SECTION 1. Tax 2.32 is created, to define the term “gross receipts" as it applies to subch. VII of ch. 77, Stats., relating to the recycling surcharge.
As a result of a nonstatutory provision in 1999 Wis. Act 9, sec. 9143(3d), the department is required to submit proposed rules to define “gross receipts" under subch. VII of ch. 77, Stats., as affected by 1999 Wis. Act 9. The proposed rules are to be submitted to the Legislative Council staff under s. 227.15(1), Stats., no later than February 1, 2000.
Text of Rules
SECTION 1. Tax 2.32 is created to read:
Tax 2.32 Recycling surcharge – gross receipts defined. (1) PURPOSE. This section defines “gross receipts" for purposes of the recycling surcharge under subch. VII of ch. 77, Stats.
Note: For any taxable year, a recycling surcharge is imposed on: (a) individuals, estates, trusts, statutory employes and partnerships that have at least $4,000,000 in gross receipts from a trade or business for the taxable year; (b) corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year; and (c) individuals, estates, trusts and partnerships engaged in farming that have at least $1,000,000 in gross receipts from farming for the taxable year.
(2) DEFINITIONS. In subch. VII of ch. 77, Stats., and this section:
(a) “Gross receipts from all activities of corporations" means the sum of the following items reportable by corporations other than those listed in pars. (c) and (d):
1. Gross receipts or sales reportable on line 1a of federal form 1120, U. S. corporation income tax return.
2. Gross dividends reportable on line 4 of federal form 1120.
3. Gross interest income reportable on line 5 of federal form 1120.
4. Gross rents reportable on line 6 of federal form 1120.
5. Gross royalties reportable on line 7 of federal form 1120.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the net gain or loss on lines 8 and 9 of federal form 1120.
7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.
Note: In this subsection, line numbers of forms refer to the 1999 forms.
(b) “Gross receipts from all activities of exempt organizations taxable as corporations" means the sum of the following items reportable by those entities:
1. Gross receipts or sales reportable on line 1a of federal form 990-T, exempt organization business income tax return.
2. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on lines 4a and 4b of federal form 990-T.
3. Gross rents includable in computing rent income on line 6 of federal form 990-T.
4. Gross income from unrelated debt-financed property includable in computing unrelated debt-financed income on line 7 of federal form 990-T.
5. Gross interest, annuities, royalties and rents from controlled organizations includable in computing those items of income on line 8 of federal form 990-T.
6. Gross investment income includable in computing investment income on line 9 of federal form 990-T.
7. Gross exploited exempt activity income includable in computing that item of income on line 10 of federal form 990-T.
8. Gross advertising income includable in computing advertising income on line 11 of federal form 990-T.
9. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.
(c) “Gross receipts from all activities of insurance companies" means the sum of the following items reportable by insurance companies:
1. Gross premiums earned reportable on lines 1 and 8 of schedule A on federal form 1120-PC, U. S. property and casualty insurance company income tax return.
2. Gross dividends reportable on line 2 of schedule A, or line 2 of schedule B if applicable, on federal form 1120-PC.
3. Gross interest income reportable on line 3a of schedule A, or line 1a of schedule B if applicable, on federal form 1120-PC.
4. Gross rents reportable on line 4 of schedule A, or line 3 of schedule B if applicable, on federal form 1120-PC.
5. Gross royalties reportable on line 5 of schedule A, or line 4 of schedule B if applicable, on federal form 1120-PC.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on lines 6 and 7 of schedule A, or lines 5 and 7 of schedule B if applicable, on federal form 1120-PC.
7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.
(d) “Gross receipts from all activities of tax-option (S) corporations" means the sum of the following items reportable by S corporations:
1. Gross receipts or sales reportable on line 1a of federal form 1120S, U. S. corporation income tax return for an S corporation.
2. Gross rents includable in computing the income from real estate and other rental activities reportable on lines 2 and 3a of schedule K on federal form 1120S.
3. Gross interest income reportable on line 4a of schedule K on federal form 1120S.
4. Gross dividends reportable on line 4b of schedule K on federal form 1120S.
5. Gross royalties includable in computing royalty income reportable on line 4c of schedule K on federal form 1120S.
6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on line 4 of federal form 1120S and lines 4d, 4e, 4f and 5 of schedule K on federal form 1120S.
7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.
(e) “Gross receipts from farming, of individuals, estates, trusts and partnerships engaged in farming" means the sum of the following items reportable by those entities:
1. Gross receipts or sales reportable on lines 1, 4, 5a, 6a, 7a, 8a and 9 of federal schedule F, profit or loss from farming.
2. The gross sales price of farm assets, including livestock, includable in computing ordinary income or loss on federal form 4797, sales of business property.
(f) “Gross receipts of exempt organizations taxable as trusts" means the total receipts or sales from all trade or business activities other than farming, reportable by those entities for federal income tax purposes, before any deduction for returns and allowances or any other business expenses. Gross receipts include any of the following:
1. Gross receipts or sales reportable on line 1a of federal form 990-T, exempt organization business income tax return.
2. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on lines 4a and 4b of federal form 990-T.
3. Gross rents includable in computing rent income on line 6 of federal form 990-T.
4. Gross income from unrelated debt-financed property includable in computing unrelated debt-financed income on line 7 of federal form 990-T.
5. Gross interest, annuities, royalties and rents from controlled organizations includable in computing those items of income on line 8 of federal form 990-T
6. Gross investment income includable in computing investment income on line 9 of federal form 990-T.
7. Gross exploited exempt activity income includable in computing that item of income on line 10 of federal form 990-T.
8. Gross advertising income includable in computing advertising income on line 11 of federal form 990-T.
9. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.
(g) “Gross receipts of individuals, estates, trusts and statutory employes" means the total receipts or sales from all trade or business activities other than farming, reportable by those entities for federal income tax purposes, before any deduction for returns and allowances or any other business expenses. Gross receipts include any of the following:
1. Gross receipts or sales reportable on line 1 of federal schedule C, profit or loss from business.
2. Gross receipts reportable on line 1 of federal schedule C-EZ, net profit from business.
3. The gross sales price of assets includable in computing ordinary income or loss on federal form 4797, sales of business property.
Note: See par. (e) for information relating to individuals, estates and trusts engaged in farming.
(h) “Gross receipts of partnerships" means the total receipts or sales from all trade or business activities other than farming, reportable by partnerships for federal income tax purposes, before any deduction for returns and allowances or any other business expenses. Gross receipts include the sum of the following:
1. Gross receipts or sales reportable on line 1a of federal form 1065, U. S. partnership return of income.
2. Gross receipts, other than farm receipts, passed through from other partnerships and fiduciaries and includable in computing the amount on line 4 of federal form 1065.
3. The gross sales price from the sale or disposition of business assets, other than farm assets, includable in computing the net gain or loss on line 6 of federal form 1065.
4. Gross receipts from the rental of tangible personal property.
5. Other gross receipts includable in computing other income or loss on line 7 of federal form 1065.
Note: See par. (e) for information relating to partnerships engaged in farming.
Note: Section Tax 2.32 interprets subch. VII of ch. 77, Stats.
Note: Subchapter VII of ch. 77, Stats., was amended by 1999 Wis. Act 9, to replace the expired temporary recycling surcharge with a recycling surcharge, effective for taxable years beginning on or after January 1, 2000. This section applies to the recycling surcharge imposed for taxable years beginning on or after January 1, 2000.
Initial Regulatory Flexibility Analysis
This proposed rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
This rule defines gross receipts for purposes of the recycling surcharge, as required by section 9143 (3d) of 1999 Wis. Act 9. To the extent that gross receipts as defined in this rule are the receipts intended by the Legislature to be subject to the recycling surcharge in enacted in Act 9, this rule has no fiscal effect.
Notice of Hearing
Revenue
Notice is hereby given that pursuant to ss. 70.32(2)(c) 1., (2r)(b) and 227.11(2)(a), Stats., and interpreting s. 70.32(2)(c)1., (2r)(b) and (c), Stats., the State of Wisconsin Department of Revenue will hold a public hearing in Room 027, GEF-2, 101 South Webster Street, in the City of Madison, Wisconsin, on the 11th day of April, 2000, commencing at 1 p.m. , to consider the proposed rule submitted to the Legislative Council Rules Clearinghouse March 7, 2000 relating to the assessment of agricultural land.
Analysis prepared by the Wisconsin Department Of Revenue
Statutory Authority: ss. 70.32 (2) (c) 1., 70.32 (2r) (b) and 227.11 (2) (a)
Statute Interpreted: s. 70.32 (2) (c) 1., (2r) (b) and (c)
Under the current rule, agricultural use is defined by reference to the 1987 Standard Industrial Classification (SIC) Manual and includes land eligible for enrollment in specified federal agricultural programs. The rule amends the definition of agricultural use to update the 1987 SIC references to 1997 North American Industrial Classification System references. The rule also updates the references to the federal agricultural programs and provides that land enrolled in those programs is in agricultural use. The rule also defines land enrolled in specified state agricultural programs as being in agricultural use if such lands were in agricultural use at the time of enrollment. The updated definition of agricultural use is effective for assessments as of January 1, 2001.
The rule also provides that, beginning with the assessments as of January 1, 2000, the assessed value of each parcel of agricultural land is its use value.
Text of Rule
SECTION 1. Section Tax 18.05 is amended to read:
Tax 18.05 Definitions. In this subchapter:
(1) "Agricultural use" means any of the following:
(a) Activities included in major group 01 -- agricultural production-crops, set forth in the standard industrial classification manual, 1987 edition, subsector 111 Crop Production, set forth in the North American Industry Classification System (NAICS), United States, 1997, published by the executive office of the president, U.S. office of management and budget. "Agricultural use" does not include growing short rotation woody trees with a growing and harvesting cycle of 10 years or less for pulp or tree stock under NAICS industry 111421.
(b) Activities included in major group 02 -- agricultural production-livestock and animal specialties, set forth in the standard industrial classification manual, 1987 edition, subsector 112 Animal Production, set forth in the North American Industry Classification System, United States, 1997, published by the executive office of the president, U.S. office of management and budget.
