Wisconsin Administrative Code › Department of Revenue › Chapter Tax 2 - Income Taxation, Returns, Records And Gross Income › Section Tax 2.64 - Alternative apportionment for combined groups including specialized industries

Current through June 24, 2024
(1) SCOPE. Section
			 71.255(5)
			 (a), Stats., provides that a combined group
			 is generally required to use the modified sales factor method to apportion its
			 combined unitary income. However, s.
			 71.255(5)
			 (b), Stats., provides that a qualifying
			 combined group may petition the department to use an alternative apportionment
			 method. This section provides rules relating to the eligibility requirements,
			 continuity, and limitations of this privilege.
(2) ELIGIBILITY REQUIREMENTS.
(a)
Qualifying combined
			 group
. A qualifying combined group is a combined group for which 30
			 percent or more of the combined unitary income would, in the absence of
			 combined reporting, be required to be apportioned using more than one factor
			 under a method described in ss.
			 Tax
			 2.46, 2.465, 2.47, 2.475, 2.48, 2.50, or
			 2.502.
(b)
Requirements for
			 petition
. The designated agent of the combined group requesting an
			 alternative apportionment method shall file a petition no less than 60 days
			 before filing the first original, timely filed return using the alternative
			 method. If a return using the modified sales factor method has already been
			 timely filed without an extension, the designated agent may file an amended
			 return using the alternative method if it files a petition no less than 60 days
			 before the end of the automatic 7-month extension period provided in ss.
			 71.24(7)
			 or
			 71.44(3),
			 Stats., as applicable, and the petition is approved by the department. The
			 petition shall include the following:
1. The
			 full name, address, and federal employer identification number of each member
			 of the combined group.
2. The
			 combined group's taxable year for which the alternative apportionment method as
			 requested would begin to be effective.
3. A description of the alternative
			 apportionment method requested.
4.
			 A complete and precise statement of the reasons for the modification requested,
			 including why the modified sales factor method would result in an unfair
			 representation of the degree of unitary business activity in this state. This
			 statement shall provide clear and convincing evidence of its
			 assertions.
5. A calculation of the
			 combined group's tax liability for the first taxable year to which the petition
			 applies and for the previous taxable year, using the apportionment method
			 prescribed in s.
			 71.255(5)
			 (a), Stats., for both years. For the previous
			 taxable year's computation, this amount shall be computed as if a combined
			 report including those same corporations were required in the previous taxable
			 year, even if it was before s.
			 71.255,
			 Stats., was in effect.
6. A
			 calculation of the combined group's tax liability for the first taxable year to
			 which the petition applies and for the previous taxable year, similar to the
			 calculation in subd. 5., but using the requested apportionment method instead
			 of the modified sales factor method.
7. A calculation of each combined group
			 member's tax liability for the first taxable year to which the petition applies
			 and for the previous taxable year, similar to the calculations in subds. 5. and
			 6., computed as if each corporation were not a member of the combined group and
			 using the method prescribed by ss.
			 Tax
			 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49,
			 2.495, 2.50, or 2.502, as applicable to each corporation.
8. A statement as to whether any combined
			 group member is being audited by the department at the time of the
			 petition.
(c)
Limitation
. The department may not grant a taxpayer's petition
			 for an alternative apportionment method if the alternative method would result
			 in a lower tax liability than the sum of the tax liabilities of the combined
			 group members computed as if they were not members of a combined group and
			 using the apportionment method prescribed by ss.
			 Tax
			 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49,
			 2.495, 2.50, or 2.502, as applicable to each corporation.
(d)
Approval or rejection
.
1. The petition shall be approved by the
			 department in writing. The department shall approve or reject the petition
			 within 45 days after receiving it. However, failure of the department to act
			 within 45 days or acceptance of a return using the alternative apportionment
			 method does not constitute approval of the petition or method used. The
			 department may, after receipt and review of the petition, require additional
			 information necessary to determine whether the modified sales factor method
			 does not fairly represent the degree of unitary business activity in this
			 state. If the department does not have all the required information to approve
			 the petition, the 45-day period described in this paragraph is suspended until
			 the information is provided. Filing of a petition does not affect the accrual
			 of interest on underpayment of estimated taxes.
2. If the designated agent timely files a
			 petition as described in par. (b) but does not receive an order from the
			 department approving or rejecting the petition before the due date of the
			 return, the designated agent must file the return using the modified sales
			 factor method. If the department subsequently approves the petition, the
			 designated agent may amend the return using the approved method, in which case
			 the amended return must contain the attachments described in par.
			 (e).
(e) Attachments to
			 return. For each combined return on which the alternative apportionment method
			 is used, the designated agent shall include the following documentation with
			 the return:
1. A copy of the department's
			 written approval for the alternative apportionment method.
2. A calculation of the combined group's tax
			 liability computed as if it used the modified sales factor method instead of
			 the alternative apportionment method.
3. A calculation of each combined group
			 member's tax liability for the taxable year included in the combined return
			 computed as if each corporation were not a member of the combined group and
			 using the apportionment method prescribed by ss.
			 Tax
			 2.39, 2.45, 2.46, 2.465, 2.47, 2.475, 2.48, 2.49,
			 2.495, 2.50, or 2.502, as applicable to each
			 corporation.