1995 Wisconsin Act 27

71.36 (1m) A tax-option corporation may deduct from its net income all amounts included in the Wisconsin adjusted gross income of its shareholders, the capital gain deduction under s. 71.05 (6) (b) 9. and all amounts not taxable to nonresident shareholders under ss. 71.04 (1) and (4) to (9) and 71.362. For purposes of this subsection, interest on federal obligations, obligations issued under ss. 66.39, 66.40, 66.431 and 66.4325, obligations issued under s. 234.65 to fund an economic development loan to finance construction, renovation or development of property that would be exempt under s. 70.11 (36) and obligations issued under subch. II of ch. 229 is not included in shareholders' income. The proportionate share of the net loss of a tax-option corporation shall be attributed and made available to shareholders on a Wisconsin basis but subject to the limitation and carry-over rules as prescribed by section 1366 (d) of the internal revenue code. Net operating losses of the corporation to the extent attributed or made available to a shareholder may not be used by the corporation for further tax benefit. For purposes of computing the Wisconsin adjusted gross income of shareholders, tax-option items shall be reported by the shareholders and those tax-option items, including capital gains and losses, shall retain the character they would have if attributed to the corporation, including their character as business income. In computing the tax liability of a shareholder, no credit against gross tax that would be available to the tax-option corporation if it were a nontax-option corporation may be claimed.

27,3404k Section 3404k. 71.365 (1m) of the statutes is amended to read:

71.365 (1m) Tax-option corporations; depreciation. A tax-option corporation may compute amortization and depreciation under either the federal internal revenue code as amended to December 31, 1993 1994, or the federal internal revenue code in effect for the taxable year for which the return is filed, except that property first placed in service by the taxpayer on or after January 1, 1983, but before January 1, 1987, that, under s. 71.04 (15) (b) and (br), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, and property first placed in service in taxable year 1981 or thereafter but before January 1, 1987, that, under s. 71.04 (15) (bm), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, shall continue to be depreciated under the internal revenue code as amended to December 31, 1980. Any difference between the adjusted basis for federal income tax purposes and the adjusted basis under this chapter shall be taken into account in determining net income or loss in the year or years for which the gain or loss is reportable under this chapter. If that property was placed in service by the taxpayer during taxable year 1986 and thereafter but before the property is used in the production of income subject to taxation under this chapter, the property's adjusted basis and the depreciation or other deduction schedule are not required to be changed from the amount allowable on the owner's federal income tax returns for any year because the property is used in the production of income subject to taxation under this chapter. If that property was acquired in a transaction in taxable year 1986 or thereafter in which the adjusted basis of the property in the hands of the transferee is the same as the adjusted basis of the property in the hands of the transferor, the Wisconsin adjusted basis of that property on the date of transfer is the adjusted basis allowable under the internal revenue code as defined for Wisconsin purposes for the property in the hands of the transferor.

27,3404q Section 3404q. 71.42 (2) (g) of the statutes is amended to read:

71.42 (2) (g) For taxable years that begin after December 31, 1992, and before January 1, 1994, “internal revenue code" means the federal internal revenue code as amended to December 31, 1992, excluding sections 103, 104 and 110 of P.L. 102-227, and as amended by P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13113, 13150, 13171, 13174 and 13203 of P.L. 103-66, and P.L. 103-465 and as indirectly affected by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, excluding sections 103, 104 and 110 of P.L. 102-227, P.L. 102-318, P.L. 102-486 and, P.L. 103-66, excluding sections 13101 (a) and (c) 1, 13113, 13150, 13171, 13174 and 13203 of P.L. 103-66, and P.L. 103-465 except that “internal revenue code" does not include section 847 of the federal internal revenue code. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1992, do not apply to this paragraph with respect to taxable years beginning after December 31, 1992, and before January 1, 1994, except that changes to the internal revenue code made by P.L. 103-66 and P.L. 103-465 and changes that indirectly affect the federal internal revenue code made by P.L. 103-66 and P.L. 103-465 apply for Wisconsin purposes at the same time as for federal purposes.

27,3404r Section 3404r. 71.42 (2) (h) of the statutes is amended to read:

71.42 (2) (h) For taxable years that begin after December 31, 1993, and before January 1, 1995, “internal revenue code" means the federal internal revenue code as amended to December 31, 1993 excluding sections 103, 104 and 110 of P.L. 102-227 and sections 13113, 13150 (d), 13171 (d), 13174, 13203 (d) and 13215 of P.L. 103-66, and as amended by P.L. 103-296, P.L. 103-337 and P.L. 103-465 and as indirectly affected by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, excluding sections 103, 104 and 110 of P.L. 102-227, P.L. 102-318, P.L. 102-486 and P.L. 103-66, excluding sections 13113, 13150 (d), 13171 (d), 13174, 13203 (d) and 13215 of P.L. 103-66, P.L. 103-296, P.L. 103-337 and P.L. 103-465 except that “internal revenue code" does not include section 847 of the federal internal revenue code. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1993, do not apply to this paragraph with respect to taxable years beginning after December 31, 1993, and before January 1, 1995, except that changes to the internal revenue code made by P.L. 103-296, P.L. 103-337 and P.L. 103-465 and changes that indirectly affect the provisions applicable to this subchapter made by P.L. 103-296, P.L. 103-337 and P.L. 103-465 apply for Wisconsin purposes at the same time as for federal purposes.

27,3404s Section 3404s. 71.42 (2) (i) of the statutes is created to read:

71.42 (2) (i) For taxable years that begin after December 31, 1994, “internal revenue code" means the federal internal revenue code as amended to December 31, 1994, excluding sections 103, 104 and 110 of P.L. 102-227 and sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of P.L. 103-66, and as indirectly affected by P.L. 99-514, P.L. 100-203, P.L. 100-647, P.L. 101-73, P.L. 101-140, P.L. 101-179, P.L. 101-239, P.L. 101-508, P.L. 102-227, excluding sections 103, 104 and 110 of P.L. 102-227, P.L. 102-318, P.L. 102-486, P.L. 103-66, excluding sections 13113, 13150 (d), 13171 (d), 13174 and 13203 (d) of P.L. 103-66, P.L. 103-296, P.L. 103-337 and P.L. 103-465 except that “internal revenue code" does not include section 847 of the federal internal revenue code. The internal revenue code applies for Wisconsin purposes at the same time as for federal purposes. Amendments to the federal internal revenue code enacted after December 31, 1994, do not apply to this paragraph with respect to taxable years beginning after December 31, 1994.

27,3405 Section 3405 . 71.45 (1) of the statutes is amended to read:

71.45 (1) Exempt and excludable income. There shall be exempt from taxation under this subchapter income of insurers exempt from federal income taxation pursuant to section 501 (c) (15) of the internal revenue code, town mutuals organized under or subject to ch. 612, foreign insurers, and domestic insurers engaged exclusively in life insurance business, domestic insurers insuring against financial loss by reason of nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien or charge on real estate and corporations organized under ch. 185, but not including income of cooperative sickness care associations organized under s. 185.981, or of a service insurance corporation organized under ch. 613, that is derived from a health maintenance organization as defined in s. 609.01 (2) or a limited service health organization as defined in s. 609.01 (3), or operating under subch. I of ch. 616 which are bona fide cooperatives operated without pecuniary profit to any shareholder or member, or operated on a cooperative plan pursuant to which they determine and distribute their proceeds in substantial compliance with s. 185.45.

27,3405g Section 3405g. 71.45 (1m) of the statutes is repealed.

27,3405m Section 3405m. 71.45 (1s) of the statutes is repealed.

27,3405r Section 3405r. 71.45 (1t) of the statutes is created to read:

71.45 (1t) Exemption from the income tax. The interest and income from the following obligations are exempt from the tax imposed under s. 71.43 (1):

(a) Those issued under s. 66.39.

(b) Those issued under s. 66.40.

(c) Those issued under s. 66.431.

(d) Those issued under s. 66.4325.

(e) Those issued under s. 234.65 to fund an economic development loan to finance construction, renovation or development of property that would be exempt under s. 70.11 (36).

(f) Those issued under subch. II of ch. 229.

27,3406 Section 3406 . 71.45 (2) (a) (intro.) of the statutes is amended to read:

71.45 (2) (a) (intro.) Insurers subject to taxation under this chapter shall pay a tax according to or measured by net income. Such tax is payable under s. 71.44 (1). “Net Except as provided in sub. (5), “net income" of an insurer subject to taxation under this chapter means federal taxable income as determined in accordance with the provisions of the internal revenue code adjusted as follows:

27,3406m Section 3406m. 71.45 (2) (a) 3. of the statutes is amended to read:

71.45 (2) (a) 3. For insurers subject to taxation under s. 71.43 (1), by adding to federal taxable income the amount of any interest income, except interest under sub. (1t), that is not included in federal taxable income except the amount of any interest income which is by federal law exempt from taxation by this state and, for insurers subject to taxation under s. 71.43 (2), by adding to federal taxable income the amount of any interest income which is not included in federal taxable income.

27,3406r Section 3406r. 71.45 (2) (a) 10. of the statutes is amended to read:

71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1di) (1dd) to (1ds) and not passed through by a partnership, limited liability company or tax-option corporation that has added that amount to the partnership's, limited liability company's or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (4) and (5).

27,3406v Section 3406v. 71.45 (2) (a) 13. of the statutes is amended to read:

71.45 (2) (a) 13. By adding or subtracting, as appropriate, the difference between the depreciation deduction under the federal internal revenue code as amended to December 31, 1993 1994, and the depreciation deduction under the federal internal revenue code in effect for the taxable year for which the return is filed, so as to reflect the fact that the insurer may choose between these 2 deductions, except that property first placed in service by the taxpayer on or after January 1, 1983, but before January 1, 1987, that, under s. 71.04 (15) (b) and (br), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, and property first placed in service in taxable year 1981 or thereafter but before January 1, 1987, that, under s. 71.04 (15) (bm), 1985 stats., is required to be depreciated under the internal revenue code as amended to December 31, 1980, shall continue to be depreciated under the internal revenue code as amended to December 31, 1980.

27,3407 Section 3407 . 71.45 (5) of the statutes is created to read:

71.45 (5) Exceptions. The net income of a cooperative sickness care association organized under s. 185.981, or of a service insurance corporation organized under ch. 613, that is derived from a health maintenance organization, as defined in s. 609.01 (2), or a limited service health organization, as defined in s. 609.01 (3), is the net income that would be determined if the cooperative sickness care association or service insurance corporation were subject to federal income taxation and as if that income were that of an insurance company.

27,3407m Section 3407m. 71.47 (1dd) of the statutes is created to read:

71.47 (1dd) Development zones day care credit. (a) In this subsection:

1. “Day care center benefits" means benefits provided at a day care facility that is licensed under s. 48.65 or 48.69 and that for compensation provides care for at least 6 children.

2. “Employment-related day care expenses" means amounts paid or incurred by a claimant for providing or making day care center benefits available to a qualifying individual in order to enable a member of a targeted group to be employed by the claimant.

4. “Member of a targeted group" means a person under sub. (1dj) (am) 1.

5. “Qualifying individual" means a dependent of a member of a targeted group who is employed by a claimant and with respect to whom the member is entitled to a deduction under section 151 (c) of the internal revenue code for federal income tax purposes, a dependent of a member of a targeted group who is employed by a claimant if the dependent is physically or mentally incapable of caring for himself or herself or the spouse of a member of a targeted group who is employed by the claimant if the spouse is physically or mentally incapable of caring for himself or herself.

(b) Except as provided in s. 73.03 (35), for any taxable year for which that person is certified under s. 560.765 (3) and begins business operations in a zone under s. 560.71 after the effective date of this paragraph .... [revisor inserts date], or certified under s. 560.797 (4) (a), for each zone for which the person is certified or entitled a person may credit against taxes otherwise due under this subchapter employment-related day care expenses, up to $1,200 for each qualifying individual.

(c) Subsection (1di) (b), (c), (d) 1., (f) and (g), as it applies to the credit under sub. (1di), applies to the credit under this subsection.

(d) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

(dm) No credit may be allowed under this subsection unless the claimant includes with the claimant's return a statement from the department of development verifying the amount of qualifying employment-related day care expenses.

(e) The credit under this subsection, as it applies to a person certified under s. 560.765 (3), applies to a person who conducts economic activity in a zone under s. 560.795 (1) and who is entitled to tax benefits under s. 560.795 (3), subject to the limits under s. 560.795 (2). A credit under this subsection may be credited using expenses incurred by a claimant on the effective date of this paragraph .... [revisor inserts date].

27,3407r Section 3407r. 71.47 (1de) of the statutes is created to read:

71.47 (1de) Development zones environmental remediation credit. (a) Except as provided in s. 73.03 (35), for any taxable year for which a person is certified under s. 560.765 (3) and begins business operations in a zone under s. 560.71 after the effective date of this paragraph .... [revisor inserts date], or certified under s. 560.797 (4) (a), for each zone for which the person is certified or entitled the person may claim as a credit against taxes otherwise due under this subchapter an amount equal to 7.5% of the amount that the person expends to remove or contain environmental pollution, as defined in s. 144.01 (3), in the zone or to restore soil or groundwater that is affected by environmental pollution, as defined in s. 144.01 (3), in the zone if the person fulfills all of the following requirements:

1. Begins the work, other than planning and investigating, for which the credit is claimed after the area that includes the site where the work is done is designated a development zone under s. 560.71 , a development opportunity zone under s. 560.795 or an enterprise development zone under s. 560.797 and after the claimant is certified under s. 560.765 (3) , entitled under s. 560.795 (3) (a) or certified under s. 560.797 (4) (a).

(b) Subsection (1di) (b), (c), (d), (f) and (g), as it applies to the credit under s. 71.07 (2di), applies to the credit under this subsection.

(c) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

(d) The credit under this subsection, as it applies to a person certified under s. 560.765 (3), applies to a person who conducts economic activity in a zone under s. 560.795 (1) and who is entitled to tax benefits under s. 560.795 (3), subject to the limits under s. 560.795 (2). A credit under this subsection may be credited using expenses incurred by a claimant on the effective date of this paragraph .... [revisor inserts date].

27,3408g Section 3408g. 71.47 (1dj) (d) of the statutes is amended to read:

71.47 (1dj) (d) If the allowable amount of the credit under par. (am) exceeds the taxes otherwise due under this chapter on or measured by the claimant's income, the amount of the credit not used as an offset against those taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft unless the claimant does not fulfill the requirements under sub. (1di) (b) 2. and bases the claim on activity in a zone under s. 560.797.

27,3410mm Section 3410mm. 71.47 (1dj) (h) of the statutes is created to read:

71.47 (1dj) (h) For claims based on activity in a zone under s. 560.797, the rules under sub. (1di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

27,3410r Section 3410r. 71.47 (1ds) (c) of the statutes is amended to read:

71.47 (1ds) (c) If the allowable amount of the credit under par. (b) exceeds the taxes otherwise due under this chapter on or measured by the claimant's income, the amount of the credit not used as an offset against those taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft unless the claimant does not fulfill the requirements under sub. (1di) (b) 2. and bases the claim on activity in a zone under s. 560.797.

27,3411mm Section 3411mm. 71.47 (1ds) (h) of the statutes is created to read:

71.47 (1ds) (h) For claims based on activity in a zone under s. 560.797, the rules under sub. (1di) (b) and (c) as they apply to the credit under that subsection apply to the credit under this subsection.

27,3412m Section 3412m. 71.47 (6) (a) of the statutes is amended to read:

71.47 (6) (a) Any person may credit against taxes otherwise due under this chapter, up to the amount of those taxes, an amount equal to 5% of the costs of qualified rehabilitation expenditures, as defined in section 48 (g) (2) 47 (c) (2) of the internal revenue code, for certified historic structures on property located in this state if the physical work of construction or destruction in preparation for construction begins after December 31, 1988, and the rehabilitated property is placed in service after June 30, 1989.

27,3412rg Section 3412rg. 71.49 (1) (eb), (ec), (en) and (eo) of the statutes are created to read:

71.49 (1) (eb) Development zones jobs credit under s. 71.47 (1dj) if the credit is based on activity in a zone under s. 560.797.

(ec) Development zones sales tax credit under s. 72.47 (1ds) if the credit is based on activity in a zone under s. 560.797.

(en) Development zones day care credit under s. 71.28 (1dd).

(eo) Development zones environmental remediation credit under s. 71.28 (1de).

27,3412rr Section 3412rr. 71.49 (1) (f) of the statutes is amended to read:

71.49 (1) (f) The total of farmers' drought property tax credit under s. 71.47 (1fd), farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.47 (2m), development zones sales tax credit under s. 71.47 (1ds) unless the credit is based on activity in a zone under s. 560.797, development zones jobs credit under s. 71.47 (1dj) unless the credit is based on activity in a zone under s. 560.797 and estimated tax payments under s. 71.48.

27,3413 Section 3413 . 71.52 (6) of the statutes is amended to read:

71.52 (6) “Income" means the sum of Wisconsin adjusted gross income and the following amounts, to the extent not included in Wisconsin adjusted gross income: maintenance payments (except foster care maintenance and supplementary payments excludable under section 131 of the internal revenue code), support money, cash public assistance and general relief (not including credit granted under this subchapter and amounts under s. 46.27), cash benefits paid by counties under s. 59.07 (154), the gross amount of any pension or annuity (including railroad retirement benefits, all payments received under the federal social security act and veterans disability pensions), nontaxable interest received from the federal government or any of its instrumentalities, nontaxable interest received on state or municipal bonds, worker's compensation, unemployment compensation, the gross amount of “loss of time" insurance, compensation and other cash benefits received from the United States for past or present service in the armed forces, scholarship and fellowship gifts or income, capital gains, gain on the sale of a personal residence excluded under section 121 of the internal revenue code, dividends, income of a nonresident or part-year resident who is married to a full-year resident, housing allowances provided to members of the clergy, the amount by which a resident manager's rent is reduced, nontaxable income of an American Indian, nontaxable income from sources outside this state and nontaxable deferred compensation. Intangible drilling costs, depletion allowances and depreciation, including first-year depreciation allowances under section 179 of the internal revenue code, amortization, contributions to individual retirement accounts under section 219 of the internal revenue code, contributions to Keogh plans, net operating loss carry-forwards and capital loss carry-forwards deducted in determining Wisconsin adjusted gross income shall be added to “income". “Income" does not include gifts from natural persons, cash reimbursement payments made under title XX of the federal social security act, surplus food or other relief in kind supplied by a governmental agency, the gain on the sale of a personal residence deferred under section 1034 of the internal revenue code or nonrecognized gain from involuntary conversions under section 1033 of the internal revenue code. Amounts not included in adjusted gross income but added to “income" under this subsection in a previous year and repaid may be subtracted from income for the year during which they are repaid. A marital property agreement or unilateral statement under ch. 766 has no effect in computing “income" for a person whose homestead is not the same as the homestead of that person's spouse.

27,3414 Section 3414 . 71.54 (2) (a) (intro.) of the statutes is amended to read:

71.54 (2) (a) (intro.) Property taxes accrued or rent constituting property taxes accrued shall be reduced by one-twelfth for each month or portion of a month for which the claimant received general relief from any municipality or county under s. 59.07 (154) equal to or in excess of $400, or received assistance under s. 49.19, except assistance received:

27,3414m Section 3414m. 71.55 (1) of the statutes is amended to read:

71.55 (1) Application of credit against any liability. The amount of any claim otherwise payable under this subchapter may be applied by the department of revenue against any amount certified to the department under s. 71.93 or 71.935 or may be credited under s. 71.80 (3) or (3m).

27,3415r Section 3415r. 71.61 (1) of the statutes is amended to read:

71.61 (1) Department may apply credit against any tax liability. The amount of any claim otherwise payable under this subchapter may be applied by the department against any amount certified to the department under s. 71.93 or 71.935 or may be credited under s. 71.80 (3) or (3m).

27,3417m Section 3417m. 71.67 (4) (a) of the statutes is amended to read:

71.67 (4) (a) The administrator of the lottery division in the gaming commission department under ch. 565 shall withhold from any lottery prize of $2,000 or more an amount determined by multiplying the amount of the prize by the highest rate applicable to individuals under s. 71.06 (1). The administrator shall deposit the amounts withheld, on a monthly basis, as would an employer depositing under s. 71.65 (3) (a).

27,3419 Section 3419 . 71.67 (6) of the statutes is created to read:

71.67 (6) Withholding registration; fee. Each employer who is required to withhold under this chapter shall obtain a valid certificate under s. 73.03 (50).

27,3419m Section 3419m. 71.75 (1) of the statutes is amended to read:

71.75 (1) Except as provided in ss. 46.255, 71.77 (5) and (7) (b) and 71.93 and 71.935, the provisions for refunds and credits provided in this section shall be the only method for the filing and review of claims for refund of income and surtaxes, and no person may bring any action or proceeding for the recovery of such taxes other than as provided in this section.

27,3420m Section 3420m. 71.75 (9) of the statutes is amended to read:

71.75 (9) All refunds under this chapter are subject to attachment under ss. 46.255 and, 71.93 and 71.935.

27,3420x Section 3420x. 71.78 (4) (L) of the statutes is amended to read:

71.78 (4) (L) The administrator of the lottery division in the gaming commission department for the purpose of withholding lottery winnings under s. 565.30 (5).

27,3422 Section 3422 . 71.78 (4) (n) of the statutes is created to read:

71.78 (4) (n) The state public defender and the department of administration for the purpose of collecting payment ordered under s. 48.275 (2), 757.66, 973.06 (1) (e) or 977.076 (1).

27,3422m Section 3422m. 71.78 (4) (o) of the statutes is created to read:

71.78 (4) (o) The department of regulation and licensing or an examining board or affiliated credentialing board attached to the department of regulation and licensing for the purpose of determining under s. 440.08 (2r) whether an applicant for renewal of a credential is liable for any delinquent taxes owed to this state.

27,3423 Section 3423 . 71.78 (5) of the statutes is amended to read:

71.78 (5) Agreement with department. Copies of returns and claims specified in sub. (1) and related schedules, exhibits, writings or audit reports shall not be furnished to the persons listed under sub. (4), except persons under sub. (4) (e) and, (k) , (n) and (o) or under an agreement between the department of revenue and another agency of government.