SECTION 7. Tax 2.65 (3) (c) is amended to read:
Tax 2.65 (3) (c) If a combined group member chooses to file a separate Wisconsin return to report its separate entity items rather than having the designated agent include them in the combined return in the manner described in s.
Tax 2.67 (2) (d) 3., the member shall consider the totality of its share of items from the combined return plus its separate entity items for purposes of applying any limitations, so that its total net tax plus
recycling economic development surcharge does not differ from the amount that would have been due if the separate entity items had been included in the combined return. The combined group member shall submit a copy of the combined return with its separate return.
SECTION 8. Tax 2.67 (2) (d) 3. is amended to read:
Tax 2.67 (2) (d) 3. The separate entity net income or loss and apportionment factors included in the combined return shall be reported on Wisconsin Form 4N, Nonapportionable and Separately Apportioned Income. The designated agent shall complete and submit Form 4N with the combined return for each applicable corporation and carry forward the total Form 4N amounts to the appropriate line on Form 4. For purposes of the requirement of s.
71.255 (2) (d), Stats., separate entity items reported on Form 4N shall be considered filed on a separate return. However, for purposes of determining a combined group member's net income, tax, interest, underpayment interest,
recycling economic development surcharge, and the statute of limitations, the separate entity amounts shall be added to its amounts, if any, computed in the unitary combination.
SECTION 9. Tax 2.82 (1) (c), (6), and (Examples) are amended to read:
Tax 2.82 (1) (c) An unlicensed foreign corporation is subject to Wisconsin franchise or income taxes if it has nexus with Wisconsin. The purpose of this rule is to provide guidelines for determining what constitutes nexus, that is, what business activities are needed for a foreign corporation to be subject to Wisconsin franchise or income taxes. The rule also explains how nexus applies to a foreign corporation in the context of s.
71.255, Stats., relating to combined reporting, and s.
77.93, Stats., relating to the
recycling
economic development surcharge.
(6)
NEXUS FOR RECYCLING ECONOMIC DEVELOPMENT SURCHARGE. If a corporation has nexus under this section, the corporation is considered to be doing business in this state for purposes of s.
77.93, Stats., relating to the
recycling economic development surcharge. Therefore, if a corporation, other than a corporation exempt from taxation, has nexus and has at least $4,000,000 of gross receipts from all activities for the taxable year, the corporation is subject to the
recycling economic development surcharge. The
recycling economic development surcharge applies to each member of a combined group separately.
(Examples) 1) Corporation A is incorporated outside Wisconsin and is not a member of a combined group. Corporation A is licensed to do business in Wisconsin, but all of its activities in Wisconsin are protected by P.L.
86-272. Therefore, Corporation A does not have nexus. Corporation A is not subject to the
recycling economic development surcharge because it does not have nexus in Wisconsin.
2) Assume the same facts as Example 1, except that Corporation A is in Combined Group ABCD, which consists of Corporations A, B, C, and D. Corporation D has a warehouse and several stores in Wisconsin that are part of the combined group's common unitary business. Since Corporation D has nexus in Wisconsin, all corporations in the combined group have nexus in Wisconsin. Corporations A, B, and D have sales to Wisconsin customers but Corporation C does not. The gross receipts, Wisconsin income, gross tax, and resulting recycling economic development surcharge for each corporation in the group are as follows:
Corporation Gross Receipts Wisconsin Income Gross Tax Recycling Surcharge
A $10,000,000 $100,000 $7,900
$237
B $3,000,000 $400,000 $31,600
$0
C $50,000,000 $0 $0
$25
D $100,000,000 $6,000,000 $474,000 $9,800
The Wisconsin income and gross tax are computed using the method described in s.
Tax 2.61. Since the
recycling economic development surcharge applies to each member of a combined group separately:
Corporation A is subject to the recycling economic development surcharge because its gross receipts are at least $4,000,000.
Corporation B is not subject to the recycling
economic development surcharge because its gross receipts are less than $4,000,000.
Corporation C is subject to the minimum $25 recycling economic development surcharge because its gross receipts are at least $4,000,000 and it has no gross tax liability.
Corporation D is subject to the maximum $9,800 recycling economic development surcharge because its gross tax of $474,000 multiplied by the recycling economic development surcharge rate of 3% exceeds $9,800. The amount in excess of $9,800 is not imposed even though the other members have recycling economic development surcharge liability of less than $9,800.
SECTION 10. Tax 2.96 (2) (c) and (3) (b) and (c) are amended to read:
Tax 2.96 (2) (c) A taxpayer who desires to minimize interest charges during the extension period may pay the estimated tax liability on or before the original due date of the franchise or income tax return. The estimated tax liability includes the
recycling economic development surcharge imposed under s.
77.93, Stats.
(3) (b) If 90% of the tax shown on the return is not paid by the unextended due date of the return, the difference between that amount and the estimated taxes paid along with any interest due is subject to interest at 11/2% per month until paid regardless of any extension granted for filing the return. The tax shown on the return includes the
recycling
economic development surcharge imposed under s.
77.93, Stats.
(c) A corporation return filed after the extension period is subject to a $30 $150 late filing fee.
SECTION 11. Tax 2.99 (title), (1), and (2) (a) are amended to read:
Tax 2.99 (title) Dairy and livestock farm investment credit.
(1) This section clarifies certain terms as they apply to the dairy
and livestock farm investment credit under ss.
71.07 (3n),
71.28 (3n), and
71.47 (3n), Stats.
(2) (a) “Amount the claimant paid in the taxable year" means the purchase price of facilities or equipment acquired and first placed in service in this state during taxable years that begin after December 31, 2003, and before January 1, 2010 2017.
SECTION 12. Tax 2.99 (Note) is created to read:
Note:
2005 Wis. Act 25 renamed the “dairy investment credit" the “dairy and livestock farm investment credit," effective for taxable years beginning on or after January 1, 2006. The term “dairy and livestock farm investment credit" as used in this section refers to the “dairy investment credit" for taxable years prior to January 1, 2006.
SECTION 13. Tax 3.01 (4) (e) 4. b. is amended to read:
Tax 3.01 (4) (e) 4. b. The Wisconsin
recycling
economic development surcharge, which is imposed on partnerships and tax-option (S) corporations pursuant to s.
77.93 (1),
(3), and
(5), Stats.
SECTION 14. Tax 3.095 (4) (a) 9. is repealed
SECTION 15. Tax 3.095 (4) (a) 10. and 11. are renumbered 3.095 (4) (a) 9. and 10.
SECTION 16. Tax 3.095 (4) (a) 11. to 19. are created to read:
Tax 3.095 (4) (a) 11. WHEDA bonds or notes issued under s.
234.08 or
234.61, Stats., on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects.
12. Bonds or notes issued by a local exposition district created under subch.
II of ch. 229, Stats.
13. Bonds or notes issued by a local professional baseball park district created under subch.
III of ch. 229, Stats.
14. Bonds or notes issued by a local professional football stadium district created under subch.
IV of ch. 229, Stats.
15. Bonds or notes issued by a local cultural arts district created under subch.
V of ch. 229, Stats.
16. Bonds or notes issued by the Wisconsin Aerospace Authority.
17. Wisconsin Health and Educational Facilities Authority bonds or notes issued under s.
231.03 (6), Stats., on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in s.
231.01 (5), Stats., to fund the acquisition of information technology hardware or software.
18. Bonds or notes issued by a commission created under s.
66.0304, Stats., if any of the following applies:
a. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and WHEDA has the authority to issue its bonds or notes for the project being funded.
b. The bonds or notes are used by a health facility, as defined in s.
231.01 (5), Stats., to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded.
c. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s.
66.1201,
66.1333, or
66.1335, Stats.
19. WHEDA bonds or notes, if the bonds or notes are issued to provide loans to a public affairs network under s.
234.75 (4), Stats.
SECTION 17. Tax 8.24 is repealed.
ADMINISTRATIVE RULES
FISCAL ESTIMATE
AND ECONOMIC IMPACT ANALYSIS
|
Type of Estimate and Analysis
|
X Original Updated Corrected
|
Administrative Rule Chapter, Title and Number
|
Chapters Tax 1, 2, 3, and 8 – General administration, income taxation, returns, records, gross income, exclusions, exemptions, and intoxicating liquors
|
Subject
|
Tax law changes made by 2011 Wisconsin Act 32 and other legislation
|
Fund Sources Affected
|
Chapter 20 , Stats. Appropriations Affected
|
GPR FED PRO PRS SEG SEG-S
|
|
Fiscal Effect of Implementing the Rule
|
X No Fiscal Effect
Indeterminate
|
Increase Existing Revenues
Decrease Existing Revenues
|
Increase Costs
Could Absorb Within Agency's Budget
Decrease Costs
|
The Rule Will Impact the Following (Check All That Apply)
|
State's Economy
Local Government Units
|
Specific Businesses/Sectors
Public Utility Rate Payers
|
Would Implementation and Compliance Costs Be Greater Than $20 million?
Yes X No
|
Policy Problem Addressed by the Rule
|
The rule does not create or revise policy, other than to reflect statutory changes.
|
Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
|
As indicated in the attached fiscal estimate, the fiscal effect of the proposed rule changes was included in the fiscal effect of the legislation on which the proposed rule order is based. The rule itself does not create any further economic or fiscal impact or implementation and compliance costs beyond the statutes it interprets.
No comments concerning the economic effect of the rule were submitted in response to the department's solicitation.
|
Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
|
Clarifications and guidance provided by administrative rules may lower the compliance costs for businesses, local governmental units, and individuals.
If the rule is not implemented, Chapters Tax 1, 2, 3, and 8 will be incomplete in that they will not reflect current law.
|
Long Range Implications of Implementing the Rule
|
No long-range implications are anticipated.
|
Compare With Approaches Being Used by Federal Government
|
N/A
|
Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
|
N/A
|
Assumptions Used in Arriving at Fiscal Estimate:
The proposed rule updates the following Administrative Code Sections:
•
Section
Tax 1.11 to provide the CEO of the Wisconsin Economic Development Corporation limited authority to examine tax returns, to implement s.
71.78 (4) (m) as amended by
2011 Act 32;
• Section
Tax 2.96 to change the late filing fees for income, franchise, and partnership returns and withholding reports, to implement s. 71..83 (3) as amended by
2009 Act 28;
• Various sections of Chapter
Tax 2 to implement the change from a recycling surcharge to an economic development surcharge as provided in
2011 Act 32; and
• Various sections of
Tax 8.24 to implement statutory changes in
2007 Act 85 which authorize the direct shipment of wine, and
2011 Act 32 concerning three-tier beer laws.
All of the proposed rule changes are being made to implement statutory changes. Any fiscal effect from the statutory changes would have been included in the fiscal estimate for the bills which were enacted. As such, the proposed rule has no fiscal effect.
Notice of Hearing
Revenue
Hearing Information
The hearing will be held:
Date: Monday, February 27, 2012
Time: 10:00 A.M.
Location: State Revenue Building
Events Room
2135 Rimrock Road
Madison, WI 53713
Handicap access is available at the hearing location.
Appearances at the Hearing and Submittal of Written Comments
Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person listed below no later than February 27, 2012, and will be given the same consideration as testimony presented at the hearing.
Dale Kleven
Department of Revenue
Mail Stop 6-40
2135 Rimrock Road
P.O. Box 8933
Madison, WI 53708-8933
Telephone: (608) 266-8253
Analysis by the Department of Revenue
Statutes interpreted
Statutory authority
Explanation of agency authority
Section
73.029, Stats., provides “[t]he department of revenue may require electronic funds transfer only by promulgating rules." This provision applies to proposed rule changes relating to section
Tax 1.12.
Section
77.52 (19), Stats., provides “[t]he department shall by rule provide for the efficient collection of the taxes imposed by this subchapter on sales of tangible personal property, or items, property, or goods under sub. (1) (b), (c), or (d), or services by persons not regularly engaged in selling at retail in this state or not having a permanent place of business, but who are temporarily engaged in selling from trucks, portable roadside stands, concessions at fairs and carnivals, and the like. The department may authorize such persons to sell property or items, property or goods under sub. (1) (b), (c), or (d) or sell, perform, or furnish services on a permit or nonpermit basis as the department by rule prescribes and failure of any person to comply with such rules constitutes a misdemeanor." This provision applies to proposed rule changes relating to Chapter
Tax 11.
Section
77.65 (3), Stats., provides “[t[he department may enter into the agreement to simplify and modernize sales tax and use tax administration in order to substantially reduce the tax compliance burden for all sellers and for all types of commerce. The department may act jointly with other states that are signatories to the agreement to establish standards for the certification of a certified service provider and certified automated system and to establish performance standards for multistate sellers. The department may promulgate rules to administer this section, may procure jointly with other states that are signatories to the agreement goods and services in furtherance of the agreement, and may take other actions reasonably required to implement this section. The secretary of revenue or the secretary's designee may represent this state before the states that are signatories to the agreement." This provision also applies to proposed rule changes relating to Chapter
Tax 11.
Section
227.11 (2) (a), Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute..."
Related statute or rule
There are no other applicable statutes or rules.
Plain language analysis
