Amendment SA2-SSA1-SB55

SB55-SSA1-SA2,268,6 " Section 2150d. 71.07 (9t) of the statutes is created to read:

SB55-SSA1-SA2,268,8 71.07 (9t) Artistic endowment credit. (a) Definition. In this subsection, "claimant" means a person who files a claim under this subsection.

SB55-SSA1-SA2,268,16 (b) Filing claims. For taxable years beginning after December 31, 2002, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 25% of the amount contributed to the artistic endowment fund under s. 25.78, up to a maximum $50 contribution in a taxable year for a claimant who claims the credit as an individual or claims the credit as a married person who files a separate income tax return, up to a maximum $100 contribution in a taxable year for a claimant and a claimant's spouse who file a joint return.

SB55-SSA1-SA2,268,18 (c) Limitations and conditions. 1. Nonresidents of this state are not eligible for the credit under this subsection, except as provided under subd. 2.

SB55-SSA1-SA2,269,4 2. For a claimant who is a part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant's spouse is a nonresident or if the claimant or the claimant's spouse, or both, are part-year residents of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.

SB55-SSA1-SA2,269,7 3. No new claim may be filed under this subsection for a taxable year that begins after December 31 of the year in which the department determines that the total amount of revenues received by the endowment fund equals $50,150,000.

SB55-SSA1-SA2,269,9 4. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

SB55-SSA1-SA2, s. 2150e Section 2150e. 71.10 (4) (dg) of the statutes is created to read:

SB55-SSA1-SA2,269,11 71.10 (4) (dg) The artistic endowment credit under s. 71.07 (9t).".

SB55-SSA1-SA2,269,12 922. Page 737, line 24: after that line insert:

SB55-SSA1-SA2,269,13 " Section 2150e. 71.07 (9) (b) 1. of the statutes is amended to read:

SB55-SSA1-SA2,269,18 71.07 (9) (b) 1. Subject to the limitations under this subsection and except as provided in subds. 2., 4. and, 5., and 6., a claimant may claim as a credit against, but not to exceed the amount of, taxes under s. 71.02, 10% of the first $2,000 of property taxes or rent constituting property taxes, or 10% of the first $1,000 of property taxes or rent constituting property taxes of a married person filing separately.

SB55-SSA1-SA2, s. 2150f Section 2150f. 71.07 (9) (b) 5. of the statutes is amended to read:

SB55-SSA1-SA2,270,2 71.07 (9) (b) 5. For taxable years beginning after December 31, 1999, and before January 1, 2001, subject to the limitations under this subsection a claimant may claim as a credit against, but not to exceed the amount of, taxes under s. 71.02, 12% of the first $2,500 of property taxes or rent constituting property taxes, or 12% of the first $1,250 of property taxes or rent constituting property taxes of a married person filing separately.

SB55-SSA1-SA2, s. 2150g Section 2150g. 71.07 (9) (b) 6. of the statutes is created to read:

SB55-SSA1-SA2,270,9 71.07 (9) (b) 6. For taxable years beginning after December 31, 2000, subject to the limitations under this subsection, a claimant may claim as a credit against, but not to exceed the amount of, taxes under s. 71.02, 13.3% of the first $2,000 of property taxes or rent constituting property taxes, or 13.3% of the first $1,000 of property taxes or rent constituting property taxes of a married person filing separately.".

SB55-SSA1-SA2,270,10 923. Page 738, line 5: delete lines 5 and 6.

SB55-SSA1-SA2,270,12 924. Page 741, line 22: delete "(2dx) and, (3g), and" and substitute "(2dx), and".

SB55-SSA1-SA2,270,13 925. Page 763, line 5: after that line insert:

SB55-SSA1-SA2,270,14 " Section 2160d. 71.25 (5) (a) 9. of the statutes is amended to read:

SB55-SSA1-SA2,270,23 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.

SB55-SSA1-SA2, s. 2160e Section 2160e. 71.25 (5) (a) 10. of the statutes is amended to read:

SB55-SSA1-SA2,271,6 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.

SB55-SSA1-SA2, s. 2160g Section 2160g. 71.25 (5) (b) 1. of the statutes is renumbered 71.25 (5) (b).

SB55-SSA1-SA2, s. 2160h Section 2160h. 71.25 (5) (b) 2. of the statutes is repealed.".

SB55-SSA1-SA2,271,10 926. Page 763, line 6: delete the material beginning with that line and ending with page 768, line 6, and substitute:

SB55-SSA1-SA2,271,11 " Section 2169d. 71.25 (9) (a) of the statutes is amended to read:

SB55-SSA1-SA2,271,22 71.25 (9) (a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under par. (b) 1. and 2. plus 50% of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of determining the numerator of the sales factor for a member of a combined reporting group under s. 71.255 (7), "taxpayer" means the member of a combined reporting group, as defined in s. 71.255 (1) (c), that transferred title to tangible personal property or, for sales other than sales of tangible personal property, that made the sale.".

SB55-SSA1-SA2,271,23 927. Page 768, line 16: after that line insert:

SB55-SSA1-SA2,271,24 " Section 2173x. 71.26 (1) (b) of the statutes is amended to read:

SB55-SSA1-SA2,272,5 71.26 (1) (b) Political units. Income received by the United States, the state, the Milwaukee County child welfare district under s. 48.562, and all counties, cities, villages, towns, school districts, technical college districts, joint local water authorities created under s. 66.0823, family care districts under s. 46.2895, or other political units of this state.".

SB55-SSA1-SA2,272,6 928. Page 768, line 16: after that line insert:

SB55-SSA1-SA2,272,7 " Section 2173d. 71.255 of the statutes is created to read:

SB55-SSA1-SA2,272,8 71.255 Combined reporting. (1) Definitions. In this section:

SB55-SSA1-SA2,272,12 (a) "Brother-sister parent corporation" means a parent corporation that is a member of a commonly controlled group, if any members of the commonly controlled group are not connected to the parent corporation by stock ownership as described in par. (d) 1. to 5.

SB55-SSA1-SA2,272,15 (b) "Combined report" means a form prescribed by the department that specifies the income of each taxpayer member of a commonly controlled group operating as a unitary business.

SB55-SSA1-SA2,272,17 (c) "Combined reporting group" means the members of a commonly controlled group that are included in a combined report under sub. (2).

SB55-SSA1-SA2,272,19 (d) "Commonly controlled group" means any of the following, but does not include an insurer that is exempt from taxation under s. 71.45 (1):

SB55-SSA1-SA2,273,2 1. A parent corporation and any corporation or chain of corporations that are connected to the parent corporation by direct or indirect ownership by the parent corporation if the parent corporation owns stock representing more than 50% of the voting power of at least one of the connected corporations or if the parent corporation or any of the connected corporations owns stock that cumulatively represents more than 50% of the voting power of each of the connected corporations.

SB55-SSA1-SA2,273,5 2. Any 2 or more corporations if a common owner directly or indirectly owns stock representing more than 50% of the voting power of the corporations or the connected corporations.

SB55-SSA1-SA2,273,9 3. A partnership or limited liability company if a parent corporation or any corporation connected to the parent corporation by common ownership directly or indirectly owns shares representing more than 50% of the shares of the partnership or limited liability company.

SB55-SSA1-SA2,273,11 4. Any 2 or more corporations if stock representing more than 50% of the voting power in each corporation are interests that cannot be separately transferred.

SB55-SSA1-SA2,273,16 5. Any 2 or more corporations if stock representing more than 50% of the voting power 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.

SB55-SSA1-SA2,273,17 (e) "Corporation" has the meaning given in s. 71.22 (1) or 71.42 (1).

SB55-SSA1-SA2,273,18 (f) "Department" means the department of revenue.

SB55-SSA1-SA2,273,20 (g) "Designated agent" means the taxpayer member of a commonly controlled group who files a group return on behalf of the commonly controlled group.

SB55-SSA1-SA2,273,22 (h) "Group return" means a tax return filed on behalf of the taxpayer members of a commonly controlled group.

SB55-SSA1-SA2,274,2 (i) "Intercompany transaction" means a transaction between corporations, partnerships, or limited liability companies that become members of the same commonly controlled group that is engaged in a unitary business immediately after the transaction.

SB55-SSA1-SA2,274,4 (im) "Partnership" means any entity considered a partnership under section 7701 of the Internal Revenue Code.

SB55-SSA1-SA2,274,6 (j) "Separate return" means a return filed by a corporation, regardless of whether the corporation is required to file a tax return under s. 71.24 or 71.44.

SB55-SSA1-SA2,274,9 (k) "Taxpayer member" means a corporation that is subject to tax under s. 71.23 (1) or (2) or 71.43, that is a member of a combined reporting group, and that files a combined report under this section.

SB55-SSA1-SA2,274,15 (L) "Top tier corporation" means a member of a commonly controlled group that is not connected with a parent corporation by stock ownership as described in par. (d) 1. to 5., is a parent corporation, or is a brother-sister parent corporation, regardless of whether it is doing business in this state or deriving income from sources in this state, and regardless of whether its income and apportionment factors are excluded from a combined report filed under this section.

SB55-SSA1-SA2,274,24 (m) "Unitary business" means the business activities or operations of an entity that are of mutual benefit to, integrated with, or dependent upon or contribute to activities of at least one other entity, including transactions that serve an operational function, as determined by the department. Two or more businesses are presumed to be a unitary business if the businesses have unity of ownership, operation, and use as indicated by 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.

SB55-SSA1-SA2,275,8 (2) Corporations required to use combined reporting. (a) Except as provided in par. (b), a corporation that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43, that is a member of a commonly controlled group, and that is engaged, in whole or in part, in a unitary business with one or more members of the commonly controlled group shall compute the corporation's income attributable to this state by using the income computation under s. 71.26 or 71.45, the apportionment formula under s. 71.25 (6) or 71.45 (3) and (3m), and the tax credits under s. 71.28 or 71.47 of all of the following that are members of the commonly controlled group:

SB55-SSA1-SA2,275,13 1. Any corporation organized or incorporated under the laws of the United States, any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, or any subdivision of the United States, including corporations under sections 931 to 936 of the Internal Revenue Code.

SB55-SSA1-SA2,275,15 2. Any domestic international sales corporation under sections 991 to 994 of the Internal Revenue Code.

SB55-SSA1-SA2,275,17 3. Any foreign sales corporation under sections 921 to 927 of the Internal Revenue Code.

SB55-SSA1-SA2,275,19 4. Any export trade corporation under sections 970 and 971 of the Internal Revenue Code.

SB55-SSA1-SA2,275,24 5. Any corporation regardless of its place of incorporation if the average of its property factor under s. 71.25 (7) and its payroll factor under s. 71.25 (8), for property and payroll within the United States and computed on an annual basis, is at least 20% during any part of the taxable year that a corporation is a member of the commonly controlled group.

SB55-SSA1-SA2,276,4 6. Any corporation not described in subds. 1. to 5. to the extent of the corporation's income within the United States and the corporation's property factor under s. 71.25 (7) and payroll factor under s. 71.25 (8) assignable to a location within the United States.

SB55-SSA1-SA2,276,15 (b) A corporation that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43, that is a member of a commonly controlled group, and that is engaged, in whole or in part, in a unitary business with one or more members of the commonly controlled group may compute the corporation's income attributable to this state by using the income computation under s. 71.26 or 71.45, the apportionment formula under s. 71.25 (6) or 71.45 (3) and (3m), and the tax credits under s. 71.28 or 71.47 of all the members of the commonly controlled group, regardless of the country in which any member of the commonly controlled group is organized or incorporated or conducts business, if all top tier corporations that are members of the commonly controlled group elect under sub. (3) to compute the corporation's income as provided under this paragraph.

SB55-SSA1-SA2,276,23 (3) Computation election. (a) A top tier corporation that is a member of a commonly controlled group may elect on the commonly controlled group's behalf, and in the manner prescribed by the department, to compute the income of each corporation that is a member of the commonly controlled group under sub. (2) (b). If more than one member of the commonly controlled group is a top tier corporation, an election under this subsection is not effective unless all top tier corporations elect on the commonly controlled group's behalf, and in the manner prescribed by the department, to compute income under sub. (2) (b).

SB55-SSA1-SA2,277,6 (b) A top tier corporation shall file an election made under par. (a) with the department before the last day of the taxable year. The top tier corporation shall designate a taxable year that corresponds with the taxable year of any taxpayer member that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43. If the top tier corporation fails to file the election before the last day of the taxable year designated under this paragraph, all members of the commonly controlled group to which the top tier corporation belongs, including the top tier corporation, shall compute income under sub. (2) (a).

SB55-SSA1-SA2,277,17 (c) Except as provided under par. (d), the members of the commonly controlled group subject to an election under this subsection shall compute their income under sub. (2) (b) for 5 taxable years, beginning with the taxable year designated under par. (b). Thereafter, the members of the commonly controlled group shall compute their income under sub. (2) (b) for periods of 5 taxable years and until any top tier corporation that is a member of the commonly controlled group notifies the department, in a manner prescribed by the department, before the last day of the last taxable year in any period of 5 taxable years that the top tier corporation is terminating the election under this subsection. A termination under this paragraph takes effect on the first day of the first taxable year beginning after the top tier corporation notifies the department under this paragraph.

SB55-SSA1-SA2,277,22 (d) The department may grant a request by a top tier corporation to terminate an election under this subsection before the first period of 5 taxable years under par. (c) expires, if the top tier corporation shows good cause for granting the request, as determined by the department and consistent with section 1502 of the Internal Revenue Code.

SB55-SSA1-SA2,278,2 (e) Except as provided in par. (f), if an election by a top tier corporation on behalf of the members of a commonly controlled group under this subsection is terminated, no top tier corporation may make an election on behalf of the members of the same commonly controlled group until 5 taxable years have elapsed from the day that the termination of the original election took effect.

SB55-SSA1-SA2,278,7 (f) The department may grant a request by a top tier corporation to make an election under this subsection before the period of 5 taxable years under par. (e) have elapsed, if the top tier corporation shows good cause for granting the request, as determined by the department and consistent with section 1502 of the Internal Revenue Code.

SB55-SSA1-SA2,278,19 (4) Accounting period. For purposes of this section, the income under ss. 71.26 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 a combined reporting group shall be determined by using the same accounting period. If the combined reporting group 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 combined reporting group. If the combined reporting group has no common parent corporation, the income, the apportionment factors, and the tax credits of the combined reporting group shall be determined using the accounting period of the member of the combined reporting group that has the most significant operations on a recurring basis in this state, as determined by the department.

SB55-SSA1-SA2,279,3 (5) Filing returns. (a) Corporations with the same accounting period. Corporations that must file a combined report under this section and that have the same accounting period may file a group return, as prescribed by the department, that reports the aggregate state franchise or state income tax liability of all of the members of the combined reporting group. Corporations that are required to file a combined report under this section may file separate returns reporting the respective apportionment of the corporation's state franchise or state income tax liability as determined under sub. (2) (a), if each corporation filing a separate return pays its own apportionment of its state franchise or state income tax liability.

SB55-SSA1-SA2,279,17 (b) Corporations with different accounting periods. Corporations that are required to file a combined report and that have different accounting periods shall file separate returns and shall use the actual figures from the corporations' financial records to determine the proper income and income-related computations to convert to a common accounting period. Corporations that are required to file a combined report may use a proportional method to convert income to a common accounting period if the results of the proportional method do not materially misrepresent the income apportioned to this state. The apportionment factors under ss. 71.25 and 71.45 and the tax credits under ss. 71.28 and 71.47 shall be computed according to the same method used to determine the income under ss. 71.26 and 71.45 for the common accounting period. If a corporation performs an interim closing of its financial records to determine the income attributable to the common accounting period, the actual figures from the interim closing shall be used to convert the apportionment factors and tax credits to the common accounting period.

SB55-SSA1-SA2,280,9 (c) Designated agent. 1. For corporations that are subject to this section and that file a group return under par. (a), the parent corporation of the combined reporting group is the sole designated agent for each member of the combined reporting group including the parent corporation, if the parent corporation is a taxpayer member of the combined reporting group and income of the parent corporation is included on the group return. If the parent corporation is not a taxpayer member or if the parent corporation's income is not included on the group return, the taxpayer members may appoint a taxpayer member to be the designated agent. If the parent corporation of the combined reporting group is not eligible to be the designated agent and no taxpayer member is appointed to be the designated agent, the designated agent is the taxpayer member that has the most significant operations in this state on a recurring basis, as determined by the department. The designated agent, as determined under this subdivision, remains the designated agent until the designated agent is no longer a taxpayer member or until the taxpayer members appoint a different designated agent. If the designated agent changes, the combined reporting group shall notify the department of such a change, in a manner prescribed by the department.

SB55-SSA1-SA2,281,7 2. The designated agent shall file the group return under par. (a), shall file for any extensions under s. 71.24 (7) or 71.44 (3), shall file amended reports and claims for refund or credit, and shall send and receive all correspondence with the department regarding a group return. Any notice the department sends to the designated agent is considered a notice sent to all members of the combined reporting group. Any refund with respect to a group return shall be paid to and in the name of the designated agent and shall discharge any liability of the state to any member of a combined reporting group regarding the refund. The combined reporting group filing a group return under par. (a) shall pay all taxes, including estimated taxes, in the designated agent's name. The designated agent shall participate on behalf of the members of the combined reporting group in any investigation or hearing requested by the department regarding a group return and shall produce all information requested by the department regarding a group return. The designated agent may execute a power of attorney on behalf of the members of the combined reporting group. The designated agent shall execute waivers, closing agreements, and other documents regarding a group return filed under par. (a) and any waiver, agreement, or document executed by the designated agent shall be considered as executed by all members of the combined reporting group. If the department acts in good faith with a combined reporting group member that represents itself as the designated agent for the combined reporting group but that combined reporting group member is not the designated agent, any action taken by the department with that combined reporting group member has the same effect as if that combined reporting group member were the actual designated agent for the combined reporting group.

SB55-SSA1-SA2,281,11 (d) Part-year members. If a corporation becomes a member of a combined reporting group or ceases to be a member of a combined reporting group after the beginning of a common accounting period, the corporation's income shall be apportioned to this state as follows:

SB55-SSA1-SA2,281,20 1. If the corporation is required to file 2 or more short period federal returns for the common accounting period, the income for the short period that the corporation was a member of a combined reporting group shall be determined as provided under sub. (2), the corporation shall join in filing a combined report for that short period, and the corporation may join in filing a group return for that short period. The income for the remaining short period shall be reported on a separate return under s. 71.25 or 71.45. If the corporation becomes a member of another combined reporting group in the remaining short period, the corporation's income shall be determined for the remaining short period as provided under sub. (2).

SB55-SSA1-SA2,281,22 2. If the corporation is not required to file federal short period returns, the corporation shall file a separate return. Income shall be determined as follows:

SB55-SSA1-SA2,281,24 a. As provided under sub. (2) for any period that the corporation was a member of a combined reporting group.

SB55-SSA1-SA2,282,2 b. On a separate report under s. 71.25 or 71.45 for any period that the corporation was not a member of a combined reporting group.

SB55-SSA1-SA2,282,6 (e) Amended group return. The election to file a group return under this section applies to an amended group return that includes the same corporations that joined in the filing of the original group return. Under this section, an amended group return shall be filed as follows:

SB55-SSA1-SA2,282,15 1. If an election to file a group return that is in effect for a taxable year is revoked for the taxable year because the combined reporting group that filed the group return is not subject to sub. (2), as determined by the department, the designated agent for the combined reporting group may not file an amended group return. The designated agent and each corporation that joined in filing the group return shall file a separate amended return. To compute the tax due on a separate amended return, a corporation that files a separate amended return shall consider all of the payments, credits or other amounts, including refunds, that the designated agent allocated to the corporation.

SB55-SSA1-SA2,282,20 2. If a change in tax liability under this section is the result of the removal of a corporation from a combined reporting group because the corporation was not eligible to be a member of the combined reporting group for the taxable year, as determined by the department, the designated agent shall file an amended group return and the ineligible corporation shall file a separate amended return.

SB55-SSA1-SA2,283,2 3. If a corporation erroneously fails to join in the filing of a group return, the designated agent shall file an amended group return that includes the corporation. If a corporation that erroneously fails to join in the filing of a group return has filed a separate return, the corporation shall file an amended separate return that shows no net income, overpayment or underpayment, and shows that the corporation has joined in the filing of a group return.

SB55-SSA1-SA2,283,4 (6) Income computation under combined reporting. For the purposes of sub. (2), income attributable to this state shall be determined as follows:

SB55-SSA1-SA2,283,11 (a) Determine the net income of each member of a combined reporting group under s. 71.26 or 71.45, as appropriate, before deducting net business losses. A member of a combined reporting group may determine its loss or net income under s. 71.26 (3) (y), 71.45 (2) (a) 13., or 71.49 (2), as appropriate, regardless of the accounting method used to determine the loss or net income of other members of the combined reporting group. A unitary business with operations in a foreign country shall compute its loss or net income as provided by rule by the department.

SB55-SSA1-SA2,283,13 (b) Adjust each member's income, as determined under par. (a), as provided under s. 71.30.

SB55-SSA1-SA2,283,19 (c) From the amount determined under par. (b), subtract intercompany transactions, as provided by rule by the department, such that intercompany accounts of assets, liabilities, equities, income, costs or expenses are excluded from the income determination to accurately reflect the income, the apportionment factors and the tax credits in a combined report that is filed under this section. An intercompany transaction includes the following:

SB55-SSA1-SA2,283,22 1. Income or gain from sales, exchanges, contributions, or other transfers of tangible or intangible property from a member of the combined reporting group to another member of the combined reporting group.

SB55-SSA1-SA2,283,24 2. Annual rent paid by a member of the combined reporting group to another member of the combined reporting group.

SB55-SSA1-SA2,284,2 3. Annual license fees or royalties paid by a member of the combined reporting group to another member of the combined reporting group.

SB55-SSA1-SA2,284,5 4. Loans, advances, receivables, and similar items that one member of the combined reporting group owes to another member of the combined reporting group, including interest income and interest expense related to these items.