Wisconsin Legislature: Text

(3) (a) Under ss. 71.76 and 77.96 (4), Stats., a taxpayer meeting the conditions described in sub. (4) shall report to the department changes or corrections made to a tax return by the internal revenue service, or file with the department amended Wisconsin franchise or income tax returns or amended recycling economic development surcharge returns reporting any information contained in amended returns filed with the internal revenue service, or with another state if there has been allowed a credit against Wisconsin taxes for taxes paid to that state. If such changes, corrections, or amended returns relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall report such changes or corrections or file amended combined returns.

(b) Except as provided in sub. (5), the department may give notice to the taxpayer of assessment or refund within 90 days of the date the department receives the taxpayer's report of federal adjustments or amended return described in par. (a). The 90-day limitation does not apply to instances where the taxpayer files an incorrect franchise or income tax return or recycling economic development surcharge return with intent to defeat or evade the franchise or income tax or temporary recycling economic development surcharge assessment.

(4) (a) (intro.) If the federal net income tax payable, a credit claimed or carried forward, a net operating loss carried forward or a capital loss carried forward on a taxpayer's federal tax return is adjusted by the internal revenue service in a way which affects the amount of Wisconsin net franchise or income tax or recycling economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward, the taxpayer shall report the adjustments to the department within 90 days after they become final. If such adjustments relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall report such adjustments. The following shall also apply with respect to federal adjustments:

1. f. For combined groups, the “finality of federal adjustments" is determined on the basis of that particular combined group member the adjustments of which ultimately affect the amount of Wisconsin net franchise or income tax or recycling economic development surcharge payable, the amount of a Wisconsin credit, credit carryforward, net business loss, net business loss carryforward, capital loss or capital loss carried forward of the combined group to which that member belongs.

2. The taxpayer shall submit to the department a copy of the final federal audit report issued by the internal revenue service together with any other documents or schedules necessary to inform the department of the adjustments as finally determined. The report shall be included with an amended Wisconsin return if a Wisconsin refund is being claimed and may be, but is not required to be, included with an amended return if additional Wisconsin tax or recycling economic development surcharge is due or if there is no change in tax or recycling economic development surcharge.

3. A taxpayer shall be deemed to concede the accuracy of the federal adjustments for Wisconsin franchise or income tax or recycling economic development surcharge purposes unless a statement is included with the report to the department stating why the taxpayer believes the adjustments are incorrect.

(b) If a taxpayer files an amended federal tax return and the changes on the amended federal tax return affect the amount of Wisconsin net franchise or income tax or recycling economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward, the taxpayer shall file with the department an amended Wisconsin return reflecting the same changes. A taxpayer filing an amended return with another state shall file an amended Wisconsin return if a credit has been allowed against Wisconsin taxes for taxes paid to that state and if the changes affect the amount of Wisconsin net franchise or income tax or recycling economic development surcharge payable, the amount of a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward. If the changes described in this paragraph relate to income, credits claimed or carried forward, net business losses or net business losses carried forward, capital losses or capital losses carried forward, or any other item that is required to be included in a combined report under s. 71.255 (1) (b), Stats., the designated agent of the combined group shall file an amended combined return. The amended Wisconsin return shall be filed within 90 days after the date the amended return is filed with the internal revenue service or other state.

(5) (c) 2. If a taxpayer reports federal adjustments to the department after the expiration of the 4-year period for filing an amended Wisconsin return as described in par. (b), a refund based upon federal adjustments reducing the taxpayer's federal tax liability, which are applicable to the taxpayer's Wisconsin tax or recycling economic development surcharge liability, may still be made if notice of the refund is given to the taxpayer within 90 days of the date the department received a timely report of the federal adjustments.

(6) (a) If a taxpayer fails to report federal adjustments or the filing of an amended federal or other state return, relating to the taxable year 1987 and thereafter, within the 90-day period described in sub. (3) (b), the department may assess additional Wisconsin franchise or income tax or recycling economic development surcharge relating to the adjustments or amended return within 4 years after discovery by the department.

SECTION 3. Tax 2.12 (1), (3) (a), (b), (c), and (e), and (Note) are amended to read:

Tax 2.12 (1) This section applies to amended Wisconsin franchise or income tax returns, including amended combined returns, amended partnership returns, amended recycling economic development surcharge returns and amended farmland preservation credit and homestead credit claims.

(3) (a) The department shall accept amended returns and credit claims to correct previously filed original, other amended or adjusted Wisconsin franchise or income tax returns, partnership returns, recycling economic development surcharge returns or farmland preservation credit or homestead credit claims.

(b) A refund of taxes or credits under ch. 71, Stats., or recycling economic development surcharge under s. 77.96 (4), Stats., may be claimed only by filing an amended return or credit claim, on a form and in the manner described in subs. (5) and (6).

(c) An amended Wisconsin return shall be filed with the department if either an amended federal return is filed or an amended return is filed with another state for which a credit for taxes has been allowed against Wisconsin taxes, and the changes to the amended federal or other state return affect the amount of Wisconsin net franchise or income tax or recycling economic development surcharge payable, a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward.

(e) An amended return or credit claim does not begin or extend the statute of limitation periods for assessing additional tax or recycling economic development surcharge or claiming a refund.

(Note) Subchapter VII of Ch. 77, Stats., was amended by 1999 Wis. Act 9, to create a recycling surcharge effective for taxable years beginning on or after January 1, 2000, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. For taxable years ending before April 1, 1999, subch. VII of ch. 77, Stats., provided for a temporary recycling surcharge; the term “recycling economic development surcharge" as used in this section refers to the “temporary recycling surcharge" for those years and to the “recycling surcharge" prior to July 1, 2011.

SECTION 4. Tax 2.32 (title), (1), (2) (a) 1. and 7. (Note), (d) 1., 3., 4., 5., and 6., (e) 1., (g) 1. and 2., and (h) 1., (3), and (Note) are amended to read:

Tax 2.32 (title) Recycling Economic development surcharge — gross receipts defined.

(1) This section defines “gross receipts" for purposes of the recycling economic development surcharge under subch. VII of ch. 77, Stats.

Note to LRB: Amend the note at the end of Tax 2.32 (1) as follows:

Note: For any taxable year, a recycling an economic development surcharge is imposed on: (a) individuals, estates, trusts, statutory employees 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 $4,000,000 in gross receipts from farming for the taxable year.

(2) (a) 1. Gross receipts or sales reportable on line 1a 1c of federal form 1120, U. S. corporation income tax return.

7. (Note) In this subsection, line numbers of forms refer to the 1999 2011 forms.

(d) 1. Gross receipts or sales reportable on line 1a 1c of federal form 1120S, U. S. corporation income tax return for an S corporation.

3. Gross interest income reportable on line 4a 4 of schedule K on federal form 1120S.

4. Gross Ordinary dividends reportable on line 4b 5a of schedule K on federal form 1120S.

5. Gross royalties includable in computing royalty income reportable on line 4c 6 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 7, 8a, and 9 of schedule K on federal form 1120S.

(e) 1. Gross receipts or sales reportable on lines 1 1c, 4 2a, 2b, 3a, 4a, 5a, 6a, 7a, 8a and 9 7b of federal schedule F, profit or loss from farming.

(g) 1. Gross receipts or sales reportable on line 1 1d of federal schedule C, profit or loss from business.

2. Gross receipts reportable on line 1 1d of federal schedule C-EZ, net profit from business.

(h) 1. Gross receipts or sales reportable on line 1a 1c of federal form 1065, U. S. partnership return of income.

(3) The recycling economic development surcharge applies to each member of a combined group separately. See s. Tax 2.82 for rules pertaining to the imposition and calculation of the recycling economic development surcharge for combined group members.

(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, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. This section applies to the recycling economic development surcharge imposed for taxable years beginning on or after January 1, 2000.

SECTION 5. Tax 2.60 (2) (d) is amended to read:

Tax 2.60 (2) (d) “Combined return" has the same meaning as “combined report" as explained in par. (c). In general, a combined return includes the computation of combined unitary income, the apportionment of the income to each combined group member, as applicable, any separate entity items, loss carryforwards, and credits of each combined group member, and the net tax and recycling economic development surcharge liability of each combined group member. To be considered complete, a combined return shall contain all the items required in s. Tax 2.67 (2) (c).

SECTION 6. Tax 2.63 (4) is repealed.

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.

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;

• Section Tax 2.99 to implement statutory changes to the Dairy and Livestock Farm Investment Credit made in 2005 Act 25 and 2011 Act 15;