SECTION 8. Tax 2.02 (12) (Note 5) is created to read:
Tax 2.02 (12) (Note) Beginning on January 1, 1968 and ending on January 1, 2010, Wisconsin had a formal reciprocity agreement with Minnesota. The reciprocity agreement was limited to income from personal services, including wages, salaries, tips, fees, commissions, bonuses, or similar earnings, provided the taxpayer personally rendered the service. The reciprocity exclusion for personal service income did not apply where the personal or professional service income was earned as a part of a business operated by the taxpayer which had employees that did more than incidental duties for the business, or where there was the sale or delivery of goods which was more than an incidental part of the business. A partner's salary from a partnership where the selling of goods or services of the employees was more than incidental was subject to the reciprocity exclusion, but the partnership profits were not excluded. Distributions from a tax-sheltered annuity were also considered subject to the reciprocity exclusion. To qualify for the exclusion, the Minnesota agreement required the taxpayer to have a place of abode in Wisconsin, and the taxpayer was required to customarily return to it at least once a month.
SECTION 9. Tax 2.12 (5) (a) and (b) are amended to read:
Tax 2.12 (5) (a) Beginning on or after January 1, 2015, Except except as provided in par. (b) or (c), a claim for refund shall be filed on the same form as the original form, in the manner prescribed in sub. (6).
(b) Prior to January 1, 2015, Except except as provided in par. (c), a claim for refund shall be filed on a form 1X, in the manner prescribed in sub. (6), if any of the following apply:
SECTION 10. Tax 2.31 (1) (Note) is amended to read:
Tax 2.31 (1) Note: Wisconsin has reciprocity agreements with Illinois, Indiana, Kentucky, and Michigan and Minnesota.
SECTION 11. Tax 2.39 (3) (a) 1., (b) 1., (c) 1., (d), and (d) (Note) are amended to read:
Tax 2.39 (3) (a) 1. For taxable years beginning before January 1, 2006, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, and sleeping car companies, as defined in ss. 71.04 (8) (a) and (b) 1. and 71.25 (10) (a) and (b) 1., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (a) or 71.25 (6) (a), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors. (b) 1. For taxable years beginning after December 31, 2005, and before January 1, 2007, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, and sleeping car companies, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (b) or 71.25 (6) (b), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors. (c) 1. For taxable years beginning after December 31, 2006, and before January 1, 2008, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, and sleeping car companies, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use an apportionment fraction as described in s. 71.04 (4) (c) or 71.25 (6) (c), Stats. Property, payroll, or sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of any of the apportionment factors. (d) For taxable years beginning after December 31, 2007, persons engaged in business in and outside this state, except direct air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, and railroads, and sleeping car companies, as defined in ss. 71.04 (8) (a) and (b) 2. and 71.25 (10) (a) and (b) 2., Stats., and corporations that are authorized to use an alternative method of apportionment under s. 71.25 (14), Stats., shall use only the sales factor to compute the apportionment fraction, as provided in s. 71.04 (4) (d) or 71.25 (6) (d), Stats. Sales related to the production of nonapportionable income may not be included in either the numerator or the denominator of the sales factor. If either the numerator or the denominator of the sales factor is zero or a negative number, the sales factor shall be determined as described in ss. 71.04 (4m) (a) 2., (b) 2., or (c) 2. or 71.25 (6m) (a) 2., (b) 2., or (c) 2., Stats. (d) Note: See ss. Tax 2.46, 2.47, 2.475, 2.48, 2.49, 2.495, 2.50, 2.502, and 2.505 for special apportionment fractions of interstate direct air carriers, motor carriers, railroads, sleeping car companies, pipelines, financial institutions, broker−dealers, investment advisers, investment companies, underwriters, public utilities, telecommunications companies, and professional sports clubs. SECTION 12. Tax 2.475 (title), (1), (1) (Note), (2) (title) and (intro.), (2) (b) (Note), and (4) (Note) are amended to read:
Tax 2.475 (title) Apportionment of apportionable income of interstate railroads, sleeping car companies and car line companies.
(1) General. The apportionable income of a railroad, sleeping car company, or car line company engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the company is in a combined group, its Wisconsin share of the combined group’s apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7). (1) Note: A railroad, sleeping car company, or car line company that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting. (2) Interstate railroads and sleeping car companies. With respect to the imposition of Wisconsin franchise or income tax measured by or on net income for taxable years beginning on or after January 1, 1991, the apportionable income of a railroad or sleeping car company engaged in business in and outside this state shall be apportioned to Wisconsin on the basis of the arithmetical average of the following 2 factors:
(b) Note: Railroads and sleeping car companies that are in combined groups must adjust the numerator and denominator of each of these factors and then convert the arithmetical average of these factors to the modified sales factor. The modified sales factor then determines the company’s Wisconsin share of the combined group’s apportionable income. See s. 71.255 (5), Stats., and s. Tax 2.61 (7) for details. (4) Note: Section 71.26 (1) (a), Stats., was amended by 1991 Wis. Act 39, effective for taxable years beginning on or after January 1, 1991. For taxable years beginning before January 1, 1991, railroads, sleeping car companies and car line companies were exempt from Wisconsin franchise and income taxation. SECTION 13. Tax 2.955 (3) (a) is amended to read:
Tax 2.955 (3) (a) Income tax paid to Illinois, Indiana, Kentucky, or Michigan or Minnesota on personal service income earned in these states included under a reciprocity agreement.
SECTION 14. Tax 2.955 (4) (e) and (f) are created to read:
Tax 2.955 (4) (e) For a Wisconsin resident partner in a partnership or member of a limited liability company treated as a partnership:
1. If a Wisconsin resident partner or member files an individual income tax return with another state, attach a copy of the other state’s income tax return to the Wisconsin income tax return.
2. If the partnership or limited liability company treated as a partnership files a combined or composite return with another state on behalf of its partners or members who are nonresidents of that state and pays the tax on their proportionate share of the income earned there, attach to the Wisconsin income tax return either a copy of the Wisconsin schedule 3K−1 on which is shown the partner's or member's share of tax paid to that state, or a letter as provided in par. (f).
3. If the partnership or limited liability company treated as a partnership files a partnership income or franchise tax return with another state and pays tax on or measured by income earned there that is attributable to its partners or members who are nonresidents of that state, attach to the Wisconsin income tax return either a copy of the Wisconsin schedule 3K−1 on which is shown the partner's or member's share of tax paid to that state, or a letter as provided in par. (f).
(f) If the partnership or limited liability company treated as a partnership is not required to file a form 3, "Wisconsin Partnership Return," a Wisconsin resident partner or member shall attach to the Wisconsin income tax return a letter provided by the partnership or limited liability company treated as a partnership in lieu of Wisconsin schedule 3K−1 as required in pars. (e) 2. and 3. The letter shall include a schedule showing the partner's or member's proportionate share of the items of income taxable by that state, the adjusted gross income, and the net tax paid.
SECTION 15. Tax 3.01 (7) (b) 1. is amended to read:
Tax 3.01 (7) (b) 1. A taxpayer with related entity expenses shall disclose such expenses on or before the extended due date of the return for the year in which the expenses are reported. The department is authorized to disallow related entity expenses, even if the expenses meet the conditions in s. 71.80 (23) (a), Stats., and sub. (4) for failure to timely disclose such expenses. The form prescribed by the department to disclose related entity expenses shall not be accepted by the department if filed with an amended return after the extended due date. Failure to disclose or untimely disclosure by a taxpayer subjects the taxpayer and related entities to the provisions of sub. (5) (e) (f). SECTION 16. Tax 3.05 (3) is amended to read:
Tax 3.05 (3) Amount of deduction. Sections 71.05 (6) (b) 47m., 71.26 (1) (h), and 71.45 (1) (c), Stats., provide for an income and franchise tax deduction, prior to January 1, 2015, in an amount equal to the increase in the number of full−time equivalent employees employed by the taxpayer in this state during the taxable year, multiplied by $4,000 for a business with gross receipts of no greater than $5,000,000 in the taxable year or $2,000 for a business with gross receipts greater than $5,000,000 in the taxable year. SECTION 17. Tax 3.095 (4) (a) 22. is created to read:
Tax 3.095 (4) 22. Bonds or notes issued by a sponsoring municipality to assist a local exposition district created under subch. II of ch. 229, Stats. SECTION 18. Tax 9.69 (5) (intro.) is amended to read:
Tax 9.69 (5) (intro.) Recordkeeping requirements. Every tobacco product manufacturer required to file a schedule under sub. (3) shall maintain complete and accurate records to support the information reported on the required schedule. These records shall be maintained for a period of 4 5 years from the date of sale into Wisconsin and shall include all of the following:
SECTION 19. Effective date; general. This rule shall take effect on the first day of the month following publication in the Wisconsin Administrative Register as provided in s. 227.22 (2) (intro.), Stats.
