in the manner described in sub. (2) (b).
Tax 2.66(4)(e)2. 2. If the corporation discovers the error prior to the time the designated agent files the combined return for the taxable year, but the corporation has already filed a separate return for the period that should have been included in the combined return, the corporation shall file an amended separate return showing no net income, overpayment, or underpayment, and stating that the corporation will join in the filing of a combined return and identifying the designated agent of the combined group. Unless the corporation specifies otherwise on the amended return, the department will not refund the erroneously paid amounts. When the designated agent files the combined return including that corporation, the corporation may apply the separate estimated payments to the combined return unless the corporation specified otherwise on its amended return or has otherwise received a refund of the separate estimated payments. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).
Tax 2.66(4)(e)3. 3. If the corporation discovers the error after the designated agent has filed the combined return for the taxable year, but the corporation has not filed a separate return or otherwise received a refund of the separate estimated payments, the designated agent shall file an amended combined return and apply the corporation's separate estimated payments to the amount due on the amended combined return. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).
Tax 2.66(4)(e)4. 4. If the corporation discovers the error after the designated agent has filed the combined return for the taxable year and after the corporation has already filed a separate return for the period that should have been included in the combined return, the corporation shall file an amended separate return and the combined group shall file an amended combined return. The provisions of subd. 2. apply with respect to the amended separate return. The corporation may apply the separate estimated payments to the amended combined return unless the corporation specified otherwise on its amended return or has otherwise received a refund of the separate estimated payments. The designated agent shall report the separate estimated payments so applied in the manner described in sub. (2) (b).
Tax 2.66 Note Note: If an allocation described in sub. (4) (a), (c) 2., or (d) is necessary and the department has not prescribed a form to use to notify the department of the allocation, send correspondence notifying the department of the allocation to: Corporation Processing Unit, Wisconsin Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908.
Tax 2.66 Note Note: Section Tax 2.66 interprets ss. 71.255 (7), 71.29, and 71.84 (2), Stats.
Tax 2.66 History History: EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10.
Tax 2.66 Annotation Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.65 for more information on the duties of the designated agent. See s. Tax 2.67 for more information on combined returns.
Tax 2.67 Tax 2.67 Combined returns.
Tax 2.67(1)(1)Scope. This section provides rules relating to the filing of combined returns by corporations required to use combined reporting under s. 71.255, Stats. This section explains the filing requirements for combined returns, provides rules relating to defining the taxable year included in a combined return, and describes how interest, penalties, and statutes of limitations apply to combined returns.
Tax 2.67(2) (2) Filing requirements for combined returns.
Tax 2.67(2)(a) (a) General. The designated agent of a combined group shall file a combined return on behalf of the group. For each combined group member included in the combined return, the combined return satisfies the member's requirement for filing returns under ss. 71.24 (1) or (1m) or 71.44 (1) or (1m), Stats., as applicable. The combined return shall be filed by the date provided in ss. 71.24 (1), (1m), and (7) or 71.44 (1), (1m), and (3), Stats., as applicable.
Tax 2.67(2)(b) (b) Electronic filing. All combined returns shall be filed electronically. The secretary of revenue may waive the requirement to file a combined return electronically when the secretary determines that the requirement causes an undue hardship, if the person requests the waiver in writing and clearly indicates why the requirement causes an undue hardship. In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors:
Tax 2.67(2)(b)1. 1. Unusual circumstances that may prevent the person from filing electronically.
Tax 2.67 Note Example: The person does not have access to a computer that is connected to the Internet.
Tax 2.67(2)(b)2. 2. Any other factor that the secretary determines is pertinent.
Tax 2.67 Note Note: Written requests should be e-mailed to DORWaiverRequest@revenue.wi.gov, faxed to (608) 267-1030, or addressed to Mandate Waiver Request, Wisconsin Department of Revenue, Mail Stop 5-77, P.O. Box 8949, Madison, WI 53708-8949.
Tax 2.67 Note Note: Forms not filed electronically may be delivered in person to the Department of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to the address specified on the form or in the instructions.
Tax 2.67(2)(c) (c) Components of combined return. A combined return shall include the following items, and shall be considered incomplete if any of these items are excluded:
Tax 2.67(2)(c)1. 1. One Wisconsin Form 6, Income or Franchise Tax Return, for the combined group as a whole.
Tax 2.67(2)(c)4. 4. If the combined group is using apportionment, one Form A-1, Apportionment Data for Single Factor Formulas, or Form A-2, Apportionment Data for Multiple Factor Formulas, per member as applicable.
Tax 2.67(2)(c)5. 5. Any other required supporting forms and schedules listed in s. Tax 2.03, as applicable. Unless stated otherwise in the instructions, supporting forms and schedules shall be prepared separately for each combined group member.
Tax 2.67(2)(c)6. 6. A copy of the complete federal return for each combined group member, including all supporting schedules and any amended returns, for the member's taxable year included in the combined return. For combined group members that also file in a federal consolidated return, any of the following alternatives shall be considered to satisfy this requirement:
Tax 2.67(2)(c)6.a. a. A copy of the federal consolidated return, including all supporting forms, schedules, and statements for each corporation included in the consolidated return, as submitted to the internal revenue service.
Tax 2.67(2)(c)6.b. b. Pro forma federal returns prepared separately for each combined group member, including all supporting forms and schedules prepared separately for each combined group member.
Tax 2.67(2)(c)6.c. c. A spreadsheet showing the line-by-line computation of taxable income of each combined group member included in the federal consolidated return, including consolidating adjustments, plus the supporting forms, schedules, and statements filed with the internal revenue service pertaining to each member. The supporting statements shall include balance sheets as of the beginning and end of the tax year, a reconciliation of income per books with income per return, and a reconciliation of retained earnings, to the extent the member was required to submit these items to the internal revenue service.
Tax 2.67(2)(c)7. 7. For combined groups that also file in a federal consolidated return, a copy of federal Form 851, Affiliations Schedule.
Tax 2.67(2)(d) (d) Separate entity items.
Tax 2.67(2)(d)1.1. Subject to the provisions of s. Tax 2.65 (3) (b), if any combined group member has separate entity items, the designated agent shall include those separate entity items in the combined return. If a corporation that would otherwise be a combined group member has no items that are subject to combination under the water's edge rules of s. Tax 2.61 (4), the designated agent may include that corporation's separate entity items in the combined return, in which case the combined return shall include the items specified in sub. (2) (c) 5. and 6. and subd. 3. for that corporation as if it is a combined group member. Alternatively, the corporation may file a separate Wisconsin return to report those items.
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.