SB510: Bill Text

SB510,17,16 6. Any member that is doing business in a tax haven, if the member is engaged in an activity that is sufficient for that tax haven jurisdiction to impose a tax under federal law. If the member's business activity in a tax haven is entirely outside the scope of the laws and practices that cause the jurisdiction to be a tax haven, the member's business activity is not considered to be conducted in a tax haven for purposes of this section.

SB510,17,21 7. Any member not described in subds. 1. to 6., to the extent that its income is derived from or attributable to sources within the United States, including the District of Columbia and any territory or possession of the United States, as determined under the Internal Revenue Code and by its apportionment factors related to that income.

SB510,18,2 (b) The department may require that a combined report filed under this section include the income and associated apportionment factors of any persons not described under par. (a) that are members of a unitary business to reflect the proper apportionment of income of the entire unitary business, including persons that are not, or would not be, subject to the taxes imposed under this chapter if doing business in this state.

SB510,18,5 (3) Components of income subject to tax. Each taxpayer member is responsible for the tax imposed under this chapter based on its taxable income or loss apportioned or allocated to this state, including:

SB510,18,7 (a) Its share of any business income apportionable to this state of each of the combined groups of which it is a member, as determined under subs. (4) and (5).

SB510,18,10 (b) Its share of any business income apportionable to this state of a distinct business activity conducted in and outside this state wholly by the taxpayer member, as determined under s. 71.25.

SB510,18,12 (c) Its income from a business conducted wholly by the taxpayer member entirely in this state.

SB510,18,14 (d) Its income sourced to this state from the sale or exchange of capital or assets and from involuntary conversions, as determined under sub. (4) (a) 8.

SB510,18,15 (e) Its nonbusiness income or loss allocable to this state.

SB510,18,17 (f) Its income or loss allocated or apportioned in an earlier year that is state source income during the income year, other than a net business loss carry-forward.

SB510,18,24 (g) Its net business loss carry-forward. If the taxable income computed under this subsection and subs. (4) and (5) results in a loss for a taxpayer member of the combined group, the taxpayer member has a net business loss, subject to the net business loss limitations and carry-forward provisions in s. 71.26 (4). The business loss is applied as a deduction in a subsequent year only if the taxpayer member has net income sourced to this state, regardless of whether the taxpayer is a member of a combined group in the subsequent year.

SB510,19,2 (4) Business income of the combined group. The business income of a combined group is determined as follows:

SB510,19,6 (a) Compute the sum of the income of each member of the combined group as determined for federal income tax purposes, as if the members were not consolidated for federal purposes, and modified as provided under s. 71.26. Each member of the combined group shall determine its income as follows:

SB510,19,11 1. For any member incorporated in the United States, including the District of Columbia and any territory or possession of the United States, or included in a consolidated federal corporate income tax return, the income included in the total income of the combined group is the corporation's taxable income as determined under s. 71.26.

SB510,19,14 2. Except as provided in subd. 3, for any member not included in subd. 1., the income included in the total income of the combined group shall be determined as follows:

SB510,19,17 a. Each foreign branch or foreign corporation shall prepare a profit and loss statement in the currency in which the branch's or corporation's books of account are regularly maintained.

SB510,19,20 b. The member shall adjust any statement prepared under subd. 2. a. to conform to the accounting principles generally accepted in the United States for the preparation of profit and loss statements.

SB510,19,23 c. The member shall adjust any statement prepared under subd. 2. a. to conform to the tax accounting standards required by the department for the administration of this chapter.

SB510,20,3 d. Each member of the combined group shall translate its profit and loss statements, and the related apportionment factors, into the currency in which the parent corporation maintains its books and records.

SB510,20,5 e. Each member shall express in U.S. dollars the income apportioned to this state.

SB510,20,18 3. If the department determines that the income determination under this subsection reasonably approximates income as determined under s. 71.26, any member not included in subd. 1. may determine its income based on a consolidated profit and loss statement that includes the member and that is prepared for the purpose of filing, by related corporations, with the securities and exchange commission. If the member is not required to file with the securities and exchange commission, the department may allow, for purposes of this subdivision, the use of the consolidated profit and loss statement prepared for reporting to shareholders and subject to review by an independent auditor. If a statement described in this subdivision does not reasonably approximate income as determined under s. 71.26, the department may accept the statement if the member makes appropriate adjustments to the statement, as determined by the department, to approximate the income determined under s. 71.26.

SB510,20,21 4. If a unitary business includes income from a pass-through entity, the total income of the combined group includes the member's direct and indirect distributive share of the pass-through entity's unitary business income.

SB510,21,2 5. All dividends paid by one member to another are not included in the recipients income, if the dividends are paid out of the earnings and profits of the unitary business in the current taxable year or in an earlier taxable year. This subdivision does not apply to dividends received from members of a unitary business that are not a part of the combined group.

SB510,21,9 6. Except as provided by the department by rule, business income or loss from an intercompany transaction between members of the same combined group shall be deferred in a manner similar to 26 CFR 1.1502-13. Upon the occurrence of any of the following events, deferred business income or loss resulting from an intercompany transaction between members of a combined group shall be included in the income of the seller and shall be apportioned as business income earned immediately before the event:

SB510,21,11 a. The object of the deferred intercompany transaction is sold by the buyer to an entity that is not a member of the combined group.

SB510,21,14 b. The object of the deferred intercompany transaction is sold by the buyer to an entity that is a member of the combined group for use outside the unitary business in which the buyer and seller are engaged.

SB510,21,16 c. The object of the deferred intercompany transaction is converted by the buyer to a use outside the unitary business in which the buyer and seller are engaged.

SB510,21,18 d. The buyer and seller are no longer members of the same combined group, regardless of whether the members remain a unitary business.

SB510,22,5 7. A charitable expense incurred by a member of a combined group, to the extent allowable as a deduction under section 170 of the Internal Revenue Code, shall be subtracted first from the business income of the combined group, subject to the income limitations of section 170 of the Internal Revenue Code as it applies to the entire business income of the group, and any remaining amount shall be treated as a nonbusiness expense allocable to the member that incurred the expense, subject to the income limitations of section 170 of the Internal Revenue Code as it applies to the nonbusiness income of that member. Any charitable deduction described under this subdivision that is allowed as a carryover deduction in a subsequent year is considered to be originally incurred in the subsequent year by the same member, and this section applies in the subsequent year for purposes of determining the allowable deduction in that year.

SB510,22,9 8. Gain or loss from the sale or exchange of capital assets, property described in section 1231 (a) (3) of the Internal Revenue Code, and property subject to an involuntary conversion, is removed from the total separate net income of each member of a combined group and is apportioned and allocated as follows:

SB510,22,14 a. For short-term capital gains or losses, long-term capital gains or losses, gains or losses under section 1231 of the Internal Revenue Code, and involuntary conversions, the business gain and loss of all members are combined within each class of net business gain or loss and each such class is separately apportioned to each member using the member's apportionment percentage determined under sub. (5).

SB510,22,20 b. Each taxpayer member shall net its apportioned business gain or loss for all classes, as determined under subd. 8. a., including any such apportioned business gain and loss from other combined groups, against the taxpayer member's nonbusiness gain and loss for all classes allocated to this state as provided under sections 1231 and 1222 of the Internal Revenue Code, not including nonbusiness items allocated to another state.

SB510,22,24 c. Any resulting state source income or loss, if the loss is not subject to section 1211 of the Internal Revenue Code, of a taxpayer member produced by the application of subd. 8. a. and b. shall then be applied to all other state source income or loss of that member.

SB510,23,4 d. Any resulting state source loss of a member that is subject to section 1211 of the Internal Revenue Code shall be carried forward or carried back by that member and shall be treated as state source short-term capital loss incurred by that member for the year for which the carry-forward or carry-back applies.

SB510,23,8 9. Any expense of one member of the unitary business that is directly or indirectly attributable to the nonbusiness or exempt income of another member of the unitary business shall be allocated to that other member as corresponding nonbusiness or exempt expense, as appropriate.

SB510,23,11 (b) Subtract any nonbusiness income of the combined group from the amount determined under par. (a) and add any nonbusiness expense or loss of the combined group to the amount determined under par. (a).

SB510,23,16 (5) Taxpayer's share of business income of a combined group. The taxpayer's share of the business income apportionable to this state of each combined group of which it is a member shall be the product of the business income of the combined group as determined under sub. (4) and the taxpayer member's sales factor percentage, determined under s. 71.25, modified as follows:

SB510,23,18 (a) Include in the numerator the taxpayer member's sales associated with the combined group's unitary business in this state.

SB510,23,22 (b) Include in the numerator the taxpayer member's sales associated with the combined group's unitary business to another state in which the taxpayer member is not engaged in business, regardless of whether another member of the combined group is engaged in business in the other state.

SB510,23,25 (c) Include in the denominator the sales of all members of the combined group, including the taxpayer, that are associated with the combined group's unitary business regardless of where that business is located.

SB510,24,5 (d) Include sales of a pass-through entity owned directly or indirectly by a corporation in proportion to a ratio the numerator of which is the amount of the corporation's distributive share of the pass-through entity's unitary income included in the income of the combined group in under sub. (4) and the denominator of which is the amount of the pass-through entity's total unitary income.

SB510,24,6 (e) Exclude sales between members of the combined group.

SB510,24,9 (f) If a member of a combined group is not subject to the taxes imposed under s. 71.23 because it is not engaged in business in this state, the numerator of the member's sales factor is zero.

SB510,24,14 (6) Credits and post-apportionment deductions. No tax credit or post-apportionment deduction earned by one member of the combined group, but not completed, used by, or allowed to that member, may be used in whole or in part by another member of the combined group or applied in whole or in part against the total income of the combined group.

SB510,25,2 (7) Designated agent. (a) For purposes of administering this section, each combined group shall appoint a sole designated agent. The designated agent is the parent corporation of the combined group, if the parent corporation is a taxpayer member of the combined group and the income of the parent corporation is included in the combined report. If there is no such parent corporation, the designated agent may be appointed by the taxpayer members. If there is no such parent corporation and no taxpayer member is appointed, the designated agent is the taxpayer member that has the most significant operations in this state on a recurring basis, as determined by the department. The designated agent may change only when the designated agent is no longer subject to the tax imposed under s. 71.23 (1) or (2), in which case the combined group shall notify the department of such a change in the manner prescribed by the department.

SB510,25,4 (b) The designated agent is responsible for acting on behalf of the taxpayer members of the combined group and shall do all of the following:

SB510,25,5 1. File with the department a combined report under sub. (1) (b).

SB510,25,6 2. File any extensions under s. 71.24.

SB510,25,7 3. File any amended combined reports and claims for refund or credit.

SB510,25,9 4. Send and receive all correspondence with the department regarding the combined report.

SB510,25,13 5. Remit all taxes, including estimated taxes, to the department. For purposes of computing interest on late payments, all payments remitted are considered to be made on a proportionate basis by all taxpayer members of the combined group, unless otherwise specified by the designated agent.

SB510,25,18 6. Participate on behalf of the combined group members in any investigation or hearing requested by the department regarding a combined report, produce all information requested by the department regarding the combined report, and file any appeal related to a combined report. Any appeal filed by the designated agent is considered filed by all members of the combined group.

SB510,25,22 7. Execute any waiver, closing agreement, power of attorney, or other document regarding the combined report filed under sub. (1) (b). Any waiver, agreement, or document executed by the designated agent is considered executed by all members of the combined group.

SB510,25,25 8. Receive notices regarding the combined report. Any such notice the department sends to the designated agent is considered sent to all taxpayer members of the combined group.

SB510,26,3 9. Receive refunds regarding the combined report. Any such refund shall be paid to and in the name of the designated agent and shall discharge any liability of the state to any member of the combined group regarding the refund.

SB510,26,8 (c) The department may relieve the designated agent from any of the duties described in par. (b) to the extent that the duties relate to income, expense, or loss that is not includable in the business income of the combined group under sub. (4). Unless the department provides for such relief by rule, a designated agent shall obtain written approval from the department to be relieved of any such duties.

SB510,26,19 (8) Taxable year of the combined group. (a) Except as provided in par. (b), the combined group's taxable year is the designated agent's taxable year. If a member's taxable year is different from the combined group's taxable year, the designated agent may elect to determine the portion of each member's income to be included in the combined report either from a separate income statement from each member that is prepared by the member's books and records for the months that are included in the combined group's taxable year or by including in the combined report all of the income of each member for the year that ends during the combined group's taxable year. Any election made under this paragraph remains in effect for subsequent years unless the designated agent submits a request to the department to change the election and the department approves in writing.

SB510,26,22 (b) If 2 or more members of a combined group file a federal consolidated return, the combined group's taxable year is the taxable year that corresponds to the federal consolidated return.

SB510,27,4 (9) Part-year members of a combined group. If a corporation becomes a member of a combined group, or ceases to be a member of a combined group, after the beginning of the combined group's taxable year, the corporation's income shall be determined as provided under subs. (3), (4), and (5) for that portion of the year in which the corporation was a member of the combined group, and the income shall be included in the combined report. The income for the remaining short period shall be reported on a separate return or separate combined report.

SB510,27,9 (10) Presumptions and burden of proof. A commonly controlled group is presumed to be engaged in a unitary business and all of the income of the unitary business is presumed to be apportionable business income under this section. A corporation has the burden of proving that it is not a member of a combined group that is subject to this section.

SB510, s. 22 Section 22. 71.26 (1m) (j) of the statutes is created to read:

SB510,27,11 71.26 (1m) (j) Those issued under s. 59.58 (6) (f).

SB510, s. 23 Section 23. 71.26 (3) (x) of the statutes is amended to read:

SB510,27,16 71.26 (3) (x) Sections 1501 to 1505, 1551, 1552, 1563 and 1564 (relating to consolidated returns) are excluded, except as provided under section 1502 of the U.S. treasury regulations as it relates to deferred gain or loss from an intercompany transaction under s. 71.255 (4) (a) 6.

SB510, s. 24 Section 24. 71.45 (1t) (j) of the statutes is created to read:

SB510,27,18 71.45 (1t) (j) Those issued under s. 59.58 (6) (f).

SB510, s. 25 Section 25. 77.9971 of the statutes is amended to read:

SB510,28,7 77.9971 Imposition. A regional transit authority under s. 59.58 (6) may impose a fee at a rate not to exceed $2, or not to exceed $15 if the governing body of the regional transit authority approves a fee under this section at such a rate, for each transaction in the region, as defined in s. 59.58 (6) (a) 2., on the rental, but not for rerental and not for rental as a service or repair replacement vehicle, of Type 1 automobiles, as defined in s. 340.01 (4) (a), by establishments primarily engaged in short-term rental of passenger cars without drivers, for a period of 30 days or less, unless the sale is exempt from the sales tax under s. 77.54 (1), (4), (7) (a), (7m), (9), or (9a). The fee imposed under this subchapter shall be effective on the first day of the first month that begins at least 90 days after the governing body of the regional transit authority approves the imposition of the fee and notifies the department of revenue. The governing body shall notify the department of a repeal of the fee imposed under this subchapter at least 60 days before the effective date of the repeal.

SB510, s. 26 Section 26. 231.01 (4) (a) of the statutes is amended to read:

SB510,28,15 231.01 (4) (a) "Cost" means the sum of all costs incurred by a participating health institution, participating educational institution, participating research institution, or participating child care provider, as approved by the authority, as are reasonable and necessary to accomplish the project, exclusive of any private or federal, state, or local financial assistance received by the participating health institution, participating educational institution, participating research institution, or participating child care provider for the payment of the project cost.

SB510, s. 27 Section 27. 231.01 (4) (b) 1. of the statutes is amended to read:

SB510,28,24 231.01 (4) (b) 1. The cost incurred by or on behalf of the participating health institution, participating educational institution, participating research institution, or participating child care provider of all necessary developmental, planning, and feasibility studies, surveys, plans, and specifications, architectural, engineering, legal, or other special services, the cost of acquisition of land and any buildings and improvements on the land, site preparation, and development including demolition or removal of existing structures, construction, reconstruction, and equipment, including machinery, fixed equipment, and personal property.

SB510, s. 28 Section 28. 231.01 (4) (b) 2. of the statutes is amended to read:

SB510,29,4 231.01 (4) (b) 2. The reasonable cost of financing incurred by a participating health institution, participating educational institution, participating research institution, or participating child care provider in the course of the development of the project to the occupancy date.

SB510, s. 29 Section 29. 231.01 (4) (c) of the statutes is amended to read:

SB510,29,13 231.01 (4) (c) All rents and other net revenues from the operation of the real property, improvements, or personal property on the project site by a participating health institution, participating educational institution, participating research institution, or participating child care provider on and after the date on which the contract between a participating health institution, participating educational institution, participating research institution, or participating child care provider and the authority was entered into, but prior to the occupancy date, shall reduce the sum of all costs in this subsection.

SB510, s. 30 Section 30. 231.01 (6t) of the statutes is created to read:

SB510,29,18 231.01 (6t) "Participating research institution" means an entity that provides or operates a research facility and that undertakes the financing and construction or acquisition of a project or undertakes the refunding or refinancing of obligations or of a mortgage or of advances as provided in this chapter.

SB510, s. 31 Section 31. 231.01 (7) (a) 1. of the statutes is amended to read:

SB510,29,23 231.01 (7) (a) 1. A specific health facility, educational facility, research facility, or child care center work or improvement to be refinanced, acquired, constructed, enlarged, remodeled, renovated, improved, furnished, or equipped by the authority with funds provided in whole or in part under this chapter.

SB510, s. 32 Section 32. 231.01 (7) (a) 2. of the statutes is amended to read:

SB510,30,5 231.01 (7) (a) 2. One or more structures suitable for use as a child care center, research facility, health facility, laboratory, laundry, nurses' or interns' residence or other multi-unit housing facility for staff, employees, patients or relatives of patients admitted for treatment or care in a health facility, physician's facility, administration building, research facility, maintenance, storage, or utility facility.

SB510, s. 33 Section 33. 231.01 (7) (a) 4. of the statutes is amended to read:

SB510,30,10 231.01 (7) (a) 4. Any structure useful for the operation of a health facility, educational facility, research facility, or child care center, including facilities or supporting service structures essential or convenient for the orderly conduct of the health facility, educational facility, research facility, or child care center.

SB510, s. 34 Section 34. 231.01 (7) (c) of the statutes is amended to read:

SB510,30,16 231.01 (7) (c) "Project" may include any combination of projects undertaken jointly by any participating health institution, participating educational institution, participating research institution, or participating child care provider with one or more other participating health institutions, participating educational institutions, participating research institutions, or participating child care providers.

SB510, s. 35 Section 35. 231.01 (8c) of the statutes is created to read:

SB510,30,19 231.01 (8c) "Research facility" means an institution, place, building, or agency that satisfies all of the following:

SB510,30,22 (a) Is owned by an entity that is described in section 501 (c) (3) of the Internal Revenue Code and that is exempt from federal income tax under section 501 (a) of the Internal Revenue Code.