Illinois income tax reciprocity. 71.10(7e)(a)
For purposes of income tax reciprocity reached with the state of Illinois under s. 71.05 (2)
, whenever the income taxes on residents of one state which would have been paid to the 2nd state without reciprocity exceed the income taxes on residents of the 2nd state which would have been paid to the first state without reciprocity, the state with the net revenue loss shall receive from the other state the amount of the loss. Interest shall be payable on all delinquent balances relating to taxable years beginning after December 31, 1999. The secretary of revenue may enter into agreements with the state of Illinois specifying the reciprocity payment due date, conditions constituting delinquency, interest rates and the method of computing interest due on any delinquent amounts.
The data used for computing the loss to either state shall be determined by the respective departments of revenue of both states on or before December 1 of the year following the close of the previous calendar year. If an agreement cannot be reached as to the amount of the loss, the secretary of revenue of this state and the director of taxation of the state of Illinois shall each appoint a member of a board of arbitration and these members shall appoint a 3rd member of the board. The board shall select one of its members as chairperson. The board may administer oaths, take testimony, subpoena witnesses and require their attendance, require the production of books, papers and documents and hold hearings at such places as it considers necessary. The board shall then make a determination as to the amount to be paid the other state which shall be conclusive. This state shall pay no more than 50 percent of the cost of such arbitration.
The payments under this subsection may be made only if the secretary of revenue of this state and the director of taxation of the state of Illinois enter into a written agreement relating to income tax reciprocity that applies to taxable years beginning after December 31, 1997.
Discharge of indebtedness; modifications.
If a person excludes from gross income an amount of income from a discharge of indebtedness because of discharges of debts described under section 108
(a) of the internal revenue code, the person shall make the adjustments specified in section 108
(b) of the internal revenue code, but the net operating loss under s. 71.01 (14)
, not the federal net operating loss, and Wisconsin credits, not federal credits, and the capital loss carry-forward as limited under s. 71.05 (10) (c)
, not the federal capital loss carry-forward, shall be applied, and the reduction rate for a credit carry-over is 6.93 percent, not 33 1/3 percent.
Unless specifically provided in this subchapter, the penalties under subch. XIII
apply for failure to comply with this subchapter unless the context requires otherwise.
Publication of standard deduction and tax brackets.
The department of revenue shall annually publish notice of the standard deduction amounts and the brackets for the individual income tax in the administrative register.
History: 1987 a. 312
; 1987 a. 411
; 1987 a. 422
; 1989 a. 31
; 1991 a. 39
; 1993 a. 16
; 1995 a. 27
; 1997 a. 27
; 1999 a. 9
; 2001 a. 16
; 2003 a. 33
; 2005 a. 25
; 2007 a. 1
; 2009 a. 2
; 2011 a. 32
; 2011 a. 260
; 2013 a. 20
; 2013 a. 165
; 2015 a. 55
; 2017 a. 58
; 2019 a. 54
SPECIAL PROVISIONS APPLICABLE TO FIDUCIARIES
Unless specifically provided in this subchapter, fiduciaries shall be subject to all of the provisions, requirements and liabilities of this chapter, so far as applicable, unless the context requires otherwise.
History: 1987 a. 312
In this subchapter, “Wisconsin taxable income" means federal taxable income, as defined in s. 71.01 (4)
, as modified under s. 71.05 (6)
History: 1997 a. 27
Imposition of tax. 71.125(1)(1)
Except as provided in sub. (2)
, the tax imposed by this chapter on individuals and the rates under s. 71.06 (1)
, and (2)
shall apply to the Wisconsin taxable income of estates or trusts, except nuclear decommissioning trust or reserve funds, and that tax shall be paid by the fiduciary.
Each electing small business trust, as defined in section 1361
(e) (1) of the Internal Revenue Code, is subject to tax at the highest rate under s. 71.06 (1)
, or (1q)
, whichever taxable year is applicable, on its income as computed under section 641
of the Internal Revenue Code, as modified by s. 71.05 (6)
Filing returns. 71.13(1)(1)
Estate or trust.
Annual returns of income of an estate or a trust shall be made to the department by the fiduciary thereof at or before the time such income is required to be reported to the internal revenue service under the internal revenue code. Under such rules as the department prescribes, a return made by one of 2 or more joint fiduciaries shall be sufficient compliance with the requirements of this section. A return made pursuant to this subsection shall contain a statement that the fiduciary has sufficient knowledge of the affairs of the person for whom the return is made to enable him or her to make the return, and that the return is, to the best of his or her knowledge and belief, true and correct.
Schedules to beneficiaries.
Every fiduciary who is required to file a return under sub. (1)
shall, on or before the due date of the return, including extensions, provide a schedule to each beneficiary whose share of income, deductions, credits, or other items of the fiduciary may affect the beneficiary's tax liability under this chapter. The schedule shall separately indicate the beneficiary's share of each item.
Returns required prior to closing estate or trust. 71.13(2)(a)
A personal representative or trustee applying to a court having jurisdiction for a discharge of his or her trust and a final settlement of his or her accounts, before the application is granted, shall file all of the following with the department:
Returns of income received by the decedent, any previous guardian, personal representative, or trustee, during each of the years open to assessment under s. 71.77
, if the returns had not previously been filed, including a return of income for the year of death to the date of death.
Returns of income received during the period of the personal representative's or trustee's administration or trust except for the final income tax year of the estate or trust.
Sales and use tax returns and withholding returns or reports that were required to be filed, if not previously filed.
Upon receipt of the returns described in par. (a)
, the department shall immediately determine the amount of taxes including interest, penalties, and costs to be payable, as well as any delinquent income, withholding, sales, and use taxes, penalties, interest, and costs due, and shall certify those amounts to the court. The court shall then enter an order directing the personal representative or trustee to pay the amounts found to be due by the department and take the department's receipt for the amount paid. The receipt shall be evidence of the payment and shall be filed with the court before a final distribution of the estate or trust is ordered and the personal representative or trustee is discharged. The filing of the receipt shall in no manner affect the obligation of the personal representative or trustee to file income, sales, and withholding returns covering transactions reportable during the final taxable year of the estate or trust and to pay income, sales, use and withholding taxes, penalties, interest, and costs due as the result of such transactions.
Required filing may be dispensed with by court.
Returns of income required to be made by sub. (2)
may be dispensed with by order of the court having jurisdiction in cases where it is clearly evident to the court that no income tax is due or to become due from the trust or estate.
Situs of income.
For purposes of determining the situs of income under this subchapter:
The estate of a decedent shall be considered resident at the domicile of the decedent at the time of his or her death.
A trust created at death by will, contract, declaration of trust or implication of law by a decedent who at the time of death was a resident of this state shall be considered resident at the domicile of the decedent at the time of the decedent's death until transferred by the court having jurisdiction under s. 72.27
to another court's jurisdiction. After jurisdiction is transferred, the trust shall be considered resident at the place to which jurisdiction is transferred. The hearing to transfer jurisdiction shall be held only after giving written notice to the department of revenue under s. 879.05
Except as provided in sub. (2)
and s. 71.04 (1) (b) 2.
, trusts created by contract, declaration of trust or implication of law that are made irrevocable and were administered in this state before October 29, 1999, shall be considered resident at the place where the trust is being administered. The following trusts shall be considered to be administered in the state of domicile of the corporate trustee of the trust at any time that the grantor of the trust is not a resident of this state:
Trusts that have any assets invested in a common trust fund, as defined in section 584
of the internal revenue code, maintained by a bank or trust company domiciled in this state that is a member of the same affiliated group, as defined in section 1504
of the internal revenue code, as the corporate trustee.
Trusts the assets of which in whole or in part are managed, or about which investment decisions are made, by a corporation domiciled in this state if that corporation and the corporate trustee are members of the same affiliated group, as defined in section 1504
of the internal revenue code.
Subject to par. (b)
and except as provided in sub. (2)
and s. 71.04 (1) (b) 2.
, only the following trusts, or portions of trusts, that become irrevocable on or after October 29, 1999, or that became irrevocable before October 29, 1999, and are first administered in this state on or after October 29, 1999, are resident of this state:
Trusts, or portions of trusts, the assets of which consist of property placed in the trust by a person who is a resident of this state at the time that the property was placed in the trust if, at the time that the assets were placed in the trust, the trust was irrevocable.
Trusts, or portions of trusts, the assets of which consist of property placed in the trust by a person who is a resident of this state at the time that the trust became irrevocable if, at the time that the property was placed in the trust, the trust was revocable.
Is revocable if the person whose property constitutes the trust may revest title to the property in that person.
Is irrevocable if the power to revest title, as described in subd. 1.
, does not exist.
The unrelated business taxable income of trusts shall be apportioned under the department of revenue's rules.
Income computation. 71.15(1)(1)
The standard deduction shall not be allowed in computing the taxable income of an estate, a trust or a common trust fund.
A personal exemption for the decedent under s. 71.07 (8)
shall not be allowed the personal representative, except against the tax on income of the decedent in the year of death. If the decedent would have been entitled to an exemption for the decedent's spouse or a dependent under s. 71.07 (8)
, had the decedent lived, the exemption shall be allowed to the personal representative so long as over one-half of the support of the spouse or dependent is supplied by the decedent or by the personal representative from the decedent's estate and the gross income of the spouse or dependent for the calendar year in which the taxable year of the personal representative begins is less than $500.
History: 1987 a. 312
; 2001 a. 102
Allocation of modifications.
The Wisconsin modifications applicable to the Wisconsin taxable income or Wisconsin adjusted gross income of estates, trusts and beneficiaries thereof with respect to income derived from such estates or trusts shall be computed and allocated as follows:
A modification or portion thereof which relates to an item of income, gain, loss or deduction which affects the computation of the federal distributable net income of the estate or trust for the current year shall be apportioned among and taken into account by the fiduciary and the beneficiary or beneficiaries in the same proportion that the item to which it relates is considered as distributed among them for federal income tax purposes.
Any remaining modifications or portions thereof shall be taken into account by the fiduciary.
If an additional assessment is made against the fiduciary or any beneficiary as a result of correction of an erroneous allocation of the modifications applicable to the income of an estate or trust, any overpayment resulting from consistent application of such correction to all other taxpayers interested in such estate or trust shall be refunded notwithstanding any rule of law which would otherwise bar such refund.
History: 1987 a. 312
General provisions. 71.17(1)(1)
Assessment of trust income distributable to nonresident beneficiary.
The income of a trust distributable or distributed to a nonresident beneficiary shall be assessed as the income of other nonresidents is assessed. No personal exemptions shall be allowed in assessing the income of such nonresident beneficiary unless that beneficiary makes a complete return under this chapter.
Lien on trust estate; income taxes levied against beneficiary.
All income taxes levied against the income of beneficiaries shall be a lien on that portion of the trust estate or interest therein from which the income taxed is derived, and such taxes shall be paid by the fiduciary, if not paid by the distributee, before the same become delinquent. Every person who, as a fiduciary under the provisions of this subchapter, pays an income tax shall have all the rights and remedies of reimbursement for any taxes assessed against him or her or paid by him or her in such capacity, as provided in s. 70.19 (1)
Liability for payment of taxes due from decedent.
Any income, withholding, sales, or use taxes, penalties, interest, and costs found to be due from a decedent, an estate, or a trust for any of the years open to assessment under s. 71.77
and any delinquent income, withholding, sales, or use taxes, penalties, interest, and costs found to be due shall be assessed against and paid by one of the following:
The personal representative or trustee.
The beneficiaries, in the same ratio that their interest in the estate or trust bears to the total estate or trust, if found to be due after the personal representative or trustee is discharged.
Trusts established or maintained out-of-state; grantor liable for tax.
The establishment or maintenance of a trust outside Wisconsin by a Wisconsin resident as grantor, the income from which trust is taxable to the grantor or to any person other than the trust under the internal revenue code, is hereby declared to be a tax avoidance device designed to avoid the legal application of the Wisconsin income tax to income properly taxable to the grantor or such other person. Any Wisconsin resident who is the grantor of such a trust shall be liable for the Wisconsin income tax on the income of such trust which is federally taxable to such grantor or other person under the internal revenue code.
Trusts that are exempt from federal income tax.
Trusts exempt from federal income tax pursuant to subtitle A, chapter 1, subchapter F of the internal revenue code shall to the same extent be exempt from taxation under this chapter.
If a qualified funeral trust makes the election under section 685
of the Internal Revenue Code for federal income tax purposes, that election applies for purposes of this chapter and each trust shall compute its own tax and shall apply the rates under s. 71.06 (1)
, or (1q)
PARTNERSHIPS AND LIMITED LIABILITY COMPANIES
Unless specifically provided in this subchapter, partnerships and limited liability companies shall be subject to all of the provisions, requirements and liabilities of this chapter, so far as applicable, unless the context requires otherwise.
History: 1987 a. 312
; 1993 a. 112
In this subchapter, “partnership" includes limited liability companies and other entities that are treated as partnerships under the Internal Revenue Code, and “partnership" does not include publicly traded partnerships treated as corporations under s. 71.22 (1k)
History: 1997 a. 27
; 2005 a. 25
Filing returns. 71.20(1)(1)
Every partnership shall furnish to the department a true and accurate statement, on or before the date on which the partnership is required to file for federal income tax purposes, not including any extension, under the Internal Revenue Code, in the manner and form and setting forth the facts the department deems necessary to enforce this chapter. A partnership that is the owner of a single-owner entity that is disregarded as a separate entity under section 7701
of the Internal Revenue Code shall include that entity's information on the owner's return under this subchapter. The statement shall be subscribed by one of the partners of the partnership.
Every partnership that is required to file a return under sub. (1)
shall, on or before the due date of the return, including extensions, provide a schedule to each partner whose share of income, deductions, credits, or other items of the partnership may affect the partner's tax liability under this chapter. The schedule shall separately indicate the partner's share of each item.
Nothing in this section precludes the department of revenue from requiring any person other than a corporation to file an income tax return when in the judgment of the department a return should be filed.
Any extension granted by law or by the Internal Revenue Service for the filing of the federal return that corresponds to the return required under sub. (1)
extends the time for filing under this section.
See also ss. Tax 2.08
, and 2.10
, Wis. adm. code.
The net income of a partnership shall be computed in the same manner and on the same basis as provided for computation of the income of persons other than corporations.
The standard deduction shall not be allowed in computing the taxable income of a partnership.
The credits under s. 71.28 (4m)
may not be claimed by a partnership or by partners, including partners of a publicly traded partnership.
The amount of the credits computed by a partnership under s. 71.07 (2dm)
, and (10)
and passed through to partners shall be added to the partnership's income.
Amounts computed by a partnership under s. 71.07 (5n)
in the previous taxable year and not included in federal ordinary business income shall be added to the partnership's income.
(a) (3) of the internal revenue code is modified so that state taxes and taxes of the District of Columbia that are value-added taxes, single business taxes or taxes on or measured by all or a portion of net income, gross income, gross receipts or capital stock are not deductible.
If persons who, on the day on which an election under this paragraph is made, hold more than 50 percent of the capital and profits of a partnership consent, a partnership that is a partnership for federal income tax purposes may elect, on or before the due date or extended due date of its return under this chapter, to be taxed at the entity level at a rate of 7.9 percent of net income reportable to this state as described in par. (d) 1.
for that taxable year.
It is the intent of the election under par. (a)
that partners of a partnership may not include in their Wisconsin adjusted gross income their proportionate share of all items of income, gain, loss, or deduction of the partnership. It is also the intent that the partnership shall pay tax on items that would otherwise be taxed if this election was not made.
If persons who, on the day on which the election under this paragraph is made, hold more than 50 percent of the capital and profits of a partnership that has elected to be taxed at the entity level under par. (a)
consent, a partnership that is a partnership for federal income tax purposes may elect, on or before the due date or extended due date of its return under this chapter, to revoke for that taxable year its election under par. (a)
If an election is made under par. (a)
, all of the following apply: