Chapter 71

71.80(12)(c)2.a. a. Within 10 days of completion of service, notice of the service and a copy of the served notice, order, pleading, or process are sent by the state department, officer, or agency making the service to the person, or the person’s personal representative, at the person’s last-known address.

71.80(12)(c)2.b. b. An affidavit of compliance with this paragraph is filed with the department of financial institutions.

71.80(12)(c)3. 3. The department of financial institutions shall keep a record of all notices, orders, pleadings, processes, and affidavits served upon or filed with it under this section, noting in the record the day and hour of service or filing.

71.80(14) (14) Signatures required.

71.80(14)(a) (a) Except as otherwise provided by par. (b), sub. (20) and ss. 71.03 (2) (b) and (c), 71.13 (1), 71.20 (1), 71.21 (1) and 71.24 (4), any return, statement or other document required to be made under this chapter shall be signed in accordance with rules promulgated by the department.

71.80(14)(b) (b) The fact that an individual’s name is signed to a return, statement or other document shall be prima facie evidence for all purposes that the return, statement or other document was actually signed by that person.

71.80(15) (15) Surety bond; entertainer.

71.80(15)(a) (a) In this subsection, “employer” means the resident person or firm which engages the services of an entertainer, as defined in s. 71.01 (2), or an entertainment corporation or, in the absence of that person or firm, the resident person last having receipt, custody or control of the proceeds of the entertainment event.

71.80(15)(b) (b)

71.80(15)(b)1. 1. All entertainers, except entertainers who work for an entertainment corporation, and entertainment corporations not otherwise employed or regularly engaged in business in this state shall file a surety bond with the department of revenue at least 7 days before a performance. That bond shall be payable to the department to guarantee payment of income, franchise, sales and use taxes, income taxes withheld under subch. X, penalties and interest. The amount of the bond shall be 6 percent of either the total contract price on all contracts that exceed $7,000 or, if the total contract price is not readily determinable and the department’s estimate of the total remuneration to be received by the entertainer or entertainment corporation exceeds $7,000, 6 percent of the department’s estimate. Amounts previously earned in this state by an entertainer or entertainment corporation during the same calendar year for which no bond or cash deposit has been filed under this paragraph or for which no amounts have been withheld under s. 71.64 (5) shall be added together to determine the total contract price. The department shall approve the form and content of the bond. The bond shall remain in force until the liability under the bond is released by the department.

71.80(15)(b)2. 2. The total contract price under subd. 1. may be reduced by travel expenses, or advance payments of travel expenses, made pursuant to an accountable plan under U.S. Treasury Regulation 1.62-2. For purposes of this subdivision, “travel expenses” means amounts paid to, or on behalf of, an entertainer for actual transportation, lodging, and meals that are directly related to the entertainer’s performance in this state.

71.80(15)(c) (c) In place of the bond under par. (b) and with the department’s approval, an entertainer or entertainment corporation may deposit with the department money equal to the face value of the bond required under par. (b). The department shall retain the money until it determines the depositor’s liability for state income, franchise, sales and use taxes and income tax withheld under subch. X. If the deposit exceeds the liability, the department shall refund the difference to the depositor without interest.

71.80(15)(d) (d) If the department concludes that a bond or money deposit is not necessary to protect the revenues of the state, it may waive the requirements of pars. (b) and (c).

71.80(15)(e) (e) Each person who is an employer of an entertainer or entertainment corporation, as defined in s. 71.63 (3), shall, before paying for those services, require proof that the bond required by par. (b) or the money deposit required by par. (c) has been provided or that the department has waived those requirements. If proof is not provided, the person shall withhold and immediately transmit to the department from that person’s payment the amount for which a bond should have been provided under par. (b). Failure to withhold or transmit the amount required under this paragraph or under s. 71.64 (5) shall make the person required to withhold it personally liable for the amount required under this paragraph.

71.80(15)(f) (f) An employer of an entertainer or entertainment corporation under s. 71.63 (3) (b) who is required to withhold moneys under par. (e) or s. 71.64 (5) and who has no direct knowledge of the total contract price to be paid an entertainer or entertainment corporation is not liable under par. (e) if the employer withholds moneys based upon a signed statement provided by the entertainer, the entertainment corporation or the promoter attesting to the amount of the total contract price. The employer shall deliver the signed statement to the department within 30 days after the date of the performance. Statements under this paragraph are subject to s. 71.83 (2) (b) 1. and 2.

71.80(16) (16) Surety bond; nonresident contractor.

71.80(16)(a) (a) All nonresident persons, whether incorporated or not, engaging in construction contracting in this state as contractor or subcontractor and not otherwise regularly engaged in business in this state, shall file a surety bond with the department, payable to the department of revenue, to guarantee the payment of income or franchise taxes, required unemployment insurance contributions, sales and use taxes and income taxes withheld from wages of employees, together with any penalties and interest thereon. The department shall approve the form and contents of such bond. The amount of the bond shall be 3 percent of the contract or subcontract price on all contracts of $50,000 or more or 3 percent of contractor’s or subcontractor’s estimated cost-and-profit under a cost-plus contract of $50,000 or more. When the aggregate of 2 or more contracts in one calendar year is $50,000 or more the amount of the bond or bonds shall be 3 percent of the aggregate amount of such contracts. Such surety bond must be filed within 60 days after construction is begun in this state by any such contractor or subcontractor on any contract the price of which is $50,000 or more (or the estimated cost-and-profit of which is $50,000 or more), or within 60 days after construction is begun in this state on any contract for less than $50,000, when the amount of such contract, when aggregated with any other contracts, construction on which was begun in this state in the same calendar year, equals or exceeds $50,000. If the department concludes that no bond is necessary to protect the tax revenues of the state, including contributions under ch. 108, the requirements under this subsection may be waived by the secretary of revenue or the secretary’s designated departmental representative. The bond shall remain in force until the liability thereunder is released by the secretary or the secretary’s designated departmental representative.

71.80(16)(b) (b) A construction contractor required to file a surety bond under par. (a) may, in lieu of such requirement, but subject to approval by the department, deposit with the secretary of administration an amount of cash equal to the face of the bond that would otherwise be required. If an offer to deposit is made, the department shall issue a certificate to the secretary of administration authorizing the secretary to accept payment of such moneys and to give the secretary’s receipt therefor. A copy of such certificate shall be sent to the contractor who shall, within the time fixed by the department, pay such amount to the secretary of administration. A copy of the receipt of the secretary of administration shall be filed with the department. Upon final determination by the department of such contractor’s liability for state income or franchise taxes, required unemployment insurance contributions, sales and use taxes, and income taxes withheld from wages of employees, interest and penalties, by reason of such contract or contracts, the department shall certify to the secretary of administration the amount of taxes, penalties, and interest as finally determined, shall instruct the secretary of administration as to the proper distribution of such amount, and shall state the amount, if any, to be refunded to such contractor. The secretary of administration shall make the payments directed by such certificate within 30 days after receipt thereof. Amounts refunded to the contractor are without interest.

71.80(16)(c) (c) All persons subject to this subsection shall notify the department of revenue of the completion of a construction project in this state within 30 days after such completion.

71.80(17) (17) Tax receipts transmitted to the secretary of administration. Within 15 days after receipt of any income or franchise tax payments, the department shall transmit the same to the secretary of administration.

71.80(18) (18) Timely filing defined. Documents and payments required or permitted by this chapter that are mailed shall be considered furnished, reported, filed or made on time, if mailed in a properly addressed envelope, with postage duly prepaid, which envelope is postmarked, or marked or recorded electronically as provided under section 7502 (f) (2) (c) of the Internal Revenue Code, before midnight of the date prescribed for such furnishing, reporting, filing or making, provided such document or payment is actually received by the department or at the destination that the department or the department of administration prescribes within 5 days of such prescribed date. Documents and payments that are not mailed are timely if they are received on or before the due date by the department or at the destination that the department or the department of administration prescribes. For purposes of this subsection, “mailed” includes delivery by a delivery service designated under section 7502 (f) of the Internal Revenue Code.

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

71.80(19) (19) Whole dollar amounts.

71.80(19)(a) (a) Rounding amounts. With respect to any amount required to be shown on a form prescribed for any return, statement or other document required by this chapter, if the amount of such item is other than a whole dollar amount the fractional part of a dollar shall be disregarded unless it amounts to 50 cents or more, in which case the amount (determined without regard to the fractional part of a dollar) shall be increased to the next whole dollar.

71.80(19)(b) (b) Election not to use whole dollar amounts. Any person making a return, statement or other document required by this chapter shall be allowed to make such return, statement or other document without regard to par. (a).

71.80(19)(c) (c) Inapplicability to computation of amount. Paragraph (a) does not apply to items which must be taken into account in making the computations necessary to determine the total amount required to be shown on a form, statement or other document but applies only to such final amount.

71.80(20) (20) Electronic filing. If a person is required to file 10 or more wage statements or 10 or more of any one type of information return with the department, the person shall file the statements or the returns electronically, by means prescribed by the department.

71.80 Cross-reference Cross-reference: See also s. Tax 2.04, Wis. adm. code.

71.80(21) (21) Business entity conversion. Notwithstanding any provision of ss. 178.1141 to 178.1145, 179.1141 to 179.1145, 180.1161, 181.1161, and 183.1041 to 183.1045, the conversion of a business entity to another form of business entity under s. 178.1141, 179.1141, 180.1161, 181.1161, or 183.1041 shall be treated for state tax purposes in the same manner as the conversion is treated for federal tax purposes.

71.80(21m) (21m) Business entity interest exchange. Notwithstanding any provision of ss. 178.1131 to 178.1135, 179.1131 to 179.1135, 180.1102, 180.11021, 180.11032, 180.1105, 180.1106, 181.1131 to 181.1135, and 183.1031 to 183.1035, an interest exchange under s. 178.1131, 179.1131, 180.1102, 181.1131, or 183.1031 shall be treated for state tax purposes in the same manner as the interest exchange is treated for federal tax purposes.

71.80(22) (22) Business entity merger. Notwithstanding any provision of ss. 178.1121 to 178.1125, 179.1121 to 179.1125, 180.1101, 180.11012, 180.11031 to 180.1106, 181.1101 to 181.11055, and 183.1021 to 183.1025, the merger of a business entity with one or more business entities under s. 178.1121, 179.1121, 180.1101, 181.1101, or 183.1021 shall be treated for state tax purposes in the same manner as the merger is treated for federal tax purposes.

71.80(22m) (22m) Business entity domestication. Notwithstanding any provision of ss. 178.1151 to 178.1155, 179.1151 to 179.1155, 180.1171 to 180.1175, 181.1171 to 181.1175, and 183.1051 to 183.1055, a domestication under s. 178.1151, 179.1151, 180.1171, 181.1171, or 183.1051 shall be treated for state tax purposes in the same manner as the domestication is treated for federal tax purposes.

71.80(23) (23) Related entity addbacks.

71.80(23)(a) (a) The deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall be allowed for any interest expenses, rental expenses, intangible expenses, or management fees described in ss. 71.05 (6) (a) 24., 71.26 (2) (a) 7., 71.34 (1k) (j), or 71.45 (2) (a) 16. if any of the following applies to the interest expenses, rental expenses, intangible expenses, or management fees:

71.80(23)(a)1. 1. The related entity to which the taxpayer paid, accrued, or incurred the interest expenses, rental expenses, intangible expenses, or management fees during the taxable year directly or indirectly paid, accrued, or incurred such amounts in the same taxable year to a person who is not a related entity or the related entity to which the taxpayer paid, accrued, or incurred such expenses or fees is a holding company or a direct or indirect subsidiary of a holding company, as defined in 12 USC 1841 (a) or (l) or 12 USC 1467a (a) (1) (D), not including any entity that is organized under the laws of another jurisdiction and that primarily holds and manages investments of a bank, subsidiary, or affiliate. For purposes of this subdivision, “interest” does not include interest that is paid in connection with any debt that is incurred to acquire the taxpayer’s assets or stock under section 368 of the Internal Revenue Code. If a portion of such an interest expense, rental expense, intangible expense, or management fee is paid, accrued, or incurred in the same taxable year to a person who is not a related entity, that portion shall be allowed as a deduction to the taxpayer.

71.80(23)(a)2. 2. The related entity was subject to tax on, or measured by, its net income or receipts in this state or any state, U.S. possession, or foreign country; the related entity’s tax base in such state, U.S. possession, or foreign country included the income received from the taxpayer for the interest expenses, rental expenses, intangible expenses, or management fees; the related entity’s aggregate effective tax rate applied to such income or receipts was at least 80 percent of the taxpayer’s aggregate effective tax rate; and the related entity is not a real estate investment trust under section 856 of the Internal Revenue Code, other than a qualified real estate investment trust. For purposes of this subdivision, “any state, U.S. possession, or foreign country” does not include any state, U.S. possession, or foreign country under the laws of which the taxpayer files with the related entity, or the related entity files with another entity, a combined income tax report or return, a consolidated income tax report or return, or any other report or return that is due because of the imposition of a tax that is measured on or by income or receipts, if the report or return results in eliminating the tax effects of transactions, directly or indirectly, between either the taxpayer and the related entity or between the related entity and another entity.

71.80(23)(a)3. 3. The taxpayer establishes that the transaction satisfies any other conditions that the department considers relevant, based on the facts and circumstances, to determine that the primary motivation for the transaction was one or more business purposes other than the avoidance or reduction of state income or franchise taxes; that the transaction changed the economic position of the taxpayer in a meaningful way apart from tax effects; and that the interest expenses, rental expenses, intangible expenses, or management fees were paid, accrued, or incurred using terms that reflect an arm’s-length relationship.

71.80(23)(b) (b) Notwithstanding par. (a), the deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall not be allowed for any interest expenses, rental expenses, intangible expenses, or management fees that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities, if the aggregate amount paid, accrued, or incurred for those related entity transactions is not disclosed on a separate form prescribed by the department in the manner prescribed by the department.

71.80(24) (24) Throwback transition. For persons subject to tax under this chapter whose sales factor includes sales under s. 71.04 (7) (a) or 71.25 (9) (a), the department shall deem timely paid the estimated tax payments attributable to the difference between the person’s tax liability for the taxable year and the person’s tax liability for the taxable year computed under ch. 71, 2007 stats., for installments that become due during the period beginning on January 1, 2009, and ending on July 1, 2009, provided that such estimated tax payments are paid by the next installment due date that follows in sequence following July 1, 2009. However, if the next installment due date that follows in sequence following July 1, 2009, is less than 45 days after July 1, 2009, such estimated tax payments, in addition to the payment due less than 45 days after July 1, 2009, shall be deemed timely paid if paid by the next subsequent installment due date.

71.80(25) (25) Net operating and business loss carry-forward and carry-back.

71.80(25)(a) (a) No offset of Wisconsin income may be made under s. 71.05 (8) (b) 1., 71.26 (4) (a), or 71.45 (4) (a) unless the incurred loss was computed on a return that was filed within 4 years of the unextended due date for filing the original return for the taxable year in which the loss was incurred.

71.80(25)(b) (b) No carry-back of a loss may be allowed under s. 71.05 (8) (b) 1. unless claimed within 4 years of the unextended due date for filing the original return for the taxable year to which the loss is carried back.

71.80(26) (26) Pass-through entity representative.

71.80(26)(a) (a) Each pass-through entity shall designate, in the manner prescribed by the department, a pass-through member or other person with substantial presence in the United States as the representative of the pass-through entity. In the case in which such designation is not in effect, the pass-through entity shall appoint a representative within 60 days following a written request by the department. If the pass-through entity fails to appoint a representative following a written request by the department, the department may designate a representative and notify the pass-through entity, or the beneficiaries in the case of a closed estate or trust, in writing of the designation. The pass-through entity may at any time provide a written statement to the department designating a new representative and the department shall accept the designation if the statement is signed by an authorized agent of the pass-through entity. The representative designated by a pass-through entity under this paragraph may be different than the pass-through entity’s federal representative or authorized agent.

71.80(26)(b) (b) The representative designated under par. (a) shall have the power and duty to do all of the following:

71.80(26)(b)1. 1. Act as the sole authority on behalf of the pass-through entity and its pass-through members with respect to a determination under s. 71.745.

71.80(26)(b)2. 2. Provide the department sufficient information to identify each pass-through member and the capital, profits, and loss interest of each pass-through member.

71.80(26)(b)3. 3. Enter into extension agreements on behalf of the pass-through entity under s. 71.77 (5).

71.80(26)(b)4. 4. Receive notices of pass-through entity adjustments under this chapter.

71.80(26)(b)5. 5. Notify all pass-through members of their share of corrections and adjustments made to pass-through items within 60 days after a determination under s. 71.745 becomes final or after receipt of notice of approval under s. 71.76 (2) (b).

71.80(26)(b)6. 6. File appeals of notices of pass-through entity adjustments under this chapter.

71.80(26)(b)7. 7. Enter into settlement agreements and bind pass-through members to adjustments relating to pass-through items.

71.80(26)(c) (c) The representative designated under par. (a) may delegate the powers and duties under par. (b) to an authorized agent of the pass-through entity.

71.80 History History: 1987 a. 312; 1987 a. 411 ss. 70, 189 to 192; 1989 a. 31; 1991 a. 39, 301; 1993 a. 205; 1995 a. 27, 404, 418; 1997 a. 27, 39, 291; 2001 a. 44, 102; 2003 a. 33; 2005 a. 49; 2007 a. 20, 226; 2009 a. 2, 28, 276; 2013 a. 20, 349; 2015 a. 55, 218, 295; 2017 a. 59, 231, 324; 2021 a. 258, 262.

71.805 71.805 Tax avoidance transactions voluntary compliance program.

71.805(1) (1) Definitions. In this section:

71.805(1)(a) (a) “Tax avoidance transaction” means a transaction, plan, or arrangement devised for the principal purpose of avoiding federal or Wisconsin income or franchise tax. “Tax avoidance transaction” includes a listed transaction as provided under U.S. department of the treasury regulations as of October 27, 2007, and may include a transaction, as determined by the department, that provides a tax benefit for Wisconsin income or franchise tax purposes without providing a similar benefit for federal income tax purposes.

71.805(1)(b) (b) “Taxpayer” means a person who is subject to the taxes imposed under this chapter and who has a tax liability attributable to using a tax avoidance transaction for any taxable year beginning before January 1, 2007.

71.805(2) (2) Penalty waiver or abatement. All of the following apply with regard to a taxpayer who satisfies the conditions under sub. (3):

71.805(2)(a) (a) Except as provided under sub. (4) (b), the department shall waive or abate all penalties that are applicable to the underreporting or underpayment of Wisconsin income or franchise taxes attributable to using a tax avoidance transaction for any taxable year for which the taxpayer satisfies the conditions under sub. (3).

71.805(2)(b) (b) The department shall not seek a criminal prosecution against the taxpayer with respect to using a tax avoidance transaction for any taxable year for which the taxpayer satisfies the conditions under sub. (3).

71.805(3) (3) Taxpayer eligibility. A taxpayer is eligible for the benefits described under sub. (2) (a) and (b), if, during the period beginning on January 1, 2008, and ending on May 31, 2008, the taxpayer does the following:

71.805(3)(a) (a) Files an amended Wisconsin tax return for each taxable year for which the taxpayer has previously filed a Wisconsin tax return that uses a tax avoidance transaction to underreport the taxpayer’s Wisconsin income or franchise tax liability and the amended return reports the total Wisconsin net income and tax for the taxable year, computed without regard to any tax avoidance transaction and without regard to any other adjustment that is unrelated to any tax avoidance transaction.

71.805(3)(b) (b) Pays, in full, for each taxable year for which an amended return is filed under par. (a), the entire amount of Wisconsin income or franchise tax and interest due that is attributable to using a tax avoidance transaction, except that the secretary of revenue may enter into an agreement with the taxpayer to make payments in installments. A taxpayer who does not comply with an installment agreement provided under this paragraph is ineligible to receive the benefits described under sub. (2) (a) and (b) and the total amount of tax, interest, and penalties shall be immediately due and payable.

71.805(4) (4) Limitations and administration.

71.805(4)(a) (a) A taxpayer who receives the benefits described under sub. (2) may not file an appeal or a claim for credit or refund with respect to the tax avoidance transactions for the taxable years for which the taxpayer satisfied the conditions under sub. (3), except to the extent that a timely filed appeal or claim for a refund results from an adjustment to the taxpayer’s federal income tax liability regarding such transactions.

71.805(4)(b) (b) The department may not waive or abate a penalty as provided under sub. (2) (a) if the penalty relates to an amount of Wisconsin income and franchise tax that is attributable to a tax avoidance transaction and assessed and paid prior to January 1, 2008, or after May 31, 2008.

71.805 History History: 2007 a. 20.

71.81 71.81 Disclosing reportable transactions.

71.81(1) (1) Definitions. In this section:

71.81(1)(a) (a) “Listed transaction” means any reportable transaction that is the same as, or substantially similar to, a transaction, plan, or arrangement specifically identified by the U.S. secretary of the treasury as a listed transaction, for purposes of section 6011 of the Internal Revenue Code and that is specifically identified by the U.S. secretary of the treasury as a listed transaction on or after the date the transaction occurred.

71.81(1)(b) (b) “Material advisor” means any person who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction and who, directly or indirectly, derives gross income from providing such aid, assistance, or advice in an amount that exceeds the threshold amount.

71.81(1)(c) (c) “Reportable transaction” means any transaction, plan, or arrangement, including a listed transaction, for which a taxpayer is required to submit information to the department because the taxpayer is required to disclose the transaction, plan, or arrangement for federal income tax purposes for the taxable year in which the transaction occurred, as provided under U.S. department of treasury regulations.

71.81(1)(d) (d) “Tax shelter” means any entity, plan, or arrangement, if avoiding or evading federal income tax or Wisconsin income or franchise tax is a significant purpose of the entity, plan, or arrangement.

71.81(1)(e) (e) “Threshold amount” means the following:

71.81(1)(e)1. 1. In the case of a reportable transaction, not including a listed transaction, from which the tax benefits are provided primarily to an individual, $50,000.

71.81(1)(e)2. 2. In the case of a listed transaction from which the tax benefits are provided primarily to an individual, $10,000.

71.81(1)(e)3. 3. In the case of a reportable transaction, not including a listed transaction, from which the tax benefits are provided primarily to an entity and not an individual, $250,000.

71.81(1)(e)4. 4. In the case of a listed transaction, from which the tax benefits are provided primarily to an entity and not an individual, $25,000.

71.81(2) (2) Disclosure. For each taxable year in which a taxpayer has participated in a reportable transaction, the taxpayer shall file with the department a copy of any form required by the internal revenue service for disclosing the reportable transaction for federal income tax purposes no later than 60 days after the date for which the taxpayer is required to file the form for federal income tax purposes, except that, if the taxpayer has filed a form with the internal revenue service on or before October 27, 2007, the taxpayer shall file a copy of the form with the department no later than May 31, 2008. The department may require that forms filed with the department under this subsection be filed separately from this state’s income or franchise tax return. This subsection applies to any reportable transaction entered into on or after January 1, 2001, or any reportable transaction entered into prior to January 1, 2001, that reduced the taxpayer’s tax liability for taxable years beginning on or after January 1, 2001, for any taxable year for which the transaction remains undisclosed and for which the statute of limitations on assessment, including any extension provided under sub. (6), has not expired as of the date that is 60 days after October 27, 2007.

71.81(3) (3) Penalty for failing to disclose.

71.81(3)(a) (a) Any taxpayer who does not file the form under sub. (2) and who is required to file the form is subject to the following penalty:

71.81(3)(a)1. 1. If the taxpayer participated in a reportable transaction that is not a listed transaction, the lesser of $15,000 or 10 percent of the tax benefit obtained from the reportable transaction.

71.81(3)(a)2. 2. If the taxpayer participated in a listed transaction, $30,000.

71.81(3)(b) (b) The secretary of revenue may waive or abate any penalty imposed under this subsection, or any portion of such penalty, related to a reportable transaction that is not a listed transaction, if the waiver or abatement promotes compliance with this section and effective tax administration. Notwithstanding any other law or rule, a determination by the secretary of revenue under this paragraph may not be reviewed in any judicial proceeding.

71.81(3)(c) (c) The penalties imposed under this subsection apply to any failure to disclose a listed transaction entered into on or after January 1, 2001, or entered into prior to January 1, 2001, that reduced the taxpayer’s tax liability for taxable years beginning on or after January 1, 2001, including transactions that were not listed transactions when entered into, but became listed transactions before October 27, 2007, or any other reportable transaction entered into after October 27, 2007, for any taxable year for which the statute of limitations on assessment, including any extension under sub. (6), has not expired as of October 27, 2007.

71.81(4) (4) Understatement penalty.

71.81(4)(a) (a) If a taxpayer has a reportable transaction understatement, as determined in par. (b), the taxpayer shall pay, in addition to any tax owed with regard to the reportable transaction, an amount equal to either 20 percent of the reportable transaction understatement or, in the case of a reportable transaction that is not disclosed as provided in sub. (2), 30 percent of the reportable transaction understatement.

71.81(4)(b) (b) A taxpayer has a reportable transaction understatement if the following calculation results in a positive number: