AB413, s. 9 24Section 9. 71.04 (6) (intro.) of the statutes is amended to read:
AB413,6,2
171.04 (6) Payroll factor. (intro.) For purposes of sub. (4) and for taxable years
2beginning before January 1, 2008
:
AB413, s. 10 3Section 10. 71.04 (7) (d) of the statutes is amended to read:
AB413,6,114 71.04 (7) (d) Sales, other than sales of tangible personal property, are in this
5state if the income-producing activity is performed in this state. If the
6income-producing activity is performed both in and outside this state the sales shall
7be divided between those states having jurisdiction to tax such business in
8proportion to the direct costs of performance incurred in each such state in rendering
9this service. Services performed in states which do not have jurisdiction to tax the
10business shall be deemed to have been performed in the state to which compensation
11is allocated by sub. s. 71.04 (6) , 2001 stats.
AB413, s. 11 12Section 11. 71.04 (8) (b) of the statutes is renumbered 71.04 (8) (b) 1. and
13amended to read:
AB413,6,2014 71.04 (8) (b) 1. "Public For taxable years beginning before January 1, 2006,
15"public
utility", as used in this section, means any business entity described under
16subd. 2. and
any business entity which owns or operates any plant, equipment,
17property, franchise, or license for the transmission of communications or the
18production, transmission, sale, delivery, or furnishing of electricity, water or steam,
19the rates of charges for goods or services of which have been established or approved
20by a federal, state or local government or governmental agency. " Public
AB413,7,2 212. In this section, for taxable years beginning after December 31, 2005, "public
22utility" also means any business entity providing service to the public and engaged
23in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
24regardless 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.
AB413, s. 12 3Section 12. 71.04 (8) (c) of the statutes is amended to read:
AB413,7,84 71.04 (8) (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.
AB413, s. 13 9Section 13. 71.04 (10) of the statutes is amended to read:
AB413,7,2010 71.04 (10) Department may waive factor. Where, in the case of any nonresident
11individual or nonresident estate or trust engaged in business within in and without
12the
outside of this state of Wisconsin and required to apportion its income as provided
13in this section, it shall be shown to the satisfaction of the department of revenue that
14the use of any one of the 3 factors provided under sub. (4) gives an unreasonable or
15inequitable final average ratio because of the fact that such nonresident individual
16or nonresident estate or trust does not employ, to any appreciable extent in its trade
17or business in producing the income taxed, the factors made use of in obtaining such
18ratio, this factor may, with the approval of the department of revenue, be omitted in
19obtaining the final average ratio which is to be applied to the remaining net income.
20This subsection does not apply to taxable years beginning after December 31, 2007.
AB413, s. 14 21Section 14. 71.25 (6) of the statutes is renumbered 71.25 (6) (intro.) and
22amended to read:
AB413,8,1723 71.25 (6) Allocation and separate accounting and apportionment formula.
24(intro.) Corporations engaged in business within and without the state shall be taxed
25only on such income as is derived from business transacted and property located

1within the state. The amount of such income attributable to Wisconsin may be
2determined by an allocation and separate accounting thereof, when the business of
3such corporation within the state is not an integral part of a unitary business, but
4the department of revenue may permit an allocation and separate accounting in any
5case in which it is satisfied that the use of such method will properly reflect the
6income taxable by this state. In all cases in which allocation and separate accounting
7is not permissible, the determination shall be made in the following manner: for all
8businesses except air carriers, financial organizations, pipeline companies, public
9utilities, railroads, sleeping car companies, car line companies and corporations or
10associations that are subject to a tax on unrelated business income under s. 71.26 (1)
11(a) there shall first be deducted from the total net income of the taxpayer the part
12thereof (less related expenses, if any) that follows the situs of the property or the
13residence of the recipient. The remaining net income shall be apportioned to
14Wisconsin this state by use of an apportionment fraction composed of a sales factor
15under sub. (9) representing 50% of the fraction, a property factor under sub. (7)
16representing 25% of the fraction and a payroll factor under sub. (8) representing 25%
17of the fraction.
the following:
AB413, s. 15 18Section 15. 71.25 (6) (a) of the statutes is created to read:
AB413,8,2219 71.25 (6) (a) For taxable years beginning before January 1, 2006, an
20apportionment fraction composed of a sales factor under sub. (9) representing 50%
21of the fraction, a property factor under sub. (7) representing 25% of the fraction, and
22a payroll factor under sub. (8) representing 25% of the fraction.
AB413, s. 16 23Section 16. 71.25 (6) (b) of the statutes is created to read:
AB413,9,224 71.25 (6) (b) For taxable years beginning after December 31, 2005, and before
25January 1, 2007, an apportionment fraction composed of a sales factor under sub. (9)

1representing 60% of the fraction, a property factor under sub. (7) representing 20%
2of the fraction, and a payroll factor under sub. (8) representing 20% of the fraction.
AB413, s. 17 3Section 17. 71.25 (6) (c) of the statutes is created to read:
AB413,9,74 71.25 (6) (c) For taxable years beginning after December 31, 2006, and before
5January 1, 2008, an apportionment fraction composed of a sales factor under sub. (9)
6representing 80% of the fraction, a property factor under sub. (7) representing 10%
7of the fraction, and a payroll factor under sub. (8) representing 10% of the fraction.
AB413, s. 18 8Section 18. 71.25 (6) (d) of the statutes is created to read:
AB413,9,109 71.25 (6) (d) For taxable years beginning after December 31, 2007, an
10apportionment fraction composed of the sales factor under sub. (9).
AB413, s. 19 11Section 19. 71.25 (6) (e) of the statutes is created to read:
AB413,9,1812 71.25 (6) (e) For taxable years beginning after December 31, 2005, and before
13January 1, 2008, the apportionment fraction for the remaining net income of a
14financial organization shall include a sales factor that represents more than 50% of
15the apportionment fraction, as determined by rule by the department. For taxable
16years beginning after December 31, 2007, the apportionment fraction for the
17remaining net income of a financial organization is composed of a sales factor, as
18determined by rule by the department.
AB413, s. 20 19Section 20. 71.25 (6m) of the statutes is created to read:
AB413,9,2420 71.25 (6m) Apportionment formula computation. (a) 1. For taxable years
21beginning before January 1, 2008, if both the numerator and the denominator of the
22sales factor under sub. (9) related to a taxpayer's remaining net income are zero, the
23sales factor under sub. (9) is eliminated from the apportionment formula to
24determine the taxpayer's remaining net income under sub. (6).
AB413,10,4
12. For taxable years beginning after December 31, 2007, if both the numerator
2and the denominator of the sales factor under sub. (9) related to a taxpayer's
3remaining net income are zero, none of the taxpayer's remaining net income is
4apportioned to this state.
AB413,10,95 (b) 1. For taxable years beginning before January 1, 2008, if the numerator of
6the sales factor under sub. (9) related to a taxpayer's remaining net income is a
7negative number and the denominator of the sales factor under sub. (9) related to a
8taxpayer's remaining net income is a positive number, a negative number, or zero,
9the sales factor under sub. (9) is zero.
AB413,10,1410 2. For taxable years beginning after December 31, 2007, if the numerator of the
11sales factor under sub. (9) related to a taxpayer's remaining net income is a negative
12number and the denominator of the sales factor under sub. (9) related to a taxpayer's
13remaining net income is a positive number, a negative number, or zero, none of the
14taxpayer's remaining net income is apportioned to this state.
AB413,10,1915 (c) 1. For taxable years beginning before January 1, 2008, if the numerator of
16the sales factor under sub. (9) related to a taxpayer's remaining net income is a
17positive number and the denominator of the sales factor under sub. (9) related to a
18taxpayer's remaining net income is zero or a negative number, the sales factor under
19sub. (9) is one.
AB413,10,2420 2. For taxable years beginning after December 31, 2007, if the numerator of the
21sales factor under sub. (9) related to a taxpayer's remaining net income is a positive
22number and the denominator of the sales factor under sub. (9) related to a taxpayer's
23remaining net income is zero or a negative number, all of the taxpayer's remaining
24net income is apportioned to this state.
AB413, s. 21 25Section 21. 71.25 (7) (intro.) of the statutes is amended to read:
AB413,11,2
171.25 (7) Property factor. (intro.) For purposes of sub. (5) (6) and for taxable
2years beginning before January 1, 2008
:
AB413, s. 22 3Section 22. 71.25 (8) (intro.) of the statutes is amended to read:
AB413,11,54 71.25 (8) Payroll factor. (intro.) For purposes of sub. (5) (6) and for taxable
5years beginning before January 1, 2008
:
AB413, s. 23 6Section 23. 71.25 (9) (d) of the statutes is amended to read:
AB413,11,147 71.25 (9) (d) Sales, other than sales of tangible personal property, are in this
8state if the income-producing activity is performed in this state. If the
9income-producing activity is performed both in and outside this state the sales shall
10be divided between those states having jurisdiction to tax such business in
11proportion to the direct costs of performance incurred in each such state in rendering
12this service. Services performed in states which do not have jurisdiction to tax the
13business shall be deemed to have been performed in the state to which compensation
14is allocated by sub. s. 71.25 (8) , 2001 stats.
AB413, s. 24 15Section 24. 71.25 (10) (b) of the statutes is renumbered 71.25 (10) (b) 1. and
16amended to read:
AB413,11,2317 71.25 (10) (b) 1. In this section, for taxable years beginning before January 1,
182006,
"public utility" means any business entity described under subd. 2. and any
19business entity which owns or operates any plant, equipment, property, franchise,
20or license for the transmission of communications or the production, transmission,
21sale, delivery, or furnishing of electricity, water or steam the rates of charges for
22goods or services of which have been established or approved by a federal, state or
23local government or governmental agency. "Public
AB413,12,4 242. In this section, for taxable years beginning after December 31, 2005, "public
25utility" also means any business entity providing service to the public and engaged

1in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
2regardless of whether or not the entity's rates or charges for services have been
3established or approved by a federal, state or local government or governmental
4agency.
AB413, s. 25 5Section 25. 71.25 (10) (c) of the statutes is amended to read:
AB413,12,106 71.25 (10) (c) The net business income of railroads, sleeping car companies, car
7line companies, pipeline companies, financial organizations, air carriers, and public
8utilities requiring apportionment shall be apportioned pursuant to rules of the
9department of revenue, but the income taxed is limited to the income derived from
10business transacted and property located within the state.
AB413, s. 26 11Section 26. 71.25 (11) of the statutes is amended to read:
AB413,12,2212 71.25 (11) Department may waive factor. Where, in the case of any corporation
13engaged in business within in and without the outside of this state of Wisconsin and
14required to apportion its income as provided in sub. (6), it shall be shown to the
15satisfaction of the department of revenue that the use of any one of the 3 factors
16provided in sub. (6) gives an unreasonable or inequitable final average ratio because
17of the fact that such corporation does not employ, to any appreciable extent in its
18trade or business in producing the income taxed, the factors made use of in obtaining
19such ratio, this factor may, with the approval of the department of revenue, be
20omitted in obtaining the final average ratio which is to be applied to the remaining
21net income. This subsection does not apply to taxable years beginning after
22December 31, 2007.
AB413, s. 27 23Section 27. 71.45 (3) (intro.) of the statutes is amended to read:
AB413,13,724 71.45 (3) Apportionment. (intro.) With respect Except as provided in sub. (3d),
25to determine Wisconsin income for purposes of the franchise tax, domestic insurers

1not engaged in the sale of life insurance but which that, in the taxable year, have
2collected received premiums, other than life insurance premiums, written on
3subjects of
for insurance on property or risks resident, located or to be performed
4outside this state, there shall be subtracted from multiply the net income figure
5derived by application of sub. (2) (a) to arrive at Wisconsin income constituting the
6measure of the franchise tax an amount calculated by multiplying such adjusted
7federal taxable income
by the arithmetic average of the following 2 percentages:
AB413, s. 28 8Section 28. 71.45 (3) (a) of the statutes is amended to read:
AB413,13,249 71.45 (3) (a) The Subject to sub. (3d), the percentage of total determined by
10dividing the sum of direct
premiums written on all property and risks for insurance
11other than life insurance, with respect to all property and risks resident, located, or
12to be performed in this state, and assumed premiums written for reinsurance, other
13than life insurance, with respect to all property and risks resident, located, or to be
14performed in this state, by the sum of direct premiums written for insurance on all
15property and risks, other than life insurance,
wherever located during the taxable
16year, as reflects
, and assumed premiums written on insurance for reinsurance on all
17property and risks
, other than life insurance, where the subject of insurance was
18resident, located or to be performed outside this state
wherever located. In this
19paragraph, "direct premiums" means direct premiums as reported for the taxable
20year on an annual statement that is filed by the insurer with the commissioner of
21insurance under s. 601.42 (1g) (a). In this paragraph, "assumed premiums" means
22assumed reinsurance premiums from domestic insurance companies as reported for
23the taxable year on an annual statement that is filed with the commissioner of
24insurance under s. 601.42 (1g) (a)
.
AB413, s. 29
1Section 29. 71.45 (3) (b) of the statutes is renumbered 71.45 (3) (b) 1. and
2amended to read:
AB413,14,73 71.45 (3) (b) 1. The Subject to sub. (3d), the percentage of determined by
4dividing the payroll, exclusive of life insurance payroll, paid in this state in the
5taxable year by
total payroll, exclusive of life insurance payroll, paid everywhere in
6the taxable year as reflects such compensation paid outside this state.
7Compensation
.
AB413,14,16 82. Under subd. 1., payroll is paid outside in this state if the individual's service
9is performed entirely outside in this state; or the individual's service is performed
10both within and without in and outside of this state, but the service performed within
11outside of this state is incidental to the individual's service without in this state; or
12some service is performed without in this state and the base of operations, or if there
13is no base of operations, the place from which the service is directed or controlled is
14without in this state, or the base of operations or the place from which the service is
15directed or controlled is not in any state in which some part of the service is
16performed, but the individual's residence is outside in this state.
AB413, s. 30 17Section 30. 71.45 (3d) of the statutes is created to read:
AB413,14,2318 71.45 (3d) Phase in; domestic insurers. (a) For taxable years beginning after
19December 31, 2005, and before January 1, 2007, a domestic insurer that is subject
20to apportionment under sub. (3) and this subsection shall multiply the net income
21figure derived by the application of sub. (2) by an apportionment fraction composed
22of the percentage under sub. (3) (a) representing 60% of the fraction and the
23percentage under sub. (3) (b) 1. representing 40% of the fraction.
AB413,15,424 (b) For taxable years beginning after December 31, 2006, and before January
251, 2008, a domestic insurer that is subject to apportionment under sub. (3) and this

1subsection shall multiply the net income figure derived by the application of sub. (2)
2by an apportionment fraction composed of the percentage under sub. (3) (a)
3representing 80% of the fraction and the percentage under sub. (3) (b) 1. representing
420% of the fraction.
AB413,15,85 (c) For taxable years beginning after December 31, 2007, a domestic insurer
6that is subject to apportionment under sub. (3) and this subsection shall multiply the
7net income figure derived by the application of sub. (2) by the percentage under sub.
8(3) (a).
AB413, s. 31 9Section 31. 71.45 (3e) of the statutes is created to read:
AB413,15,1410 71.45 (3e) Apportionment formula computation. (a) 1. For taxable years
11beginning before January 1, 2008, if both the numerator and the denominator used
12to determine the percentage under sub. (3) (a) related to a taxpayer's net income are
13zero, the percentage under sub. (3) (a) is eliminated from the apportionment formula
14to determine the taxpayer's income under sub. (3).
AB413,15,1815 2. For taxable years beginning after December 31, 2007, if both the numerator
16and the denominator used to determine the percentage under sub. (3) (a) related to
17a taxpayer's net income are zero, none of the taxpayer's net income is apportioned
18to this state.
AB413,15,2319 (b) 1. For taxable years beginning before January 1, 2008, if the numerator
20used to determine the percentage under sub. (3) (a) related to a taxpayer's net income
21is a negative number and the denominator used to determine the percentage under
22sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
23or zero, the percentage under sub. (3) (a) is zero.
AB413,16,324 2. For taxable years beginning after December 31, 2007, if the numerator used
25to determine the percentage under sub. (3) (a) related to a taxpayer's net income is

1a negative number and the denominator used to determine the percentage under
2sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
3or zero, none of the taxpayer's net income is apportioned to this state.
AB413,16,84 (c) 1. For taxable years beginning before January 1, 2008, if the numerator used
5to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
6a positive number and the denominator used to determine the percentage under sub.
7(3) (a) related to a taxpayer's net income is zero or a negative number, the percentage
8under sub. (3) (a) is one.
AB413,16,139 2. For taxable years beginning after December 31, 2007, if the numerator used
10to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
11a positive number and the denominator used to determine the percentage under sub.
12(3) (a) related to a taxpayer's net income is zero or a negative number, all of the
13taxpayer's net income is apportioned to this state.
AB413, s. 32 14Section 32. 71.45 (3m) of the statutes is amended to read:
AB413,16,2215 71.45 (3m) Arithmetic average. The Except as provided in sub. (3d), the
16arithmetic average of the 2 percentages referred to in sub. (3) shall be applied to the
17net income figure arrived at by the successive application of sub. (2) (a) and (b) with
18respect to Wisconsin insurers to which sub. (2) (a) and (b) applies and which have
19collected received premiums, other than life insurance premiums, written upon for
20insurance, other than life insurance, where the subject of such insurance was on
21property or risks
resident, located or to be performed outside this state, to arrive at
22Wisconsin income constituting the measure of the franchise tax.
AB413, s. 33 23Section 33. Nonstatutory provisions; revenue.
AB413,17,424 (1) Income apportionment for financial organizations; rules. The
25department of revenue shall submit in proposed form rules related to the

1apportionment of the income of financial organizations under sections 71.04 (4) (e)
2and 71.25 (6) (e) of the statutes, as created by this act, to the legislative council staff
3under section 227.15 (1) of the statutes no later than the first day of the 4th month
4beginning after the effective date of this subsection.
AB413, s. 34 5Section 34. Initial applicability.
AB413,17,86 (1) Single sales factor apportionment. The treatment of section 71.45 (3)
7(intro.), (a), and (b) and (3m) of the statutes first applies to taxable years beginning
8after December 31, 2005.
AB413,17,99 (End)
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