LRB-5245/1
JS:jlg:jf
April 1998 Special Session
1997 - 1998 LEGISLATURE
May 12, 1998 - Introduced by
Committee on Senate Organization, by request of
Governor Tommy G. Thompson. Referred to Joint committee on Finance.
SB5,1,6
1An Act to amend 71.07 (3s) (c) 4., 71.28 (3) (c) 4. and 71.47 (3) (c) 4.;
to repeal
2and recreate 71.25 (12) of the statutes; and
to affect 1997 Wisconsin Act 27,
3section
9343 (9z);
relating to: income tax and franchise tax credits for sales
4taxes paid on fuel and electricity used in manufacturing, the apportionment of
5income for the corporate income tax and franchise tax and requiring and
6permitting the promulgation of rules.
Analysis by the Legislative Reference Bureau
Under current law, in computing the income tax or franchise tax liability of
corporations that operate in this state and in other states, some income is allocated
to a state and the remainder of the income is apportioned among those states. To
apportion income this state uses a formula that has property, payroll and sales
factors. The department of revenue (DOR) is also allowed to promulgate rules to
apportion income if that cannot be done with reasonable certainty by using the
generally applicable formula. This bill discontinues that authority to promulgate
rules. In its place it allows corporations to petition for, and DOR to require, if to do
so is reasonable and the generally applicable formula does not result in a fair
representation of the corporation's business activity in this state, excluding one or
more of the apportionment factors, including one or more additional factors and
using any other method of apportionment. The bill requires DOR to promulgate
permanent rules, and allows DOR to promulgate emergency rules, on the procedure
for applying for a change in the apportionment method. The bill is silent on the
authority to promulgate rules on alternative apportionment methods.
This bill also limits the pass-through of the income tax credit and franchise tax
credit for sales taxes paid on fuel and electricity used in manufacturing by a
tax-option corporation to its shareholders to credits computed for taxable years that
begin on January 1, 1998, or later.
This bill will be referred to the joint survey committee on tax exemptions for a
detailed analysis, which will be printed as an appendix to this bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB5,2,63
71.07
(3s) (c) 4. If a tax-option corporation becomes liable for tax
for a taxable
4year that begins on or after January 1, 1998, the corporation may offset the credit
5against the tax due, with any remaining credit
computed for a taxable year that
6begins on or after January 1, 1998, passing through to the shareholders.
SB5, s. 2
7Section
2. 71.25 (12) of the statutes is repealed and recreated to read:
SB5,2,128
71.25
(12) Alternative allocation. (a) If the allocation and apportionment
9provisions under this section do not result in a fair representation of the extent of a
10corporation's business activity in this state; the corporation may petition for, or the
11department of revenue may require, if to do so is reasonable, in respect to all or part
12of the corporation's business activity, any of the following:
SB5,2,1313
1. Excluding one or more of the apportionment factors.
SB5,2,1514
2. Including one or more additional apportionment factors that will result in
15a fair representation of the corporation's business activity in this state.
SB5,2,1716
3. Using any other method to effect an equitable allocation and apportionment
17of the corporation's income.
SB5,3,3
1(b) The department of revenue shall promulgate permanent rules that specify
2the procedure for applying for a change in the apportionment method. The
3department may also promulgate emergency rules on that subject.
SB5,3,96
71.28
(3) (c) 4. If a tax-option corporation becomes liable for tax
for a taxable
7year that begins on or after January 1, 1998, the corporation may offset the credit
8against the tax due, with any remaining credit
computed for a taxable year that
9begins on or after January 1, 1998, passing through to the shareholders.
SB5,3,1512
71.47
(3) (c) 4. If a tax-option corporation becomes liable for tax
for a taxable
13year that begins on or after January 1, 1998, the corporation may offset the credit
14against the tax due, with any remaining credit
computed for a taxable year that
15begins on or after January 1, 1998, passing through to the shareholders.
SB5,3,2317[
1997 Wisconsin Act 27] Section 9343 (9z)
Fuel tax credit. The treatment of
18sections 71.05 (6) (a) 15. (as it relates to the credit for fuel), 71.07 (3s) and (10) (a) and
19(b), 71.10 (4) (de), 71.21 (4) (as it relates to the credit for fuel), 71.28 (3) (b), (c) 2. to
206. and (d), 71.34 (1) (g) (as it relates to the credit for fuel) and (j), 71.365 (3) (a) and
21(b) and 71.47 (3) (b), (c) 2. to 6. and (d) of the statutes and the renumbering of sections
2271.28 (3) (c) and 71.47 (3) (c) of the statutes first apply to
credits computed for taxable
23years beginning on January 1, 1998.
SB5, s. 6
24Section
6.
Initial applicability.
SB5,4,2
1(1)
Apportionment of income. The treatment of section 71.25 (12) of the
2statutes first applies to taxable years beginning on January 1, 1998.
