Amendment SSA1-AB133

AB133-SSA1,874,18 71.25 (6) Allocation and separate accounting and apportionment formula. (intro.) Corporations engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such corporation within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except financial organizations, public utilities, railroads, sleeping car companies, car line companies and corporations or associations that are subject to a tax on unrelated business income under s. 71.26 (1) (a) there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The. Except as provided in subs. (9d) and (9g), the remaining net income shall be apportioned to Wisconsin this state by use of an apportionment fraction composed of a sales factor under sub. (9) representing 50% of the fraction, a property factor under sub. (7) representing 25% of the fraction and a payroll factor under sub. (8) representing 25% of the fraction. the following:

AB133-SSA1, s. 1729b Section 1729b. 71.25 (6) (a) of the statutes is created to read:

AB133-SSA1,874,23 71.25 (6) (a) For taxable years beginning after December 31, 2000, and before January 1, 2002, an apportionment fraction composed of a sales factor under sub. (9) representing 63% of the fraction, a property factor under sub. (7) representing 18.5% of the fraction and a payroll factor under sub. (8) representing 18.5% of the fraction.

AB133-SSA1, s. 1729c Section 1729c. 71.25 (6) (b) of the statutes is created to read:

AB133-SSA1,875,4 71.25 (6) (b) For taxable years beginning after December 31, 2001, and before January 1, 2003, an apportionment fraction composed of a sales factor under sub. (9) representing 85% of the fraction, a property factor under sub. (7) representing 7.5% of the fraction and a payroll factor under sub. (8) representing 7.5% of the fraction.

AB133-SSA1, s. 1729d Section 1729d. 71.25 (6) (c) of the statutes is created to read:

AB133-SSA1,875,7 71.25 (6) (c) For taxable years beginning after December 31, 2002, an apportionment fraction composed of the sales factor under sub. (9).

AB133-SSA1, s. 1730 Section 1730. 71.25 (7) (intro.) of the statutes is amended to read:

AB133-SSA1,875,10 71.25 (7) Property factor. (intro.) For purposes of sub. (5) and for taxable years beginning before January 1, 2003:

AB133-SSA1, s. 1731 Section 1731. 71.25 (8) (intro.) of the statutes is amended to read:

AB133-SSA1,875,13 71.25 (8) Payroll factor. (intro.) For purposes of sub. (5) and for taxable years beginning before January 1, 2003:

AB133-SSA1, s. 1732 Section 1732. 71.25 (9) (d) of the statutes is amended to read:

AB133-SSA1,875,23 71.25 (9) (d) Sales, other than sales of tangible personal property, are in this state if the income-producing activity is performed in this state. If the income-producing activity is performed both in and outside this state the sales shall be divided between those states having jurisdiction to tax such business in proportion to the direct costs of performance incurred in each such state in rendering this service. Services performed in states which do not have jurisdiction to tax the business shall be deemed to have been performed in the state to which compensation is allocated by sub. (8). This paragraph does not apply to taxable years beginning after December 31, 1999.

AB133-SSA1, s. 1733 Section 1733. 71.25 (9) (dc) of the statutes is created to read:

AB133-SSA1,876,4 71.25 (9) (dc) For taxable years beginning after December 31, 1999, sales, rents, royalties, and other income from real property, and the receipts from the lease or rental of tangible personal property are attributed to the state in which the property is located.

AB133-SSA1, s. 1734 Section 1734. 71.25 (9) (dg) of the statutes is created to read:

AB133-SSA1,876,10 71.25 (9) (dg) For taxable years beginning after December 31, 1999, receipts from the lease or rental of moving property including but not limited to motor vehicles, rolling stock, aircraft, vessels, or mobile equipment are included in the numerator of the sales factor under par. (a) to the extent that the property is used in this state. The use of moving property in this state is determined as follows:

AB133-SSA1,876,16 1. The use of a motor vehicle or rolling stock in this state is determined by multiplying the gross receipts from the lease or rental of the motor vehicle or rolling stock by a fraction having as a numerator the number of miles traveled within this state by the motor vehicle or rolling stock while leased or rented in the taxable year and having as a denominator the total number of miles traveled by the motor vehicle or rolling stock while leased or rented in the taxable year.

AB133-SSA1,876,21 2. The use of an aircraft in this state is determined by multiplying the gross receipts from the lease or rental of the aircraft by a fraction having as a numerator the number of landings of the aircraft in this state while leased or rented in the taxable year and having as a denominator the total number of landings of the aircraft while leased or rented in the taxable year.

AB133-SSA1,877,2 3. The use of a vessel or mobile equipment in this state is determined by multiplying the gross receipts from the lease or rental of the vessel or mobile equipment by a fraction having as a numerator the number of days that the vessel or mobile equipment is in this state while leased or rented in the taxable year and having as a denominator the total number of days that the vessel or mobile equipment is leased or rented in the taxable year.

AB133-SSA1,877,6 4. If the taxpayer does not know the location of moving property while such property is leased or rented in the taxable year, the moving property is used in the state in which such property is located at the time the lessee or renter takes possession of the property.

AB133-SSA1, s. 1735 Section 1735. 71.25 (9) (dn) of the statutes is created to read:

AB133-SSA1,877,10 71.25 (9) (dn) For taxable years beginning after December 31, 1999, gross royalties and gross income received for the use of intangible property are attributed to this state if any of the following applies:

AB133-SSA1,877,13 1. The purchaser of intangible property uses the intangible property in the production, fabrication or manufacturing of a product that is sold to a customer who is located in this state.

AB133-SSA1,877,16 2. The purchaser of intangible property uses the intangible property in the printing or publication of materials that are sold to a customer who is located in this state.

AB133-SSA1,877,18 3. The purchaser of intangible property uses the intangible property in the operation of a trade or business at a location in this state.

AB133-SSA1,877,20 4. The purchaser of intangible property is billed for the purchase of the intangible property at a location in this state.

AB133-SSA1,877,22 5. The taxpayer is not subject to income tax in the state in which the intangible property is used but the taxpayer's commercial domicile is in this state.

AB133-SSA1, s. 1736 Section 1736. 71.25 (9) (dr) of the statutes is created to read:

AB133-SSA1,878,2 71.25 (9) (dr) 1. For taxable years beginning after December 31, 1999, receipts from a service are attributed to the state where the purchaser of the service received the benefit of the service. The benefit of a service is received in this state if any of the following applies:

AB133-SSA1,878,3 a. The service relates to real property that is located in this state.

AB133-SSA1,878,5 b. The service relates to tangible personal property that is located in this state at the time that the service is received.

AB133-SSA1,878,6 c. The service is provided to a person who is located in this state.

AB133-SSA1,878,7 d. The service is provided to a person doing business in this state.

AB133-SSA1,878,8 e. The service is performed at a location in this state.

AB133-SSA1,878,17 2. If the purchaser of a service receives the benefit of a service in more than one state, the receipts from the performance of the service are included in the numerator of the sales factor under par. (a) according to the portion of the service received in this state. If the state where a purchaser received the benefit of a service cannot be determined, the benefit of a service is received in the state where the purchaser, in the regular course of the purchaser's business, ordered the service. If the state where a purchaser ordered a service cannot be determined, the benefit of the service is received in the state where the purchaser, in the regular course of the purchaser's business, receives a bill for the service.

AB133-SSA1,878,21 3. If the taxpayer is not subject to income tax in the state in which the benefit of the service is received, the benefit of the service is received in this state to the extent that the taxpayer's employes or representatives performed services from a location in this state.

AB133-SSA1, s. 1736b Section 1736b. 71.25 (9) (ds) of the statutes is created to read:

AB133-SSA1,879,2 71.25 (9) (ds) 1. For taxable years beginning after December 31, 1999, the gate receipts from professional sporting events are attributed to the state in which the taxpayer's sports facility is located. Gate receipts include the taxpayer's in-state gate receipts and the taxpayer's share of out-of-state gate receipts.

AB133-SSA1,879,8 2. For taxable years beginning after December 31, 1999, radio and television receipts received by the taxpayer from a professional sports association contract with a communications network are attributed to this state in proportion to the number of events held in this state in which the taxpayer's team is a participant and that are related to the contract compared to the total number of events in which the taxpayer's team is a participant and that are related to the contract.

AB133-SSA1, s. 1736c Section 1736c. 71.25 (9) (dt) of the statutes is created to read:

AB133-SSA1,879,13 71.25 (9) (dt) 1. For taxable years beginning after December 31, 1999, the gross receipts from radio and television broadcasting, including advertising revenue, are attributed to this state in proportion to the audience in this state as compared to the total audience.

AB133-SSA1,879,16 2. For taxable years beginning after December 31, 1999, the gross receipts from newspapers and magazines, including advertising revenue, are attributed to this state in proportion to the circulation in this state as compared to the total circulation.

AB133-SSA1, s. 1736d Section 1736d. 71.25 (9) (dw) of the statutes is created to read:

AB133-SSA1,879,22 71.25 (9) (dw) 1. Except as provided in subds. 2. and 3., if a person doing business in this state and outside this state owns a business that is subject to apportionment under sub. (6) or s. 71.04 (4) and a business that is a subject to apportionment under sub. (10), the person shall apportion income as provided under sub. (6) or s. 71.04 (4).

AB133-SSA1,880,6 2. A person who has filed a tax return and who has reported income on the return as apportioned under subd. 1 may request permission from the department to use an alternative apportionment method in the next taxable year, if the person receives at least 50% of the person's total gross receipts in a taxable year from a business described under sub. (10) (c). If the department grants permission to a person to use an alternative apportionment method under this subdivision, the person may not use the alternative method, and shall apportion income under subd. 1., if the person receives less than 50% of the person's total gross receipts in a taxable year from a business described under sub. (10) (c).

AB133-SSA1,880,9 3. The department may require that a person who is subject to apportionment under this subsection use an alternative apportionment method to accurately reflect income that is attributable to this state.

AB133-SSA1, s. 1737 Section 1737. 71.25 (9) (e) (title) of the statutes is repealed.

AB133-SSA1, s. 1738 Section 1738. 71.25 (9) (f) (title) of the statutes is repealed.

AB133-SSA1, s. 1738g Section 1738g. 71.25 (9d) of the statutes is created to read:

AB133-SSA1,880,13 71.25 (9d) Financial organizations. (a) Definitions. In this subsection:

AB133-SSA1,880,15 1. "Billing address" means the address to which a taxpayer under this subsection sends a notice, statement or bill to the taxpayer's customer.

AB133-SSA1,880,16 2. "Credit card" includes a debit card and a travel and entertainment card.

AB133-SSA1,880,19 3. "Credit card reimbursement fee" means the fee that a taxpayer receives from a merchant's bank because a person to whom the taxpayer has issued a credit card has paid for merchandise or services sold by the merchant with the credit card.

AB133-SSA1,881,6 4. "Financial organization" means a bank; a savings bank; a bank holding company; a savings and loan association; a trust company; a credit union, except a credit union that is exempt from taxes under s. 71.26 (1) (a); a production credit association; or an agency or branch of a foreign depository; whether chartered under the laws of this state, another state or territory, the laws of the United States or the laws of a foreign county. "Financial organization" includes a corporation that derives at least 50% of its total gross income from finance leases, including direct finance leases and leverage leases as defined by rule, and a corporation that derives at least 50% of its total gross income from an activity that a financial organization performs, except that "financial organization" does not include an insurance company that is taxable under s. 71.43 or a real estate broker, securities dealer or broker-dealer that is taxable under s. 71.26.

AB133-SSA1,881,16 5. "Loan" means any extension of credit or creation of debt that results from direct negotiations between the taxpayer under this subsection and the taxpayer's customer; the purchase, in whole or in part, of an extension of credit; and participations, syndications and leases that are considered loans for federal income tax purposes. "Loan" does not include loans under section 595 of the Internal Revenue Code; futures or forward contracts; options; notional principal contracts; credit card receivables; purchased credit card relationships; noninterest bearing balances that are due from depository institutions; cash items in the process of collection; federal funds sold; securities; assets held in a trading account; and interest in any mortgage-backed or assets-backed security.

AB133-SSA1,881,19 6. "Merchant discount" means a fee or discount that is charged to a merchant for accepting a credit card as payment for merchandise or services that are sold to the credit card holder.

AB133-SSA1,881,21 7. "State" means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico or a territory or possession of the United States.

AB133-SSA1,881,23 8. "Taxpayer" means a financial organization that is subject to apportionment under this subsection.

AB133-SSA1,882,9 (b) Apportionment. For taxable years beginning after December 31, 1999, a financial organization that does business in this state and outside this state shall apportion its net business income as provided in this subsection. A taxpayer that is subject to this subsection shall apportion its nonbusiness income under sub. (5) (b) and shall deduct the net business income that follows the situs of its property from its total net business income. The taxpayer's remaining net business income shall be apportioned to this state by multiplying the remaining net business income by an apportionment fraction that has as a numerator the gross receipts of the taxpayer in this state during the taxable year and that has a denominator the taxpayer's total gross receipts during the taxable year. The following sources of a taxpayer's business income are subject to apportionment:

AB133-SSA1,882,12 1. `Gross receipts from the lease of real property.' Gross receipts from the lease, rental or sublease of real property owned by the taxpayer shall be apportioned under sub. (9) (dc).

AB133-SSA1,882,15 2. `Gross receipts from the lease of tangible personal property.' Gross receipts from the lease, rental or sublease of tangible personal property owned by the taxpayer shall be apportioned under sub. (9) (dc) and (dg).

AB133-SSA1,882,25 3. `Gross interest from loans secured by real property.' The numerator of the apportionment fraction includes gross interest, fees or penalties from loans that are secured by real property if the real property is located in this state at the time the loan is secured and if the value of the real property represents at least 50% of the aggregate value of the collateral that is used to secure the loan. If the real property that is used to secure a loan is located in this state and in another state or a foreign country, the gross interest, fees or penalties from the loan are included in the numerator of the apportionment fraction, if at least 50% of the fair market value of the real property is located within this state or if the loan borrower is located in this state.

AB133-SSA1,883,3 4. `Gross interest from loans.' The numerator of the apportionment fraction includes gross interest, fees or penalties from loans that are not secured by real property, if the loan borrower is located in this state.

AB133-SSA1,883,6 5. `Sale of loans.' The numerator of the apportionment fraction includes income from the sale of loans and income under section 1286 of the Internal Revenue Code. The income that is included in the numerator is determined as follows:

AB133-SSA1,883,10 a. The gross receipts from the sale of loans secured by real property is multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 3. and that has as a denominator the total amount of interest, fees and penalties from loans that are secured by real property.

AB133-SSA1,883,14 b. The net gains from the sale of loans that are not secured by real property is multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 4. and that has as a denominator the total amount of interest, fees and penalties from loans that are not secured by real property.

AB133-SSA1,883,18 6. `Credit card receivables.' The numerator of the apportionment fraction includes gross interest, fees or penalties from credit card receivables and gross receipts from fees charged to credit card holders, if the billing address of the credit card holder is in this state.

AB133-SSA1,883,23 7. `Gross receipts from the sale of credit card receivables.' The numerator of the apportionment fraction includes gross receipts from the sale of credit card receivables, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 6. and that has as a denominator the total amount of interest, fees and penalties that are charged to credit card holders.

AB133-SSA1,884,3 8. `Credit card reimbursement fees.' The numerator of the apportionment fraction includes credit card reimbursement fees, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 6. and that has as a denominator the total amount of interest, fees and penalties that are charged to credit card holders.

AB133-SSA1,884,9 9. `Gross receipts from a merchant discount.' The numerator of the apportionment fraction includes gross receipts from a merchant discount if the merchant's business is principally managed from a location in this state. The gross receipts from a merchant discount shall not include credit card holder charge backs. The amount of gross receipts from a merchant discount shall not be reduced by interchange transaction fees or by a credit card reimbursement fee.

AB133-SSA1,884,19 10. `Loan servicing fees.' a. The numerator of the apportionment fraction includes loan servicing fees derived from loans that are secured by real property, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 3. and that has as a denominator the total amount of interest, fees and penalties from loans that are secured by real property. The numerator of the apportionment fraction also includes loan servicing fees derived from loans that are not secured by real property, multiplied by a fraction that has as a numerator the amount included in the numerator under subd. 4. and that has as a denominator the total amount of interest, fees and penalties from loans that are not secured by real property.

AB133-SSA1,884,22 b. If the taxpayer receives loan servicing fees for servicing a loan, the numerator of the apportionment fraction shall include such fees if the borrower of the loan is located in this state.

AB133-SSA1,885,2 11. `Gross income from investment banking services.' The numerator of the apportionment fraction includes gross income, including commissions, management fees or underwriting fees, earned from investment banking services if the purchaser of the services is located in this state.

AB133-SSA1,885,4 12. `Gross receipts from other services.' The gross receipts from services that are not described under subds. 1. to 11. shall be apportioned under sub. (9) (dr).

AB133-SSA1,885,6 13. `Other sales.' Sales under sub. (9) that are not apportioned under this subsection shall be apportioned under sub. (9).

AB133-SSA1,885,10 (c) Receipts not taxed. Fifty percent of the gross receipts of the taxpayer that are apportioned under this subsection to a state in which the taxpayer is not taxable is included in the numerator of the apportionment fraction under par. (b), if the taxpayer's commercial domicile is in this state.

AB133-SSA1, s. 1738k Section 1738k. 71.25 (9g) of the statutes is created to read:

AB133-SSA1,885,13 71.25 (9g) Brokers-dealer and underwriters. (a) Definitions. In this subsection:

AB133-SSA1,885,14 1. "Billing address" has the meaning given in sub. (9d) (a) 1.

AB133-SSA1,885,16 2. "Brokerage commission" includes sales fees on agency or principal transactions.

AB133-SSA1,885,22 3. "Broker-dealer" means a person who does business as a broker of securities or commodities. "Broker-dealer" does not include a sales agent; a bank, savings institution or trust company that enters a securities or commodities transaction as an agent; a executor, guardian or conservator who enters a securities or commodities transaction as an agent for another; or a person who purchases or sells the person's own securities or commodities.

AB133-SSA1,885,24 4. "Taxpayer" means a broker-dealer or an underwriter who is subject to apportionment under this subsection.

AB133-SSA1,886,5 5. "Underwriter" means a person who guarantees to provide a definite sum of money by a definite date to a corporate or government entity in exchange for securities; who markets a corporate or government security offering to the public; or who buys a security offering for a specified price and sells the security offering to the public.

AB133-SSA1,886,16 (b) Apportionment. For taxable years beginning after December 31, 1999, a broker-dealer or an underwriter who does business in this state and outside this state shall apportion its net business income as provided under this subsection. A taxpayer that is subject to this subsection shall apportion its nonbusiness income under sub. (5) (b) and shall deduct the net business income that follows the situs of its property from its total net business income. The taxpayer's remaining net business income shall be apportioned to this state by multiplying the remaining net business income by an apportionment fraction that has as a numerator the gross receipts of the taxpayer in this state during the taxable year and that has a denominator the taxpayer's total gross receipts during the taxable year. The following sources of a taxpayer's business income are subject to apportionment:

AB133-SSA1,886,20 1. `Security brokerage services.' The numerator of the apportionment fraction includes gross brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by customers, if the billing address of the customer is in this state.

AB133-SSA1,886,24 2. `Underwriting services.' The numerator of the apportionment fraction includes gross income, including commissions, management fees or underwriting fees, earned from underwriting services if the purchaser of the services is located in this state.

AB133-SSA1,887,4 3. `Other services.' The numerator of the apportionment fraction includes gross income, including commissions or management fees, earned from providing investment research, management services or financial services to a customer, if the customer's billing address is in this state.

AB133-SSA1,887,6 4. `Other sales.' Sales under sub. (9) that are not apportioned under this subsection shall be apportioned under sub. (9).