(6) If the petition is sent using a delivery service other than the United States postal service, and bears a delivery service mark which is the equivalent of a United States postal service postmark, the petition is “postmarked" on the date of that delivery service mark.

(7) If the petition is sent using a delivery service other than the United States postal service, and does not bear a delivery service mark which is the equivalent of a United States postal service postmark, or bears an illegible delivery service mark, the petition is “postmarked" 2 business days prior to the date the petition was physically received by the division of unemployment insurance of the department or the commission.

Section 9. LIRC 2.03 is repealed.

Section 10. LIRC 2.04 is repealed.

Section 11. LIRC 3.01 is repealed and recreated to read:

LIRC 3.01 Petitions for review; where filed. A petition for commission review of the findings or order of a department administrative law judge under s. 102.18, Stats., shall be filed with any of the following:

(1) The worker's compensation division of the department, at any of the following locations:

(a) 201 East Washington Avenue, P.O. Box 7901, Madison, Wisconsin 53707 (FAX: 608-267-0394).

(b) 819 North Sixth Street, Milwaukee, Wisconsin 53203 (FAX: 414-227-4012).

(c) 1500 North Casaloma Drive, Suite 310, Appleton, Wisconsin 54915 (FAX: 920-832-5355).

(2) The commission, at its office at 3319 West Beltline Highway, P.O. Box 8126, Madison, Wisconsin 53708 (FAX: 608-267-4409).

Section 12. LIRC 3.02 is repealed.

Section 13. LIRC 3.04 is amended to read:

LIRC 3.04 Compromise settlements. Compromise settlements of worker's compensation claims are solely within the jurisdiction of the worker's compensation division, department of workforce development, according to governed by s. 102.16, Stats., and s. DWD 80.03. Under s. 102.18 (4) (d), Stats., if a compromise is reached while a case is pending commission review, the compromise shall be submitted to the commission, and the commission shall remand the case to the worker's compensation division of the department for consideration of the compromise. If the compromise is not approved, the party who filed the petition for commission review may reinstate its petition by notifying the commission. Under s. 102.24 (2), Stats., if a compromise is reached while a case is pending court review of a commission order, remand shall be to the commission and the commission shall then remand the case to the department for consideration of the compromise.

Section 14. LIRC 4.01 is amended to read:

LIRC 4.01 Petitions for commission review; where filed. A petition for commission review of the findings and order of a department administrative law judge under s. 106.52 or 111.39 (5), Stats., shall be received within 21 days from the date of mailing of the findings and order to the parties by filed with the equal rights division of the department at any of the following locations:

(1) The equal rights division, 819 North Sixth Street, Milwaukee, Wisconsin 53203 , or (FAX: 414-227-4981).

(2) The central administrative office of the equal rights division, at 201 East Washington Avenue, P.O. Box 8928, Madison, Wisconsin 53708 (FAX: 608-267-4592).

Section 15. LIRC 4.02 is repealed.

Assumptions Used in Arriving at Fiscal Estimate

Repeal of LIRC 2.04 eliminates fees of $1.00 per page ($25 minimum) for a transcript prepared by or for the Commission and substitutes a 20 cents per page photocopying fee under LIRC 1.045. Based on averaging and estimating fees collected for transcripts requested in recent years, the loss in fees would amount to approximately $1100 to $1200 per year.

Estimate: 20 transcripts per year

70 pages ($70)

$1400 minus 20 cents per page offset for photocopying ($250) = $1120

The commission's rules of procedure affect small businesses when they are parties to cases pending before the commission. The proposed rule changes primarily serve to clarify existing procedural rules. The changes in procedure made by the proposed rules will create an additional method by which a petition for review may be filed, and reduce the charge for obtaining copies of certain documents. These changes are not anticipated to have any significant effect on small businesses.

Notice is hereby given that, pursuant to ss. 71.04 (8) (c) and 71.25 (10) (c), Stats., and interpreting ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats., the Department of Revenue will hold a public hearing at the time and place indicated below, to consider the repeal and recreation and creation of rules relating to the computation of the apportionment fraction by multistate public utilities and telecommunications companies.

The hearing will be held at 9:00 A.M. on Monday, February 27, 2006, in the Events Room (1st floor) of the State Revenue Building, located at 2135 Rimrock Road, Madison, Wisconsin.

Handicap access is available at the hearing location.

Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person shown below no later than March 6, 2006, and will be given the same consideration as testimony presented at the hearing.

Statutes interpreted: ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats.

Statutory authority: ss. 71.04 (8) (c) and 71.25 (10) (c), Stats.

Explanation of agency authority: The net business income of public utilities and telecommunications companies requiring apportionment shall be apportioned pursuant to rules of the department of revenue.

Related statute(s) or rule(s): ss. 71.04 (4), (4m), (5), (6), and (7) and 71.25 (6), (6m), (7), (8), and (9), Stats., ss. 71.04 (5), (6), and (7) and 71.25 (7), (8), and (9), 2001 Stats., and s. Tax 2.39.

Plain language analysis: This proposed rule order prescribes the method to be used for apportioning the apportionable income of the following business entities:

• interstate public utilities, other than telecommunications companies, and

• interstate telecommunications companies.

Section 1. The special apportionment formula for interstate public utilities, other than telecommunications companies, is being eliminated. For taxable years beginning before 2006, the three factors will be equally weighted in the apportionment formula. The phase-in of the single sales factor apportionment formula will apply to public utilities, other than telecommunications companies.

Section 2. Interstate telecommunications companies will compute their property, payroll, and sales factors under the 2001 statutes and rules. The three factors will be equally weighted in the apportionment formula. Gross receipts from the use of computer software and from services will continue to be included in the numerator of the sales factor based on the location of the income-producing activity. The phase-in of the single sales factor apportionment will not apply to telecommunications companies.

Summary of, and comparison with, existing or proposed federal regulation: There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.

Comparison with rules in adjacent states:

Illinois does not have a special apportionment formula for interstate public utilities and telecommunications companies. Their apportionment formula consists solely of a sales factor. Sales of tangible personal property are sourced on a destination basis. Sales of services are attributed to the state where the income-producing activity occurred. If the income-producing activity occurred in more than one state, the sale is attributed to the state with the greater costs of performance.

Iowa does not have a special apportionment formula for interstate public utilities and telecommunications companies. The apportionment formula consists solely of a sales factor. Sales of tangible personal property are sourced on a destination basis. Sales of services are sourced where the benefit of the service is received. In the case of the transportation of electricity, “traffic units" are used to determine where the benefit is received. Rules prescribe where the benefit is received for services provided by telecommunications companies.

Michigan does not have a special apportionment formula for interstate public utilities and telecommunications companies. The apportionment formula consists of a three-factor formula with sales weighted 90%, and property and payroll each weighted 5%. Sales of tangible personal property are sourced on a destination basis. Sales of services are sourced where the income-producing activity occurred. If the income-producing activity occurred in more than one state, the sale is attributed to the state with the greater costs of performance.

Minnesota does not have a special apportionment formula for interstate public utilities and telecommunications companies. The apportionment formula consists of a three-factor formula with sales weighted 75%, and property and payroll each weighted 12.5%. Sales of tangible personal property are sourced on a destination basis. Sales of services are sourced where the benefit of the service is received, where the service was ordered, or where the service was billed, depending on the circumstances.

Summary of factual data and analytical methodologies: 2003 Wisconsin Act 37 changed the apportionment formula used by multistate businesses for determining the income taxable by Wisconsin. As a result of this legislation, single sales factor apportionment will be phased in for most businesses, including any public utility that owns or operates any plant, equipment, property, franchise, or license for the production, transmission, sale, delivery, or furnishing of electricity, water, or steam, the rates of charges for goods or services of which have been established or approved by a federal, state, or local government or governmental agency. The phase-in of single sales factor apportionment begins for taxable years beginning on January 1, 2006. 2003 Act 37 also provides that multistate telecommunications companies are to apportion their income under rules of the Department of Revenue. 2005 Wisconsin Act 25 changed how gross receipts from the use of computer software and from services are sourced for purposes of the apportionment formula. Receipts from the use of computer software are sourced to the location where the software is used. Receipts from services are sourced where the benefit of the service is received. The change in the sourcing rules first applies to taxable years beginning January 1, 2005. Telecommunications companies have requested that in addition to excluding them from single sales factor apportionment as provided by 2003 Act 37, the rule would exclude them from the special sourcing rules for gross receipts from the use of computer software and from services. In consultation with telecommunications company personnel, the department developed language and used it to create this proposed rule order.

Analysis and supporting documents used to determine effect on small business: The department has prepared a fiscal estimate regarding this proposed rule order. It was determined that there is not a significant fiscal effect on small business.

Anticipated costs incurred by private sector: This proposed rule order does not have a significant fiscal effect on the private sector.

Effect on small business: This proposed rule order does not have a significant fiscal effect on small business.

Agency contact person: Please contact Dale Kleven at (608) 266-8253 or dkleven@dor.state.wi.us, if you have any questions regarding this proposed rule order.

Place where comments are to be submitted and deadline for submission: Comments may be submitted to the contact person shown below no later than one week after the public hearing on this proposed rule order is conducted. Information as to the place, date, and time of the public hearing will be published in the Wisconsin Administrative Register.

Dale Kleven

Department of Revenue

Mail Stop 6-40

2135 Rimrock Road

P.O. Box 8933\

Madison, WI 53708-8933

SECTION 1. Tax 2.50 is repealed and recreated to read:

Tax 2.50 Apportionment of apportionable income of interstate public utilities. (1) SCOPE. A public utility that is engaged in business both in and outside this state shall apportion its apportionable income as provided in this section. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b) 1., Stats.

(2) DEFINITIONS. In this section:

(a) “Payroll factor" means the payroll fraction computed under s. 71.04 (6) or 71.25 (8), Stats., and s. Tax 2.39.

(b) “Property factor" means the property fraction computed under s. 71.04 (5) or 71.25 (7), Stats., and s. Tax 2.39.

(c) “Public utility" means any business entity that owns or operates any plant, equipment, property, franchise, or license for the production, transmission, sale, delivery, or furnishing of electricity, water, or steam the rates of charges for goods or services of which have been established or approved by a federal, state, or local government or governmental agency.

(d) “Sales factor" means the sales fraction computed under ss. 71.04 (4m) and (7) or 71.25 (6m) and (9), Stats., and s. Tax 2.39.

(3) APPORTIONMENT FORMULA COMPUTATION. For taxable years beginning after December 31, 2004, a public utility that does business in and outside this state shall determine its net income for state franchise or income tax purposes as provided in this section. The public utility shall first deduct from its total net income its nonapportionable income, less related expenses. Nonapportionable income shall be allocated as provided in s. 71.25 (5) (b) 1., Stats. The public utility shall apportion its remaining net income to this state as follows:

(a) For taxable years beginning before January 1, 2006, apportionable income shall be apportioned using an apportionment fraction obtained by taking the arithmetical average of the sales factor, property factor, and payroll factor.

(b) For taxable years beginning after December 31, 2005, and before January 1, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor, representing 60% of the fraction, the property factor representing 20% of the fraction, and the payroll factor representing 20% of the fraction.

(c) For taxable years beginning after December 31, 2006, and before January 1, 2008, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor representing 80% of the fraction, the property factor representing 10% of the fraction, and the payroll factor representing 10% of the fraction.

(d) For taxable years beginning after December 31, 2007, apportionable income shall be apportioned using an apportionment fraction composed of the sales factor.

Note: The provisions of s. Tax 2.50 first apply for taxable years beginning on January 1, 2005.

Note: Section Tax 2.50 interprets ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats.