Amendment SA3-AB100

LRBb0781/1

JK/MES/RCT:kjf:rs

2005 - 2006 LEGISLATURE

SENATE AMENDMENT 3, TO 2005 ASSEMBLY BILL 100

June 29, 2005 - Offered by Senators Robson, Plale, Hansen, Decker, Wirch, Coggs, Miller, Carpenter, Breske, Lassa, Risser, Taylor and Erpenbach.

AB100-SA3,1,1 At the locations indicated, amend the engrossed bill as follows:

AB100-SA3,1,2 1. Page 564, line 17: after that line insert:

AB100-SA3,1,3 " Section 1285e. 71.05 (1) (ap) of the statutes is created to read:

AB100-SA3,1,7 71.05 (1) (ap) Pension income. Except for a payment that is exempt under par. (a), (am), or (an), or that is exempt as a railroad retirement benefit, up to $10,000 of payments or distributions received each year by an individual from a retirement plan offered by an employer if all of the following apply:

AB100-SA3,1,8 1. The individual does not claim an exemption under par. (aq).

AB100-SA3,1,10 2. The individual does not work more than 1,044 hours during the year to which the exemption claim relates.

AB100-SA3,1,12 3. The individual is at least 55 years of age before the close of the taxable year to which the exemption claim relates.

AB100-SA3, s. 1285g Section 1285g. 71.05 (1) (aq) of the statutes is created to read:

AB100-SA3,2,3 71.05 (1) (aq) Individual retirement income. Up to $10,000 of payments or distributions received each year by an individual from an individual retirement account established under 26 USC 408 or 26 USC 408A, if all of the following apply:

AB100-SA3,2,4 1. The individual does not claim an exemption under par. (ap).

AB100-SA3,2,6 2. The individual does not work more than 1,044 hours during the year to which the exemption claim relates.

AB100-SA3,2,8 3. The individual is at least 55 years of age before the close of the taxable year to which the exemption claim relates.".

AB100-SA3,2,9 2. Page 564, line 20: after that line insert:

AB100-SA3,2,10 " Section 1286d. 71.05 (6) (b) 4. of the statutes is amended to read:

AB100-SA3,2,22 71.05 (6) (b) 4. Disability payments other than disability payments that are paid from a retirement plan, the payments from which are exempt under sub. (1) (ap), if the individual either is single or is married and files a joint return, to the extent those payments are excludable under section 105 (d) of the internal revenue code Internal Revenue Code as it existed immediately prior to its repeal in 1983 by section 122 (b) of P.L. 98-21, except that if an individual is divorced during the taxable year that individual may subtract an amount only if that person is disabled and the amount that may be subtracted then is $100 for each week that payments are received or the amount of disability pay reported as income, whichever is less. If the exclusion under this subdivision is claimed on a joint return and only one of the spouses is disabled, the maximum exclusion is $100 for each week that payments are received or the amount of disability pay reported as income, whichever is less.

AB100-SA3, s. 1286de Section 1286de. 71.05 (6) (b) 8. of the statutes is repealed and recreated to read:

AB100-SA3,3,2 71.05 (6) (b) 8. All unemployment compensation benefits received in the year to which the income tax return relates.".

AB100-SA3,3,3 3. Page 565, line 10: delete lines 10 to 25 and substitute:

AB100-SA3,3,4 " Section 1286hn. 71.05 (6) (b) 21. b. of the statutes is created to read:

AB100-SA3,3,9 71.05 (6) (b) 21. b. Except as provided in subd. 21. c., for taxable years beginning after December 31, 2006, and before January 1, 2008, the difference between the amount of social security benefits included in federal adjusted gross income for the current year and 50 percent of the amount calculated under section 86 of the Internal Revenue Code as that section existed on December 31, 1992.

AB100-SA3, s. 1286in Section 1286in. 71.05 (6) (b) 21. c. of the statutes is created to read:

AB100-SA3,3,14 71.05 (6) (b) 21. c. For taxable years beginning after December 31, 2006, and before January 1, 2008, for an individual who is eligible to claim the credit under subch. VIII, the amount of social security benefits included in federal adjusted gross income under section 86 of the Internal Revenue Code.".

AB100-SA3, s. 1286jn Section 1286jn. 71.05 (6) (b) 21. d. of the statutes is created to read:

AB100-SA3,3,18 71.05 (6) (b) 21. d. For taxable years beginning after December 31, 2007, the amount of social security benefits included in federal adjusted gross income under section 86 of the Internal Revenue Code.".

AB100-SA3,3,19 4. Page 614, line 11: after that line insert:

AB100-SA3,3,20 " Section 1343g. 71.25 (9) (a) of the statutes is amended to read:

AB100-SA3,4,7 71.25 (9) (a) The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. For sales of tangible personal property, the numerator of the sales factor is the sales of the taxpayer during the tax period under par. (b) 1. and 2. plus 50% of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of determining the numerator of the sales factor for a member of a combined reporting group under s. 71.255 (7), "taxpayer" means the member of a combined reporting group, as defined in s. 71.255 (1) (c), that transferred title to tangible personal property or, for sales other than sales of tangible personal property, that made the sale.".

AB100-SA3,4,8 5. Page 616, line 12: after that line insert:

AB100-SA3,4,9 " Section 1349e. 71.255 of the statutes is created to read:

AB100-SA3,4,10 71.255 Combined reporting. (1) Definitions. In this section:

AB100-SA3,4,14 (a) "Brother-sister parent corporation" means a parent corporation that is a member of a commonly controlled group, if any members of the commonly controlled group are not connected to the parent corporation by stock ownership or interest ownership as described in par. (d).

AB100-SA3,4,17 (b) "Combined report" means a form prescribed by the department that specifies the income of each taxpayer member of a commonly controlled group operating as a unitary business.

AB100-SA3,4,19 (c) "Combined reporting group" means the members of a commonly controlled group that are included in a combined report under sub. (2).

AB100-SA3,4,21 (d) "Commonly controlled group" means any of the following, but does not include an insurer that is exempt from taxation under s. 71.45 (1):

AB100-SA3,5,4 1. A parent corporation and any corporation or chain of corporations that are connected to the parent corporation by direct or indirect ownership by the parent corporation if the parent corporation owns stock representing more than 50 percent of the voting power of at least one of the connected corporations or if the parent corporation or any of the connected corporations own stock that cumulatively represents more than 50 percent of the voting power of each of the connected corporations.

AB100-SA3,5,7 2. Any 2 or more corporations if a common owner directly or indirectly owns stock representing more than 50 percent of the voting power of the corporations or the connected corporations.

AB100-SA3,5,11 3. A partnership or limited liability company if a parent corporation or any corporation connected to the parent corporation by common ownership directly or indirectly owns more than a 50 percent interest in the capital and profits of the partnership or limited liability company.

AB100-SA3,5,13 4. Any 2 or more corporations if stock representing more than 50 percent of the voting power in each corporation is interest that cannot be separately transferred.

AB100-SA3,5,18 5. Any 2 or more corporations if stock representing more than 50 percent of the voting power in each corporation is directly owned by, or for the benefit of, family members. In this subdivision, "family member" means an individual related by blood, marriage, or adoption within the 2nd degree of kinship as computed under s. 852.03 (2), 1995 stats., or the spouse of such an individual.

AB100-SA3,5,23 6. A corporation, partnership, or limited liability company if a parent corporation or any corporation connected to the parent corporation by common ownership does not hold more than a 50 percent ownership interest in the corporation, partnership, or limited liability company but effectively controls the corporation, partnership, or limited liability company.

AB100-SA3,5,24 (e) "Corporation" has the meaning given in s. 71.22 (1) or 71.42 (1).

AB100-SA3,5,25 (f) "Department" means the department of revenue.

AB100-SA3,6,3 (g) "Designated agent" means the taxpayer member of a commonly controlled group that files a group return on behalf of the taxpayer members of a combined reporting group.

AB100-SA3,6,5 (h) "Group return" means a tax return filed on behalf of the taxpayer members of a combined reporting group.

AB100-SA3,6,8 (i) "Intercompany transaction" means a transaction between corporations, partnerships, or limited liability companies that become members of the same combined reporting group immediately after the transaction.

AB100-SA3,6,10 (im) "Partnership" means any entity considered a partnership under section 7701 of the Internal Revenue Code.

AB100-SA3,6,13 (j) "Separate return" means a return filed by a corporation, regardless of whether the corporation is a member of a combined reporting group or is required to file a tax return under s. 71.24 or 71.44.

AB100-SA3,6,16 (k) "Taxpayer member" means a corporation that is subject to tax under s. 71.23 (1) or (2) or 71.43, that is a member of a combined reporting group, and that files a combined report under this section.

AB100-SA3,6,22 (L) "Top-tier corporation" means a member of a commonly controlled group that is not connected with a parent corporation by stock ownership or interest ownership as described in par. (d), is a parent corporation, or is a brother-sister parent corporation, regardless of whether it is doing business in this state or deriving income from sources in this state, and regardless of whether its income and apportionment factors are excluded from a combined report filed under this section.

AB100-SA3,7,6 (m) "Unitary business" includes the business activities or operations of an entity that are of mutual benefit to, integrated with, or dependent upon or that contribute to activities of at least one other entity, including transactions that serve an operational function, as determined by the department. Two or more businesses are presumed to be a unitary business if the businesses have unity of ownership, operation, and use as indicated by centralized management or a centralized executive force; centralized purchasing, advertising, or accounting; intercorporate sales or leases; intercorporate services; intercorporate debts; intercorporate use of proprietary materials; interlocking directorates; or interlocking corporate officers.

AB100-SA3,7,15 (2) Corporations required to use combined reporting. (a) Except as provided in par. (b), and subject to sub. (6), a corporation that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43, that is a member of a commonly controlled group, and that is engaged, in whole or in part, in a unitary business with one or more members of the commonly controlled group shall compute the corporation's income attributable to this state by using the income computation under s. 71.26 or 71.45, the apportionment formula under s. 71.25 (6) or 71.45, and the tax credits under s. 71.28 or 71.47 of all of the following that are members of the commonly controlled group:

AB100-SA3,7,20 1. Any corporation organized or incorporated under the laws of the United States, any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, or any political subdivision of the United States, including corporations under sections 931 to 936 of the Internal Revenue Code.

AB100-SA3,7,22 2. Any domestic international sales corporation under sections 991 to 994 of the Internal Revenue Code.

AB100-SA3,7,24 3. Any foreign sales corporation under sections 921 to 927 of the Internal Revenue Code.

AB100-SA3,8,2 4. Any export trade corporation under sections 970 and 971 of the Internal Revenue Code.

AB100-SA3,8,7 5. Any corporation, regardless of its place of incorporation if the average of its property factor under s. 71.25 (7) and its payroll factor under s. 71.25 (8), for property and payroll within the United States and computed on an annual basis, is at least 20 percent during any part of the taxable year that a corporation is a member of the commonly controlled group.

AB100-SA3,8,11 6. Any corporation not described in subds. 1. to 5. to the extent of the corporation's income within the United States and the corporation's property factor under s. 71.25 (7) and payroll factor under s. 71.25 (8) assignable to a location within the United States.

AB100-SA3,8,22 (b) A corporation that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43, that is a member of a commonly controlled group, and that is engaged, in whole or in part, in a unitary business with one or more members of the commonly controlled group may, subject to sub. (6), compute the corporation's income attributable to this state by using the income computation under s. 71.26 or 71.45, the apportionment formula under s. 71.25 (6) or 71.45, and the tax credits under s. 71.28 or 71.47 of all the members of the commonly controlled group, regardless of the country in which any member of the commonly controlled group is organized or incorporated or conducts business, if all top-tier corporations that are members of the commonly controlled group elect under sub. (3) to compute the corporation's income as provided under this paragraph.

AB100-SA3,9,5 (3) Computation election. (a) A top-tier corporation that is a member of a commonly controlled group may elect on the commonly controlled group's behalf, and in the manner prescribed by the department, to compute the income of each corporation that is a member of the commonly controlled group under sub. (2) (b). If more than one member of the commonly controlled group is a top-tier corporation, an election under this subsection is not effective unless all top-tier corporations elect on the commonly controlled group's behalf, and in the manner prescribed by the department, to compute income under sub. (2) (b).

AB100-SA3,9,13 (b) A top-tier corporation shall file an election made under par. (a) with the department before the last day of the taxable year. The top-tier corporation shall designate a taxable year that corresponds with the taxable year of any taxpayer member that is subject to the tax imposed under s. 71.23 (1) or (2) or 71.43. If the top-tier corporation fails to file the election before the last day of the taxable year designated under this paragraph, all members of the commonly controlled group to which the top-tier corporation belongs, including the top-tier corporation, shall compute income under sub. (2) (a).