Chapter 71

71.22(9ad)(b)5.e. e. The entity is organized in a country that has a tax treaty with the United States.

71.22(9ad)(c) (c) For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

71.22(9am) (9am) “Related entity” means any person related to a taxpayer as provided under section 267 or 1563 of the Internal Revenue Code during all or a portion of the taxpayer’s taxable year and any real estate investment trust under section 856 of the Internal Revenue Code, except a qualified real estate investment trust, if more than 50 percent of any class of the beneficial interests or shares of the real estate investment trust are owned directly, indirectly, or constructively by the taxpayer, or any person related to the taxpayer, during all or a portion of the taxpayer’s taxable year. For purposes of this subsection, the constructive ownership rules of section 318 (a) of the Internal Revenue Code, as modified by section 856 (d) (5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets, or net profits of any person.

71.22(9an) (9an) For purposes of s. 71.26 (2) (a) 7. and 9., “rental expenses” means the gross amounts that would otherwise be deductible under the Internal Revenue Code, as modified under s. 71.26 (3), for the use of, or the right to use, real property and tangible personal property in connection with real property, including services furnished or rendered in connection with such property, regardless of how reported for financial accounting purposes and regardless of how computed.

71.22(9g) (9g) For purposes of s. 71.25 (9) (df), (dh), (dj), and (dk), “state” means a state of the United States, the District of Columbia, the commonwealth of Puerto Rico, or any territory or possession of the United States, unless the context requires that “state” means only the state of Wisconsin.

71.22(9m) (9m) “Subscribe” means write one’s signature or, if the department prescribes another method of authenticating, use that other method.

71.22(10) (10) “Taxable year” means the taxable period upon the basis of which the taxable income of the taxpayer is computed for federal income tax purposes. The taxable year of a corporation that keeps its accounting records on the basis of a 52-53 week period ends on the last day of the month closest to the end of the 52-53 week period.

71.22(11) (11) Except as provided in s. 71.45 (2), “Wisconsin net income”, for corporations engaged in business wholly within this state, means net income and, for corporations engaged in business both within and outside this state, means the amount assigned to this state under s. 71.25 (6), (10) (c) or (13) or by a separate accounting or allocation, if allowed under s. 71.25 (6), or by another method approved under s. 71.25 (11), (12) or (14).

71.22 History History: 1987 a. 312; 1987 a. 411 ss. 14, 19, 109, 112; 1989 a. 31, 336; 1991 a. 39, 269; 1993 a. 16, 112, 437; 1995 a. 27, 380, 428; 1997 a. 27, 37, 237, 252, 299; 1999 a. 9, 194; 2001 a. 16, 109; 2003 a. 33; 2005 a. 25, 49; 2007 a. 20, 226; 2009 a. 2, 28, 161, 183; 2011 a. 32; 2013 a. 20; 2015 a. 55, 216; 2017 a. 59, 231; 2019 a. 185; 2021 a. 1; 2021 a. 240 s. 30; 2023 a. 36; s. 35.17 correction in (4) (m) 2., (n) 2., (4m) (m) 2., (n) 2.

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 that are not subject to the franchise tax under sub. (2) and that own property within this state; that derive income from sources within this state or from activities that are attributable to 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, or that buy or sell lottery prizes if the winning tickets were originally bought in this state; 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, buying or selling lottery prizes if the winning tickets were originally bought in this state 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.

71.23(3)(am) (am) 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)(am)1. 1. 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)(am)2. 2. 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)(am)3. 3. 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(3)(am)4. 4. The storage for no more than 90 days in this state in or on property owned by a person, other than the foreign corporation, of the foreign corporation’s tangible personal property, if the tangible personal property is transferred to the person and is used in this state by the person for fabricating, processing, manufacturing or printing on the parcel of property in or on which the tangible personal property is stored and if the parcel of property has an assessed value, for property tax purposes, of at least $10,000,000 but no more than $11,000,000 on January 1, 1999.

71.23(3)(bm) (bm) Except as provided in s. 71.255 (5), an out-of-state business, as defined in s. 323.12 (5) (a) 6., may do business in this state without subjecting itself to the imposition of the income or franchise tax under subs. (1) and (2) if its only activity in this state is disaster relief work, as defined in s. 323.12 (5) (a) 3.

71.23 History History: 1987 a. 312; 1999 a. 9; 2015 a. 84.

71.24 71.24 Filing returns; extensions; payment of tax.

71.24(1) (1) Filing returns. Every corporation, except a corporation 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 the date on which the corporation 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. 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 the corporation’s statement a report that identifies each item of the corporation’s 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 Cross-reference Cross-reference: See also s. Tax 2.09, Wis. adm. code.

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 a true and accurate statement on or before the date on which the corporation is required to file for federal income tax purposes, not including any extension, under the Internal Revenue Code. 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) (6) Changing reporting period.

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.

71.24(7)(a) (a) In the case of a corporation required to file a return, the department of revenue shall allow an automatic extension of 7 months or until the original due date of the corporation’s corresponding federal return, whichever is later. 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 the corporation reports the extension in the manner specified by the department on the return. 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, except as provided in par. (b), be subject to interest at the rate of 12 percent per year during such period.

71.24(7)(b) (b) 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, income or franchise taxes payable upon the filing of the tax return are not subject to interest as otherwise provided under par. (a).

71.24 Cross-reference Cross-reference: See also ss. Tax 2.88 and 2.96, Wis. adm. code.

71.24(9) (9) Delinquencies.

71.24(9)(a) (a) Corporation franchise and income taxes not paid on or before the deadline for filing returns described in sub. (1) or (1m) 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.

71.24 History History: 1987 a. 312; 1987 a. 411 ss. 91, 116; 1989 a. 31; 1991 a. 39; 1993 a. 199; 1995 a. 428; 1997 a. 27; 2007 a. 20; 2009 a. 28 ss. 1618, 1636; 2009 a. 276 s. 39; 2017 a. 2.

71.24 Cross-reference Cross-reference: See also s. Tax 2.03, Wis. adm. code.

71.25 71.25 Situs of income; allocation and apportionment. For purposes of determining the situs of income under this section and s. 71.255 (5) (a) 1. and 2.:

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. Income gain or loss from the sources listed in this paragraph is presumed apportionable as unitary or operational income or other income that has a taxable presence in this state. 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)1. 1. Sale of inventory.

71.25(5)(a)2. 2. Farms, mines and quarries.

71.25(5)(a)3. 3. Sale of scrap and by-products.

71.25(5)(a)4. 4. Commissions.

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)6. 6. Royalties from intangible assets.

71.25(5)(a)7. 7. Redemption of securities.

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)11. 11. Management fees.

71.25(5)(a)12. 12. Franchise fees.

71.25(5)(a)13. 13. Treble damages.

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)16. 16. Foreign exchange gain or loss.

71.25(5)(a)17. 17. Sale of receivables.

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)19. 19. Sale or exchange of petroleum at the wellhead.

71.25(5)(a)20. 20. Personal services performed by employees 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)22. 22. Redemption of the corporation’s bonds.

71.25(5)(a)23. 23. Interest on state and federal tax refunds on business income or business property.

71.25(5)(a)24. 24. Pari-mutuel wager winnings or purses under ch. 562.

71.25(5)(b) (b) Nonapportionable income. 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, 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.

71.25(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 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 net income shall be apportioned to this state by use of the following:

71.25(6)(a) (a) For taxable years beginning before January 1, 2006, an apportionment fraction composed of a sales factor under sub. (9) representing 50 percent of the fraction, a property factor under sub. (7) representing 25 percent of the fraction, and a payroll factor under sub. (8) representing 25 percent of the fraction.

71.25(6)(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. (9) representing 60 percent of the fraction, a property factor under sub. (7) representing 20 percent of the fraction, and a payroll factor under sub. (8) representing 20 percent of the fraction.

71.25(6)(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. (9) representing 80 percent of the fraction, a property factor under sub. (7) representing 10 percent of the fraction, and a payroll factor under sub. (8) representing 10 percent of the fraction.

71.25(6)(d) (d) For taxable years beginning after December 31, 2007, an apportionment fraction composed of the sales factor under sub. (9).

71.25(6)(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.

71.25 Cross-reference Cross-reference: See also ss. Tax 2.41 and 2.505, Wis. adm. code.

71.25(6m) (6m) Apportionment formula computation.

71.25(6m)(a) (a)

71.25(6m)(a)1. 1. For taxable years beginning before January 1, 2008, if both the numerator and the denominator of the sales factor under sub. (9) related to a taxpayer’s remaining net income are zero, the sales factor under sub. (9) is eliminated from the apportionment formula to determine the taxpayer’s remaining net income under sub. (6).

71.25(6m)(a)2. 2. For taxable years beginning after December 31, 2007, if both the numerator and the denominator of the sales factor under sub. (9) related to a taxpayer’s remaining net income are zero, none of the taxpayer’s remaining net income is apportioned to this state.

71.25(6m)(b) (b)

71.25(6m)(b)1. 1. For taxable years beginning before January 1, 2008, if the numerator of the sales factor under sub. (9) related to a taxpayer’s remaining net income is a negative number and the denominator of the sales factor under sub. (9) related to a taxpayer’s remaining net income is a positive number, a negative number, or zero, the sales factor under sub. (9) is zero.

71.25(6m)(b)2. 2. For taxable years beginning after December 31, 2007, if the numerator of the sales factor under sub. (9) related to a taxpayer’s remaining net income is a negative number and the denominator of the sales factor under sub. (9) 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.

71.25(6m)(c) (c)