SB45: Bill Text

SB45,852,2 71.06 (2e) Bracket indexing. For taxable years beginning after December 31, 1998, and before January 1, 2000, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2) (c) and (d), and for taxable years beginning after December 31, 2001, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1p) and (2) (g) and (h), shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the year before the previous year, as determined by the federal department of labor. Each amount that is revised under this subsection shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subsection and incorporate the changes into the income tax forms and instructions.

SB45, s. 1704 Section 1704. 71.06 (2m) of the statutes is amended to read:

SB45,852,7 71.06 (2m) Rate changes. If a rate under sub. (1), (1m), (1n), (1p) or (2) changes during a taxable year, the taxpayer shall compute the tax for that taxable year by the methods applicable to the federal income tax under section 15 of the internal revenue code.

SB45, s. 1705 Section 1705. 71.06 (2s) (b) of the statutes is amended to read:

SB45,852,21 71.06 (2s) (b) For taxable years beginning after December 31, 1997, and before January 1, 2000, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1m) and (2) (c) and (d) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1m) and (2) (c) and (d) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

SB45, s. 1706 Section 1706. 71.06 (2s) (c) of the statutes is created to read:

SB45,853,10 71.06 (2s) (c) For taxable years beginning after December 31, 1999, and before January 1, 2001, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1n) and (2) (e) and (f) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1n) and (2) (e) and (f) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

SB45, s. 1707 Section 1707. 71.06 (2s) (d) of the statutes is created to read:

SB45,853,24 71.06 (2s) (d) For taxable years beginning after December 31, 2000, with respect to nonresident individuals, including individuals changing their domicile into or from this state, the tax brackets under subs. (1p) and (2) (g) and (h) shall be multiplied by a fraction, the numerator of which is Wisconsin adjusted gross income and the denominator of which is federal adjusted gross income. In this paragraph, for married persons filing separately "adjusted gross income" means the separate adjusted gross income of each spouse, and for married persons filing jointly "adjusted gross income" means the total adjusted gross income of both spouses. If an individual and that individual's spouse are not both domiciled in this state during the entire taxable year, the tax brackets under subs. (1p) and (2) (g) and (h) on a joint return shall be multiplied by a fraction, the numerator of which is their joint Wisconsin adjusted gross income and the denominator of which is their joint federal adjusted gross income.

SB45, s. 1708 Section 1708. 71.07 (2dj) (am) 3. of the statutes is amended to read:

SB45,854,3 71.07 (2dj) (am) 3. Modify the rule for certification under section 51 (d) (16) (A) of the internal revenue code to allow certification within the 90-day period beginning with the first day of employment of the employe by the claimant.

SB45, s. 1709 Section 1709. 71.07 (2dx) (b) 4. of the statutes is amended to read:

SB45,854,10 71.07 (2dx) (b) 4. The amount determined by multiplying the amount determined under s. 560.785 (1) (b) (bm) by the number of full-time jobs retained, as provided in the rules under s. 560.785, excluding jobs for which a credit has been claimed under sub. (2dj), in a an enterprise development zone under s. 560.797 and filled by a member of a targeted group for which significant capital investment was made and by then subtracting the subsidies paid under s. 49.147 (3) (a) for those jobs.

SB45, s. 1710 Section 1710. 71.07 (3) of the statutes is amended to read:

SB45,854,14 71.07 (3) Farmland preservation credit , farmland preservation acreage credit. The farmland preservation credit and the farmland preservation acreage credit under subch. IX may be claimed against taxes otherwise due.

SB45, s. 1711 Section 1711. 71.07 (5) (a) 7. of the statutes is created to read:

SB45,854,18 71.07 (5) (a) 7. Miscellaneous itemized deductions under the Internal Revenue Code, without regard to whether such deductions are subject to the 2% floor as described in section 67 of the Internal Revenue Code.

SB45, s. 1712 Section 1712. 71.07 (5) (a) 8. of the statutes is created to read:

SB45,854,22 71.07 (5) (a) 8. Any employment-related educational expense that is claimed as an itemized deduction under the Internal Revenue Code to the extent that such an amount is also claimed as a subtract modification under s. 71.05 (6) (b) 28.

SB45, s. 1713 Section 1713. 71.07 (5m) (e) of the statutes is created to read:

SB45,854,25 71.07 (5m) (e) Sunset. No new claim may be filed under this subsection for a taxable year that begins after December 31, 1999.

SB45, s. 1714 Section 1714. 71.07 (6) (am) 2. c. of the statutes is amended to read:

SB45,855,4 71.07 (6) (am) 2. c. For taxable years beginning after December 31, 1999, and before January 1, 2001, 2.75% of the earned income of the spouse with the lower earned income, but not more than $385 $440.

SB45, s. 1715 Section 1715. 71.07 (6) (am) 2. d. of the statutes is amended to read:

SB45,855,8 71.07 (6) (am) 2. d. For taxable years beginning after December 31, 2000, 3% of the earned income of the spouse with the lower earned income, but not more than $420 $480.

SB45, s. 1716 Section 1716. 71.07 (8) (d) of the statutes is created to read:

SB45,855,11 71.07 (8) (d) No new claim may be filed under this subsection for a taxable year that begins after December 31, 1999.

SB45, s. 1717 Section 1717. 71.07 (9) (g) of the statutes is created to read:

SB45,855,14 71.07 (9) (g) No new claim may be filed under this subsection for a taxable year that begins after December 31, 1999.

SB45, s. 1718 Section 1718. 71.07 (9e) (af) (intro.) of the statutes is amended to read:

SB45,855,20 71.07 (9e) (af) (intro.) For taxable years beginning after December 31, 1995, and subject to par. (afm), any natural person may credit against the tax imposed under s. 71.02 an amount equal to one of the following percentages of the federal basic earned income credit for which the person is eligible for the taxable year under section 32 (b) (1) (A) to (C) of the internal revenue code:

SB45, s. 1719 Section 1719. 71.07 (9e) (afm) of the statutes is created to read:

SB45,856,2 71.07 (9e) (afm) If a natural person who is otherwise eligible for the credit under this subsection is also participating in Wisconsin works under s. 49.147 (4) (c), the credit that such a natural person may claim under par. (af) shall be calculated as if the calculation of the person's federal basic earned income credit described in par. (af) did not include wages that the person received from a wage-paying community service job under s. 49.147 (4) (c).

SB45, s. 1720 Section 1720. 71.10 (4) (i) of the statutes is amended to read:

SB45,856,9 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit and farmland preservation acreage credit under subch. IX, homestead credit under subch. VIII, farmland tax relief credit under s. 71.07 (3m), farmers' drought property tax credit under s. 71.07 (2fd), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

SB45, s. 1721 Section 1721. 71.125 of the statutes is amended to read:

SB45,856,14 71.125 Imposition of tax. (1) Except as provided in sub. (2), the tax imposed by this chapter on individuals and the rates under s. 71.06 (1), (1m) , (1n), (1p) and (2) shall apply to the Wisconsin taxable income of estates or trusts, except nuclear decommissioning trust or reserve funds, and that tax shall be paid by the fiduciary.

SB45,856,19 (2) Each electing small business trust, as defined in section 1361 (e) (1) of the Internal Revenue Code, is subject to tax at the highest rate under s. 71.06 (1) or under s. 71.06, (1m), (1n) or (1p), whichever taxable year is applicable, on its income as computed under section 641 of the Internal Revenue Code, as modified by s. 71.05 (6) to (12), (19) and (20).

SB45, s. 1722 Section 1722. 71.17 (6) of the statutes is amended to read:

SB45,856,24 71.17 (6) Funeral trusts. If a qualified funeral trust makes the election under section 685 of the Internal Revenue Code for federal income tax purposes, that election applies for purposes of this chapter and each trust shall compute its own tax and shall apply the rates under s. 71.06 (1) and, (1m), (1n) or (1p).

SB45, s. 1723 Section 1723. 71.23 (3) (d) of the statutes is created to read:

SB45,857,5 71.23 (3) (d) The storage for any length of time in this state in or on property owned by a person other than the foreign corporation of its tangible personal property and the transfer of possession to another person in this state when the tangible personal property is for fabricating, processing, manufacturing or printing by that other person in this state.

SB45, s. 1724 Section 1724. 71.25 (5) (a) (intro.) of the statutes is amended to read:

SB45,857,12 71.25 (5) (a) Apportionable income. (intro.) Except as provided in sub. (6), corporations engaged in business both within and without this state are subject to apportionment. Income, gain or loss from the sources listed in this paragraph is presumed apportionable. Apportionable income includes all income or loss of corporations, other than nonapportionable income as specified in par. (b), including, but not limited to, income, gain or loss from the following sources:

SB45, s. 1725 Section 1725. 71.25 (5) (a) 9. of the statutes is amended to read:

SB45,857,22 71.25 (5) (a) 9. Interest and dividends if the operations of the payer are unitary with those of the payee, or if those operations are not unitary but the investment activity from which that income is derived is an integral part of a unitary business and the payer and payee are neither affiliates nor related as parent company and subsidiary. In this subdivision, "investment activity" includes decision making relating to the purchase and sale of stocks and other securities, investing surplus funds and the management and record keeping associated with corporate investments, not including activities of a broker or other agent in maintaining an investment portfolio.

SB45, s. 1726 Section 1726. 71.25 (5) (a) 10. of the statutes is amended to read:

SB45,858,4 71.25 (5) (a) 10. Sale of intangible assets if the operations of the company in which the investment was made were unitary with those of the investing company, or if those operations were not unitary but the investment activity from which that gain or loss was derived is an integral part of a unitary business and the companies were neither affiliates nor related as parent company and subsidiary. In this subdivision, "investment activity" has the meaning given under subd. 9.

SB45, s. 1727 Section 1727. 71.25 (5) (b) 1. of the statutes is renumbered 71.25 (5) (b).

SB45, s. 1728 Section 1728. 71.25 (5) (b) 2. of the statutes is repealed.

SB45, s. 1729 Section 1729. 71.25 (6) of the statutes is amended to read:

SB45,859,4 71.25 (6) Allocation and separate accounting and apportionment formula. Corporations engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such corporation within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except financial organizations, public utilities, railroads, sleeping car companies, car line companies and corporations or associations that are subject to a tax on unrelated business income under s. 71.26 (1) (a) there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The For taxable years beginning before January 1, 2000, the remaining net income shall be apportioned to Wisconsin this state by use of an apportionment fraction composed of a sales factor under sub. (9) representing 50% of the fraction, a property factor under sub. (7) representing 25% of the fraction and a payroll factor under sub. (8) representing 25% of the fraction. For taxable years beginning on or after January 1, 2000, the remaining net income shall be apportioned to this state by use of an apportionment fraction composed of the sales factor under sub. (9).

SB45, s. 1730 Section 1730. 71.25 (7) (intro.) of the statutes is amended to read:

SB45,859,7 71.25 (7) Property factor. (intro.) For purposes of sub. (5) and for taxable years beginning before January 1, 2000:

SB45, s. 1731 Section 1731. 71.25 (8) (intro.) of the statutes is amended to read:

SB45,859,10 71.25 (8) Payroll factor. (intro.) For purposes of sub. (5) and for taxable years beginning before January 1, 2000:

SB45, s. 1732 Section 1732. 71.25 (9) (d) of the statutes is amended to read:

SB45,859,20 71.25 (9) (d) Sales, other than sales of tangible personal property, are in this state if the income-producing activity is performed in this state. If the income-producing activity is performed both in and outside this state the sales shall be divided between those states having jurisdiction to tax such business in proportion to the direct costs of performance incurred in each such state in rendering this service. Services performed in states which do not have jurisdiction to tax the business shall be deemed to have been performed in the state to which compensation is allocated by sub. (8). This paragraph does not apply to taxable years beginning after December 31, 1999.

SB45, s. 1733 Section 1733. 71.25 (9) (dc) of the statutes is created to read:

SB45,859,25 71.25 (9) (dc) For taxable years beginning after December 31, 1999, sales, rents, royalties, and other income from real property, and the receipts from the lease or rental of tangible personal property are attributed to the state in which the property is located.

SB45, s. 1734 Section 1734. 71.25 (9) (dg) of the statutes is created to read:

SB45,860,6 71.25 (9) (dg) For taxable years beginning after December 31, 1999, receipts from the lease or rental of moving property including but not limited to motor vehicles, rolling stock, aircraft, vessels, or mobile equipment are included in the numerator of the sales factor under par. (a) to the extent that the property is used in this state. The use of moving property in this state is determined as follows:

SB45,860,8 1. A motor vehicle is used in this state if it is registered in this state and used wholly in this state.

SB45,860,12 2. The use of rolling stock in this state is determined by multiplying the receipts from the lease or rental of the rolling stock by a fraction having as a numerator the miles traveled within this state by the leased or rented rolling stock and having as a denominator the total miles traveled by the leased or rented rolling stock.

SB45,860,16 3. The use of an aircraft in this state is determined by multiplying the receipts from the lease or rental of the aircraft by a fraction having as a numerator the number of landings of the aircraft in this state and having as a denominator the total number of landings anywhere of the aircraft.

SB45,860,22 4. The use of a vessel, mobile equipment or other mobile property in this state is determined by multiplying the receipts from the lease or rental of the property by a fraction having as a numerator the number of days in the taxable year that the vessel, mobile equipment or other mobile property was in this state and having as a denominator the number of days in the taxable year that the vessel, mobile equipment or other mobile property was rented or leased.

SB45, s. 1735 Section 1735. 71.25 (9) (dn) of the statutes is created to read:

SB45,861,10 71.25 (9) (dn) 1. For taxable years beginning after December 31, 1999, royalties and other income received for the use of intangible property are attributed to the state where the purchaser uses the intangible property. If intangible property is used in more than one state, the royalties and other income received for the use of the intangible property shall be apportioned to this state according to the portion of the intangible property's use in this state. If the portion of intangible property's use in this state cannot be determined, the royalties and other income received for the use of intangible property shall be excluded from the numerator and the denominator of the sales factor under par. (a). Intangible property is used in this state if a purchaser uses the intangible property or uses the rights to intangible property in the regular course of the purchaser's business in this state, regardless of where the purchaser's customers are located.

SB45,861,20 2. For taxable years beginning after December 31, 1999, sales of intangible property are attributed to the state where a purchaser uses the intangible property. If intangible property is used in more than one state, the sales of the intangible property shall be apportioned to this state according to the portion of the intangible property's use in this state. If the portion of intangible property's use in this state cannot be determined, the sales of the intangible property shall be excluded from the numerator and the denominator of the sales factor under par. (a). Intangible property is used in this state if a purchaser uses the intangible property in the regular course of the purchaser's business in this state, regardless of where the purchaser's customers are located.

SB45, s. 1736 Section 1736. 71.25 (9) (dr) of the statutes is created to read:

SB45,862,7 71.25 (9) (dr) For taxable years beginning after December 31, 1999, receipts from the performance of services are attributed to the state where the purchaser received the benefit of the services. If a purchaser receives the benefit of a service in more than one state, the receipts from the performance of the service are included in the numerator of the sales factor under par. (a) according to the portion of the benefit of the service received in this state. If the state where a purchaser received the benefit of a service cannot be determined, the benefit of a service is received in the state where the purchaser, in the regular course of the purchaser's business, ordered the service. If the state where a purchaser ordered a service cannot be determined, the benefit of the service is received in the state where the purchaser, in the regular course of the purchaser's business, receives a bill for the service.

SB45, s. 1737 Section 1737. 71.25 (9) (e) (title) of the statutes is repealed.

SB45, s. 1738 Section 1738. 71.25 (9) (f) (title) of the statutes is repealed.

SB45, s. 1739 Section 1739. 71.255 of the statutes is created to read:

SB45,862,11 71.255 Combined reporting. (1) Definitions. In this section:

SB45,862,12 (a) "Affiliated group" means any of the following:

SB45,862,18 1. A parent corporation and any corporation or chain of corporations that are connected to the parent corporation by ownership by the parent corporation if the parent corporation owns stock representing at least 50% of the voting stock of at least one of the connected corporations or if the parent corporation or any of the connected corporations owns stock that cumulatively represents at least 50% of the voting stock of each of the connected corporations.

SB45,862,20 2. Any 2 or more corporations if a common owner owns stock representing at least 50% of the voting stock of the corporations or the connected corporations.

SB45,862,24 3. A partnership, limited liability company or tax-option corporation if a parent corporation or any corporation connected to the parent corporation by common ownership owns shares representing at least 50% of the shares of the partnership, limited liability company or tax-option corporation.

SB45,863,2 4. Any 2 or more corporations if stock representing at least 50% of the voting stock in each corporation are interests that cannot be separately transferred.

SB45,863,7 5. Any 2 or more corporations if stock representing at least 50% of the voting stock is directly owned by, or for the benefit of, family members. In this subdivision, "family members" means an individual or a spouse related by blood, marriage or adoption within the 2nd degree of kinship as computed under s. 852.03 (2), 1995 stats.

SB45,863,11 (b) "Combined report" means a form prescribed by the department that shows the calculations under this section to divide the income of an affiliated group conducting a unitary business among the jurisdictions where the affiliated group conducts its trade or business.

SB45,863,12 (c) "Corporation" has the meaning given in s. 71.22 (1) or 71.42 (1).

SB45,863,13 (d) "Department" means the department of revenue.

SB45,863,17 (e) "Intercompany transaction" means a transaction between corporations, partnerships, limited liability companies or tax-option corporations that become members of the same affiliated group that is engaged in a unitary business immediately after the transaction.

SB45,863,19 (f) "Partnership" means any entity considered a partnership under section 7701 of the Internal Revenue Code.

SB45,864,3 (g) "Unitary business" means 2 or more businesses that have common ownership or are integrated with or dependent upon each other. Two or more businesses are presumed to be a unitary business if the businesses have centralized management or a centralized executive force; centralized purchasing, advertising or accounting; intercorporate sales or leases; intercorporate services; intercorporate debts; intercorporate use of proprietary materials; interlocking directorates or interlocking corporate officers; or if a business conducted in this state is owned by a person that conducts a business entirely outside of this state that is different from the business conducted in this state.

SB45,864,13 (2) Corporations required to use combined reporting. A corporation that is subject to tax under s. 71.23 (1) or (2) or 71.43, that is a member of an affiliated group and that is engaged in a unitary business with one or more members of the affiliated group shall compute the corporation's income using the combined reporting method under this section. Any corporation, regardless of the country where the corporation is organized or incorporated or conducts business, and any tax-option corporation, if the department determines that combined reporting is necessary to accurately report the income of the tax-option corporation apportioned to this state, shall file a combined report if the corporation is a member of an affiliated group that is engaged in a unitary business.

SB45,865,2 (3) Accounting period. For purposes of this section, the income under ss. 71.26, 71.34 and 71.45, the apportionment factors under ss. 71.25 and 71.45 and the tax credits under ss. 71.28 and 71.47 of all corporations that are members of an affiliated group and that are engaged in a unitary business shall be determined by using the same accounting period. If the affiliated group that is engaged in a unitary business has a common parent corporation, the accounting period of the common parent corporation shall be used to determine the income, the apportionment factors and the tax credits of all the corporations that are members of the affiliated group that is engaged in a unitary business. If the affiliated group that is engaged in a unitary business has no common parent corporation, the income, the apportionment factors and the tax credits of the affiliated group that is engaged in a unitary business shall be determined using the accounting period of the member of the affiliated group that has the most significant operations on a recurring basis in this state.