SB197, s. 26 18Section 26. 71.25 (10) (b) of the statutes is renumbered 71.25 (10) (b) 1. and
19amended to read:
SB197,13,220 71.25 (10) (b) 1. In this section, for taxable years beginning before January 1,
212006,
"public utility" means any business entity described under subd. 2. and any
22business entity which owns or operates any plant, equipment, property, franchise,
23or license for the transmission of communications or the production, transmission,
24sale, delivery, or furnishing of electricity, water or steam the rates of charges for

1goods or services of which have been established or approved by a federal, state or
2local government or governmental agency. "Public
SB197,13,8 32. In this section, for taxable years beginning after December 31, 2005, "public
4utility" also means any business entity providing service to the public and engaged
5in the transportation of goods and persons for hire, as defined in s. 194.01 (4),
6regardless of whether or not the entity's rates or charges for services have been
7established or approved by a federal, state or local government or governmental
8agency.
SB197, s. 27 9Section 27. 71.25 (10) (c) of the statutes is amended to read:
SB197,13,1410 71.25 (10) (c) The net business income of railroads, sleeping car companies, car
11line companies, pipeline companies, financial organizations, air carriers, and public
12utilities requiring apportionment shall be apportioned pursuant to rules of the
13department of revenue, but the income taxed is limited to the income derived from
14business transacted and property located within the state.
SB197, s. 28 15Section 28. 71.25 (11) of the statutes is amended to read:
SB197,14,216 71.25 (11) Department may waive factor. Where, in the case of any corporation
17engaged in business within in and without the outside this state of Wisconsin and
18required to apportion its income as provided in sub. (6), it shall be shown to the
19satisfaction of the department of revenue that the use of any one of the 3 factors
20provided in sub. (6) gives an unreasonable or inequitable final average ratio because
21of the fact that such corporation does not employ, to any appreciable extent in its
22trade or business in producing the income taxed, the factors made use of in obtaining
23such ratio, this factor may, with the approval of the department of revenue, be
24omitted in obtaining the final average ratio which is to be applied to the remaining

1net income. This subsection does not apply to taxable years beginning after
2December 31, 2007.
SB197, s. 29 3Section 29. 71.45 (3) (intro.) of the statutes is amended to read:
SB197,14,124 71.45 (3) Apportionment. (intro.) With respect Except as provided in sub. (3d),
5to determine Wisconsin income for purposes of the franchise tax, domestic insurers
6not engaged in the sale of life insurance but which that, in the taxable year, have
7collected received premiums, other than life insurance premiums, written on
8subjects of
for insurance on property or risks resident, located or to be performed
9outside this state, there shall be subtracted from multiply the net income figure
10derived by application of sub. (2) (a) to arrive at Wisconsin income constituting the
11measure of the franchise tax an amount calculated by multiplying such adjusted
12federal taxable income
by the arithmetic average of the following 2 percentages:
SB197, s. 30 13Section 30. 71.45 (3) (a) of the statutes is amended to read:
SB197,15,414 71.45 (3) (a) The Subject to sub. (3d), the percentage of total determined by
15dividing the sum of direct
premiums written on all property and risks for insurance
16other than life insurance, with respect to all property and risks resident, located, or
17to be performed in this state, and assumed premiums written for reinsurance, other
18than life insurance, with respect to all property and risks resident, located, or to be
19performed in this state, by the sum of direct premiums written for insurance on all
20property and risks, other than life insurance,
wherever located during the taxable
21year, as reflects
, and assumed premiums written on insurance for reinsurance on all
22property and risks
, other than life insurance, where the subject of insurance was
23resident, located or to be performed outside this state
wherever located. In this
24paragraph, "direct premiums" means direct premiums as reported for the taxable
25year on an annual statement that is filed by the insurer with the commissioner of

1insurance under s. 601.42 (1g) (a). In this paragraph, "assumed premiums" means
2assumed reinsurance premiums from domestic insurance companies as reported for
3the taxable year on an annual statement that is filed with the commissioner of
4insurance under s. 601.42 (1g) (a)
.
SB197, s. 31 5Section 31. 71.45 (3) (b) of the statutes is renumbered 71.45 (3) (b) 1. and
6amended to read:
SB197,15,117 71.45 (3) (b) 1. The Subject to sub. (3d), the percentage of determined by
8dividing the payroll, exclusive of life insurance payroll, paid in this state in the
9taxable year by
total payroll, exclusive of life insurance payroll, paid everywhere in
10the taxable year as reflects such compensation paid outside this state.
11Compensation
.
SB197,15,20 122. Under subd. 1., payroll is paid outside in this state if the individual's service
13is performed entirely outside in this state; or the individual's service is performed
14both within and without in and outside this state, but the service performed within
15outside this state is incidental to the individual's service without in this state; or
16some service is performed without in this state and the base of operations, or if there
17is no base of operations, the place from which the service is directed or controlled is
18without in this state, or the base of operations or the place from which the service is
19directed or controlled is not in any state in which some part of the service is
20performed, but the individual's residence is outside in this state.
SB197, s. 32 21Section 32. 71.45 (3d) of the statutes is created to read:
SB197,16,322 71.45 (3d) Phase in; domestic insurers. (a) Except as provided in par. (d), for
23taxable years beginning after December 31, 2005, and before January 1, 2007, a
24domestic insurer that is subject to apportionment under sub. (3) and this subsection
25shall multiply the net income figure derived by the application of sub. (2) by an

1apportionment fraction composed of the percentage under sub. (3) (a) representing
260% of the fraction and the percentage under sub. (3) (b) 1. representing 40% of the
3fraction.
SB197,16,94 (b) Except as provided in par. (d), for taxable years beginning after December
531, 2006, and before January 1, 2008, a domestic insurer that is subject to
6apportionment under sub. (3) and this subsection shall multiply the net income
7figure derived by the application of sub. (2) by an apportionment fraction composed
8of the percentage under sub. (3) (a) representing 80% of the fraction and the
9percentage under sub. (3) (b) 1. representing 20% of the fraction.
SB197,16,1310 (c) Except as provided in par. (d), for taxable years beginning after December
1131, 2007, a domestic insurer that is subject to apportionment under sub. (3) and this
12subsection shall multiply the net income figure derived by the application of sub. (2)
13by the percentage under sub. (3) (a).
SB197,16,2214 (d) If a taxpayer who is subject to apportionment under sub. (3) has a net gain
15of 100 employees in this state in any taxable year beginning after the effective date
16of this paragraph .... [revisor inserts date], and before January 1, 2008, the
17taxpayer's remaining net income may, at the taxpayer's option, be apportioned to this
18state by an apportionment fraction composed of the percentage under sub. (3) (a)
19beginning with the taxable year in which the employees are hired, except that if the
20taxpayer does not retain such employees in this state for at least 3 consecutive
21taxable years, the taxpayer shall apportion the taxpayer's remaining net income as
22provided under pars. (a) to (c), as appropriate.
SB197, s. 33 23Section 33. 71.45 (3e) of the statutes is created to read:
SB197,17,324 71.45 (3e) Apportionment formula computation. (a) 1. For taxable years
25beginning before January 1, 2008, if both the numerator and the denominator used

1to determine the percentage under sub. (3) (a) related to a taxpayer's net income are
2zero, the percentage under sub. (3) (a) is eliminated from the apportionment formula
3to determine the taxpayer's income under sub. (3).
SB197,17,74 2. For taxable years beginning after December 31, 2007, if both the numerator
5and the denominator used to determine the percentage under sub. (3) (a) related to
6a taxpayer's net income are zero, none of the taxpayer's net income is apportioned
7to this state.
SB197,17,128 (b) 1. For taxable years beginning before January 1, 2008, if the numerator
9used to determine the percentage under sub. (3) (a) related to a taxpayer's net income
10is a negative number and the denominator used to determine the percentage under
11sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
12or zero, the percentage under sub. (3) (a) is zero.
SB197,17,1713 2. For taxable years beginning after December 31, 2007, if the numerator used
14to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
15a negative number and the denominator used to determine the percentage under
16sub. (3) (a) related to a taxpayer's net income is a positive number, a negative number,
17or zero, none of the taxpayer's net income is apportioned to this state.
SB197,17,2218 (c) 1. For taxable years beginning before January 1, 2008, if the numerator used
19to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
20a positive number and the denominator used to determine the percentage under sub.
21(3) (a) related to a taxpayer's net income is zero or a negative number, the percentage
22under sub. (3) (a) is one.
SB197,18,223 2. For taxable years beginning after December 31, 2007, if the numerator used
24to determine the percentage under sub. (3) (a) related to a taxpayer's net income is
25a positive number and the denominator used to determine the percentage under sub.

1(3) (a) related to a taxpayer's net income is zero or a negative number, all of the
2taxpayer's net income is apportioned to this state.
SB197, s. 34 3Section 34. 71.45 (3m) of the statutes is amended to read:
SB197,18,114 71.45 (3m) Arithmetic average. The Except as provided in sub. (3d), the
5arithmetic average of the 2 percentages referred to in sub. (3) shall be applied to the
6net income figure arrived at by the successive application of sub. (2) (a) and (b) with
7respect to Wisconsin insurers to which sub. (2) (a) and (b) applies and which have
8collected received premiums, other than life insurance premiums, written upon for
9insurance, other than life insurance, where the subject of such insurance was on
10property or risks
resident, located or to be performed outside this state, to arrive at
11Wisconsin income constituting the measure of the franchise tax.
SB197, s. 35 12Section 35. Nonstatutory provisions; revenue.
SB197,18,1813 (1) Income apportionment for financial organizations; rules. The
14department of revenue shall submit in proposed form rules related to the
15apportionment of the income of financial organizations under sections 71.04 (4) (e)
16and 71.25 (6) (e) of the statutes, as created by this act, to the legislative council staff
17under section 227.15 (1) of the statutes no later than the first day of the 4th month
18beginning after the effective date of this subsection.
SB197, s. 36 19Section 36. Initial applicability.
SB197,18,22 20(1) Single sales factor apportionment. The treatment of section 71.45 (3)
21(intro.), (a), and (b) and (3m) of the statutes first applies to taxable years beginning
22after December 31, 2005.
SB197,18,2323 (End)
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