Tax 2.11Tax 2.11 Credit for sales and use tax paid on fuel and electricity. Tax 2.11(1)(a)(a) Fuel and electricity “consumed in manufacturing” means only fuel and electricity used to operate machines and equipment used directly in the step-by-step manufacturing process. Fuel and electricity are not “consumed in manufacturing” if they are used in providing plant heating, cooling, air conditioning, communications, lighting, safety and fire prevention, research and product development, receiving, storage, sales, distribution, warehousing, shipping, advertising or administrative department activities. However, fuel and electricity used directly in manufacturing steam which is used by the manufacturer in further manufacturing or in heating a facility, or both, is consumed in manufacturing. Tax 2.11(2)(a)(a) Under s. 71.28 (3), Stats., a corporation may reduce its income or franchise tax liability for the year by an amount equal to the Wisconsin state and county sales and use taxes it has paid on fuel and electricity consumed in manufacturing personal property within Wisconsin. Tax 2.11(2)(b)(b) If separate gas or electric meters are not used to accurately measure the fuel and electricity consumed in manufacturing in Wisconsin, a reasonable allocation is necessary. Tax 2.11(2)(c)(c) The credit is allowable for all Wisconsin and Wisconsin county sales and use taxes paid during the taxable year on fuel or electricity destined for manufacturing purposes, regardless of when the fuel or electricity was or is to be consumed. Tax 2.11 NoteNote: Refer to Streets and Roads Construction Corporation v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-6239, July 28, 1981, and Fort Howard Paper Company v. Wisconsin Department of Revenue, Wisconsin Tax Appeals Commission, Docket No. I-8266, November 1, 1983.
Tax 2.11(3)(a)(a) If a corporation is entitled to a sales and use tax credit under s. 71.28 (3), Stats., the credit, to the extent not offset by the tax liability of the same year, may be offset against the tax liability of the subsequent year and each succeeding year up to a total of 15 years until the credit has been completely offset. Tax 2.11 NoteNote: The carry forward of the sales tax credit was increased from 5 to 15 years by 1985 Wis. Act 29, and the 15 year carry forward first applies to credits carried forward from the 1980 taxable year. Tax 2.11(3)(b)(b) The sales tax credit shall first be offset against the income or franchise tax liability computed for the tax year before an unused credit from a prior year may be applied. Tax 2.11(4)(4) Credit includable in net income. Under s. 71.26 (2), Stats., the credit computed for sales and use taxes paid on fuel and electricity consumed in manufacturing under s. 71.28 (3), Stats., shall be included in net income for the tax year. Except for tax-option corporations, the entire credit computed for the tax year is includable in net income, even though the credit is not entirely used or no income or franchise tax liability exists. Under s. 71.34 (1k) (e), Stats., tax-option corporations shall only include in net income the amount of credit computed under s. 71.28 (3), Stats., and used to offset the income or franchise tax liability of the current year. Tax 2.11 HistoryHistory: Cr. Register, February, 1978, No. 266, eff. 3-1-78; am. (2) (a) r. (1) (d), (2) (b) and (3) (a), renum. (3) (b) and (c) to be (3) (a) and (b), cr. (4), Register, September, 1983, No. 333, eff. 10-1-83; am. (1) (intro.) and (3), renum. (1) (a) to (c) to be (1) (d), (b) and (a) and am., cr. (1) (c), r. and recr. (2) and (4), Register, February, 1990, No. 410, eff. 3-1-90; corrections in (1) (b) and (4) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652. Tax 2.12Tax 2.12 Claims for refund and other amended returns. Tax 2.12(1)(1) Scope. This section applies to amended Wisconsin franchise or income tax returns, including amended combined returns, amended partnership returns, amended economic development surcharge returns and amended farmland preservation credit and homestead credit claims. Tax 2.12(2)(a)(a) “Claim for refund” means an amended Wisconsin return or credit claim as described in sub. (1), on which a refund is requested. Tax 2.12(2)(b)(b) “Timely filed,” in the case of an amended return or credit claim, means either of the following: Tax 2.12(2)(b)1.1. If the amended return or credit claim is mailed, it is mailed in a properly addressed envelope with postage prepaid and is received by the department, or is received at the destination that the department or the department of administration prescribes, within 5 business days after the last day of the statutory limitation period or extended limitation period. Tax 2.12(2)(b)2.2. If the amended return or credit claim is not mailed, it is in the possession of the department, or is received at the destination that the department or the department of administration prescribes, prior to the expiration of the statutory limitation period or extended limitation period. Tax 2.12(3)(a)(a) The department shall accept amended returns and credit claims to correct previously filed original, other amended or adjusted Wisconsin franchise or income tax returns, partnership returns, economic development surcharge returns or farmland preservation credit or homestead credit claims. Tax 2.12(3)(b)(b) A refund of taxes or credits under ch. 71, Stats., or economic development surcharge under s. 77.96 (4), Stats., may be claimed only by filing an amended return or credit claim, on a form and in the manner described in subs. (5) and (6). Tax 2.12(3)(c)(c) An amended Wisconsin return shall be filed with the department if either an amended federal return is filed or an amended return is filed with another state for which a credit for taxes has been allowed against Wisconsin taxes, and the changes to the amended federal or other state return affect the amount of Wisconsin net franchise or income tax or economic development surcharge payable, a Wisconsin credit or a Wisconsin net operating loss, net business loss or capital loss carried forward. Changes to a net operating or business loss carryforward may not be made unless the change to 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. Changes to a net operating or business loss carry-back may not be made unless the change to the loss is 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. Tax 2.12(3)(d)(d) An amended Wisconsin return filed to report internal revenue service adjustments as provided in s. Tax 2.105 (4) (a) shall include a copy of the final federal audit report. Tax 2.12(3)(e)(e) An amended return or credit claim does not begin or extend the statute of limitation periods for assessing additional tax or economic development surcharge or claiming a refund. Tax 2.12(4)(a)(a) Except as provided in par. (b), if an amended return or credit claim shows a refund, it shall be filed within 4 years of the unextended due date of the original return. Tax 2.12(4)(b)(b) The 4-year filing limitation in par. (a) does not apply in the following situations: Tax 2.12(4)(b)1.1. Except as provided in subds. 3. and 4., a claim for refund may not be filed for any year covered by a field audit that resulted in a refund or no change in the tax owed, or in an assessment that has become final under s. 71.88 (1) (a) or (2) (a), 71.89 (2), 73.01 or 73.015, Stats., provided the department advises the taxpayer that the field audit is final unless the taxpayer appeals the result. Tax 2.12(4)(b)2.2. Except as provided in subds. 3. and 4., a claim for refund may not be filed for any item of income or deduction assessed as a result of an office audit, provided the assessment has become final under s. 71.88 (1) (a) or (2) (a), 71.89 (2), 73.01 or 73.015, Stats. Section 71.88 (1) (a), Stats., provides that a taxpayer may file a petition for redetermination within 60 days of receipt of a notice of additional assessment, refund or denial of refund. If a taxpayer does not file a petition for redetermination of a notice of assessment, refund or refund denial, the adjustments made in the notice are final and conclusive. The taxpayer is not entitled to a refund on any subsequent claim for refund based on the same adjustments as those in the notice of assessment, refund or denial of refund. Tax 2.12 NoteExamples: 1) Taxpayer A files an amended 2016 return to claim additional business expenses. The department allows only a portion of the claimed additional expenses, based on a difference in interpretation of the law. A notice of refund is issued March 1, 2019. The taxpayer does not file a petition for redetermination. In December 2019, the taxpayer files another amended return claiming the same additional business deductions as those disallowed in the prior notice of refund. The taxpayer is not entitled to a refund on the claim for refund. The March 1, 2019, notice of refund is final.
Tax 2.12 Note2) Taxpayer B files an amended 2016 return to claim additional business expenses. The department disallows a portion of the claimed additional expenses, due to lack of substantiation of the expenses as requested in a letter to the taxpayer. A notice of refund is issued March 1, 2019. The taxpayer does not file a petition for redetermination. In December 2019, the taxpayer submits adequate substantiation to support the full deduction. The deduction is not allowed and no additional refund will be issued. Since no petition for redetermination was filed for the March 1, 2019, notice of refund, that notice is final.
Tax 2.12 Note3) Taxpayer C files a timely 2017 return claiming a refund of earned income credit and excess income tax withheld. During the processing of the return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. The taxpayer does not respond to the request for additional information. A notice of refund is issued in July 2018, to refund the excess income tax withheld only. The taxpayer does not file a petition for redetermination. The taxpayer files a timely 2018 return claiming a refund of earned income credit and excess income tax withheld. During the processing of this return the taxpayer is sent a letter requesting additional information to substantiate the earned income credit. This letter requests the same information that was requested for the processing of the 2017 return. The taxpayer submits the additional information needed for both the 2017 and 2018 returns. Since the taxpayer did not submit a petition for redetermination for the 2017 notice of refund, that notice is final. A notice of refund for the earned income credit is issued for 2018 only.
Tax 2.12(4)(b)3.a.a. For taxable years beginning on or after January 1, 2000, a claim for refund for each year for which an amount due is calculated as a result of items adjusted in an office audit or field audit assessment or refund may be filed within 4 years of the date of the adjustment notice, provided no petition for redetermination was filed and, if the adjustment notice was an assessment, the amount due was paid. No refund claim may be filed under this subd. 3. a. for any year that resulted in a refund or no change in the amount owed. Tax 2.12 NoteExamples: 1) Taxpayer D files a timely 2015 return. The department completes an office audit of this return by issuing a notice of refund dated March 30, 2020. The notice of refund allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.
Tax 2.12 Note2) Taxpayer E files timely 2015 and 2016 returns. The department completes an audit of the returns and issues a notice of refund dated March 30, 2020. The notice of refund allows an additional itemized deduction credit for each year but also disallows a portion of the claimed business expenses for each year, with the net result being a refund for each year. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.
Tax 2.12 Note3) Taxpayer F files a timely 2010 return on April 15, 2011. The department completes an office audit of this return by issuing a notice of additional tax due dated March 30, 2015. The notice of additional tax due allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses.
Tax 2.12 Note4) Taxpayer G files timely 2010 and 2011 returns. The department completes an office audit of these returns by issuing a notice of refund dated March 30, 2015. The notice of refund allows an additional itemized deduction credit resulting in a refund for 2010 and disallows a portion of the claimed business expenses for an assessment for 2011, with the net result being a refund for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses for the year 2011.
Tax 2.12 Note5) Taxpayer H files timely 2010 and 2011 returns. The department completes an office audit of these returns by issuing a notice of additional tax due dated March 30, 2015. The notice of additional tax due allows an additional itemized deduction credit resulting in a refund for 2010 and disallows a portion of the claimed business expenses resulting in an assessment for 2011, with the net result being an assessment for the two years combined. The taxpayer does not file a petition for redetermination. The taxpayer has until March 30, 2019, to file a claim for refund for the disallowed business expenses for the year 2011.
Tax 2.12(4)(b)3.b.b. For taxable years beginning prior to January 1, 2000, a claim for refund for each year for which an amount due is calculated as a result of items adjusted in an office audit or field audit net assessment may be filed within 2 years of the date of the assessment notice, provided no petition for redetermination was filed and the amount due was paid. No refund claim may be filed under this subd. 3. b. for any year that resulted in a refund or no change in the amount owed or, in the case of a multiple year audit resulting in a net refund, for any year for which an amount due is calculated. Tax 2.12 NoteExamples: 1) Taxpayer I files a timely 1999 return on April 15, 2000. The department completes an office audit of this return by issuing a notice of refund dated March 30, 2004. The notice of refund allows an additional itemized deduction credit and disallows a portion of the claimed business expenses. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for the disallowed business expenses.
Tax 2.12 Note2) Taxpayer J files timely 1998 and 1999 returns. The department completes an office audit of these returns by issuing a notice of refund dated March 30, 2003. The notice of refund allows an additional itemized deduction credit resulting in a refund for 1998 and disallows a portion of the claimed business expenses for an assessment for 1999, with the net result being a refund for the two years combined. The taxpayer does not file a petition for redetermination. The notice of refund is final, and the taxpayer is not entitled to any refund on a subsequent claim for refund for 1998 or 1999.
Tax 2.12(4)(b)4.4. A claim for refund of an overpayment attributable to a capital loss carryback may be filed by a corporation, or designated agent of a combined group, within 4 years after the due date, or extended due date, for filing the return for the taxable year of the capital loss that is carried back. Tax 2.12 NoteNote: For combined groups, see s. Tax 2.61 (6) (c) for rules applicable to capital gains and losses. Tax 2.12(4)(b)5.5. If the limitation period for making an assessment or refund has been extended by written agreement between a taxpayer and the department, a claim for refund relating to the year or years covered by the extension agreement may be filed during the extension period. Tax 2.12 NoteNote: For combined groups, refer to s. Tax 2.65 for rules applicable to the designated agent of a combined group. Tax 2.12(4)(b)6.6. An amended Wisconsin return filed under the provisions of sub. (3) (c) shall be filed with the department within 90 days after the date the amended federal or other state return is filed. Tax 2.12(4)(b)7.7. An amended Wisconsin return filed under the provisions of sub. (3) (d) shall be filed with the department within 90 days of the date on which the federal audit adjustments become final. Tax 2.12(4)(b)8.8. An amended Wisconsin return filed under the provisions of s. 71.30 (4), Stats., to claim a reduction of income resulting from a renegotiation or price redetermination of a defense contract or subcontract shall be filed within one year of the final determination. Tax 2.12 NoteNote: Refer to s. Tax 2.105 for additional information regarding amended Wisconsin returns required as a result of filing amended federal or other state returns, or reports required as a result of federal audit adjustments made by the internal revenue service. Tax 2.12(5)(a)(a) Beginning on or after January 1, 2015, except as provided in par. (c), a claim for refund shall be filed on the same form as the original form, in the manner prescribed in sub. (6). Tax 2.12(5)(c)(c) The department may prescribe a special form for taxpayers to use in claiming a refund, to address a specific tax issue. In this situation, the special form may be used in lieu of the amended form prescribed in par. (a). Tax 2.12 NoteExample: Wisconsin form 1X-R was developed in 1993 to address the issue of the flow-through of interest exempt from Wisconsin taxes received from a qualified retirement plan.
Tax 2.12(5)(d)(d) An amended Wisconsin return or credit claim filed for a purpose other than to request a refund is not required to be filed on a specific form. Tax 2.12(6)(a)(a) An amended return or credit claim shall be in writing, indicate the reporting period for which the change was made and contain a statement setting forth the specific grounds upon which the amended form is based. Tax 2.12(6)(b)(b) An amended return or credit claim other than form 1X shall be identified as an amended form by checking the “amended return” box if one is provided on the form or by marking “AMENDED” across the top of the first page of the amended form. Tax 2.12(6)(c)(c) A claim for refund may not be made a part of or attached to any original Wisconsin return or credit claim. Tax 2.12(6)(d)(d) An amended return or credit claim shall be mailed to the department at the address specified on the form or in its instructions. Tax 2.12 NoteNote: Subchapter VII of ch. 77, Stats., was amended by 1999 Wis. Act 9 to create a recycling surcharge effective for taxable years beginning on or after January 1, 2000, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. For taxable years ending before April 1, 1999, subch. VII of ch. 77, Stats., provided for a temporary recycling surcharge; the term “economic development surcharge” as used in this section refers to the “temporary recycling surcharge” for those years and to the “recycling surcharge” prior to July 1, 2011. Tax 2.12 NoteNote: Section Tax 2.12 interprets ss. 71.255 (1), (4), and (7), 71.30 (4), 71.738 (2m), 71.74, 71.75, 71.76, 71.77, 71.80 (18) and 77.96 (4), Stats. Tax 2.12 HistoryHistory: Cr. Register, August, 1976, No. 248, eff. 9-1-76; am. (1) (a), Register, September, 1983, No. 333, eff. 10-1-83; am, (1) (a) and (b), r. and recr. (1) (c) and (2), Register, February, 1990, No. 410, eff. 3-1-90; r. and recr. Register, May, 1996, No. 485, eff. 6-1-96; CR 02-033:am. (1), (3) (a), (b), (c) and (e), (4) (b) 1., 2., 4., 5., and (6) (b) to (d), r. and recr. (2), (4) (b) 3., and (5) (a), renum. and am. (5) (b) to be (5) (c), cr. (5) (b) and (d), Register October 2002 No. 562, eff. 11-1-02; CR 10-095: am. (1), (4) (b) 4. Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (1), (3) (a) to (c), (e) Register July 2012 No. 679, eff. 8-1-12; CR 17-019: am. (5) (a), (b) Register June 2018 No. 750 eff. 7-1-18; CR 19-141: am. (3) (c) Register September 2020 No. 777, eff. 10-1-20; CR 21-085: am (4) (b) 2. (Examples), 3. a. (Examples), (5) (a), r. (5) (b), am. (5) (c) Register August 2022 No. 800, eff. 9-1-22. Tax 2.12 AnnotationCross Reference: See s. Tax 2.67 (2) (e) for rules relating to amended returns for combined groups.
Tax 2.30Tax 2.30 Property located outside Wisconsin — depreciation and sale. Tax 2.30(1)(1) Scope. This section applies only with respect to resident individuals, estates, and trusts. Tax 2.30(2)(2) Definition. In this section, “Internal Revenue Code” means the Internal Revenue Code in effect for the taxable year specified in s. 71.01 (6), Stats. Tax 2.30 NoteExample: For taxable year 2017, “Internal Revenue Code” means the Internal Revenue Code in effect on December 31, 2016.
Tax 2.30(3)(3) Resident individuals, estates, and trusts. Income or loss derived from property and business located outside Wisconsin by resident individuals, estates, and trusts, is taxable or deductible as appropriate under ch. 71, Stats. Except as provided in sub. (4), the basis for depreciation and for determining gain or loss on disposition of property for these taxpayers is the same as the basis determined under the Internal Revenue Code, whether the property was acquired before becoming or while a resident of this state. Tax 2.30(4)(a)(a) When an individual acquires a new residence, the adjusted basis of the new residence is not reduced for nonrecognized gain from the sale or exchange of an old residence located outside Wisconsin if: Tax 2.30(4)(a)1.1. The sale or exchange of the old residence occurred in taxable year 1975 or thereafter when the individual was not a resident of Wisconsin; or Tax 2.30(4)(a)2.2. The sale or exchange of the old residence occurred before taxable year 1975, whether the individual was a resident or not at the time of the sale or exchange. Tax 2.30(4)(b)(b) When an individual sells or exchanges a principal residence located outside Wisconsin and the nonrecognition of gain provisions do not apply, the adjusted basis of the residence sold or exchanged is not reduced for nonrecognized gain from any previous sale or exchange of a principal residence located outside Wisconsin if: Tax 2.30(4)(b)1.1. The previous sale or exchange occurred in taxable year 1975 or thereafter when the individual was not a resident of Wisconsin; or Tax 2.30(4)(b)2.2. The previous sale or exchange occurred before taxable year 1975, whether the individual was a resident or not at the time of the sale or exchange. Tax 2.30 NoteExample: A taxpayer becomes a Wisconsin resident on July 1, 1988. Prior to becoming a Wisconsin resident the taxpayer had owned several different homes. Each time a new home was acquired, the federal nonrecognition of gain provisions applied with respect to the gain realized from the sale of the previous home. Upon becoming a Wisconsin resident, the taxpayer owned a home in Missouri with a federal adjusted basis of $65,000 ($95,000 cost, less $30,000 of gains postponed from prior sales). The Missouri home was sold for $97,000 in August 1988. The taxpayer decides not to purchase a new residence. The Wisconsin adjusted basis of the Missouri home is $95,000.
Tax 2.30(4)(c)(c) For residential real property and certain agricultural real property placed in service during taxable year 1986, depreciation and gain or loss on disposition of the property shall be computed under the Internal Revenue Code in effect on December 31, 1980 unless: Tax 2.30(4)(c)1.1. The property is placed in service out-of-state by a taxpayer during taxable year 1986 before the taxpayer becomes a Wisconsin resident. In this case, the property’s adjusted basis and depreciation are the same as the amounts allowable for federal tax purposes. Tax 2.30 NoteExample: A taxpayer becomes a Wisconsin resident on January 1, 1987. Prior to that date, the taxpayer is an Illinois resident. On July 1, 1986, the taxpayer purchases and places in service residential real property located in Illinois. On the taxpayer’s 1987 Wisconsin return, the taxpayer’s adjusted basis and depreciation on this property will be the same as the amounts shown on the taxpayer’s 1987 federal return. The taxpayer does not have to recompute the basis of the property and depreciate it using one of the methods permitted under the December 31, 1980 Code.
Tax 2.30(4)(c)2.2. The property located out-of-state is acquired in a transaction occurring in taxable year 1986 or thereafter where the basis of the property in the hands of the transferee is the same as the adjusted basis of the property in the hands of the transferor. The adjusted basis of the property on the date of the transfer is the same as the federal adjusted basis. Tax 2.30 NoteExample: A taxpayer is a Wisconsin resident. The taxpayer receives by gift on January 1, 1986, residential real property located in Illinois. The adjusted basis of the property to the donor, transferor, is $200,000. In acquiring the property by gift, the taxpayer, transferee, receives the same adjusted basis in the property as the transferor. The Wisconsin adjusted basis will be the federal adjusted basis on January 1, 1986.
