The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB532, s. 1 1Section 1. 71.04 (4) (intro.) of the statutes, as affected by 2003 Wisconsin Act
237
, is renumbered 71.04 (4) and amended to read:
SB532,3,53 71.04 (4) Nonresident allocation and apportionment formula. Nonresident
4individuals and nonresident estates and trusts engaged in business within and
5without the state shall be taxed only on such income as is derived from business
6transacted and property located within the state. The amount of such income
7attributable to Wisconsin may be determined by an allocation and separate
8accounting thereof, when the business of such nonresident individual or nonresident
9estate or trust within the state is not an integral part of a unitary business, but the
10department of revenue may permit an allocation and separate accounting in any case
11in which it is satisfied that the use of such method will properly reflect the income
12taxable by this state. In all cases in which allocation and separate accounting is not
13permissible, the determination shall be made in the following manner: for all
14businesses except air carriers, financial organizations, telecommunications
15companies, pipeline companies,
public utilities, railroads, sleeping car companies
16and car line companies there shall first be deducted from the total net income of the
17taxpayer the part thereof (less related expenses, if any) that follows the situs of the

1property or the residence of the recipient. The remaining net income shall be
2apportioned to this state by use of the following: an apportionment fraction composed
3of a sales factor representing 50 percent of the fraction, a property factor
4representing 25 percent of the fraction, and a payroll factor representing 25 percent
5of the fraction.
SB532, s. 2 6Section 2. 71.04 (4) (a) to (e) of the statutes, as created by 2003 Wisconsin Act
737
, are repealed.
SB532, s. 3 8Section 3. 71.04 (4m) of the statutes, as created by 2003 Wisconsin Act 37, is
9repealed.
SB532, s. 4 10Section 4. 71.04 (5) (intro.) of the statutes, as affected by 2003 Wisconsin Act
1137
, is amended to read:
SB532,3,1312 71.04 (5) Property factor. (intro.) For purposes of sub. (4) and for taxable
13years beginning before January 1, 2008
:
SB532, s. 5 14Section 5. 71.04 (6) (intro.) of the statutes, as affected by 2003 Wisconsin Act
1537
, is amended to read:
SB532,3,1716 71.04 (6) Payroll factor. (intro.) For purposes of sub. (4) and for taxable years
17beginning before January 1, 2008
:
SB532, s. 6 18Section 6. 71.04 (7) (d) of the statutes, as affected by 2003 Wisconsin Act 37,
19is amended to read:
SB532,4,220 71.04 (7) (d) Sales, other than sales of tangible personal property, are in this
21state if the income-producing activity is performed in this state. If the
22income-producing activity is performed both in and outside this state the sales shall
23be divided between those states having jurisdiction to tax such business in
24proportion to the direct costs of performance incurred in each such state in rendering
25this service. Services performed in states which do not have jurisdiction to tax the

1business shall be deemed to have been performed in the state to which compensation
2is allocated by s. 71.04 sub. (6) , 2001 stats.
SB532, s. 7 3Section 7. 71.04 (8) (b) 1. and 2. of the statutes, as affected by 2003 Wisconsin
4Act 37
, are consolidated, renumbered 71.04 (8) (b) and amended to read:
SB532,4,165 71.04 (8) (b) For taxable years beginning before January 1, 2006, "public "Public
6utility", as used in this section, means any business entity described under subd. 2.
7and
any business entity which owns or operates any plant, equipment, property,
8franchise, or license for the transmission of communications or the production,
9transmission, sale, delivery, or furnishing of electricity, water or steam, the rates of
10charges for goods or services of which have been established or approved by a federal,
11state or local government or governmental agency. 2. In this section, for taxable
12years beginning after December 31, 2005, "public
"Public utility" also means any
13business entity providing service to the public and engaged in the transportation of
14goods and persons for hire, as defined in s. 194.01 (4), regardless of whether or not
15the entity's rates or charges for services have been established or approved by a
16federal, state or local government or governmental agency.
SB532, s. 8 17Section 8. 71.04 (8) (c) of the statutes, as affected by 2003 Wisconsin Act 37,
18is amended to read:
SB532,4,2419 71.04 (8) (c) The net business income of railroads, sleeping car companies, car
20line companies, pipeline companies, financial organizations, telecommunications
21companies, air carriers,
and public utilities requiring apportionment shall be
22apportioned pursuant to rules of the department of revenue, but the income taxed
23is limited to the income derived from business transacted and property located
24within the state.
SB532, s. 9
1Section 9. 71.04 (10) of the statutes, as affected by 2003 Wisconsin Act 37, is
2amended to read:
SB532,5,133 71.04 (10) Department may waive factor. Where, in the case of any nonresident
4individual or nonresident estate or trust engaged in business in and outside of this
5state and required to apportion its income as provided in this section, it shall be
6shown to the satisfaction of the department of revenue that the use of any one of the
73 factors provided under sub. (4) gives an unreasonable or inequitable final average
8ratio because of the fact that such nonresident individual or nonresident estate or
9trust does not employ, to any appreciable extent in its trade or business in producing
10the income taxed, the factors made use of in obtaining such ratio, this factor may,
11with the approval of the department of revenue, be omitted in obtaining the final
12average ratio which is to be applied to the remaining net income. This subsection
13does not apply to taxable years beginning after December 31, 2007.
SB532, s. 10 14Section 10. 71.25 (6) (intro.) of the statutes, as affected by 2003 Wisconsin Act
1537
, is renumbered 71.25 (6) and amended to read:
SB532,6,1016 71.25 (6) Allocation and separate accounting and apportionment formula.
17Corporations engaged in business within and without the state shall be taxed only
18on such income as is derived from business transacted and property located within
19the state. The amount of such income attributable to Wisconsin may be determined
20by an allocation and separate accounting thereof, when the business of such
21corporation within the state is not an integral part of a unitary business, but the
22department of revenue may permit an allocation and separate accounting in any case
23in which it is satisfied that the use of such method will properly reflect the income
24taxable by this state. In all cases in which allocation and separate accounting is not
25permissible, the determination shall be made in the following manner: for all

1businesses except air carriers, financial organizations, telecommunications
2companies, pipeline companies,
public utilities, railroads, sleeping car companies,
3car line companies and corporations or associations that are subject to a tax on
4unrelated business income under s. 71.26 (1) (a) there shall first be deducted from
5the total net income of the taxpayer the part thereof (less related expenses, if any)
6that follows the situs of the property or the residence of the recipient. The remaining
7net income shall be apportioned to this state by use of the following: an
8apportionment fraction composed of a sales factor under sub. (9) representing 50
9percent of the fraction, a property factor under sub. (7) representing 25 percent of the
10fraction, and a payroll factor under sub. (8) representing 25 percent of the fraction.
SB532, s. 11 11Section 11. 71.25 (6) (a) to (e) of the statutes, as created by 2003 Wisconsin Act
1237
, are repealed.
SB532, s. 12 13Section 12. 71.25 (6m) of the statutes, as created by 2003 Wisconsin Act 37,
14is repealed.
SB532, s. 13 15Section 13. 71.25 (7) (intro.) of the statutes, as affected by 2003 Wisconsin Act
1637
, is amended to read:
SB532,6,1817 71.25 (7) Property factor. (intro.) For purposes of sub. (6) and for taxable
18years beginning before January 1, 2008
:
SB532, s. 14 19Section 14. 71.25 (8) (intro.) of the statutes, as affected by 2003 Wisconsin Act
2037
, is amended to read:
SB532,6,2221 71.25 (8) Payroll factor. (intro.) For purposes of sub. (6) and for taxable years
22beginning before January 1, 2008
:
SB532, s. 15 23Section 15. 71.25 (9) (d) of the statutes, as affected by 2003 Wisconsin Act 37,
24is amended to read:
SB532,7,8
171.25 (9) (d) Sales, other than sales of tangible personal property, are in this
2state if the income-producing activity is performed in this state. If the
3income-producing activity is performed both in and outside this state the sales shall
4be divided between those states having jurisdiction to tax such business in
5proportion to the direct costs of performance incurred in each such state in rendering
6this service. Services performed in states which do not have jurisdiction to tax the
7business shall be deemed to have been performed in the state to which compensation
8is allocated by s. 71.25 sub. (8) , 2001 stats.
SB532, s. 16 9Section 16. 71.25 (10) (b) 1. and 2. of the statutes, as affected by 2003
10Wisconsin Act 37
, are consolidated, renumbered 71.25 (10) (b) and amended to read:
SB532,7,2211 71.25 (10) (b) In this section, for taxable years beginning before January 1,
122006,
"public utility" means any business entity described under subd. 2. and any
13business entity which owns or operates any plant, equipment, property, franchise,
14or license for the transmission of communications or the production, transmission,
15sale, delivery, or furnishing of electricity, water or steam the rates of charges for
16goods or services of which have been established or approved by a federal, state or
17local government or governmental agency. 2. In this section, for taxable years
18beginning after December 31, 2005, "public
"Public utility" also means any business
19entity providing service to the public and engaged in the transportation of goods and
20persons for hire, as defined in s. 194.01 (4), regardless of whether or not the entity's
21rates or charges for services have been established or approved by a federal, state or
22local government or governmental agency.
SB532, s. 17 23Section 17. 71.25 (10) (c) of the statutes, as affected by 2003 Wisconsin Act 37,
24is amended to read:
SB532,8,6
171.25 (10) (c) The net business income of railroads, sleeping car companies, car
2line companies, pipeline companies, financial organizations, telecommunications
3companies, air carriers,
and public utilities requiring apportionment shall be
4apportioned pursuant to rules of the department of revenue, but the income taxed
5is limited to the income derived from business transacted and property located
6within the state.
SB532, s. 18 7Section 18. 71.25 (11) of the statutes, as affected by 2003 Wisconsin Act 37,
8is amended to read:
SB532,8,189 71.25 (11) Department may waive factor. Where, in the case of any corporation
10engaged in business in and outside of this state and required to apportion its income
11as provided in sub. (6), it shall be shown to the satisfaction of the department of
12revenue that the use of any one of the 3 factors provided in sub. (6) gives an
13unreasonable or inequitable final average ratio because of the fact that such
14corporation does not employ, to any appreciable extent in its trade or business in
15producing the income taxed, the factors made use of in obtaining such ratio, this
16factor may, with the approval of the department of revenue, be omitted in obtaining
17the final average ratio which is to be applied to the remaining net income. This
18subsection does not apply to taxable years beginning after December 31, 2007.
SB532, s. 19 19Section 19. 71.45 (3) (intro.) of the statutes, as affected by 2003 Wisconsin Act
2037
, is amended to read:
SB532,9,221 71.45 (3) Apportionment. (intro.) Except as provided in sub. (3d), to To
22determine Wisconsin income for purposes of the franchise tax, domestic insurers
23that, in the taxable year, have received premiums, other than life insurance
24premiums, written for insurance on property or risks resident, located or to be

1performed outside this state shall multiply the net income figure derived by
2application of sub. (2) by the arithmetic average of the following 2 percentages:
SB532, s. 20 3Section 20. 71.45 (3) (a) of the statutes, as affected by 2003 Wisconsin Act 37,
4is amended to read:
SB532,9,185 71.45 (3) (a) Subject to sub. (3d), the The percentage determined by dividing
6the sum of direct premiums written for insurance other than life insurance, with
7respect to all property and risks resident, located, or to be performed in this state,
8and assumed premiums written for reinsurance, other than life insurance, with
9respect to all property and risks resident, located, or to be performed in this state,
10by the sum of direct premiums written for insurance on all property and risks, other
11than life insurance, wherever located, and assumed premiums written for
12reinsurance on all property and risks, other than life insurance, wherever located.
13In this paragraph, "direct premiums" means direct premiums as reported for the
14taxable year on an annual statement that is filed by the insurer with the
15commissioner of insurance under s. 601.42 (1g) (a). In this paragraph, "assumed
16premiums" means assumed reinsurance premiums from domestic insurance
17companies as reported for the taxable year on an annual statement that is filed with
18the commissioner of insurance under s. 601.42 (1g) (a).
SB532, s. 21 19Section 21. 71.45 (3) (b) 1. of the statutes, as affected by 2003 Wisconsin Act
2037
, is amended to read:
SB532,9,2421 71.45 (3) (b) 1. Subject to sub. (3d), the The percentage determined by dividing
22the payroll, exclusive of life insurance payroll, paid in this state in the taxable year
23by total payroll, exclusive of life insurance payroll, paid everywhere in the taxable
24year.
SB532, s. 22
1Section 22. 71.45 (3d) of the statutes, as created by 2003 Wisconsin Act 37, is
2repealed.
SB532, s. 23 3Section 23. 71.45 (3e) of the statutes, as created by 2003 Wisconsin Act 37, is
4repealed.
SB532, s. 24 5Section 24. 71.45 (3m) of the statutes, as affected by 2003 Wisconsin Act 37,
6is amended to read:
SB532,10,137 71.45 (3m) Arithmetic average. Except as provided in sub. (3d), the The
8arithmetic average of the 2 percentages referred to in sub. (3) shall be applied to the
9net income figure arrived at by the successive application of sub. (2) (a) and (b) with
10respect to Wisconsin insurers to which sub. (2) (a) and (b) applies and which have
11received premiums, other than life insurance premiums, written for insurance on
12property or risks resident, located or to be performed outside this state, to arrive at
13Wisconsin income constituting the measure of the franchise tax.
SB532, s. 25 14Section 25. Initial applicability.
SB532,10,1815 (1) This act first applies to taxable years beginning on January 1 of the year
16in which this subsection takes effect, except that if this subsection takes effect after
17July 31 this act first applies to taxable years beginning on January 1 of the year
18following the year in which this subsection takes effect.
SB532,10,1919 (End)
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