Oct 02, 2017
From KPMG TaxWatch
The recently-signed Wisconsin budget bill (Assembly Bill 64) includes a few changes of note for corporate taxpayers. One relates to IRC conformity. For tax years beginning after December 31, 2016 Wisconsin adopts the Code as amended on December 31, 2016. Another change relates to use of net operating losses. Specifically, the bill provides that an NOL cannot offset Wisconsin income unless the incurred loss was computed on a return that was filed within four years of the un-extended due date for filing the original return for the tax year in which the loss was incurred. A corresponding provision likewise provides that a loss cannot be carried back unless claimed within four years of the un-extended due date for filing the original return for the taxable year to which the loss is carried back. These new provisions are consistent with a position that Department of Revenue has taken on audit, specifically that it could adjust NOLs coming forward from closed tax years, but taxpayers were not permitted to establish NOLs from prior tax years outside a four-year window.
A few other changes relate to the state’s sourcing rules for service receipts. Under Wisconsin’s general rule, gross receipts from services are attributed to Wisconsin if the purchaser of the service received the benefit of the service in the state. The statute then provides a list of when the benefit of a service is considered to be received in Wisconsin. Under prior law, a service receipt was assigned to Wisconsin if it related to tangible personal property that was in Wisconsin when the service was received or related to tangible personal property delivered to customers in Wisconsin. The revised law eliminates the provision that a service receipt will be assigned to Wisconsin if it relates to tangible personal property that was in Wisconsin when the service was received. Another subtle change is that under prior law, a service was considered to be received in Wisconsin if it was provided to an individual who was physically present in Wisconsin at the time that the service was received. Under the revised law, the service will be considered to be in Wisconsin if it is purchased (rather than provided to) by an individual who is physically present in Wisconsin at the time that the service is received. One further sourcing change is the adoption of new sourcing provisions for broadcasters (as defined) effective for tax years beginning after December 31, 2018.
A number of changes are made to Wisconsin’s credit provisions. One notable change is that for tax years beginning after December 31, 2017, ten percent of the research credit is refundable. Please contact Brad Wilhelmson at 312-665-2076 with questions.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.