AB380-ASA2,1,8 1An Act to renumber and amend 71.04 (4), 71.04 (8) (b), 71.25 (6), 71.25 (10)
2(b) and 71.45 (3) (b); to amend 71.04 (5) (intro.), 71.04 (6) (intro.), 71.04 (7) (d),
371.04 (8) (c), 71.04 (10), 71.25 (7) (intro.), 71.25 (8) (intro.), 71.25 (9) (d), 71.25
4(10) (c), 71.25 (11), 71.45 (3) (intro.), 71.45 (3) (a) and 71.45 (3m); and to create
571.04 (4) (a), 71.04 (4) (b), 71.04 (4) (c), 71.04 (4m), 71.25 (6) (a), 71.25 (6) (b),
671.25 (6) (c), 71.25 (6m), 71.45 (3d) and 71.45 (3e) of the statutes; relating to:
7single sales factor apportionment of income for corporate income tax and
8franchise tax purposes and granting rule-making authority
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB380-ASA2, s. 1 9Section 1. 71.04 (4) of the statutes is renumbered 71.04 (4) (intro.) and
10amended to read:
AB380-ASA2,2,1711 71.04 (4) Nonresident allocation and apportionment formula. (intro.)
12Nonresident individuals and nonresident estates and trusts engaged in business

1within and without the state shall be taxed only on such income as is derived from
2business transacted and property located within the state. The amount of such
3income attributable to Wisconsin may be determined by an allocation and separate
4accounting thereof, when the business of such nonresident individual or nonresident
5estate or trust within the state is not an integral part of a unitary business, but the
6department of revenue may permit an allocation and separate accounting in any case
7in which it is satisfied that the use of such method will properly reflect the income
8taxable by this state. In all cases in which allocation and separate accounting is not
9permissible, the determination shall be made in the following manner: for all
10businesses except air carriers, financial organizations, pipeline companies, public
11utilities, railroads, sleeping car companies and car line companies there shall first
12be deducted from the total net income of the taxpayer the part thereof (less related
13expenses, if any) that follows the situs of the property or the residence of the
14recipient. The remaining net income shall be apportioned to Wisconsin this state by
15use of an apportionment fraction composed of a sales factor representing 50% of the
16fraction, a property factor representing 25% of the fraction and a payroll factor
17representing 25% of the fraction.
the following:
AB380-ASA2, s. 2 18Section 2. 71.04 (4) (a) of the statutes is created to read:
AB380-ASA2,2,2219 71.04 (4) (a) For taxable years beginning before January 1, 2002, an
20apportionment fraction composed of a sales factor under sub. (7) representing 50%
21of the fraction, a property factor under sub. (5) representing 25% of the fraction, and
22a payroll factor under sub. (6) representing 25% of the fraction.
AB380-ASA2, s. 3 23Section 3. 71.04 (4) (b) of the statutes is created to read:
AB380-ASA2,2,2524 71.04 (4) (b) For taxable years beginning after December 31, 2001, an
25apportionment fraction composed of the sales factor under sub. (7).
AB380-ASA2, s. 4
1Section 4. 71.04 (4) (c) of the statutes is created to read:
AB380-ASA2,3,42 71.04 (4) (c) For taxable years beginning after December 31, 2001, the
3apportionment fraction for the remaining net income of a financial organization is
4composed of a sales factor, as determined by rule by the department.
AB380-ASA2, s. 5 5Section 5. 71.04 (4m) of the statutes is created to read:
AB380-ASA2,3,106 71.04 (4m) Apportionment formula computation. (a) 1. For taxable years
7beginning before January 1, 2002, if both the numerator and the denominator of the
8sales factor under sub. (7) related to a taxpayer's remaining net income are zero, the
9sales factor under sub. (7) is eliminated from the apportionment formula to
10determine the taxpayer's remaining net income under sub. (4).
AB380-ASA2,3,1411 2. For taxable years beginning after December 31, 2001, if both the numerator
12and the denominator of the sales factor under sub. (7) related to a taxpayer's
13remaining net income are zero, none of the taxpayer's remaining net income is
14apportioned to this state.
AB380-ASA2,3,1915 (b) 1. For taxable years beginning before January 1, 2002, if the numerator of
16the sales factor under sub. (7) related to a taxpayer's remaining net income is a
17negative number and the denominator of the sales factor under sub. (7) related to a
18taxpayer's remaining net income is a positive number, a negative number, or zero,
19the sales factor under sub. (7) is zero.
AB380-ASA2,3,2420 2. For taxable years beginning after December 31, 2001, if the numerator of the
21sales factor under sub. (7) related to a taxpayer's remaining net income is a negative
22number and the denominator of the sales factor under sub. (7) related to a taxpayer's
23remaining net income is a positive number, a negative number, or zero, none of the
24taxpayer's remaining net income is apportioned to this state.
AB380-ASA2,4,5
1(c) 1. For taxable years beginning before January 1, 2002, if the numerator of
2the sales factor under sub. (7) related to a taxpayer's remaining net income is a
3positive number and the denominator of the sales factor under sub. (7) related to a
4taxpayer's remaining net income is zero or a negative number, the sales factor under
5sub. (7) is one.
AB380-ASA2,4,106 2. For taxable years beginning after December 31, 2001, if the numerator of the
7sales factor under sub. (7) related to a taxpayer's remaining net income is a positive
8number and the denominator of the sales factor under sub. (7) related to a taxpayer's
9remaining net income is zero or a negative number, all of the taxpayer's remaining
10net income is apportioned to this state.
AB380-ASA2, s. 6 11Section 6. 71.04 (5) (intro.) of the statutes is amended to read:
AB380-ASA2,4,1312 71.04 (5) Property factor. (intro.) For purposes of sub. (4) and for taxable
13years beginning before January 1, 2002
:
AB380-ASA2, s. 7 14Section 7. 71.04 (6) (intro.) of the statutes is amended to read:
AB380-ASA2,4,1615 71.04 (6) Payroll factor. (intro.) For purposes of sub. (4) and for taxable years
16beginning before January 1, 2002
:
AB380-ASA2, s. 8 17Section 8. 71.04 (7) (d) of the statutes is amended to read:
AB380-ASA2,4,2518 71.04 (7) (d) Sales, other than sales of tangible personal property, are in this
19state if the income-producing activity is performed in this state. If the
20income-producing activity is performed both in and outside this state the sales shall
21be divided between those states having jurisdiction to tax such business in
22proportion to the direct costs of performance incurred in each such state in rendering
23this service. Services performed in states which do not have jurisdiction to tax the
24business shall be deemed to have been performed in the state to which compensation
25is allocated by sub. s. 71.04 (6) , 1999 stats.
AB380-ASA2, s. 9
1Section 9. 71.04 (8) (b) of the statutes is renumbered 71.04 (8) (b) 1. and
2amended to read:
AB380-ASA2,5,93 71.04 (8) (b) 1. "Public For taxable years beginning before January 1, 2002,
4"public
utility", as used in this section, means any business entity described under
5subd. 2. and
any business entity which owns or operates any plant, equipment,
6property, franchise, or license for the transmission of communications or the
7production, transmission, sale, delivery, or furnishing of electricity, water or steam,
8the rates of charges for goods or services of which have been established or approved
9by a federal, state or local government or governmental agency. " Public
AB380-ASA2,5,15 102. In this section, for taxable years beginning after December 31, 2001, "public
11utility" also means any business entity providing service to the public and engaged
12in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
13regardless of whether or not the entity's rates or charges for services have been
14established or approved by a federal, state or local government or governmental
15agency.
AB380-ASA2, s. 10 16Section 10. 71.04 (8) (c) of the statutes is amended to read:
AB380-ASA2,5,2117 71.04 (8) (c) The net business income of railroads, sleeping car companies, car
18line companies, pipeline companies, financial organizations, air carriers and public
19utilities requiring apportionment shall be apportioned pursuant to rules of the
20department of revenue, but the income taxed is limited to the income derived from
21business transacted and property located within the state.
AB380-ASA2, s. 11 22Section 11. 71.04 (10) of the statutes is amended to read:
AB380-ASA2,6,823 71.04 (10) Department may waive factor. Where, in the case of any nonresident
24individual or nonresident estate or trust engaged in business within in and without
25the
outside this state of Wisconsin and required to apportion its income as provided

1in this section, it shall be shown to the satisfaction of the department of revenue that
2the use of any one of the 3 factors provided under sub. (4) gives an unreasonable or
3inequitable final average ratio because of the fact that such nonresident individual
4or nonresident estate or trust does not employ, to any appreciable extent in its trade
5or business in producing the income taxed, the factors made use of in obtaining such
6ratio, this factor may, with the approval of the department of revenue, be omitted in
7obtaining the final average ratio which is to be applied to the remaining net income.
8This subsection does not apply to taxable years beginning after December 31, 2001.
AB380-ASA2, s. 12 9Section 12. 71.25 (6) of the statutes is renumbered 71.25 (6) (intro.) and
10amended to read:
AB380-ASA2,7,511 71.25 (6) Allocation and separate accounting and apportionment formula.
12(intro.) Corporations engaged in business within and without the state shall be taxed
13only on such income as is derived from business transacted and property located
14within the state. The amount of such income attributable to Wisconsin may be
15determined by an allocation and separate accounting thereof, when the business of
16such corporation within the state is not an integral part of a unitary business, but
17the department of revenue may permit an allocation and separate accounting in any
18case in which it is satisfied that the use of such method will properly reflect the
19income taxable by this state. In all cases in which allocation and separate accounting
20is not permissible, the determination shall be made in the following manner: for all
21businesses except air carriers, financial organizations, pipeline companies, public
22utilities, railroads, sleeping car companies, car line companies and corporations or
23associations that are subject to a tax on unrelated business income under s. 71.26 (1)
24(a) there shall first be deducted from the total net income of the taxpayer the part
25thereof (less related expenses, if any) that follows the situs of the property or the

1residence of the recipient. The remaining net income shall be apportioned to
2Wisconsin this state by use of an apportionment fraction composed of a sales factor
3under sub. (9) representing 50% of the fraction, a property factor under sub. (7)
4representing 25% of the fraction and a payroll factor under sub. (8) representing 25%
5of the fraction.
the following:
AB380-ASA2, s. 13 6Section 13. 71.25 (6) (a) of the statutes is created to read:
AB380-ASA2,7,107 71.25 (6) (a) For taxable years beginning before January 1, 2002, an
8apportionment fraction composed of a sales factor under sub. (9) representing 50%
9of the fraction, a property factor under sub. (7) representing 25% of the fraction, and
10a payroll factor under sub. (8) representing 25% of the fraction.
AB380-ASA2, s. 14 11Section 14. 71.25 (6) (b) of the statutes is created to read:
AB380-ASA2,7,1312 71.25 (6) (b) For taxable years beginning after December 31, 2001, an
13apportionment fraction composed of the sales factor under sub. (9).
AB380-ASA2, s. 15 14Section 15. 71.25 (6) (c) of the statutes is created to read:
AB380-ASA2,7,1715 71.25 (6) (c) For taxable years beginning after December 31, 2001, the
16apportionment fraction for the remaining net income of a financial organization is
17composed of a sales factor, as determined by rule by the department.
AB380-ASA2, s. 16 18Section 16. 71.25 (6m) of the statutes is created to read:
AB380-ASA2,7,2319 71.25 (6m) Apportionment formula computation. (a) 1. For taxable years
20beginning before January 1, 2002, if both the numerator and the denominator of the
21sales factor under sub. (9) related to a taxpayer's remaining net income are zero, the
22sales factor under sub. (9) is eliminated from the apportionment formula to
23determine the taxpayer's remaining net income under sub. (6).
AB380-ASA2,8,224 2. For taxable years beginning after December 31, 2001, if both the numerator
25and the denominator of the sales factor under sub. (9) related to a taxpayer's

1remaining net income are zero, none of the taxpayer's remaining net income is
2apportioned to this state.
AB380-ASA2,8,73 (b) 1. For taxable years beginning before January 1, 2002, if the numerator of
4the sales factor under sub. (9) related to a taxpayer's remaining net income is a
5negative number and the denominator of the sales factor under sub. (9) related to a
6taxpayer's remaining net income is a positive number, a negative number, or zero,
7the sales factor under sub. (9) is zero.
AB380-ASA2,8,128 2. For taxable years beginning after December 31, 2001, if the numerator of the
9sales factor under sub. (9) related to a taxpayer's remaining net income is a negative
10number and the denominator of the sales factor under sub. (9) related to a taxpayer's
11remaining net income is a positive number, a negative number, or zero, none of the
12taxpayer's remaining net income is apportioned to this state.
AB380-ASA2,8,1713 (c) 1. For taxable years beginning before January 1, 2002, if the numerator of
14the sales factor under sub. (9) related to a taxpayer's remaining net income is a
15positive number and the denominator of the sales factor under sub. (9) related to a
16taxpayer's remaining net income is zero or a negative number, the sales factor under
17sub. (9) is one.
AB380-ASA2,8,2218 2. For taxable years beginning after December 31, 2001, if the numerator of the
19sales factor under sub. (9) related to a taxpayer's remaining net income is a positive
20number and the denominator of the sales factor under sub. (9) related to a taxpayer's
21remaining net income is zero or a negative number, all of the taxpayer's remaining
22net income is apportioned to this state.
AB380-ASA2, s. 17 23Section 17. 71.25 (7) (intro.) of the statutes is amended to read:
AB380-ASA2,8,2524 71.25 (7) Property factor. (intro.) For purposes of sub. (5) (6) and for taxable
25years beginning before January 1, 2002
:
AB380-ASA2, s. 18
1Section 18. 71.25 (8) (intro.) of the statutes is amended to read:
AB380-ASA2,9,32 71.25 (8) Payroll factor. (intro.) For purposes of sub. (5) (6) and for taxable
3years beginning before January 1, 2002
:
AB380-ASA2, s. 19 4Section 19. 71.25 (9) (d) of the statutes is amended to read:
AB380-ASA2,9,125 71.25 (9) (d) Sales, other than sales of tangible personal property, are in this
6state if the income-producing activity is performed in this state. If the
7income-producing activity is performed both in and outside this state the sales shall
8be divided between those states having jurisdiction to tax such business in
9proportion to the direct costs of performance incurred in each such state in rendering
10this service. Services performed in states which do not have jurisdiction to tax the
11business shall be deemed to have been performed in the state to which compensation
12is allocated by sub. s. 71.25 (8) , 1999 stats.
AB380-ASA2, s. 20 13Section 20. 71.25 (10) (b) of the statutes is renumbered 71.25 (10) (b) 1. and
14amended to read:
AB380-ASA2,9,2115 71.25 (10) (b) 1. In this section, for taxable years beginning before January 1,
162002,
"public utility" means any business entity described under subd. 2. and any
17business entity which owns or operates any plant, equipment, property, franchise,
18or license for the transmission of communications or the production, transmission,
19sale, delivery, or furnishing of electricity, water or steam the rates of charges for
20goods or services of which have been established or approved by a federal, state or
21local government or governmental agency. "Public
AB380-ASA2,9,25 222. In this section, for taxable years beginning after December 31, 2001, "public
23utility" also means any business entity providing service to the public and engaged
24in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
25regardless of whether or not the entity's rates or charges for services have been

1established or approved by a federal, state or local government or governmental
2agency.
AB380-ASA2, s. 21 3Section 21. 71.25 (10) (c) of the statutes is amended to read:
AB380-ASA2,10,84 71.25 (10) (c) The net business income of railroads, sleeping car companies, car
5line companies, pipeline companies, financial organizations, air carriers and public
6utilities requiring apportionment shall be apportioned pursuant to rules of the
7department of revenue, but the income taxed is limited to the income derived from
8business transacted and property located within the state.
AB380-ASA2, s. 22 9Section 22. 71.25 (11) of the statutes is amended to read:
AB380-ASA2,10,2010 71.25 (11) Department may waive factor. Where, in the case of any corporation
11engaged in business within in and without the outside this state of Wisconsin and
12required to apportion its income as provided in sub. (6), it shall be shown to the
13satisfaction of the department of revenue that the use of any one of the 3 factors
14provided in sub. (6) gives an unreasonable or inequitable final average ratio because
15of the fact that such corporation does not employ, to any appreciable extent in its
16trade or business in producing the income taxed, the factors made use of in obtaining
17such ratio, this factor may, with the approval of the department of revenue, be
18omitted in obtaining the final average ratio which is to be applied to the remaining
19net income. This subsection does not apply to taxable years beginning after
20December 31, 2001.
AB380-ASA2, s. 23 21Section 23. 71.45 (3) (intro.) of the statutes is amended to read:
AB380-ASA2,11,522 71.45 (3) Apportionment. (intro.) With respect Except as provided in sub. (3d),
23to determine Wisconsin income for purposes of the franchise tax, domestic insurers
24not engaged in the sale of life insurance but which that, in the taxable year, have
25collected received premiums, other than life insurance premiums, written on

1subjects of
for insurance on property or risks resident, located or to be performed
2outside this state, there shall be subtracted from multiply the net income figure
3derived by application of sub. (2) (a) to arrive at Wisconsin income constituting the
4measure of the franchise tax an amount calculated by multiplying such adjusted
5federal taxable income
by the arithmetic average of the following 2 percentages:
AB380-ASA2, s. 24 6Section 24. 71.45 (3) (a) of the statutes is amended to read:
AB380-ASA2,11,227 71.45 (3) (a) The Subject to sub. (3d), the percentage of total determined by
8dividing the sum of direct
premiums written on all property and risks for insurance
9other than life insurance, with respects to all property and risks resident, located,
10or to be performed in this state, and assumed premiums written for reinsurance,
11other than life insurance, with respect to all property and risks resident, located, or
12to be performed in this state, by the sum of direct premiums written for insurance
13on all property and risks, other than life insurance,
wherever located during the
14taxable year, as reflects
, and assumed premiums written on insurance for
15reinsurance on all property and risks
, other than life insurance, where the subject
16of insurance was resident, located or to be performed outside this state
wherever
17located. In this paragraph, "direct premiums" means direct premiums as reported
18for the taxable year on an annual statement that is filed by the insurer with the
19commissioner of insurance under s. 601.42 (1g) (a). In this paragraph, "assumed
20premiums" means assumed reinsurance premiums from domestic insurance
21companies as reported for the taxable year on an annual statement that is filed with
22the commissioner of insurance under s. 601.42 (1g) (a)
.
AB380-ASA2, s. 25 23Section 25. 71.45 (3) (b) of the statutes is renumbered 71.45 (3) (b) 1. and
24amended to read:
AB380-ASA2,12,5
171.45 (3) (b) 1. The Subject to sub. (3d), the percentage of determined by
2dividing the payroll, exclusive of life insurance payroll, paid in this state in the
3taxable year by
total payroll, exclusive of life insurance payroll, paid everywhere in
4the taxable year as reflects such compensation paid outside this state.
5Compensation
.
AB380-ASA2,12,14 62. Under subd. 1., payroll is paid outside in this state if the individual's service
7is performed entirely outside in this state; or the individual's service is performed
8both within and without in and outside this state, but the service performed within
9outside this state is incidental to the individual's service without in this state; or
10some service is performed without in this state and the base of operations, or if there
11is no base of operations, the place from which the service is directed or controlled is
12without in this state, or the base of operations or the place from which the service is
13directed or controlled is not in any state in which some part of the service is
14performed, but the individual's residence is outside in this state.
AB380-ASA2, s. 26 15Section 26. 71.45 (3d) of the statutes is created to read:
AB380-ASA2,12,1916 71.45 (3d) Premiums factor; domestic insurers. For taxable years beginning
17after December 31, 2001, a domestic insurer that is subject to apportionment under
18sub. (3) and this subsection shall multiply the net income figure derived by the
19application of sub. (2) by the percentage under sub. (3) (a).
AB380-ASA2, s. 27 20Section 27. 71.45 (3e) of the statutes is created to read:
AB380-ASA2,12,2521 71.45 (3e) Apportionment formula computation. (a) 1. For taxable years
22beginning before January 1, 2002, if both the numerator and the denominator used
23to determine the percentage under sub. (3) (a) related to a taxpayer's net income are
24zero, the percentage under sub. (3) (a) is eliminated from the apportionment formula
25to determine the taxpayer's income under sub. (3).
AB380-ASA2,13,4
12. For taxable years beginning after December 31, 2001, if both the numerator
2and the denominator used to determine the percentage under sub. (3) (a) related to
3a taxpayer's net income are zero, none of the taxpayer's net income is apportioned
4to this state.
AB380-ASA2,13,95 (b) 1. For taxable years beginning before January 1, 2002, if the numerator
6used to determine the percentage under sub. (3) (a) related to a taxpayer's net income
7is a negative number and the denominator used to determine the percentage under
8sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
9or zero, the percentage under sub. (3) (a) is zero.
AB380-ASA2,13,1410 2. For taxable years beginning after December 31, 2001, if the numerator used
11to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
12a negative number and the denominator used to determine the percentage under
13sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
14or zero, none of the taxpayer's net income is apportioned to this state.
AB380-ASA2,13,1915 (c) 1. For taxable years beginning before January 1, 2002, if the numerator used
16to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
17a positive number and the denominator used to determine the percentage under sub.
18(3) (a) related to a taxpayer's net income is zero or a negative number, the percentage
19under sub. (3) (a) is one.
AB380-ASA2,13,2420 2. For taxable years beginning after December 31, 2001, if the numerator used
21to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
22a positive number and the denominator used to determine the percentage under sub.
23(3) (a) related to a taxpayer's net income is zero or a negative number, all of the
24taxpayer's net income is apportioned to this state.
AB380-ASA2, s. 28 25Section 28. 71.45 (3m) of the statutes is amended to read:
AB380-ASA2,14,8
171.45 (3m) Arithmetic average. The Except as provided in sub. (3d), the
2arithmetic average of the 2 percentages referred to in sub. (3) shall be applied to the
3net income figure arrived at by the successive application of sub. (2) (a) and (b) with
4respect to Wisconsin insurers to which sub. (2) (a) and (b) applies and which have
5collected received premiums, other than life insurance premiums, written upon for
6insurance, other than life insurance, where the subject of such insurance was on
7property or risks
resident, located or to be performed outside this state, to arrive at
8Wisconsin income constituting the measure of the franchise tax.
AB380-ASA2, s. 29 9Section 29. Nonstatutory provisions; revenue.
AB380-ASA2,14,1510 (1) Income apportionment for financial organizations; rules. The
11department of revenue shall submit in proposed form rules related to the
12apportionment of the income of financial organizations under sections 71.04 (4) (c)
13and 71.25 (6) (c) of the statutes, as created by this act, to the legislative council staff
14under section 227.15 (1) of the statutes no later than the first day of the 4th month
15beginning after the effective date of this subsection.
AB380-ASA2, s. 30 16Section 30. Initial applicability.
AB380-ASA2,14,1917 (1) Single sales factor apportionment. The treatment of section 71.45 (3)
18(intro.), (a), and (b) and (3m) of the statutes first applies to taxable years beginning
19after December 31, 2001.
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