Amendment ASA1-SB55

SB55-ASA1, s. 2130dt Section 2130dt. 71.01 (7r) of the statutes is amended to read:

SB55-ASA1,724,18 71.01 (7r) Notwithstanding sub. (6), for purposes of computing amortization or depreciation, "Internal Revenue Code" means either the federal Internal Revenue Code as amended to December 31, 1999 2000, or the federal Internal Revenue Code in effect for the taxable year for which the return is filed, except that property that, under s. 71.02 (2) (d) 12., 1985 stats., is required to be depreciated for taxable year 1986 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.

SB55-ASA1, s. 1144 Section 1144. 71.04 (4) of the statutes is renumbered 71.04 (4) (intro.) and amended to read:

SB55-ASA1,725,14 71.04 (4) Nonresident allocation and apportionment formula. (intro.) Nonresident individuals and nonresident estates and trusts 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 nonresident individual or nonresident estate or trust 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 air carriers, financial organizations, pipeline companies, public utilities, railroads, sleeping car companies and car line companies 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 remaining net income shall be apportioned to Wisconsin this state by use of an apportionment fraction composed of a sales factor representing 50% of the fraction, a property factor representing 25% of the fraction and a payroll factor representing 25% of the fraction. the following:

SB55-ASA1, s. 1145 Section 1145. 71.04 (4) (a) of the statutes is created to read:

SB55-ASA1,725,19 71.04 (4) (a) For taxable years beginning before January 1, 2004, an apportionment fraction composed of a sales factor under sub. (7) representing 50% of the fraction, a property factor under sub. (5) representing 25% of the fraction, and a payroll factor under sub. (6) representing 25% of the fraction.

SB55-ASA1, s. 1146 Section 1146. 71.04 (4) (b) of the statutes is created to read:

SB55-ASA1,725,24 71.04 (4) (b) For taxable years beginning after December 31, 2003, and before January 1, 2005, an apportionment fraction composed of a sales factor under sub. (7) representing 60% of the fraction, a property factor under sub. (5) representing 20% of the fraction, and a payroll factor under sub. (6) representing 20% of the fraction.

SB55-ASA1, s. 1147 Section 1147. 71.04 (4) (c) of the statutes is created to read:

SB55-ASA1,726,4 71.04 (4) (c) For taxable years beginning after December 31, 2004, and before January 1, 2006, an apportionment fraction composed of a sales factor under sub. (7) representing 80% of the fraction, a property factor under sub. (5) representing 10% of the fraction, and a payroll factor under sub. (6) representing 10% of the fraction.

SB55-ASA1, s. 1148 Section 1148. 71.04 (4) (d) of the statutes is created to read:

SB55-ASA1,726,7 71.04 (4) (d) For taxable years beginning after December 31, 2005, an apportionment fraction composed of the sales factor under sub. (7).

SB55-ASA1, s. 1149 Section 1149. 71.04 (4) (e) of the statutes is created to read:

SB55-ASA1,726,15 71.04 (4) (e) For taxable years beginning after December 31, 2003, and before January 1, 2006, the apportionment fraction for the remaining net income of a financial organization shall include a sales factor that represents more than 50% of the apportionment fraction, as determined by rule by the department. For taxable years beginning after December 31, 2005, the apportionment fraction for the remaining net income of a financial organization is composed of a sales factor, as determined by rule by the department.

SB55-ASA1, s. 2136m Section 2136m. 71.04 (4m) of the statutes is created to read:

SB55-ASA1,726,21 71.04 (4m) Apportionment formula computation. (a) 1. For taxable years beginning before January 1, 2006, if both the numerator and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income are zero, the sales factor under sub. (7) is eliminated from the apportionment formula to determine the taxpayer's remaining net income under sub. (4).

SB55-ASA1,726,25 2. For taxable years beginning after December 31, 2005, if both the numerator and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income are zero, none of the taxpayer's remaining net income is apportioned to this state.

SB55-ASA1,727,4 (b) 1. For taxable years beginning before January 1, 2006, if the numerator of the sales factor under sub. (7) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income is not zero, the sales factor under sub. (7) is zero.

SB55-ASA1,727,9 2. For taxable years beginning after December 31, 2005, if the numerator of the sales factor under sub. (7) related to a taxpayer's remaining net income is a negative number and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income is not zero, none of the taxpayer's remaining net income is apportioned to this state.

SB55-ASA1,727,14 (c) 1. For taxable years beginning before January 1, 2006, if the numerator of the sales factor under sub. (7) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income is zero or a negative number, the sales factor under sub. (7) is one.

SB55-ASA1,727,19 2. For taxable years beginning after December 31, 2005, if the numerator of the sales factor under sub. (7) related to a taxpayer's remaining net income is a positive number and the denominator of the sales factor under sub. (7) related to a taxpayer's remaining net income is zero or a negative number, all of the taxpayer's remaining net income is apportioned to this state.

SB55-ASA1, s. 1150 Section 1150. 71.04 (5) (intro.) of the statutes is amended to read:

SB55-ASA1,727,22 71.04 (5) Property factor. (intro.) For purposes of sub. (4) and for taxable years beginning before January 1, 2006:

SB55-ASA1, s. 1151 Section 1151. 71.04 (6) (intro.) of the statutes is amended to read:

SB55-ASA1,727,25 71.04 (6) Payroll factor. (intro.) For purposes of sub. (4) and for taxable years beginning before January 1, 2006:

SB55-ASA1, s. 1152 Section 1152. 71.04 (7) (d) of the statutes is amended to read:

SB55-ASA1,728,9 71.04 (7) (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. s. 71.04 (6) , 1999 stats.

SB55-ASA1, s. 1153 Section 1153. 71.04 (8) (b) of the statutes is renumbered 71.04 (8) (b) 1. and amended to read:

SB55-ASA1,728,18 71.04 (8) (b) 1. "Public For taxable years beginning before January 1, 2004, "public utility", as used in this section, means any business entity described under subd. 2. and any business entity which owns or operates any plant, equipment, property, franchise, or license for the transmission of communications or the production, transmission, sale, delivery, or furnishing of electricity, water or steam, the rates of charges for goods or services of which have been established or approved by a federal, state or local government or governmental agency. " Public

SB55-ASA1,728,24 2. In this section, for taxable years beginning after December 31, 2003, "public utility" also means any business entity providing service to the public and engaged in the transportation of goods and persons for hire, as defined in s. 194.01 (4), regardless of whether or not the entity's rates or charges for services have been established or approved by a federal, state or local government or governmental agency.

SB55-ASA1, s. 1154 Section 1154. 71.04 (8) (c) of the statutes is amended to read:

SB55-ASA1,729,5 71.04 (8) (c) The net business income of railroads, sleeping car companies, car line companies, pipeline companies, financial organizations, air carriers and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state.

SB55-ASA1, s. 1155 Section 1155. 71.04 (10) of the statutes is amended to read:

SB55-ASA1,729,17 71.04 (10) Department may waive factor. Where, in the case of any nonresident individual or nonresident estate or trust engaged in business within in and without the outside this state of Wisconsin and required to apportion its income as provided in this section, it shall be shown to the satisfaction of the department of revenue that the use of any one of the 3 factors provided under sub. (4) gives an unreasonable or inequitable final average ratio because of the fact that such nonresident individual or nonresident estate or trust does not employ, to any appreciable extent in its trade or business in producing the income taxed, the factors made use of in obtaining such ratio, this factor may, with the approval of the department of revenue, be omitted in obtaining the final average ratio which is to be applied to the remaining net income. This subsection does not apply to taxable years beginning after December 31, 2005.

SB55-ASA1, s. 1156 Section 1156. 71.05 (6) (a) 15. of the statutes is amended to read:

SB55-ASA1,729,23 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx) and, (3g), and (3s) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).

SB55-ASA1, s. 1157 Section 1157. 71.05 (11) (b) of the statutes is amended to read:

SB55-ASA1,730,19 71.05 (11) (b) The cost of the following described property, less any federal depreciation or amortization taken, may be deducted as a subtraction modification or as subtraction modifications in the year or years in which paid or accrued, dependent on the method of accounting employed: All property purchased or constructed as a waste treatment facility utilized for the treatment of industrial wastes, as defined in s. 281.01 (5), or air contaminants, as defined in s. 285.01 (1), but not for other wastes, as defined in s. 281.01 (7) and approved by the department of revenue under s. 70.11 (21) (a), for the purpose of abating or eliminating pollution of surface waters, the air, or waters of the state and, if the property's owner is taxed under ch. 76, if the property is approved by the department of revenue. In case of such election, appropriate add modifications shall be made in subsequent years to reverse federal depreciation or amortization or to correct gain or loss on disposition. This paragraph is intended to apply only to depreciable property except that where wastes are disposed of through a lagoon process, lagooning costs and the cost of land containing such lagoons may be treated as depreciable property for purposes of this paragraph. In no event may any amount in excess of cost be deducted. Paragraph (a) applies to all property purchased prior to July 31, 1975, or purchased and constructed in fulfillment of a written construction contract or formal written bid, which contract was entered into or which bid was made prior to July 31, 1975.

SB55-ASA1, s. 1158 Section 1158. 71.06 (2e) of the statutes is amended to read:

SB55-ASA1,731,18 71.06 (2e) Bracket indexing. For taxable years beginning after December 31, 1998, and before January 1, 2000, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1m) and (2) (c) and (d), and for taxable years beginning after December 31, 1999, the maximum dollar amount in each tax bracket, and the corresponding minimum dollar amount in the next bracket, under subs. (1n), (1p), and (2) (e), (f), (g), and (h), shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1997, as determined by the federal department of labor, except that for taxable years beginning after December 31, 2000, and before January 1, 2002, the dollar amount in the top bracket under subs. (1p) (c) and (d), (2) (g) 3. and 4. and (h) 3. and 4. shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 1999, as determined by the federal department of labor. Each amount that is revised under this subsection shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subsection and incorporate the changes into the income tax forms and instructions.

SB55-ASA1, s. 1159 Section 1159. 71.07 (2dm) of the statutes is created to read:

SB55-ASA1,731,21 71.07 (2dm) Development zone capital investment credit. (a) In this subsection:

SB55-ASA1,731,23 1. "Certified" means entitled under s. 560.795 (3) (a) 4. to claim tax benefits or certified under s. 560.795 (5).

SB55-ASA1,731,24 2. "Claimant" means a person who files a claim under this subsection.

SB55-ASA1,732,2 3. "Development zone" means a development opportunity zone under s. 560.795 (1) (e).

SB55-ASA1,732,11 4. "Previously owned property" means real property that the claimant or a related person owned during the 2 years prior to the department of commerce designating the place where the property is located as a development zone and for which the claimant may not deduct a loss from the sale of the property to, or an exchange of the property with, the related person under section 267 of the Internal Revenue Code, except that section 267 (b) of the Internal Revenue Code is modified so that if the claimant owns any part of the property, rather than 50% ownership, the claimant is subject to section 267 (a) (1) of the Internal Revenue Code for purposes of this subsection.

SB55-ASA1,732,15 (b) Subject to the limitations provided in this subsection and in s. 73.03 (35), for any taxable year for which the claimant is certified, a claimant may claim as a credit against the taxes imposed under s. 71.02 an amount that is equal to 3% of the following:

SB55-ASA1,732,16 1. The purchase price of depreciable, tangible personal property.

SB55-ASA1,732,18 2. The amount expended to acquire, construct, rehabilitate, remodel, or repair real property in a development zone.

SB55-ASA1,732,23 (c) A claimant may claim the credit under par. (b) 1., if the tangible personal property is purchased after the claimant is certified and the personal property is used for at least 50% of its use in the claimant's business at a location in a development zone or, if the property is mobile, the property's base of operations for at least 50% of its use is at a location in a development zone.

SB55-ASA1,733,7 (d) A claimant may claim the credit under par. (b) 2. for an amount expended to construct, rehabilitate, remodel, or repair real property, if the claimant began the physical work of construction, rehabilitation, remodeling, or repair, or any demolition or destruction in preparation for the physical work, after the place where the property is located was designated a development zone, or if the completed project is placed in service after the claimant is certified. In this paragraph, "physical work" does not include preliminary activities such as planning, designing, securing financing, researching, developing specifications, or stabilizing the property to prevent deterioration.

SB55-ASA1,733,12 (e) A claimant may claim the credit under par. (b) 2. for an amount expended to acquire real property, if the property is not previously owned property and if the claimant acquires the property after the place where the property is located was designated a development zone, or if the completed project is placed in service after the claimant is certified.

SB55-ASA1,733,14 (f) No credit may be allowed under this subsection unless the claimant includes with the claimant's return:

SB55-ASA1,733,16 1. A copy of a verification from the department of commerce that the claimant may claim tax benefits under s. 560.795 (3) (a) 4. or is certified under s. 560.795 (5).

SB55-ASA1,733,19 2. A statement from the department of commerce verifying the purchase price of the investment and verifying that the investment fulfills the requirements under par. (b).

SB55-ASA1,733,24 (g) In calculating the credit under par. (b) a claimant shall reduce the amount expended to acquire property by a percentage equal to the percentage of the area of the real property not used for the purposes for which the claimant is certified and shall reduce the amount expended for other purposes by the amount expended on the part of the property not used for the purposes for which the claimant is certified.

SB55-ASA1,734,2 (h) The carry-over provisions of s. 71.28 (4) (e) and (f) as they relate to the credit under s. 71.28 (4) relate to the credit under this subsection.

SB55-ASA1,734,15 (i) Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, that credit shall be determined on the basis of their economic activity, not that of their shareholders, partners, or members. The corporation, partnership, or limited liability company shall compute the amount of credit that may be claimed by each of its shareholders, partners, or members and provide that information to its shareholders, partners, or members. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit based on the partnership's, company's, or corporation's activities in proportion to their ownership interest and may offset it against the tax attributable to their income from the partnership's, company's, or corporation's business operations in the development zone and against the tax attributable to their income from the partnership's, company's, or corporation's directly related business operations.

SB55-ASA1,734,24 (j) If a person who is entitled under s. 560.795 (3) (a) 4. to claim tax benefits becomes ineligible for such tax benefits, or if a person's certification under s. 560.795 (5) is revoked, that person may claim no credits under this subsection for the taxable year that includes the day on which the person becomes ineligible for tax benefits, the taxable year that includes the day on which the certification is revoked, or succeeding taxable years, and that person may carry over no unused credits from previous years to offset tax under this chapter for the taxable year that includes the day on which the person becomes ineligible for tax benefits, the taxable year that includes the day on which the certification is revoked, or succeeding taxable years.

SB55-ASA1,735,6 (k) If a person who is entitled under s. 560.795 (3) (a) 4. to claim tax benefits or certified under s. 560.795 (5) ceases business operations in the development zone during any of the taxable years that that zone exists, that person may not carry over to any taxable year following the year during which operations cease any unused credits from the taxable year during which operations cease or from previous taxable years.

SB55-ASA1,735,8 (L) 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.

SB55-ASA1, s. 1160 Section 1160. 71.07 (2dx) (a) 5. of the statutes is amended to read:

SB55-ASA1,735,22 71.07 (2dx) (a) 5. "Member of a targeted group" means a person under sub. (2dj) (am) 1., a person who resides in an empowerment zone, or an enterprise community, that the U.S. government designates, a person who is employed in an unsubsidized job but meets the eligibility requirements under s. 49.145 (2) and (3) for a Wisconsin works employment position, a person who is employed in a trial job, as defined in s. 49.141 (1) (n), or a person who is eligible for child care assistance under s. 49.155, a person who is a vocational rehabilitation referral, an economically disadvantaged youth, an economically disadvantaged veteran, a supplemental security income recipient, a general assistance recipient, an economically disadvantaged ex-convict, a qualified summer youth employee, as defined in 26 USC 51 (d) (7), a dislocated worker, as defined in 29 USC 2801 (9), or a food stamp recipient; if the person has been certified in the manner under sub. (2dj) (am) 3. by a designated local agency, as defined in sub. (2dj) (am) 2.

SB55-ASA1, s. 1161 Section 1161. 71.07 (3g) of the statutes is created to read:

SB55-ASA1,736,2 71.07 (3g) Technology zones credit. (a) Subject to the limitations under this subsection and ss. 73.03 (35m) and 560.96, a business that is certified under s. 560.96 (3) may claim as a credit against the taxes imposed under s. 71.02 an amount equal to the sum of the following, as established under s. 560.96 (3) (c):

SB55-ASA1,736,4 1. The amount of real and personal property taxes imposed under s. 70.01 that the business paid in the taxable year.

SB55-ASA1,736,6 2. The amount of income and franchise taxes imposed under s. 71.02 that the business paid in the taxable year.

SB55-ASA1,736,8 3. The amount of sales and use taxes imposed under ss. 77.52, 77.53, and 77.71 that the business paid in the taxable year.

SB55-ASA1,736,10 (b) The department of revenue shall notify the department of commerce of all claims under this subsection.

SB55-ASA1,736,12 (c) Section 71.28 (4) (e), (f), (g), and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under par. (a).

SB55-ASA1,736,20 (d) Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (a). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interest.

SB55-ASA1, s. 1162 Section 1162. 71.07 (7) (b) of the statutes is amended to read:

SB55-ASA1,737,11 71.07 (7) (b) If a resident individual, estate or trust pays a net income tax to another state, that resident individual, estate or trust may credit the net tax paid to that other state on that income against the net income tax otherwise payable to the state on income of the same year. The credit may not be allowed unless the income taxed by the other state is also considered income for Wisconsin tax purposes. The credit may not be allowed unless claimed within the time provided in s. 71.75 (2), but s. 71.75 (4) does not apply to those credits. For purposes of this paragraph, amounts declared and paid pursuant to under the income tax law of another state shall be deemed are considered a net income tax paid to that other state only in the year in which the income tax return for that state was required to be filed. Income and franchise taxes paid to another state by a tax-option corporation, partnership, or limited liability company that is treated as a partnership may be claimed as a credit under this paragraph by that corporation's shareholders, that partnership's partners, or that limited liability company's members who are residents of this state and who otherwise qualify under this paragraph.

SB55-ASA1, s. 1163 Section 1163. 71.07 (7m) of the statutes is created to read:

SB55-ASA1,737,13 71.07 (7m) Tax relief fund tax credit. (a) Definitions. In this subsection:

SB55-ASA1,737,14 1. "Claimant" means an individual taxpayer who is not a dependent.

SB55-ASA1,737,17 2. "Credit unit" means an amount calculated by the department by dividing the amount certified under par. (c) 3. by the sum of all claimants, all spouses of claimants, and all dependents.

SB55-ASA1,737,18 3. "Department" means the department of revenue.

SB55-ASA1,737,20 4. "Dependent" means an individual who is claimed by the claimant as a dependent under section 151 (c) of the Internal Revenue Code.

SB55-ASA1,738,2 (b) Filing claims. Subject to the limitations and conditions provided in this subsection, a claimant, or a claimant and his or her spouse, may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount determined by the department under par. (c). One credit amount may be claimed by each claimant, by the claimant's spouse, and for each dependent of a claimant. No credit may be claimed by a dependent.

SB55-ASA1,738,5 (c) Determination of credit amount. 1. Not later than September 1 each year, the secretary of administration shall certify to the secretary of the department the amount that is in the tax relief fund under s. 25.63.

SB55-ASA1,738,7 2. If the amount of the certification is $100,000,000 or less, the amount that may be claimed in that taxable year is zero.

SB55-ASA1,738,13 3. If the amount of the certification exceeds $100,000,000, the department shall determine the credit amount for that taxable year. The credit amount shall be based on the credit unit, but shall be modified such that the certified amount in the tax relief fund is expended as fully as possible and that the credit amount for each claimant, spouse of a claimant, and dependent of a claimant is rounded down to the nearest whole dollar amount.

SB55-ASA1,738,18 (d) Certification of amounts claimed. Not later than August 15 of the year following the year in which the department determines a credit amount under par. (c) 3., the department shall determine the amount of revenue lost because of credits claimed in the taxable year to which that credit amount relates. The amount of revenue lost shall be certified to the secretary of administration.

SB55-ASA1,738,20 (e) Limitations and conditions. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

SB55-ASA1,738,22 2. Part-year residents and nonresidents of this state are not eligible for the credit under this subsection.

SB55-ASA1,738,24 (f) Administration. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

SB55-ASA1, s. 1164 Section 1164. 71.10 (4) (dt) of the statutes is created to read:

SB55-ASA1,739,1 71.10 (4) (dt) Tax relief fund credit under s. 71.07 (7m).