SB52,1,5 1An Act to amend 71.04 (4) (a), 71.04 (4) (b), 71.04 (4) (c), 71.04 (4) (d), 71.04 (4)
2(e), 71.25 (6) (a), 71.25 (6) (b), 71.25 (6) (c), 71.25 (6) (d), 71.25 (6) (e), 71.45 (3d)
3(a), 71.45 (3d) (b) and 71.45 (3d) (c); and to create 71.04 (4) (f), 71.25 (6) (f) and
471.45 (3d) (d) of the statutes; relating to: apportioning remaining net income
5by using a single sales factor based on creating and retaining new jobs.
Analysis by the Legislative Reference Bureau
Under current law, for purposes of computing corporate income taxes and
franchise taxes, a formula is used to attribute a portion of a corporation's income to
this state. The formula has three factors: a sales factor, a property factor, and a
payroll factor. The sales factor represents 50 percent of the formula and the property
and payroll factors each represent 25 percent of the formula. For purposes of
computing income taxes and franchise taxes for an insurance company, a formula
with a premium factor and a payroll factor is used to attribute a portion of an
insurance company's income to this state.
Under current law, beginning on January 1, 2008, the sales factor will be the
only factor used to attribute a portion of a corporation's income to this state. The
property and payroll factors will be decreased, and eventually phased out, over four
years as the sales factor is increased and becomes the only factor. Beginning on
January 1, 2008, the premium factor will be the only factor used to attribute a portion
of an insurance company's income to this state. The payroll factor will be decreased,
and eventually phased out, over four years as the premium factor is increased and
becomes the only factor.

Under this bill, a corporation may use only the sales factor to attribute a portion
of the corporation's income to this state before taxable years beginning on January
1, 2008, if the corporation has a net gain of 100 employees in the taxable year and
retains the employees for three consecutive years.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB52, s. 1 1Section 1. 71.04 (4) (a) of the statutes is amended to read:
SB52,2,62 71.04 (4) (a) For Except as provided in par. (f), for taxable years beginning
3before January 1, 2006, an apportionment fraction composed of a sales factor under
4sub. (7) representing 50% 50 percent of the fraction, a property factor under sub. (5)
5representing 25% 25 percent of the fraction, and a payroll factor under sub. (6)
6representing 25% 25 percent of the fraction.
SB52, s. 2 7Section 2. 71.04 (4) (b) of the statutes is amended to read:
SB52,2,128 71.04 (4) (b) For Except as provided in par. (f), for taxable years beginning after
9December 31, 2005, and before January 1, 2007, an apportionment fraction
10composed of a sales factor under sub. (7) representing 60% 60 percent of the fraction,
11a property factor under sub. (5) representing 20% 20 percent of the fraction, and a
12payroll factor under sub. (6) representing 20% 20 percent of the fraction.
SB52, s. 3 13Section 3. 71.04 (4) (c) of the statutes is amended to read:
SB52,2,1814 71.04 (4) (c) For Except as provided in par. (f), for taxable years beginning after
15December 31, 2006, and before January 1, 2008, an apportionment fraction
16composed of a sales factor under sub. (7) representing 80% 80 percent of the fraction,
17a property factor under sub. (5) representing 10% 10 percent of the fraction, and a
18payroll factor under sub. (6) representing 10% 10 percent of the fraction.
SB52, s. 4 19Section 4. 71.04 (4) (d) of the statutes is amended to read:
SB52,3,3
171.04 (4) (d) For Except as provided in par. (f), for taxable years beginning after
2December 31, 2007, an apportionment fraction composed of the sales factor under
3sub. (7).
SB52, s. 5 4Section 5. 71.04 (4) (e) of the statutes is amended to read:
SB52,3,115 71.04 (4) (e) For Except as provided in par. (f), for taxable years beginning after
6December 31, 2005, and before January 1, 2008, the apportionment fraction for the
7remaining net income of a financial organization shall include a sales factor that
8represents more than 50% 50 percent of the apportionment fraction, as determined
9by rule by the department. For taxable years beginning after December 31, 2007, the
10apportionment fraction for the remaining net income of a financial organization is
11composed of a sales factor, as determined by rule by the department.
SB52, s. 6 12Section 6. 71.04 (4) (f) of the statutes is created to read:
SB52,3,2313 71.04 (4) (f) If a taxpayer who is subject to apportionment under this subsection
14has a net gain of 100 employees in this state in any taxable year beginning after the
15effective date of this paragraph .... [revisor inserts date], and before January 1, 2008,
16the taxpayer's remaining net income may, at the taxpayer's option, be apportioned
17to this state by an apportionment fraction composed of the sales factor under sub. (7)
18or, for a financial organization, under par. (e) beginning with the taxable year in
19which the employees are hired, except that, if the taxpayer does not retain the net
20gain of employees in this state for at least 3 consecutive taxable years, or until
21January 1, 2008, the taxpayer shall apportion the taxpayer's remaining net income
22as provided under pars. (a) to (e), as appropriate, and shall file amended returns to
23reflect the change of apportionment.
SB52, s. 7 24Section 7. 71.25 (6) (a) of the statutes is amended to read:
SB52,4,5
171.25 (6) (a) For Except as provided in par. (f), for taxable years beginning
2before January 1, 2006, an apportionment fraction composed of a sales factor under
3sub. (9) representing 50% 50 percent of the fraction, a property factor under sub. (7)
4representing 25% 25 percent of the fraction, and a payroll factor under sub. (8)
5representing 25% 25 percent of the fraction.
SB52, s. 8 6Section 8. 71.25 (6) (b) of the statutes is amended to read:
SB52,4,117 71.25 (6) (b) For Except as provided in par. (f), for taxable years beginning after
8December 31, 2005, and before January 1, 2007, an apportionment fraction
9composed of a sales factor under sub. (9) representing 60% 60 percent of the fraction,
10a property factor under sub. (7) representing 20% 20 percent of the fraction, and a
11payroll factor under sub. (8) representing 20% 20 percent of the fraction.
SB52, s. 9 12Section 9. 71.25 (6) (c) of the statutes is amended to read:
SB52,4,1713 71.25 (6) (c) For Except as provided in par. (f), for taxable years beginning after
14December 31, 2006, and before January 1, 2008, an apportionment fraction
15composed of a sales factor under sub. (9) representing 80% 80 percent of the fraction,
16a property factor under sub. (7) representing 10% 10 percent of the fraction, and a
17payroll factor under sub. (8) representing 10% 10 percent of the fraction.
SB52, s. 10 18Section 10. 71.25 (6) (d) of the statutes is amended to read:
SB52,4,2119 71.25 (6) (d) For Except as provided in par. (f), for taxable years beginning after
20December 31, 2007, an apportionment fraction composed of the sales factor under
21sub. (9).
SB52, s. 11 22Section 11. 71.25 (6) (e) of the statutes is amended to read:
SB52,5,423 71.25 (6) (e) For Except as provided in par. (f), for taxable years beginning after
24December 31, 2005, and before January 1, 2008, the apportionment fraction for the
25remaining net income of a financial organization shall include a sales factor that

1represents more than 50% 50 percent of the apportionment fraction, as determined
2by rule by the department. For taxable years beginning after December 31, 2007, the
3apportionment fraction for the remaining net income of a financial organization is
4composed of a sales factor, as determined by rule by the department.
SB52, s. 12 5Section 12. 71.25 (6) (f) of the statutes is created to read:
SB52,5,166 71.25 (6) (f) If a taxpayer who is subject to apportionment under this subsection
7has a net gain of 100 employees in this state in any taxable year beginning after the
8effective date of this paragraph .... [revisor inserts date], and before January 1, 2008,
9the taxpayer's remaining net income may, at the taxpayer's option, be apportioned
10to this state by an apportionment fraction composed of the sales factor under sub. (9)
11or, for a financial organization, under par. (e) beginning with the taxable year in
12which the employees are hired, except that, if the taxpayer does not retain the net
13gain of employees in this state for at least 3 consecutive taxable years, or until
14January 1, 2008, the taxpayer shall apportion the taxpayer's remaining net income
15as provided under pars. (a) to (e), as appropriate, and shall file amended returns to
16reflect the change of apportionment.
SB52, s. 13 17Section 13. 71.45 (3d) (a) of the statutes is amended to read:
SB52,5,2418 71.45 (3d) (a) For Except as provided in par. (d), for taxable years beginning
19after December 31, 2005, and before January 1, 2007, a domestic insurer that is
20subject to apportionment under sub. (3) and this subsection shall multiply the net
21income figure derived by the application of sub. (2) by an apportionment fraction
22composed of the percentage under sub. (3) (a) representing 60% 60 percent of the
23fraction and the percentage under sub. (3) (b) 1. representing 40% 40 percent of the
24fraction.
SB52, s. 14 25Section 14. 71.45 (3d) (b) of the statutes is amended to read:
SB52,6,7
171.45 (3d) (b) For Except as provided in par. (d), for taxable years beginning
2after December 31, 2006, and before January 1, 2008, a domestic insurer that is
3subject to apportionment under sub. (3) and this subsection shall multiply the net
4income figure derived by the application of sub. (2) by an apportionment fraction
5composed of the percentage under sub. (3) (a) representing 80% 80 percent of the
6fraction and the percentage under sub. (3) (b) 1. representing 20% 20 percent of the
7fraction.
SB52, s. 15 8Section 15. 71.45 (3d) (c) of the statutes is amended to read:
SB52,6,129 71.45 (3d) (c) For Except as provided in par. (d), for taxable years beginning
10after December 31, 2007, a domestic insurer that is subject to apportionment under
11sub. (3) and this subsection shall multiply the net income figure derived by the
12application of sub. (2) by the percentage under sub. (3) (a).
SB52, s. 16 13Section 16. 71.45 (3d) (d) of the statutes is created to read:
SB52,6,2314 71.45 (3d) (d) If a taxpayer who is subject to apportionment under sub. (3) has
15a net gain of 100 employees in this state in any taxable year beginning after the
16effective date of this paragraph .... [revisor inserts date], and before January 1, 2008,
17the taxpayer's remaining net income may, at the taxpayer's option, be apportioned
18to this state by an apportionment fraction composed of the percentage under sub. (3)
19(a) beginning with the taxable year in which the employees are hired, except that,
20if the taxpayer does not retain the net gain of employees in this state for at least 3
21consecutive taxable years, or until January 1, 2008, the taxpayer shall apportion the
22taxpayer's remaining net income as provided under pars. (a) to (c), as appropriate,
23and shall file amended returns to reflect the change of apportionment.
SB52,6,2424 (End)
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