Chapter Tax 2
INCOME TAXATION, RETURNS, RECORDS AND GROSS INCOME
Tax 2.03 Corporation returns. Tax 2.04 Information returns and wage statements. Tax 2.07 Earned income tax credit. Tax 2.08 Returns of persons other than corporations. Tax 2.085 Claim for refund on behalf of a deceased taxpayer. Tax 2.09 Reproduction of franchise or income tax forms. Tax 2.10 Copies of federal returns, statements, schedules, documents, etc. to be filed with Wisconsin returns. Tax 2.105 Notice by taxpayer of federal audit adjustments and amended returns. Tax 2.11 Credit for sales and use tax paid on fuel and electricity. Tax 2.12 Claims for refund and other amended returns. Tax 2.30 Property located outside Wisconsin — depreciation and sale. Tax 2.31 Compensation received by nonresident members of professional athletic teams. Tax 2.32 Economic development surcharge — gross receipts defined. Tax 2.39 Apportionment method. Tax 2.41 Separate accounting method. Tax 2.44 Permission to change basis of allocation. Tax 2.45 Apportionment in special cases. Tax 2.46 Apportionment of apportionable income of interstate air carriers. Tax 2.465 Apportionment of apportionable income of interstate air freight forwarders affiliated with a direct air carrier. Tax 2.47 Apportionment of apportionable income of interstate motor carriers. Tax 2.475 Apportionment of apportionable income of interstate railroads and car line companies. Tax 2.48 Apportionment of apportionable income of interstate pipeline companies. Tax 2.49 Apportionment of apportionable income of interstate financial institutions. Tax 2.495 Apportionment of apportionable income of interstate brokers-dealers, investment advisers, investment companies, and underwriters. Tax 2.50 Apportionment of apportionable income of interstate public utilities. Tax 2.502 Apportionment of apportionable income of interstate telecommunications companies. Tax 2.505 Apportionment of apportionable income of interstate professional sports clubs. Tax 2.60 Definitions relating to combined reporting. Tax 2.61 Combined reporting. Tax 2.62 Unitary business. Tax 2.63 Controlled group election. Tax 2.64 Alternative apportionment for combined groups including specialized industries. Tax 2.65 Designated agent of combined group. Tax 2.66 Combined estimated tax payments. Tax 2.67 Combined returns. Tax 2.85 Penalty for failure to produce records under s. 71.80 (9m), Stats. Tax 2.87 Reduction of delinquent interest rate under s. 71.82 (2) (b), Stats. Tax 2.89 Estimated tax requirements for short taxable years. Tax 2.90 Withholding; wages. Tax 2.91 Withholding; fiscal year taxpayers. Tax 2.92 Withholding tax exemptions. Tax 2.93 Withholding from wages of a deceased employee and from death benefit payments. Tax 2.935 Reduction of delinquent interest rate under s. 71.82 (2) (d), Stats. Tax 2.94 Tax-sheltered annuities. Tax 2.95 Reporting of installment sales by natural persons and fiduciaries. Tax 2.955 Credit for taxes paid to other states. Tax 2.957 Relocated business credit or deduction. Tax 2.96 Extensions of time to file corporation franchise or income tax returns. Tax 2.98 Disaster area losses. Tax 2.986 Registration of a business under s. 73.03 (69), Stats. Tax 2.01Tax 2.01 Residence. Individuals claiming a change of residence, i.e., domicile, from Wisconsin to another state shall file the “Residence Questionnaire,” which is a part of the 1NPR income tax form, with the Wisconsin department of revenue by attaching it to their Wisconsin income tax return for the year they claim to have changed residence, and shall furnish other information the department may require. Tax 2.01 NoteNote: Forms may be obtained from the department of revenue’s web site at www.revenue.wi.gov. Tax 2.01 HistoryHistory: 1-2-56; r. (1); renum. (2) to be (1); renum. (3) to be (2) and am., Register, September, 1964, No. 105, eff. 10-1-64; am. Register, February, 1975, No. 230, eff. 3-1-75; r. (1), renum. (2) and am., Register, July, 1987, No. 379, eff. 8-1-87; am. Register, February, 1990, No. 410, eff. 3-1-90; CR 19-141: am. Register September 2020 No. 777, eff. 10-1-20. Tax 2.02(1)(1) Purpose. This section explains the reciprocity agreements between Wisconsin and other states. Tax 2.02(2)(2) Definitions. The following definitions pertain only to Wisconsin. Definitions of the same terms in other states may vary. In this section: Tax 2.02(2)(a)(a) “Personal service income” means all salaries, wages, commissions and fees earned by an employee and all commissions and fees earned by a self-employed person in the conduct of a profession or vocation. Personal service income does not include income derived from activities involving the substantial use of capital or labor of others. Tax 2.02(2)(b)(b) “Resident” means a natural person who is domiciled in this state. Tax 2.02(3)(a)(a) Under s. 71.05 (2), Stats., income earned by a nonresident individual for performing personal services in Wisconsin shall be excluded from Wisconsin gross income to the extent the individual’s state of residence imposes an income tax on the personal service income, if the state of residence allows either of the following: Tax 2.02(3)(a)1.1. A similar exclusion for personal service income earned by individuals domiciled in Wisconsin while working in that state. Tax 2.02(3)(a)2.2. A credit against the tax imposed by that state on the personal service income equal to the Wisconsin tax on the personal service income. Tax 2.02(3)(b)(b) Under s. 71.64 (8), Stats., a Wisconsin employer of a nonresident individual residing in a state with which Wisconsin has a reciprocity agreement under sub. (4) need not withhold Wisconsin income tax from personal service income earned in Wisconsin by the nonresident. Tax 2.02(4)(a)1.1. Kentucky, for the years beginning on and after January 1, 1961. Tax 2.02(4)(a)2.2. Illinois, for the years beginning on and after January 1, 1971. Tax 2.02(4)(a)3.3. Michigan, for income earned after October 1, 1967 and years beginning on and after January 1, 1968. Tax 2.02(4)(b)(b) Wisconsin practices reciprocity with Indiana, since prior to 1960, on the basis of an informal agreement and acquiescence by Wisconsin and Indiana. Tax 2.02(5)(a)(a) Personal service income included under reciprocity agreements is taxed by an employee’s state of residence rather than by an employee’s state of employment. Wisconsin will not tax personal service income earned in Wisconsin by residents of states with which Wisconsin has reciprocity, and those states may not tax personal service income which a Wisconsin resident earns in those states, except as described in subs. (6), (7), and (8). Tax 2.02(5)(b)(b) For personal service income included under reciprocity agreements, an employer need only withhold income tax for the state of residence of an employee. Tax 2.02(5)(c)(c) Federal law regulates withholding on wages earned by employees engaged in interstate transportation activities. Tax 2.02 NoteNote: Additional information on withholding on wages earned by employees engaged in interstate transportation activities may be obtained by writing to Wisconsin Department of Revenue, Compliance Bureau, P.O. Box 8902, Madison, WI 53708.
Tax 2.02(6)(a)(a) The reciprocity agreement with Illinois is limited to “wages, salaries, commissions, and any other form of remuneration paid to employees for personal services.” However, the agreement does not extend to fees of lawyers, accountants and other self-employed persons deriving personal service income, to lottery winnings, or to persons identified in pars. (c) and (d). Tax 2.02(6)(b)(b) The Illinois Income Tax Act, Article 15, section 1501 (a) (20), defines a resident as “an individual (i) who is in this State for other than a temporary or transitory purpose during the taxable year; or (ii) who is domiciled in this State but is absent from the State for a temporary or transitory purpose during the taxable year.” Because of the differences in the definition of resident for Illinois and Wisconsin purposes, a person domiciled in Wisconsin may simultaneously be a resident of Illinois, or a person may be domiciled in Illinois but not be a resident of Illinois. Tax 2.02 NoteExample: A person is domiciled in Wisconsin and takes a job in Illinois. The person does not intend to give up his or her Wisconsin domicile, but instead intends to return to Wisconsin once his or her job in Illinois is completed, in 2 to 3 years. Assume that Illinois considers the person’s stay in Illinois as other than temporary or transitory. Therefore, the person is a resident of Illinois. The person is also a resident of Wisconsin because he or she is still domiciled in Wisconsin.
Tax 2.02 NoteNote: The term “temporary or transitory” as used in the definition of an Illinois resident set forth in sub. (6) (b) is not defined in either Illinois law or regulations. Therefore, whether or not the purpose for which an individual is in, or is absent from, Illinois is temporary or transitory in character depends upon the facts and circumstances of each particular case.
Tax 2.02(6)(c)(c) The reciprocity agreement with Illinois does not apply to any form of compensation described in par. (a) paid on or after January 1, 1974 to any individual who, at the time of payment, is simultaneously a resident of Illinois and a domiciliary of Wisconsin. All income of this person is taxable by Wisconsin. However, a credit against Wisconsin income tax may be claimed for income tax paid to Illinois. Tax 2.02(6)(d)(d) An individual who is domiciled in Illinois but is not a resident of Illinois is subject to the Wisconsin income tax on income earned in Wisconsin.
