Chapter 71

71.03(2)(m) (m) Separate return following joint return.

71.03(2)(m)1. 1. Except as provided in subds. 3. and 5., for a taxable year for which a joint return has been filed, separate returns may be filed by the spouses on or before the last day prescribed by law for timely filing the return of either has elapsed.

71.03(2)(m)2. 2. If a husband and wife change from a joint return to separate returns within the time prescribed in subd. 1., the tax paid on the joint return shall be allocated between them in proportion to the tax liability shown on each separate return.

71.03(2)(m)3. 3. In the taxable year in which the death of one or both spouses occurs, a separate return may be filed under this paragraph within the time prescribed in subd. 1., or as provided for a personal representative under par. (e) if a joint return has been filed under par. (e) by the surviving spouse or by the decedent’s personal representative and the surviving spouse. If a separate return is filed by the surviving spouse or by the decedent’s personal representative under this paragraph, the joint return previously filed shall be the separate return of the surviving spouse or the decedent for whom the separate return was not filed, unless both the surviving spouse and the decedent’s personal representative file a separate return under this paragraph. The tax on the separate return of the surviving spouse shall be determined by excluding all items properly includable in the separate return of the decedent, and the tax on the separate return of the decedent shall be determined by excluding all items properly includable in the return of the surviving spouse.

71.03(2)(m)4. 4. The time allowed the personal representative to disaffirm the joint return by the filing of a separate return does not establish a new due date for the return of the deceased spouse, and sub. (8) and ss. 71.91 and 71.92 apply to that return.

71.03(2)(m)5. 5. A separate return may not be filed unless the amount shown upon that separate return is paid in full on or before the date when the separate return is filed.

71.03 Cross-reference Cross-reference: See also s. Tax 2.08, Wis. adm. code.

71.03(3) (3) Fractional part of year. If a natural person or fiduciary files a federal income tax return for a fractional part of the year, the person shall file a Wisconsin income tax return for that fractional year. That person shall compute and report income on the basis of the period for which that return is filed, and that fractional year shall constitute a taxable year.

71.03(4) (4) Election to have department compute tax.

71.03(4)(a) (a) Natural persons whose total income is not in excess of $10,000 and consists entirely of wages subject to withholding for Wisconsin tax purposes and not more than $200 total of dividends, interest and other wages not subject to Wisconsin withholding, and who have elected the Wisconsin standard deduction and have not claimed either the credit for homestead property tax relief or deductions for expenses incurred in earning such income, shall, at their election, not be required to record on their income tax returns the amount of the tax imposed on their Wisconsin taxable income. Married persons shall be permitted this election only if the joint income of the husband and wife does not exceed $10,000, if both report their incomes on the same joint income tax return form, and if both make this election.

71.03(4)(b) (b) The department shall compute the tax on income reported by persons making the election under par. (a). After applying all known applicable credits, the department shall notify the taxpayer of the amount of taxes due or the amount of taxes to be refunded.

71.03(5) (5) Copy of federal return. To the extent necessary for the administration of the tax imposed by this chapter, when required under rules prescribed or orders issued by the department or upon the written request of the department, natural persons and fiduciaries subject to this chapter shall file with the department a true and complete copy of their federal income tax return and any other return or statement filed with, or made to, or any document received from, the internal revenue service.

71.03 Cross-reference Cross-reference: See also s. Tax 2.10, Wis. adm. code.

71.03(6) (6) Time return required.

71.03(6)(a) (a) Reports required under this section shall be made to the department of revenue on or before the date required to file the corresponding federal income tax return, not including any extension, to the internal revenue service, in the manner and form prescribed by the department of revenue, whether notified to do so or not. Such persons shall be subject to the same penalties for failure to report as those who receive notice. If the taxpayer is unable to make his or her own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer.

71.03(6)(b) (b) 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.

71.03(6m) (6m) Time to file claims; no return required. A claim for a credit under [s. 71.07 (3m) or] subch. VIII or IX that is filed by a natural person who is not required to file a report under sub. (2) (a) shall be filed on a calendar year basis in conformity with the filing requirements in subs. (6) and (7).

71.03 Note NOTE: An obsolete cross-reference is shown in brackets. Section 71.07 (3m) was repealed by 2021 Wis. Act 127. Corrective legislation is pending.

71.03(7) (7) Extension of time to file. Returns of natural persons and fiduciaries that require a statement of amounts or information contained or entered on a corresponding return under the internal revenue code shall be filed within the time fixed under that code for filing of the corresponding federal return. Any extension of time granted by law or by the internal revenue service for the filing of that corresponding federal return extends the time for filing under this chapter if a copy of the taxpayer’s application to the internal revenue service requesting the extension is filed with the return under this chapter or if a copy of any request for an extension required by the internal revenue service is filed with the return under this chapter or at an earlier date that the department prescribes by rule and if the taxpayer pays the Wisconsin tax in the manner applicable to federal income taxes under the internal revenue code. Taxes payable upon the filing of the return do not become delinquent during the period of an extension but are subject to interest at the rate of 12 percent per year during such period except as follows:

71.03(7)(a) (a) For taxable years beginning after December 31, 1989, and before January 1, 1991, for persons who served in support of Operation Desert Shield, Operation Desert Storm or an operation that is a successor to Operation Desert Shield or Operation Desert Storm in the United States, or for persons who served in Egypt, Israel, Diego Garcia or Germany, or for persons who qualify for a federal extension of time to file under 26 USC 7508, who served outside the United States because of their participation in Operation Desert Shield, Operation Desert Storm or an operation that is a successor to Operation Desert Shield or Operation Desert Storm in the Desert Shield or Desert Storm theater of operations.

71.03(7)(b) (b) For taxable years beginning after December 31, 1994, and before January 1, 1997, for persons who served in support of Operation Balkan Endeavor or an operation that is a successor to Operation Balkan Endeavor, or for persons who served in Croatia, Bosnia and Herzegovina, Serbia, Macedonia, Montenegro, Hungary, Austria, Slovakia, Czech Republic or Slovenia, or for persons who qualify for a federal extension of time to file under 26 USC 7508, who served outside the United States because of their participation in Operation Balkan Endeavor or an operation that is a successor to Operation Balkan Endeavor in the Balkan Endeavor theater of operations.

71.03(7)(c) (c) For taxable years beginning after December 31, 2000, and before January 1, 2003, for persons who served in support of Operation Enduring Freedom or an operation that is a successor to Operation Enduring Freedom in the United States, or for persons who qualify for a federal extension of time to file under 26 USC 7508, who served outside the United States because of their participation in Operation Enduring Freedom or an operation that is a successor to Operation Enduring Freedom in the Enduring Freedom theater of operations.

71.03(7)(d) (d) For taxable years beginning after December 31, 2002, for persons who served in support of Operation Iraqi Freedom or an operation that is a successor to Operation Iraqi Freedom in the United States, or for persons who qualify for a federal extension of time to file under 26 USC 7508, who served outside the United States because of their participation in Operation Iraqi Freedom or an operation that is a successor to Operation Iraqi Freedom in the Iraqi Freedom theater of operations.

71.03(7)(e) (e) For taxable years beginning after December 31, 2005, for persons who qualify for a federal extension of time to file under 26 USC 7508.

71.03(7)(f) (f) For taxable years beginning after December 31, 2008, for persons who qualify for a federal extension of time to file under 26 USC 7508A due to a presidentially declared disaster or terroristic or military action.

71.03 Cross-reference Cross-reference: See also s. Tax 2.88, Wis. adm. code.

71.03(8) (8) Payment of tax.

71.03(8)(a) (a) 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.

71.03(8)(b) (b) The final payment of taxes on incomes of persons other than corporations who file on a calendar year basis shall be made on or before the deadline for filing returns under sub. (6) (a), except for persons electing to have the department compute their tax under sub. (4).

71.03(8)(c) (c) If the taxpayer elects under sub. (4) (a) to have the department compute the tax on his or her income and the taxpayer files his or her return on or before the date on which such return is required to be filed under sub. (6) (a), the amount of taxes due thereon, as stated in the notice from the department under sub. (4) (b), shall become delinquent if not paid on or before the due date stated in the notice to the taxpayer. Such amounts of taxes due shall not be subject to any interest, other than extension interest, prior to the date of delinquency. Taxes due on returns filed after the date on which returns are required to be filed shall be deemed delinquent as of the due date of the return.

71.03(8)(d) (d) The department of revenue shall accept in advance income taxes and surtaxes from taxpayers desirous of making such payments before the same shall become due and payable. Advance payment of taxes under this provision 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.

71.03(8)(e) (e) No person is required to pay a balance due of less than $1.

71.03 History History: 1987 a. 312, 411; 1989 a. 31; 1991 a. 3, 39, 269, 301, 305, 315; 1993 a. 16, 112, 204, 213, 491; 1995 a. 255, 428; 1999 a. 9; 2001 a. 23, 102; 2003 a. 83; 2005 a. 25, 49; 2009 a. 28; 2015 a. 84; 2017 a. 324; 2021 a. 40, 127.

71.03 Note NOTE: 1991 Wis. Act 301, which affected this section, contains extensive legislative council notes.

71.04 71.04 Situs of income; allocation and apportionment.

71.04(1) (1) Situs.

71.04(1)(a) (a) All income or loss of resident individuals and resident estates and trusts shall follow the residence of the individual, estate or trust. Income or loss of nonresident individuals and nonresident estates and trusts from business, not requiring apportionment under sub. (4), (10) or (11), shall follow the situs of the business from which derived, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. All items of income, loss and deductions of nonresident individuals and nonresident estates and trusts derived from a tax-option corporation not requiring apportionment under sub. (9) shall follow the situs of the business of the corporation from which derived, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. Income or loss of nonresident individuals and nonresident estates and trusts derived from rentals and royalties from real estate or tangible personal property, or from the operation of any farm, mine or quarry, or from the sale of real property or tangible personal property shall follow the situs of the property from which derived. Income from personal services of nonresident individuals, including income from professions, shall follow the situs of the services. A nonresident limited partner’s distributive share of partnership income shall follow the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. A nonresident limited liability company member’s distributive share of limited liability company income shall follow the situs of the business, except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state. Income of nonresident individuals, estates and trusts from the state lottery under ch. 565 is taxable by this state. Income of nonresident individuals, estates and trusts from any multijurisdictional lottery under ch. 565 is taxable by this state, but only if the winning lottery ticket or lottery share was purchased from a retailer, as defined in s. 565.01 (6), located in this state or from the department. Income of nonresident individuals, nonresident trusts and nonresident estates from pari-mutuel winnings or purses under ch. 562 is taxable by this state. Income of nonresident individuals, estates and trusts from winnings from a casino or bingo hall that is located in this state and that is operated by a Native American tribe or band shall follow the situs of the casino or bingo hall. Income derived by a nonresident individual from a covenant not to compete is taxable by this state to the extent that the covenant was based on a Wisconsin-based activity. All other income or loss of nonresident individuals and nonresident estates and trusts, including income or loss derived from land contracts, mortgages, stocks, bonds and securities or from the sale of similar intangible personal property, shall follow the residence of such persons, except as provided in par. (b) and sub. (9), except that all income that is realized from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in this state shall be allocated to this state.

71.04(1)(b) (b) For purposes of determining the situs of income under this section:

71.04(1)(b)1. 1. 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.

71.04(1)(b)2. 2. 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.

71.04(1)(b)3. 3. The residence of an estate or trust shall be as provided under s. 71.14.

71.04(2) (2) Part-year resident liability determination. Liability to taxation for income which follows the residence of the recipient, in the case of persons other than corporations, who move into or out of the state within the year, shall be determined for such year on the basis of the income received (or accrued, if on the accrual basis) during the portion of the year that any such person was a resident of Wisconsin. The net income of such person assignable to the state for such year shall be used in determining the income subject to assessment under this chapter.

71.04(3) (3) Partners and limited liability company members.

71.04(3)(a) (a) Part-year residents, time of residence. Partners or members who are residents of this state for less than a full taxable year shall compute taxes for that year on their share of partnership or limited liability company income or loss under this chapter on the part of the taxable year during which they are residents in the following manner:

71.04(3)(a)1. 1. Assign an equal portion of each item of income, loss or deduction to each day of the partnership’s or limited liability company’s taxable year.

71.04(3)(a)2. 2. Multiply each daily portion of those items of income, loss or deduction by a fraction that represents the partner’s or member’s portion, on that day, of the total partnership or limited liability company interest.

71.04(3)(a)3. 3. Net the items of income, loss or deduction, after the calculation under subd. 2., for all of the days during which the partner or member was a resident of this state.

71.04(3)(b) (b) Part-year residents, nonresidents. All partners or members who are residents of this state for less than a full taxable year or who are nonresidents shall compute taxes for that year on their share of partnership or limited liability company income or loss under this chapter for the part of the taxable year during which they are nonresidents by recognizing their proportionate share of all items of income, loss or deduction attributable to a business in, services performed in, or rental of property in, this state.

71.04(3)(c) (c) Disregarding agreements. In computing taxes under this chapter a partner or member shall disregard, for purposes of determining the situs of partnership income of partners, all provisions in partnership or limited liability company agreements that do any of the following:

71.04(3)(c)1. 1. Characterize the consideration for payments to the partner or member as services or the use of capital.

71.04(3)(c)2. 2. Allocate to the partner or member, as income from or gain from sources outside this state, a greater proportion of the partner’s or member’s distributive share of partnership or limited liability company income or gain than the ratio of partnership or company income or gain from sources outside this state to partnership or company income or gain from all sources.

71.04(3)(c)3. 3. Allocate to a partner or member a greater proportion of a partnership or limited liability company item of loss or deduction from sources in this state than the partner’s or member’s proportionate share of total partnership or company loss or deduction.

71.04(3)(c)4. 4. Determine a partner’s or member’s distributive share of an item of partnership or limited liability company income, gain, loss or deduction for federal income tax purposes if the principal purpose of that determination is to avoid or evade the tax under this chapter.

71.04(4) (4) Nonresident allocation and apportionment formula. Nonresident individuals and nonresident estates and trusts 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 nonresident individual or nonresident estate or trust 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, and car line companies 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 this state by use of the following:

71.04(4)(a) (a) For taxable years beginning before January 1, 2006, an apportionment fraction composed of a sales factor under sub. (7) representing 50 percent of the fraction, a property factor under sub. (5) representing 25 percent of the fraction, and a payroll factor under sub. (6) representing 25 percent of the fraction.

71.04(4)(b) (b) For taxable years beginning after December 31, 2005, and before January 1, 2007, an apportionment fraction composed of a sales factor under sub. (7) representing 60 percent of the fraction, a property factor under sub. (5) representing 20 percent of the fraction, and a payroll factor under sub. (6) representing 20 percent of the fraction.

71.04(4)(c) (c) For taxable years beginning after December 31, 2006, and before January 1, 2008, an apportionment fraction composed of a sales factor under sub. (7) representing 80 percent of the fraction, a property factor under sub. (5) representing 10 percent of the fraction, and a payroll factor under sub. (6) representing 10 percent of the fraction.

71.04(4)(d) (d) For taxable years beginning after December 31, 2007, an apportionment fraction composed of the sales factor under sub. (7).

71.04(4)(e) (e) For taxable years beginning after December 31, 2005, and before January 1, 2008, the apportionment fraction for the remaining net income of a financial organization shall include a sales factor that represents more than 50 percent of the apportionment fraction, as determined by rule by the department. For taxable years beginning after December 31, 2007, the apportionment fraction for the remaining net income of a financial organization is composed of a sales factor, as determined by rule by the department.

71.04 Cross-reference Cross-reference: See also s. Tax 2.41, Wis. adm. code.

71.04(4m) (4m) Apportionment formula computation.

71.04(4m)(a) (a)

71.04(4m)(a)1. 1. For taxable years beginning before January 1, 2008, if both the numerator and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income are zero, the sales factor under sub. (7) is eliminated from the apportionment formula to determine the taxpayer’s remaining net income under sub. (4).

71.04(4m)(a)2. 2. For taxable years beginning after December 31, 2007, if both the numerator and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income are zero, none of the taxpayer’s remaining net income is apportioned to this state.

71.04(4m)(b) (b)

71.04(4m)(b)1. 1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a negative number and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number, a negative number, or zero, the sales factor under sub. (7) is zero.

71.04(4m)(b)2. 2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a negative number and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number, a negative number, or zero, none of the taxpayer’s remaining net income is apportioned to this state.

71.04(4m)(c) (c)

71.04(4m)(c)1. 1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is zero or a negative number, the sales factor under sub. (7) is one.

71.04(4m)(c)2. 2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is a positive number and the denominator of the sales factor under sub. (7) related to a taxpayer’s remaining net income is zero or a negative number, all of the taxpayer’s remaining net income is apportioned to this state.

71.04(5) (5) Property factor. For purposes of sub. (4) and for taxable years beginning before January 1, 2008:

71.04(5)(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.

71.04(5)(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.

71.04(5)(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.

71.04(5)(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.

71.04(6) (6) Payroll factor. For purposes of sub. (4) and for taxable years beginning before January 1, 2008:

71.04(6)(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.

71.04(6)(b) (b) Compensation is paid in this state if:

71.04(6)(b)1. 1. The individual’s service is performed entirely within this state;

71.04(6)(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;

71.04(6)(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;

71.04(6)(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;

71.04(6)(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

71.04(6)(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.

71.04(6)(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.

71.04(6)(d) (d) Payments made to an independent contractor or any person not properly classified as an employee are excluded from the payroll factor.

71.04(6)(e) (e) If the taxpayer has no employees or the department determines that employees are not a substantial income-producing factor, the department may order or permit the elimination of the payroll factor.

71.04(7) (7) Sales factor. For purposes of sub. (4):

71.04(7)(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 100 percent of the sales of the taxpayer during the tax period under pars. (b) 2m. and 3. and (c). For purposes of applying pars. (b) 2m. and 3. and (c), if a taxpayer is within another state’s jurisdiction for income or franchise tax purposes for any part of the taxable year, it is considered to be within that state’s jurisdiction for income or franchise tax purposes for the entire taxable year.