SB720,22,2 71.745 Pass-through entity audits, additional assessments and refunds at the entity level. (1) Audit assessments and refunds. Except as provided in s. 71.80 (27), the department may audit and assess tax to a pass-through entity on income otherwise reportable by the pass-through members at the highest tax rate applicable under this chapter. The department may issue a refund to a pass-through entity when the audit results in an overpayment of tax originally paid by the entity.

SB720,22,7 (2) Adjustment of credits. Except as provided in s. 71.80 (27), the department may correct the credit computation of a pass-through entity resulting from a department audit under this subchapter at the pass-through entity level, and may apply the credit adjustment to an assessment or refund issued to the pass-through entity.

SB720,22,13 (3) Adjustments to the pass-through entity are attributable to the members. Except when an election under s. 71.21 (6) (a) or 71.365 (4m) (a) is made, any adjustments to income, gain, loss, deduction, or credit made to the pass-through entity under this section are attributable to each pass-through member in a manner that is consistent with the treatment of such income, gain, loss, deduction, or credit to the pass-through entity.

SB720,22,20 (4) Liability may be assessed to more than one person. If for any reason a pass-through entity fails to timely make any report or payment required under this subchapter, the department may assess the pass-through members for any liability resulting from an audit under this subchapter. If for any reason a pass-through member fails to timely make any report or payment required under this subchapter, the department may assess the pass-through entity for any liability resulting from an audit under this subchapter.

SB720,33 Section 33. 71.75 (11) of the statutes is created to read:

SB720,22,23 71.75 (11) The department shall not issue a refund to a pass-through entity except when the claim is for overpayment of tax originally paid by the entity.

SB720,34 Section 34. 71.76 of the statutes is amended to read:

SB720,23,18 71.76 Internal revenue service and other state adjustments. If for any year the amount of federal net income tax payable, of a credit claimed or carried forward, of a net operating loss carried forward or of a capital loss carried forward of any taxpayer as reported to the internal revenue service is changed or corrected by the internal revenue service or other officer of the United States, such taxpayer shall report such changes or corrections to the department within 90 180 days after its final determination and shall concede the accuracy of such determination or state how the determination is erroneous. Such changes or corrections need not be reported unless they affect the amount of net tax payable under this chapter, of a credit calculated under this chapter, of a Wisconsin net operating loss carried forward, of a Wisconsin net business loss carried forward or of a capital loss carried forward under this chapter. Any taxpayer submitting an amended return to the internal revenue service, or to another state if there has been allowed a credit against Wisconsin taxes for taxes paid to that state, shall also file, within 90 180 days of such filing date, an amended return if any information contained on the amended return affects the amount of net tax payable under this chapter of a credit calculated under this chapter, of a Wisconsin net operating loss carried forward, of a Wisconsin net business loss carried forward or of a capital loss carried forward under this chapter.

SB720,35 Section 35. 71.77 (7) (b) of the statutes is amended to read:

SB720,24,2 71.77 (7) (b) If notice of assessment or refund is given to the taxpayer within 90 180 days of the date on which the department receives a report from the taxpayer under s. 71.76 or within such other period specified in a written agreement entered into prior to the expiration of such 90 180 days by the taxpayer and the department. If the taxpayer does not report to the department as required under s. 71.76, the department may make an assessment against the taxpayer or refund to the taxpayer within 4 years after discovery by the department.

SB720,36 Section 36. 71.775 (1) (intro.) and (a) of the statutes are consolidated, renumbered 71.775 (1) and amended to read:

SB720,24,8 71.775 (1) Definitions. In this section: (a) “Nonresident", “nonresident” includes an individual who is not domiciled in this state; a partnership, limited liability company, or corporation whose commercial domicile is outside the state; and an estate or a trust that is a nonresident under s. 71.14 (1) to (3m).

SB720,37 Section 37. 71.775 (1) (b) of the statutes is repealed.

SB720,38 Section 38. 71.78 (1) of the statutes is amended to read:

SB720,25,4 71.78 (1) Divulging information. Except as provided in subs. (4), (4m) and, (10), and (11), no person may divulge or circulate or offer to obtain, divulge, or circulate any information derived from an income, franchise, withholding, fiduciary, partnership, or limited liability company tax return or tax credit claim, including information which may be furnished by the department as provided in this section. This subsection does not prohibit publication by any newspaper of information lawfully derived from such returns or claims for purposes of argument or prohibit any public speaker from referring to such information in any address. This subsection does not prohibit the department from publishing statistics classified so as not to disclose the identity of particular returns, or claims or reports and the items thereof. This subsection does not prohibit employees or agents of the department of revenue from offering or submitting any return, including joint returns of a spouse or former spouse, separate returns of a spouse, individual returns of a spouse or former spouse, and combined individual income tax returns, or from offering or submitting any claim, schedule, exhibit, writing, or audit report or a copy of, and any information derived from, any of those documents as evidence into the record of any contested matter involving the department in proceedings or litigation on state tax matters if, in the department's judgment, that evidence has reasonable probative value.

SB720,39 Section 39. 71.78 (11) of the statutes is created to read:

SB720,25,9 71.78 (11) Pass-through entity audits. If the department audits a pass-through entity for the income or franchise taxes of its pass-through members, including when an election is made under s. 71.21 (6) (a) or 71.365 (4m) (a) to pay tax at the entity level, the department may disclose the following:

SB720,25,14 (a) To a pass-through member that the pass-through entity is under audit or was audited, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through member or to obtain information necessary to determine the proper amount of adjustment to make at the pass-through entity level.

SB720,25,20 (b) To a pass-through entity, the identities of one or more members who have failed to report pass-through items originating with the entity on their Wisconsin returns, if the disclosure is necessary to explain any amounts assessed or refunded to the pass-through entity or to obtain information about a pass-through member's return in order to determine the proper amount of adjustment to make at the pass-through entity level.

SB720,40 Section 40. 71.80 (26) of the statutes is created to read:

SB720,26,8 71.80 (26) Tax matters member of a pass-through entity. (a) Each pass-through entity filing a return in this state under this chapter shall designate one pass-through member as the tax matters member on the pass-through entity's return filed in this state for each taxable year. If no tax matters member is designated on the return or no return is filed, the pass-through entity shall appoint a tax matters member no later than 30 days after a written request by the department. If no member is so appointed, the department may designate the tax matters member and notify the pass-through entity in writing of the designation. The pass-through entity may at any time provide a written statement designating a new tax matters member and the department shall accept it if it is signed by an authorized agent of the pass-through entity. The tax matters member for this state may be different from the entity's federal tax matters member.

SB720,26,11 (b) With regard to a department audit of a pass-through entity for income or franchise taxes, the tax matters member has the power and duty to do all of the following:

SB720,26,14 1. Act as the sole authority on behalf of the pass-through entity with respect to the year under review. The pass-through members are bound by actions of the tax matters member under this subdivision.

SB720,26,17 2. Provide the department sufficient information to identify each pass-through member, and the profits interest of each pass-through member, for each taxable year affected by the audit.

SB720,26,19 3. Represent the pass-through entity and keep all pass-through members informed.

SB720,26,21 4. Enter extension agreements on behalf of the pass-through entity under s. 71.77 (5).

SB720,26,22 5. Receive pass-through entity adjustment notices.

SB720,26,25 6. Notify all pass-through members of their share of corrections and adjustments made to the pass-through entity within 90 days after the final determination date of the notice.

SB720,27,1 7. File appeals of pass-through entity adjustment notices.