SB720: Bill Text

SB720,18,17 71.25 (6) Allocation and separate accounting and apportionment formula. (intro.) 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 air carriers, financial organizations, telecommunications companies, pipeline companies, public utilities, railroads, 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, the net income shall be apportioned to this state by use of the following:

SB720,23 Section 23. 71.28 (6) (h) of the statutes is amended to read:

SB720,19,5 71.28 (6) (h) Any person, including a nonprofit entity described in section 501 (c) (3) of the Internal Revenue Code, may sell or otherwise transfer the credit under par. (a) 2m. or 3., in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and submits with the notification a copy of the transfer documents, and the department certifies ownership of the credit with each transfer. The transferor may file a claim for more than one taxable year on a form prescribed by the department to compute all years of the credit under par. (a) 2m. or 3., at the time of the transfer request. The transferee may first use the credit to offset tax in the taxable year of the transferor in which the transfer occurs, and may use the credit only to offset tax in taxable years otherwise allowed to be claimed and carried forward by the original claimant.

SB720,24 Section 24. 71.47 (6) (h) of the statutes is amended to read:

SB720,19,18 71.47 (6) (h) Any person, including a nonprofit entity described in section 501 (c) (3) of the Internal Revenue Code, may sell or otherwise transfer the credit under par. (a) 2m. or 3., in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43, if the person notifies the department of the transfer, and submits with the notification a copy of the transfer documents, and the department certifies ownership of the credit with each transfer. The transferor may file a claim for more than one taxable year on a form prescribed by the department to compute all years of the credit under par. (a) 2m. or 3., at the time of the transfer request. The transferee may first use the credit to offset tax in the taxable year of the transferor in which the transfer occurs, and may use the credit only to offset tax in taxable years otherwise allowed to be claimed and carried forward by the original claimant.

SB720,25 Section 25. 71.52 (1g) of the statutes is created to read:

SB720,20,3 71.52 (1g) “Earned income” means wages, salaries, tips, and other employee compensation that may be included in federal adjusted gross income for the taxable year, plus the amount of the claimant's net earnings from self-employment for the taxable year determined with regard to the deduction allowed to the taxpayer by section 164 (f) of the Internal Revenue Code. For purposes of this subsection, a claimant's earned income is computed without regard to any marital property laws and a claimant may elect to treat amounts excluded from federal adjusted gross income as earned income, as provided under section 112 of the Internal Revenue Code. “Earned income” does not include the following:

SB720,20,4 (a) Any amount received as a pension or annuity.

SB720,20,5 (b) Any amount to which section 871 (a) of the Internal Revenue Code applies.

SB720,20,7 (c) Any amount received for services provided by an individual while the individual is an inmate at a penal institution.

SB720,20,12 (d) Any amount received for service performed in work activities under paragraphs (4) or (7) of section 407 (d) of the Social Security Act to which the claimant is assigned under any state program under part A of title IV of the Social Security Act. This paragraph applies only to amounts subsidized under any such state program.

SB720,26 Section 26. 71.55 (10) of the statutes is amended to read:

SB720,20,22 71.55 (10) Farmers. Notwithstanding the provision in s. 71.52 (6) that requires the addition of certain disqualified losses to income, such an addition may not be made by a claimant who is a farmer whose primary income is from farming and whose farming generates less than $250,000 in gross receipts from the operation of farm premises in the year to which the claim relates. For purposes of this subsection, a claimant's primary income is from farming if the claimant's gross income from farming for the year to which the claim relates is greater than 50 percent of the claimant's total gross income from all sources for the year to which the claim relates. In this subsection, “gross income” has the meaning given in s. 71.03 (1).

SB720,27 Section 27. 71.738 (3c) of the statutes is created to read:

SB720,21,3 71.738 (3c) “Pass-through entity" means a partnership, a limited liability company, a tax-option corporation, an estate, or a trust that is treated as a pass-through entity for federal income tax purposes.

SB720,28 Section 28. 71.738 (3d) of the statutes is created to read:

SB720,21,8 71.738 (3d) “Pass-through item" means a tax-option item under s. 71.34 (3) or an item of income, gain, loss, deduction, credit, or any other item that originates with a pass-through entity and is required to be reported by one or more pass-through members under this chapter.

SB720,29 Section 29. 71.738 (3f) of the statutes is created to read:

SB720,21,14 71.738 (3f) “Pass-through member" means a person who is a partner in a partnership, shareholder in a tax-option corporation, beneficiary of an estate or a trust, or any other person whose tax liability under this chapter is determined in whole or in part by taking into account the person's share of pass-through items, directly or indirectly, from a pass-through entity.

SB720,30 Section 30. 71.738 (3g) of the statutes is created to read:

SB720,21,16 71.738 (3g) “Person” includes a pass-through entity,

SB720,31 Section 31. 71.738 (5b) of the statutes is created to read:

SB720,21,18 71.738 (5b) “Taxpayer” includes a pass-through entity,

SB720,32 Section 32. 71.745 of the statutes is created to read:

SB720,22,2 71.745 Pass-through entity audits, additional assessments and refunds at the entity level. (1) Audit assessments and refunds. Except as provided in s. 71.80 (27), the department may audit and assess tax to a pass-through entity on income otherwise reportable by the pass-through members at the highest tax rate applicable under this chapter. The department may issue a refund to a pass-through entity when the audit results in an overpayment of tax originally paid by the entity.

SB720,22,7 (2) Adjustment of credits. Except as provided in s. 71.80 (27), the department may correct the credit computation of a pass-through entity resulting from a department audit under this subchapter at the pass-through entity level, and may apply the credit adjustment to an assessment or refund issued to the pass-through entity.

SB720,22,13 (3) Adjustments to the pass-through entity are attributable to the members. Except when an election under s. 71.21 (6) (a) or 71.365 (4m) (a) is made, any adjustments to income, gain, loss, deduction, or credit made to the pass-through entity under this section are attributable to each pass-through member in a manner that is consistent with the treatment of such income, gain, loss, deduction, or credit to the pass-through entity.

SB720,22,20 (4) Liability may be assessed to more than one person. If for any reason a pass-through entity fails to timely make any report or payment required under this subchapter, the department may assess the pass-through members for any liability resulting from an audit under this subchapter. If for any reason a pass-through member fails to timely make any report or payment required under this subchapter, the department may assess the pass-through entity for any liability resulting from an audit under this subchapter.

SB720,33 Section 33. 71.75 (11) of the statutes is created to read:

SB720,22,23 71.75 (11) The department shall not issue a refund to a pass-through entity except when the claim is for overpayment of tax originally paid by the entity.

SB720,34 Section 34. 71.76 of the statutes is amended to read:

SB720,23,18 71.76 Internal revenue service and other state adjustments. If for any year the amount of federal net income tax payable, of a credit claimed or carried forward, of a net operating loss carried forward or of a capital loss carried forward of any taxpayer as reported to the internal revenue service is changed or corrected by the internal revenue service or other officer of the United States, such taxpayer shall report such changes or corrections to the department within 90 180 days after its final determination and shall concede the accuracy of such determination or state how the determination is erroneous. Such changes or corrections need not be reported unless they affect the amount of net tax payable under this chapter, of a credit calculated under this chapter, of a Wisconsin net operating loss carried forward, of a Wisconsin net business loss carried forward or of a capital loss carried forward under this chapter. Any taxpayer submitting an amended return to the internal revenue service, or to another state if there has been allowed a credit against Wisconsin taxes for taxes paid to that state, shall also file, within 90 180 days of such filing date, an amended return if any information contained on the amended return affects the amount of net tax payable under this chapter of a credit calculated under this chapter, of a Wisconsin net operating loss carried forward, of a Wisconsin net business loss carried forward or of a capital loss carried forward under this chapter.

SB720,35 Section 35. 71.77 (7) (b) of the statutes is amended to read:

SB720,24,2 71.77 (7) (b) If notice of assessment or refund is given to the taxpayer within 90 180 days of the date on which the department receives a report from the taxpayer under s. 71.76 or within such other period specified in a written agreement entered into prior to the expiration of such 90 180 days by the taxpayer and the department. If the taxpayer does not report to the department as required under s. 71.76, the department may make an assessment against the taxpayer or refund to the taxpayer within 4 years after discovery by the department.

SB720,36 Section 36. 71.775 (1) (intro.) and (a) of the statutes are consolidated, renumbered 71.775 (1) and amended to read:

SB720,24,8 71.775 (1) Definitions. In this section: (a) “Nonresident", “nonresident” includes an individual who is not domiciled in this state; a partnership, limited liability company, or corporation whose commercial domicile is outside the state; and an estate or a trust that is a nonresident under s. 71.14 (1) to (3m).

SB720,37 Section 37. 71.775 (1) (b) of the statutes is repealed.

SB720,38 Section 38. 71.78 (1) of the statutes is amended to read:

SB720,25,4 71.78 (1) Divulging information. Except as provided in subs. (4), (4m) and, (10), and (11), no person may divulge or circulate or offer to obtain, divulge, or circulate any information derived from an income, franchise, withholding, fiduciary, partnership, or limited liability company tax return or tax credit claim, including information which may be furnished by the department as provided in this section. This subsection does not prohibit publication by any newspaper of information lawfully derived from such returns or claims for purposes of argument or prohibit any public speaker from referring to such information in any address. This subsection does not prohibit the department from publishing statistics classified so as not to disclose the identity of particular returns, or claims or reports and the items thereof. This subsection does not prohibit employees or agents of the department of revenue from offering or submitting any return, including joint returns of a spouse or former spouse, separate returns of a spouse, individual returns of a spouse or former spouse, and combined individual income tax returns, or from offering or submitting any claim, schedule, exhibit, writing, or audit report or a copy of, and any information derived from, any of those documents as evidence into the record of any contested matter involving the department in proceedings or litigation on state tax matters if, in the department's judgment, that evidence has reasonable probative value.

SB720,39 Section 39. 71.78 (11) of the statutes is created to read:

SB720,25,9 71.78 (11) Pass-through entity audits. If the department audits a pass-through entity for the income or franchise taxes of its pass-through members, including when an election is made under s. 71.21 (6) (a) or 71.365 (4m) (a) to pay tax at the entity level, the department may disclose the following:

SB720,25,14 (a) To a pass-through member that the pass-through entity is under audit or was audited, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through member or to obtain information necessary to determine the proper amount of adjustment to make at the pass-through entity level.

SB720,25,20 (b) To a pass-through entity, the identities of one or more members who have failed to report pass-through items originating with the entity on their Wisconsin returns, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through entity or to obtain information about a pass-through member's return in order to determine the proper amount of adjustment to make at the pass-through entity level.

SB720,40 Section 40. 71.80 (26) of the statutes is created to read:

SB720,26,8 71.80 (26) Tax matters member of a pass-through entity. (a) Each pass-through entity filing a return in this state under this chapter shall designate one pass-through member as the tax matters member on the pass-through entity's return filed in this state for each taxable year. If no tax matters member is designated on the return or no return is filed, the pass-through entity shall appoint a tax matters member no later than 30 days after a written request by the department. If no member is so appointed, the department may designate the tax matters member and notify the pass-through entity in writing of the designation. The pass-through entity may at any time provide a written statement designating a new tax matters member and the department shall accept it if it is signed by an authorized agent of the pass-through entity. The tax matters member for this state may be different from the entity's federal tax matters member.

SB720,26,11 (b) With regard to a department audit of a pass-through entity for income or franchise taxes, the tax matters member has the power and duty to do all of the following:

SB720,26,14 1. Act as the sole authority on behalf of the pass-through entity with respect to the year under review. The pass-through members are bound by actions of the tax matters member under this subdivision.

SB720,26,17 2. Provide the department sufficient information to identify each pass-through member, and the profits interest of each pass-through member, for each taxable year affected by the audit.

SB720,26,19 3. Represent the pass-through entity and keep all pass-through members informed.

SB720,26,21 4. Enter extension agreements on behalf of the pass-through entity under s. 71.77 (5).

SB720,26,22 5. Receive pass-through entity adjustment notices.

SB720,26,25 6. Notify all pass-through members of their share of corrections and adjustments made to the pass-through entity within 90 days after the final determination date of the notice.

SB720,27,1 7. File appeals of pass-through entity adjustment notices.

SB720,27,3 8. Enter a settlement agreement related to pass-through entity items from the entity that is binding on the pass-through members.

SB720,27,5 (c) The tax matters member may delegate the powers and duties under par. (b) to an authorized agent.

SB720,41 Section 41. 71.80 (27) of the statutes is created to read:

SB720,27,15 71.80 (27) Exception to pass-through entity level assessment. No later than 60 days after receipt of the department's audit determination, in a manner prescribed by the department, a pass-through entity with 5 or fewer members for all years under review may elect an audit assessment to be assessed separately to each pass-through member. This subsection does not apply to a pass-through entity if one or more of its members is a pass-through entity for any year under review or if the pass-through entity has made an election for the taxable year under s. 71.21 (6) (a) or 71.365 (4m) (a). The election under this subsection does not dismiss the duties of a tax matters member provided under sub. (26) (a) and (b) 2., 3., and 6.

SB720,42 Section 42. 71.83 (1) (a) 12. of the statutes is created to read:

SB720,27,23 71.83 (1) (a) 12. `Incomplete or incorrect pass-through entity return.' If any pass-through entity, as defined in s. 71.738 (3c), required under this chapter to file a return files an incomplete or incorrect return, the department, upon a showing by the department under s. 73.16 (4), shall assess the pass-through entity an amount equal to 25 percent of the amount of tax assessed under s. 71.745. The amount shall be assessed, levied, and collected in the same manner as additional income or franchise taxes.

SB720,43 Section 43. 71.87 of the statutes is amended to read:

SB720,28,6 71.87 Definition. In this subchapter, “person feeling aggrieved" and “person aggrieved" include includes a pass-through entity, as defined in s. 71.738 (3c), and the spouse of a person against whom an additional assessment was made or who was denied a claim for refund for a taxable year for which a separate return was filed and include either spouse for a taxable year for which a joint return was filed or, if no return was filed, a joint return could have been filed.

SB720,44 Section 44. 73.0305 of the statutes is amended to read:

SB720,28,14 73.0305 Revenue limits calculations. The department of revenue shall annually determine and certify to the state superintendent of public instruction, no later than the 4th Monday in June at the superintendent's request, the allowable rate of increase under subch. VII of ch. 121. The allowable rate of increase is the percentage change, if not negative, in the consumer price index for all urban consumers, U.S. city average, between the preceding March 31 and the 2nd preceding March 31, as computed by the federal department of labor.

SB720,45 Section 45. 73.09 (4) (c) of the statutes is amended to read:

SB720,28,22 73.09 (4) (c) Recertification is contingent upon submission of an application for renewal, at least 60 days before the expiration date of the current certificate, attesting to the completion of the requirements specified in par. (b). Persons applying for renewal on the basis of attendance at the meetings called by the department under s. 73.06 (1) and by meeting continuing education requirements shall submit a $20 recertification fee, in an amount determined by the department not to exceed $75, with their applications.

SB720,46 Section 46. 73.09 (5) of the statutes is amended to read:

SB720,29,9 73.09 (5) Examinations. As provided in subs. (1) and (2), the department of revenue shall prepare and administer examinations for each level of certification. A person applying for an examination under this subsection shall submit a $20 an examination fee with the person's application. If the department administers and grades the examinations, the fee shall be the amount equal to the department's best estimate of the actual cost to administer and grade the examinations, but no greater than $75. If a test service provider administers and grades the examinations, the fee shall be the amount equal to the department's best estimate of the provider's actual cost to administer and grade the examinations, but no greater than $75. The department of revenue shall grant certification to each person who passes the examination for that level.

SB720,47 Section 47. 73.16 (4) of the statutes is amended to read:

SB720,29,16 73.16 (4) Negligence determinations. The department shall not impose a penalty on a taxpayer under ss. 71.09 (11) (d), 71.83 (1) (a) 1. to 4. and 12. and (3) (a), 76.05 (2), 76.14, 76.28 (6) (b), 76.39 (3), 76.645 (2), 77.60 (2) (intro.), (3), and (4), 78.68 (3) and (4), and 139.25 (3) and (4), unless the department shows that the taxpayer's action or inaction was due to the taxpayer's willful neglect and not to reasonable cause.

SB720,48 Section 48 . 74.315 (1) of the statutes is amended to read:

SB720,29,22 74.315 (1) Submission. No later than October 1 of each year, the taxation district clerk shall submit to the department of revenue, on a form prescribed by the department, a listing of all the omitted taxes under s. 70.44 to be included on the taxation district's next tax roll, if the total of all such omitted taxes exceeds $5,000 for any single description of property are $250 or more.

SB720,49 Section 49 . 74.315 (1m) of the statutes is created to read:

SB720,30,4 74.315 (1m) Amount collected from property in a tax incremental district. A tax may not be included on a form submitted under sub. (1) if the tax was levied on a property within a tax incremental district, as defined in s. 60.85 (1) (n) or 66.1105 (2) (k), unless the current value of the tax incremental district is lower than the tax incremental base, as defined in s. 60.85 (1) (m) or 66.1105 (2) (j), in the assessment year for which the tax was collected.

SB720,50 Section 50 . 74.315 (2) of the statutes is amended to read:

SB720,30,14 74.315 (2) Equalized valuation Amount determined. After receiving the form under sub. (1), but no later than November 15, the department of revenue shall determine the amount of any change in the taxation district's equalized valuation that results from considering the valuation represented by the taxes described under sub. (1) taxes to be shared with each taxing jurisdiction for which the taxation district collected taxes and determine the amount of taxes collected under s. 70.44 to be shared with each taxing jurisdiction for which the taxation district collected taxes. The department's determination under this subsection is subject to review only under s. 227.53.

SB720,51 Section 51 . 74.315 (3) of the statutes is amended to read:

SB720,30,21 74.315 (3) Notice and distribution. If the department of revenue determines under sub. (2) that the taxation district's equalized valuation changed as a result of considering the valuation represented by the taxes described under sub. (1), the The department shall notify the taxation district and the taxation district shall distribute the resulting collections under ss. 74.23 (1) (a) 5., 74.25 (1) (a) 4m., and 74.30 (1) (dm) resulting from the determinations made under sub. (2).

SB720,52 Section 52. 76.04 (1) of the statutes is amended to read:

SB720,31,2 76.04 (1) Every company defined in s. 76.02 shall, annually, file a true and accurate statement in such manner and form and setting forth such facts as the department shall deem necessary to enforce ss. 76.01 to 76.26. The annual reports for railroad companies shall be filed on or before April 15 and for conservation and regulation companies, air carriers and pipeline companies on or before May 1.

SB720,53 Section 53. 76.07 (1) of the statutes is amended to read:

SB720,31,9 76.07 (1) Duty of department. The department on or before August 1 September 15 in each year in the case of railroad companies, and on or before September 15 in the case of air carrier companies, conservation and regulation companies and pipeline companies, shall, according to its best knowledge and judgment, ascertain and determine the full market value of the property of each company within the state.

SB720,54 Section 54. 76.075 of the statutes is amended to read:

SB720,31,25 76.075 Adjustments of assessments. Within 4 years after the due date, or extended due date, of the report under s. 76.04, any person subject to taxation under this subchapter may request the department to make, or the department may make, an adjustment to the data under s. 76.07 (4g) or (4r) submitted by the person. If an adjustment under this section results in an increase in the tax due under this subchapter, the person shall pay the amount of the tax increase plus interest on that amount at the rate of 1 percent per month from the due date or extended due date of the report under s. 76.04 until the date of final determination and interest at the rate of 1.5 percent per month from the date of final determination until the date of payment. If an adjustment under this section results in a decrease in the tax due under this subchapter, the department shall refund the appropriate amount plus interest at the rate of 0.75 0.25 percent per month from the due date or extended due date under s. 76.04 until the date of refund. Sections 71.74 (1) and (2) and 71.75 (6) and (7), as they apply to income and franchise tax adjustments, apply to adjustments under this section. Review of the adjustments is as stated in s. 76.08.

SB720,55 Section 55. 76.13 (3) of the statutes is amended to read:

SB720,32,13 76.13 (3) If the Dane County circuit court, after such roll is delivered to the secretary of administration, increases or decreases the assessment of any company, the department shall immediately redetermine the tax of the company on the basis of the revised assessment, and shall certify and deliver the revised assessment to the secretary of administration as a revision of the tax roll. If the amount of tax upon the assessment as determined by the court is less than the amount paid by the company, the secretary of administration shall refund the excess to the company with interest at the rate of 9 3 percent per year. If the amount of the tax upon the assessment as determined by the court is in excess of the amount of the tax as determined by the department, interest shall be paid on the additional amount at the rate of 12 percent per year from the date of entry of judgment to the date the judgment becomes final, and at 1.5 percent per month thereafter until paid.

SB720,56 Section 56. 76.28 (4) (b) of the statutes is amended to read:

SB720,32,23 76.28 (4) (b) In the case of overpayments of license fees by any light, heat and power company under par. (a), the department shall certify the overpayments to the department of administration, which shall audit the amount of the overpayments and the secretary of administration shall pay the amounts determined by means of the audit. All refunds of license fees under this subsection shall bear interest at the annual rate of 9 3 percent from the date of the original payment to the date when the refund is made. The time for making additional levies of license fees or claims for refunds of excess license fees paid, in respect to any year, shall be limited to 4 years after the time the report for such year was filed.

SB720,57 Section 57. 76.28 (11) of the statutes is amended to read:

SB720,33,7 76.28 (11) Payment before contesting. No action or proceeding, except a petition for redetermination under sub. (4), may be brought by a light, heat or power company against this state to contest any assessment of a tax under this section unless the taxpayer first pays to this state the amount of tax assessed. If the taxpayer prevails in an action or proceeding, this state shall settle with the taxpayer, including payment of interest at 9 3 percent per year on the amount of the money paid from the date of payment until the date of judgment.