71.23
71.23
Imposition of tax. 71.23(1)(1)
Income tax. For the purpose of raising revenue for the state and the counties, cities, villages and towns, there shall be assessed, levied, collected and paid a tax as provided under this chapter on all Wisconsin net incomes of corporations which are not subject to the franchise tax under
sub. (2) and which own property within this state or whose business within this state during the taxable year, except as provided under
sub. (3), consists exclusively of foreign commerce, interstate commerce, or both; except as exempted under
s. 71.26 (1). This section shall not be construed to prevent or affect the correction of errors or omissions in the assessments of income for former years under
s. 71.74 (1) and
(2).
71.23(2)
(2) Franchise tax. For the privilege of exercising its franchise or doing business in this state in a corporate capacity, except as provided under
sub. (3), every domestic or foreign corporation, except corporations specified in
s. 71.26 (1), and every nuclear decommissioning trust or reserve fund shall annually pay a franchise tax according to or measured by its entire Wisconsin net income of the preceding taxable year at the rate set forth in
s. 71.27 (2). In addition, except as provided in
sub. (3) and
s. 71.26 (1), a corporation that ceases doing business in this state and a nuclear decommissioning trust or reserve fund that is terminated shall pay a special franchise tax according to or measured by its entire Wisconsin net income for the taxable year during which the corporation ceases doing business in this state or the nuclear decommissioning trust or reserve fund is terminated at the rates under
s. 71.27 (2). Every corporation organized under the laws of this state shall be deemed to be residing within this state for the purposes of this franchise tax. All provisions of this chapter and
ch. 73 relating to income taxation of corporations shall apply to franchise taxes imposed under this subsection, unless the context requires otherwise. The tax imposed by this subsection on national banking associations shall be in lieu of all taxes imposed by this state on national banking associations to the extent it is not permissible to tax such associations under federal law.
71.23(3)
(3) Activities that do not create nexus. A foreign corporation may do business, exercise its franchise and own property in this state to the limited extent referred to in the following activities, in addition to those activities permitted under
P.L. 86-272, without subjecting itself to the imposition of the income or franchise tax under
subs. (1) and
(2):
71.23(3)(a)
(a) The storage for any length of time in this state in or on property owned by a person other than the foreign corporation of its tangible personal property and the delivery of its tangible personal property to another person in this state when such storage and delivery is for fabricating, processing, manufacturing or printing by that other person in this state.
71.23(3)(b)
(b) The storage for any length of time in this state in or on property owned by a person other than the foreign corporation, and the shipment or delivery outside this state by another person in this state, of the entire amount of the foreign corporation's tangible personal property fabricated, processed, manufactured or printed in this state.
71.23(3)(c)
(c) If the foreign corporation is a publisher, the purchase from a printer of a printing service or of tangible personal property printed in this state for the publisher and the storage of the printed material for any length of time in this state in or on property owned by a person other than the publisher, whether or not the tangible personal property is subsequently resold or delivered in this state or shipped or delivered outside this state.
71.23 History
History: 1987 a. 312.
71.24
71.24
Filing returns; extensions; payment of tax. 71.24(1)(1)
Filing returns. Every corporation, except corporations all of whose income is exempt from taxation and except as provided in
sub. (1m), shall furnish to the department a true and accurate statement, on or before March 15 of each year, except that returns for fiscal years ending on some other date than December 31 shall be furnished on or before the 15th day of the 3rd month following the close of such fiscal year and except that returns for less than a full taxable year shall be furnished on or before the date applicable for federal income taxes under the internal revenue code, in such manner and form and setting forth such facts as the department deems necessary to enforce this chapter. Every corporation that is required to furnish a statement under this subsection and that has income that is not taxable under this subchapter shall include with its statement a report that identifies each item of its nontaxable income. The statement shall be subscribed by the president, vice president, treasurer, assistant treasurer, chief accounting officer or any other officer duly authorized so to act. In the case of a return made for a corporation by a fiduciary, the fiduciary shall subscribe the return. The fact that an individual's name is subscribed on the return shall be prima facie evidence that the individual is authorized to subscribe the return on behalf of the corporation.
71.24(1m)
(1m) Unrelated business income statement. Every corporation subject to a tax on unrelated business income under
s. 71.26 (1) (a), if that corporation is required to file for federal income tax purposes, shall furnish to the department of revenue a true and accurate statement on or before the date on or before which it is required to file for federal income tax purposes. The requirements about manner, form and subscription under
sub. (1) apply to statements under this subsection.
71.24(2)
(2) Copies of federal return. Each corporation that is required to file a return under this section shall file with that return a copy of its federal income tax return for the same taxable year.
71.24(3)
(3) Inactive corporations. Whenever a corporation has been completely inactive for an entire taxable year, in lieu of filing the statements and information otherwise required by this section, it may file a declaration, on a form to be provided by the department, subscribed by its president, if a resident of this state, and, if not a resident, then by another officer residing in this state, attesting to such inactivity. Such declaration must be filed prior to the otherwise due date for its Wisconsin return for such taxable year. Thereafter the corporation need not file such statements or information for any subsequent year unless specifically requested to do so by the department or unless in a subsequent year the corporation has been activated or reactivated.
71.24(4)
(4) Filing returns by receiver, trustee in bankruptcy or assignee. If a receiver, trustee in bankruptcy or assignee, by order of a court, by operation of law or otherwise, has possession of all or substantially all of the property or business of a corporation, whether or not such property or business is being operated, such receiver, trustee or assignee shall make the return of income for such corporation in the manner and form that corporations are required to make such returns.
71.24(5)
(5) Department may require filing. Nothing contained in this section shall preclude the department from requiring any corporation to file a return when in the judgment of the department a return should be filed.
71.24(6)(a)(a) Corporations may not change their basis of reporting from a calendar year to a fiscal year, from a fiscal year to a calendar year, or from one fiscal year to another without first obtaining the approval of the department of revenue unless the internal revenue service has approved the change or unless the change, including a change to a short taxable year, is required by the internal revenue code before approval by the internal revenue service and the reason for the change is explained in the first return filed for the new taxable year. Corporations that make changes on the basis of federal changes shall submit a copy of the internal revenue service's notice of approval, if prior federal approval, other than expeditious approval, was required, or requirement, if prior federal approval was not required or if the corporation qualifies for expeditious approval, to the department of revenue along with the return for the first taxable year for which the change applies.
71.24(6)(b)
(b) If a corporation changes its basis of reporting from a calendar year to a fiscal year a separate return shall be made for the period between the close of the last calendar year and the date designated as the close of the fiscal year. If the change is from a fiscal year to a calendar year, a separate return shall be made for the period between the close of the last fiscal year and the following December 31. If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. In no case shall a separate income or franchise tax return be made for a period of more than 12 months.
71.24(6)(c)
(c) If a separate corporation income tax return is made for a fractional part of a year for federal income tax purposes, the corporation shall file a separate Wisconsin income or franchise tax return for that fractional year. The income shall be computed and reported on the basis of the period for which the separate return is made, and that fractional part of a year shall constitute a taxable year, except that if a corporation terminates, under section
1362 (d) (1) or (2) of the internal revenue code, its election to be treated as an S corporation for federal income tax purposes the corporation may allocate its items of income, loss or deduction between its short taxable year as a tax-option corporation and its short taxable year as a nontax-option corporation according to the method under section
1362 (e) (2) of the internal revenue code.
71.24(6)(d)
(d) If a separate income [or franchise] tax return is made for a short period under
par. (b) on account of a change in the taxable year, the net income for such short period shall be placed on an annual basis using the method applicable for federal income taxes under section
443 (b) (1) of the internal revenue code.
71.24(7)
(7) Extensions. In the case of a corporation required to file a return, when sufficient reason is shown, the department of revenue may on written request allow an extension of 30 days or until the original due date of the corporation's federal return, whichever is later, if the corporation has not received an extension on its federal return. Any extension of time granted by law or by the internal revenue service for the filing of corresponding federal returns shall extend the time for filing under this subchapter to 30 days after the federal due date if a copy of any extension requested of the internal revenue service is filed with the return. Termination of an automatic extension by the internal revenue service, or its refusal to grant such automatic extension, shall similarly require that any returns due under this subchapter are due on or before 30 days after the date for termination fixed by the internal revenue service. Except for payments of estimated taxes, income or franchise taxes payable upon the filing of the tax return shall not become delinquent during such extension period, but shall be subject to interest at the rate of 12% per year during such period.
71.24(8)
(8) Payment of tax. All income and franchise taxes shall be paid to the department of revenue, at its office at Madison or at such other place the department designates.
71.24(9)(a)(a) Corporation franchise and income taxes not paid on or before the 15th day of the 3rd month following the close of the taxable year shall be deemed delinquent.
71.24(9)(b)
(b) Additional income or franchise taxes assessed under
s. 71.74 (1) to
(5),
(7) and
(8) shall become delinquent if not paid on or before the due date stated in the notice to the taxpayer.
71.24(10)
(10) Advance payments. The department of revenue shall accept in advance income or franchise taxes and surtaxes from taxpayers desirous of making such payments before the same shall become due and payable. Advance payment of taxes under this subsection shall not relieve the taxpayer from additional taxes which may result from subsequent legislation or from additional taxable income disclosed or discovered subsequent to such payment.
71.24(11)
(11) Small balances. No person is required to pay a balance due of less than $1.
71.25
71.25
Situs of income; allocation and apportionment. For purposes of determining the situs of income under this section:
71.25(1)
(1) Beneficiaries. The situs of income derived by any taxpayer as the beneficiary of the estate of a decedent or of a trust estate shall be determined as if such income had been received without the intervention of a fiduciary.
71.25(2)
(2) Grantor trusts. The situs of income received by a trustee, which income, under the internal revenue code, is taxable to the grantor of the trust or to any person other than the trust, shall be determined as if such income had been actually received directly by such grantor or such other person, without the intervention of the trust.
71.25(4)
(4) Corporations engaged in business wholly within this state. For corporations engaged in business wholly within this state, all income is subject to, or included in the measure of, the Wisconsin income or franchise tax.
71.25(5)
(5) Corporations engaged in business both within and without the state. 71.25(5)(a)(a)
Apportionable income. Except as provided in
sub. (6), corporations engaged in business both within and without this state are subject to apportionment. Apportionable income includes all income or loss of corporations, other than nonapportionable income as specified in
par. (b), including, but not limited to, income, gain or loss from the following sources:
71.25(5)(a)5.
5. Sale of real property or tangible personal property used in the production of business income.
71.25(5)(a)8.
8. Interest on trade accounts and trade notes receivable.
71.25(5)(a)9.
9. Interest and dividends if the operations of the payer are unitary with those of the payee, or if those operations are not unitary but the investment activity from which that income is derived is an integral part of a unitary business and the payer and payee are neither affiliates nor related as parent company and subsidiary. In this subdivision, "investment activity" includes decision making relating to the purchase and sale of stocks and other securities, investing surplus funds and the management and record keeping associated with corporate investments, not including activities of a broker or other agent in maintaining an investment portfolio.
71.25(5)(a)10.
10. Sale of intangible assets if the operations of the company in which the investment was made were unitary with those of the investing company, or if those operations were not unitary but the investment activity from which that gain or loss was derived is an integral part of a unitary business and the companies were neither affiliates nor related as parent company and subsidiary. In this subdivision, "investment activity" has the meaning given under
subd. 9.
71.25(5)(a)14.
14. A partner's share of income or loss from a partnership or a member's share of income or loss from a limited liability company.
71.25(5)(a)18.
18. Rentals of, or royalties from, real property or tangible personal property if that real property or tangible personal property is used in the business.
71.25(5)(a)20.
20. Personal services performed by employes of the corporation.
71.25(5)(a)21.
21. Patents, copyrights, trademarks, trade names, plans, specifications, blueprints, processes, techniques, formulas, designs, layouts, patterns, drawings, manuals and technical know-how.
71.25(5)(a)23.
23. Interest on state and federal tax refunds on business income or business property.
71.25(5)(b)1.1. Income, gain or loss from the sale of nonbusiness real property or nonbusiness tangible personal property, rental of nonbusiness real property or nonbusiness tangible personal property and royalties from nonbusiness real property or nonbusiness tangible personal property are nonapportionable and shall be allocated to the situs of the property.
71.25(5)(b)2.
2. All income, gain or loss from intangible property that is earned by a personal holding company, as defined in section
542 of the internal revenue code, as amended to December 31, 1974, shall be allocated to the residence of the taxpayer.
71.25(6)
(6) Allocation and separate accounting and apportionment formula. Corporations engaged in business within and without the state shall be taxed only on such income as is derived from business transacted and property located within the state. The amount of such income attributable to Wisconsin may be determined by an allocation and separate accounting thereof, when the business of such corporation within the state is not an integral part of a unitary business, but the department of revenue may permit an allocation and separate accounting in any case in which it is satisfied that the use of such method will properly reflect the income taxable by this state. In all cases in which allocation and separate accounting is not permissible, the determination shall be made in the following manner: for all businesses except financial organizations, public utilities, railroads, sleeping car companies, car line companies and corporations or associations that are subject to a tax on unrelated business income under
s. 71.26 (1) (a) there shall first be deducted from the total net income of the taxpayer the part thereof (less related expenses, if any) that follows the situs of the property or the residence of the recipient. The remaining net income shall be apportioned to Wisconsin by use of an apportionment fraction composed of a sales factor under
sub. (9) representing 50% of the fraction, a property factor under
sub. (7) representing 25% of the fraction and a payroll factor under
sub. (8) representing 25% of the fraction.
71.25(7)
(7) Property factor. For purposes of
sub. (5):
71.25(7)(a)
(a) The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in this state during the tax period and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used during the tax period. Cash on hand or in the bank, shares of stock, notes, bonds, accounts receivable, or other evidence of indebtedness, special privileges, franchises, goodwill, or property the income of which is not taxable or is separately allocated, shall not be considered tangible property nor included in the apportionment.
71.25(7)(b)
(b) Property used in the production of nonapportionable income or losses shall be excluded from the numerator and denominator of the property factor. Property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the property factor so as to exclude, as near as possible, the portion of such property producing the nonapportionable income or loss.
71.25(7)(c)
(c) Property owned by the taxpayer is valued at its original cost. Property rented by the taxpayer is valued at 8 times the net annual rental. Net annual rental is the annual rental paid by the taxpayer less any annual rental received by the taxpayer from sub-rentals.
71.25(7)(d)
(d) The average value of property shall be determined by averaging the values at the beginning and ending of the tax period but the secretary of revenue may require the averaging of monthly values during the tax period if reasonably required to reflect properly the average value of the taxpayer's property.
71.25(8)(a)
(a) The payroll factor is a fraction, the numerator of which is the total amount paid in this state during the tax period by the taxpayer for compensation, and the denominator of which is the total compensation paid everywhere during the tax period.
71.25(8)(b)1.
1. The individual's service is performed entirely within this state;
71.25(8)(b)2.
2. The individual's service is performed within and without this state, but the service performed without this state is incidental to the individual's service within this state;
71.25(8)(b)3.
3. A portion of the service is performed within this state and the base of operations of the individual is in this state;
71.25(8)(b)4.
4. A portion of the service is performed within this state and, if there is no base of operations, the place from which the individual's service is directed or controlled is in this state;
71.25(8)(b)5.
5. A portion of the service is performed within this state and neither the base of operations of the individual nor the place from which the service is directed or controlled is in any state in which some part of the service is performed, but the individual's residence is in this state; or
71.25(8)(b)6.
6. The individual is neither a resident of nor performs services in this state but is directed or controlled from an office in this state and returns to this state periodically for business purposes and the state in which the individual resides does not have jurisdiction to impose income or franchise taxes on the employer.
71.25(8)(c)
(c) Compensation related to the operation, maintenance, protection or supervision of property used in the production of both apportionable and nonapportionable income or losses shall be partially excluded from the numerator and denominator of the payroll factor so as to exclude, as near as possible, the portion of pay related to the operation, maintenance, protection and supervision of property used in the production of nonapportionable income.
71.25(8)(d)
(d) In this subsection, compensation includes deductible management or service fees paid to a related corporation as consideration for the performance of personal services, and the situs of those fees is in this state if the services fulfill one of the requirements under
par. (b). The recipient of the fees may not include the compensation paid to its employes with respect to personal services in either the numerator or denominator of its payroll factor. Except for management or service fees, payments made to a related corporation, an independent contractor or any person not properly classifiable as an employe are excluded. In this paragraph, "related corporation" means a corporation which is part of a controlled group as defined in section
267 (f) (1) of the internal revenue code.
71.25(8)(e)
(e) If the company has no employes and pays no management or service fees or the department determines that employes are not a substantial income-producing factor and that the management or service fees paid are insubstantial, the department may order or permit the elimination of the payroll factor.
71.25(9)(a)
(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).
71.25(9)(b)
(b) Sales of tangible personal property are in this state if any of the following occur:
71.25(9)(b)1.
1. The property is delivered or shipped to a purchaser, other than the federal government, within this state regardless of the f.o.b. point or other conditions of the sale.
71.25(9)(b)2.
2. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government within this state regardless of the f.o.b. point or other conditions of sale.
71.25(9)(b)2m.
2m. The property is shipped from an office, store, warehouse, factory or other place of storage in this state and delivered to the federal government outside this state and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.
71.25(9)(b)3.
3. The property is shipped from an office, store, warehouse, factory or other place of storage in this state to a purchaser other than the federal government and the taxpayer is not within the jurisdiction, for income or franchise tax purposes, of the destination state.
71.25(9)(c)
(c) Sales of tangible personal property by an office in this state to a purchaser in another state and not shipped or delivered from this state are in this state if the taxpayer is not within the jurisdiction for income tax purposes of either the state from which the property is delivered or shipped or of the destination state.
71.25(9)(d)
(d) Sales, other than sales of tangible personal property, are in this state if the income-producing activity is performed in this state. If the income-producing activity is performed both in and outside this state the sales shall be divided between those states having jurisdiction to tax such business in proportion to the direct costs of performance incurred in each such state in rendering this service. Services performed in states which do not have jurisdiction to tax the business shall be deemed to have been performed in the state to which compensation is allocated by
sub. (8).
71.25(9)(e)
(e)
Sales defined. In this subsection, "sales" includes, but is not limited to, the following items related to the production of business income:
