LRBs0214/1
JK:cjs:jf
2001 - 2002 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 2,
TO 2001 ASSEMBLY BILL 380
October 25, 2001 - Offered by Representative Ziegelbauer.
AB380-ASA2,1,8
1An Act to renumber and amend 71.04 (4), 71.04 (8) (b), 71.25 (6), 71.25 (10)
2(b) and 71.45 (3) (b);
to amend 71.04 (5) (intro.), 71.04 (6) (intro.), 71.04 (7) (d),
371.04 (8) (c), 71.04 (10), 71.25 (7) (intro.), 71.25 (8) (intro.), 71.25 (9) (d), 71.25
4(10) (c), 71.25 (11), 71.45 (3) (intro.), 71.45 (3) (a) and 71.45 (3m); and
to create
571.04 (4) (a), 71.04 (4) (b), 71.04 (4) (c), 71.04 (4m), 71.25 (6) (a), 71.25 (6) (b),
671.25 (6) (c), 71.25 (6m), 71.45 (3d) and 71.45 (3e) of the statutes;
relating to:
7single sales factor apportionment of income for corporate income tax and
8franchise tax purposes and granting rule-making authority
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB380-ASA2, s. 1
9Section
1. 71.04 (4) of the statutes is renumbered 71.04 (4) (intro.) and
10amended to read:
AB380-ASA2,2,1711
71.04
(4) Nonresident allocation and apportionment formula. (intro.)
12Nonresident individuals and nonresident estates and trusts engaged in business
1within and without the state shall be taxed only on such income as is derived from
2business transacted and property located within the state. The amount of such
3income attributable to Wisconsin may be determined by an allocation and separate
4accounting thereof, when the business of such nonresident individual or nonresident
5estate or trust within the state is not an integral part of a unitary business, but the
6department of revenue may permit an allocation and separate accounting in any case
7in which it is satisfied that the use of such method will properly reflect the income
8taxable by this state. In all cases in which allocation and separate accounting is not
9permissible, the determination shall be made in the following manner: for all
10businesses except
air carriers, financial organizations,
pipeline companies, public
11utilities, railroads, sleeping car companies and car line companies there shall first
12be deducted from the total net income of the taxpayer the part thereof (less related
13expenses, if any) that follows the situs of the property or the residence of the
14recipient. The remaining net income shall be apportioned to
Wisconsin this state by
15use of
an apportionment fraction composed of a sales factor representing 50% of the
16fraction, a property factor representing 25% of the fraction and a payroll factor
17representing 25% of the fraction. the following:
AB380-ASA2,2,2219
71.04
(4) (a) For taxable years beginning before January 1, 2002, an
20apportionment fraction composed of a sales factor under sub. (7) representing 50%
21of the fraction, a property factor under sub. (5) representing 25% of the fraction, and
22a payroll factor under sub. (6) representing 25% of the fraction.
AB380-ASA2,2,2524
71.04
(4) (b) For taxable years beginning after December 31, 2001, an
25apportionment fraction composed of the sales factor under sub. (7).
AB380-ASA2,3,42
71.04
(4) (c) For taxable years beginning after December 31, 2001, 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.
AB380-ASA2,3,106
71.04
(4m) Apportionment formula computation. (a) 1. For taxable years
7beginning before January 1, 2002, if both the numerator and the denominator of the
8sales factor under sub. (7) related to a taxpayer's remaining net income are zero, the
9sales factor under sub. (7) is eliminated from the apportionment formula to
10determine the taxpayer's remaining net income under sub. (4).
AB380-ASA2,3,1411
2. For taxable years beginning after December 31, 2001, if both the numerator
12and the denominator of the sales factor under sub. (7) related to a taxpayer's
13remaining net income are zero, none of the taxpayer's remaining net income is
14apportioned to this state.
AB380-ASA2,3,1915
(b) 1. For taxable years beginning before January 1, 2002, if the numerator of
16the sales factor under sub. (7) related to a taxpayer's remaining net income is a
17negative number and the denominator of the sales factor under sub. (7) related to a
18taxpayer's remaining net income is a positive number, a negative number, or zero,
19the sales factor under sub. (7) is zero.
AB380-ASA2,3,2420
2. For taxable years beginning after December 31, 2001, if the numerator of the
21sales factor under sub. (7) related to a taxpayer's remaining net income is a negative
22number and the denominator of the sales factor under sub. (7) related to a taxpayer's
23remaining net income is a positive number, a negative number, or zero, none of the
24taxpayer's remaining net income is apportioned to this state.
AB380-ASA2,4,5
1(c) 1. For taxable years beginning before January 1, 2002, if the numerator of
2the sales factor under sub. (7) related to a taxpayer's remaining net income is a
3positive number and the denominator of the sales factor under sub. (7) related to a
4taxpayer's remaining net income is zero or a negative number, the sales factor under
5sub. (7) is one.
AB380-ASA2,4,106
2. For taxable years beginning after December 31, 2001, if the numerator of the
7sales factor under sub. (7) related to a taxpayer's remaining net income is a positive
8number and the denominator of the sales factor under sub. (7) related to a taxpayer's
9remaining net income is zero or a negative number, all of the taxpayer's remaining
10net income is apportioned to this state.
AB380-ASA2, s. 6
11Section
6. 71.04 (5) (intro.) of the statutes is amended to read:
AB380-ASA2,4,1312
71.04
(5) Property factor. (intro.) For purposes of sub. (4)
and for taxable
13years beginning before January 1, 2002:
AB380-ASA2, s. 7
14Section
7. 71.04 (6) (intro.) of the statutes is amended to read:
AB380-ASA2,4,1615
71.04
(6) Payroll factor. (intro.) For purposes of sub. (4)
and for taxable years
16beginning before January 1, 2002:
AB380-ASA2,4,2518
71.04
(7) (d) Sales, other than sales of tangible personal property, are in this
19state if the income-producing activity is performed in this state. If the
20income-producing activity is performed both in and outside this state the sales shall
21be divided between those states having jurisdiction to tax such business in
22proportion to the direct costs of performance incurred in each such state in rendering
23this service. Services performed in states which do not have jurisdiction to tax the
24business shall be deemed to have been performed in the state to which compensation
25is allocated by
sub. s. 71.04 (6)
, 1999 stats.
AB380-ASA2, s. 9
1Section
9. 71.04 (8) (b) of the statutes is renumbered 71.04 (8) (b) 1. and
2amended to read:
AB380-ASA2,5,93
71.04
(8) (b) 1.
"Public For taxable years beginning before January 1, 2002,
4"public utility", as used in this section, means
any business entity described under
5subd. 2. and any business entity which owns or operates any plant, equipment,
6property, franchise, or license for the transmission of communications or the
7production, transmission, sale, delivery, or furnishing of electricity, water or steam,
8the rates of charges for goods or services of which have been established or approved
9by a federal, state or local government or governmental agency.
"
Public
AB380-ASA2,5,15
102. In this section, for taxable years beginning after December 31, 2001, "public 11utility"
also means any business entity providing service to the public and engaged
12in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
13regardless of whether or not the entity's rates or charges for services have been
14established or approved by a federal, state or local government or governmental
15agency.
AB380-ASA2,5,2117
71.04
(8) (c) The net business income of railroads, sleeping car companies, car
18line companies,
pipeline companies, financial organizations
, air carriers and public
19utilities requiring apportionment shall be apportioned pursuant to rules of the
20department of revenue, but the income taxed is limited to the income derived from
21business transacted and property located within the state.
AB380-ASA2,6,823
71.04
(10) Department may waive factor. Where, in the case of any nonresident
24individual or nonresident estate or trust engaged in business
within in and
without
25the outside this state
of Wisconsin and required to apportion its income as provided
1in this section, it shall be shown to the satisfaction of the department of revenue that
2the use of any one of the 3 factors provided under sub. (4) gives an unreasonable or
3inequitable final average ratio because of the fact that such nonresident individual
4or nonresident estate or trust does not employ, to any appreciable extent in its trade
5or business in producing the income taxed, the factors made use of in obtaining such
6ratio, this factor may, with the approval of the department of revenue, be omitted in
7obtaining the final average ratio which is to be applied to the remaining net income.
8This subsection does not apply to taxable years beginning after December 31, 2001.
AB380-ASA2, s. 12
9Section
12. 71.25 (6) of the statutes is renumbered 71.25 (6) (intro.) and
10amended to read:
AB380-ASA2,7,511
71.25
(6) Allocation and separate accounting and apportionment formula. 12(intro.) Corporations engaged in business within and without the state shall be taxed
13only on such income as is derived from business transacted and property located
14within the state. The amount of such income attributable to Wisconsin may be
15determined by an allocation and separate accounting thereof, when the business of
16such corporation within the state is not an integral part of a unitary business, but
17the department of revenue may permit an allocation and separate accounting in any
18case in which it is satisfied that the use of such method will properly reflect the
19income taxable by this state. In all cases in which allocation and separate accounting
20is not permissible, the determination shall be made in the following manner: for all
21businesses except
air carriers, financial organizations,
pipeline companies, public
22utilities, railroads, sleeping car companies, car line companies and corporations or
23associations that are subject to a tax on unrelated business income under s. 71.26 (1)
24(a) there shall first be deducted from the total net income of the taxpayer the part
25thereof (less related expenses, if any) that follows the situs of the property or the
1residence of the recipient. The remaining net income shall be apportioned to
2Wisconsin this state by use of
an apportionment fraction composed of a sales factor
3under sub. (9) representing 50% of the fraction, a property factor under sub. (7)
4representing 25% of the fraction and a payroll factor under sub. (8) representing 25%
5of the fraction. the following:
AB380-ASA2,7,107
71.25
(6) (a) For taxable years beginning before January 1, 2002, an
8apportionment fraction composed of a sales factor under sub. (9) representing 50%
9of the fraction, a property factor under sub. (7) representing 25% of the fraction, and
10a payroll factor under sub. (8) representing 25% of the fraction.
AB380-ASA2,7,1312
71.25
(6) (b) For taxable years beginning after December 31, 2001, an
13apportionment fraction composed of the sales factor under sub. (9).
AB380-ASA2,7,1715
71.25
(6) (c) For taxable years beginning after December 31, 2001, the
16apportionment fraction for the remaining net income of a financial organization is
17composed of a sales factor, as determined by rule by the department.
AB380-ASA2,7,2319
71.25
(6m) Apportionment formula computation. (a) 1. For taxable years
20beginning before January 1, 2002, if both the numerator and the denominator of the
21sales factor under sub. (9) related to a taxpayer's remaining net income are zero, the
22sales factor under sub. (9) is eliminated from the apportionment formula to
23determine the taxpayer's remaining net income under sub. (6).
AB380-ASA2,8,224
2. For taxable years beginning after December 31, 2001, if both the numerator
25and the denominator of the sales factor under sub. (9) related to a taxpayer's
1remaining net income are zero, none of the taxpayer's remaining net income is
2apportioned to this state.
AB380-ASA2,8,73
(b) 1. For taxable years beginning before January 1, 2002, if the numerator of
4the sales factor under sub. (9) related to a taxpayer's remaining net income is a
5negative number and the denominator of the sales factor under sub. (9) related to a
6taxpayer's remaining net income is a positive number, a negative number, or zero,
7the sales factor under sub. (9) is zero.
AB380-ASA2,8,128
2. For taxable years beginning after December 31, 2001, if the numerator of the
9sales factor under sub. (9) related to a taxpayer's remaining net income is a negative
10number and the denominator of the sales factor under sub. (9) related to a taxpayer's
11remaining net income is a positive number, a negative number, or zero, none of the
12taxpayer's remaining net income is apportioned to this state.
AB380-ASA2,8,1713
(c) 1. For taxable years beginning before January 1, 2002, if the numerator of
14the sales factor under sub. (9) related to a taxpayer's remaining net income is a
15positive number and the denominator of the sales factor under sub. (9) related to a
16taxpayer's remaining net income is zero or a negative number, the sales factor under
17sub. (9) is one.
AB380-ASA2,8,2218
2. For taxable years beginning after December 31, 2001, if the numerator of the
19sales factor under sub. (9) related to a taxpayer's remaining net income is a positive
20number and the denominator of the sales factor under sub. (9) related to a taxpayer's
21remaining net income is zero or a negative number, all of the taxpayer's remaining
22net income is apportioned to this state.
AB380-ASA2, s. 17
23Section
17. 71.25 (7) (intro.) of the statutes is amended to read:
AB380-ASA2,8,2524
71.25
(7) Property factor. (intro.) For purposes of sub.
(5) (6) and for taxable
25years beginning before January 1, 2002:
AB380-ASA2, s. 18
1Section
18. 71.25 (8) (intro.) of the statutes is amended to read:
AB380-ASA2,9,32
71.25
(8) Payroll factor. (intro.) For purposes of sub.
(5) (6) and for taxable
3years beginning before January 1, 2002:
AB380-ASA2,9,125
71.25
(9) (d) Sales, other than sales of tangible personal property, are in this
6state if the income-producing activity is performed in this state. If the
7income-producing activity is performed both in and outside this state the sales shall
8be divided between those states having jurisdiction to tax such business in
9proportion to the direct costs of performance incurred in each such state in rendering
10this service. Services performed in states which do not have jurisdiction to tax the
11business shall be deemed to have been performed in the state to which compensation
12is allocated by
sub. s. 71.25 (8)
, 1999 stats.