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Wisconsin Department of Revenue

Corporation Franchise or Income Tax

  1. Where is my refund of Wisconsin tax?
  2. What kind of tax does Wisconsin have, and what are the tax rates?
  3. Am I required to file a Wisconsin corporation franchise or income tax return?
  4. Where do I file my Wisconsin returns?
  5. What is the deadline for filing my Wisconsin return?
  6. Are extensions available if I can't file my Wisconsin return by the due date?
  7. Does Wisconsin allow the federal bonus depreciation?
  8. What is the maximum section 179 expense deduction allowable for tax years beginning in 2003 or after?
  9. Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. I have a section 179 expense deduction carryover that I could not use on my federal return. Can I use this section 179 expense deduction carryover to offset the additional income I am reporting for Wisconsin?
  10. Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. Can I recompute my deduction for charitable contributions on my Wisconsin return?
  11. The “Additional Information Required” section of Wisconsin Form 4 and Form 5, requires me to provide related party information on line 4. How does Wisconsin define “related party” for purposes of completing line 4?
  12. Does “related party” include partnerships and limited liability companies (LLCs)?
  13. Is a “related party” limited to other entities that have nexus with Wisconsin?
  14. Am I required to include transactions with an international related entity?
  15. What transactions should be reported on line 4 of the “Additional Information Required” section?
  16. What is included in “royalties paid”?
  17. Am I subject to the recycling surcharge?
  18. How do I amend my Wisconsin franchise or income tax return?
  19. What type of permits do I need if I am starting a new business in Wisconsin, and should I be aware of special Wisconsin taxes for corporations?
  20. If I close my business, should I notify the Wisconsin Department of Revenue?
  21. How can I send in money if I do not have the proper Wisconsin forms?
  22. What records should I keep for Wisconsin tax purposes, and how long should I keep them?
  1. Where is my refund of Wisconsin tax?

    If you have any questions regarding your corporation franchise or income tax refund, you may call (608) 266-0800 or write to the Department of Revenue, P.O. Box 8908, Madison, WI 53708-8908.

  2. What kind of tax does Wisconsin have, and what are the tax rates?

    Wisconsin has both a franchise tax and an income tax. However, only one tax is imposed against a corporation in a taxable year for the privilege of exercising its Wisconsin franchise or for doing business in Wisconsin.

    Franchise tax applies to:

    • All domestic corporations (those organized under Wisconsin law) and
    • Foreign corporations (those not organized under Wisconsin law) doing business in Wisconsin, except where taxation is exempted by statute or barred by federal law.

    The tax rate is 7.9%. Income from obligations of the United States government and its instrumentalities is included in income under the franchise tax law.

    Income tax applies only to foreign corporations which are not subject to the franchise tax and which own property in Wisconsin or whose business in Wisconsin is exclusively in foreign or interstate commerce. The tax rate is 7.9%. Income from obligations of the United States government and its instrumentalities isn't included in income under the income tax law.

    Estimated Tax for Corporations: Corporations must make estimated franchise or income tax payments if their current-year tax liability will be $500 or more, unless they owed no tax for the previous 12-month taxable year and their Wisconsin net income is less than $250,000 for the current taxable year.

  3. Am I required to file a Wisconsin corporation franchise or income tax return?

    Every corporation organized under the laws of Wisconsin or licensed to do business in Wisconsin (except certain organizations exempt under sec. 71.26(1), Wis. Stats.) is required to file a Wisconsin corporate franchise or income tax return, regardless of whether or not business was transacted. Unlicensed corporations are also required to file returns for each year they do business or have certain business activities in Wisconsin.

    Who Must File

    • Corporations organized under Wisconsin law.
    • Foreign corporations licensed to do business in Wisconsin.
    • Unlicensed corporations doing business in Wisconsin.
    • Foreign corporations having an interest in a partnership that does business in Wisconsin.
    • Publicly traded partnerships treated as corporations in section 7704 of the Internal Revenue Code (IRC).
    • Limited liability companies (LLCs) treated as corporations for federal income tax purposes.
    • Corporations that derive income from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin.

    Who Is Not Required to File

    The following corporations are not required to file Wisconsin franchise or income tax returns unless they derive income from the sale of or purchase and subsequent sale or redemption of lottery prizes if the winning tickets were originally bought in Wisconsin:

    • Corporations and associations exempt under sec. 71.26(1), Wis. Stats., except those with (a) unrelated business taxable income as defined in IRC section 512, or (b) income derived from a health maintenance organization or a limited service health organization. This includes insurers exempt from federal income taxation under IRC section 501(c)(15), town mutuals organized under Chapter 612, Wis. Stats., foreign insurers, domestic insurers engaged exclusively in life insurance business, domestic mortgage insurers, some cooperatives, and religious, scientific, educational, benevolent, or other corporations or associations of individuals not organized or conducted for profit.

    • Corporations that are completely inactive in and outside Wisconsin and have filed Form 4H.

    • Credit unions that don't act as a public depository for state or local government funds and have filed Form CU.

    Registration and Filing Requirements for Exempt Organizations

    • Exempt organizations that do not have unrelated business taxable income are not required to file Wisconsin franchise or income tax returns. However, these organizations may be required to file an Application for Business Tax Registration, Form BTR-101, with the Department of Revenue. Certain charitable organizations may apply for a Certificate of Exempt Status (CES) number.

    • Exempt organizations generally must register with the Wisconsin Department of Financial Institutions.

    • Charitable organizations must register with the Wisconsin Department of Regulation and Licensing. In addition, these organizations must file a Charitable Organization Annual Report, Form 308, or an Affidavit in Lieu of Annual Financial Report, Form 1943, with the Department of Regulation and Licensing.

    • For additional information, you may refer to the following sources:

  4. Where do I file my Wisconsin returns?

    Send corporation franchise or income tax returns to:

    Wisconsin Department of Revenue
    P.O. Box 8908
    Madison, WI 53708-8908

  5. What is the deadline for filing my Wisconsin return?

    Generally, a corporation must file its franchise or income tax return by the 15th day of the 3rd month following the close of its taxable year. However, Form 4T, filed by exempt organizations, is due at the same time as federal Form 990-T, the 15th day of the 5th month after a nonprofit corporation's taxable year ends. If a return is filed late, without an extension, the corporation may be subject to penalties and interest.

    Returns for short taxable years (periods of less than 12 months) are due on or before the federal due date. A corporation that becomes, or ceases to be, a member of an affiliated group and as a result must file two short period returns for federal purposes must also file two short period returns for Wisconsin. The Wisconsin returns are due at the same time as the federal returns. Each short period is considered a taxable year, the same as for federal purposes.

    A return is considered filed by the due date if:

    • The return is mailed in a properly addressed envelope with the postage duly prepaid,
    • The envelope containing the return is postmarked on or before the due date, and
    • The return is received by the Department within 5 days of the due date.

    Note: You can also use certain private delivery services approved by the Internal Revenue Service.

  6. Are extensions available if I can't file my Wisconsin return by the due date?

Any extension allowed by the Internal Revenue Service for filing the federal return automatically extends the Wisconsin due date to 30 days after the federal extended due date. You don't need to submit either a copy of the federal extension or an application for a Wisconsin extension to the Department by the original due date of your return. However, you must attach a copy of the federal extension to the Wisconsin return that you file.

If you aren't requesting a federal extension, Wisconsin law provides an automatic extension of 7 months or until the original due date of the corporation's corresponding federal return, whichever is later.

  1. Does Wisconsin allow the federal bonus depreciation?

    Federal bonus depreciation deductions do not apply for Wisconsin tax purposes. Property placed in service in taxable years beginning on or after January 1, 2001, must be depreciated or amortized under the Internal Revenue Code as amended to December 31, 2000.

For property acquired after September 10, 2001, taxpayers may not claim the special 30% bonus depreciation deduction allowed by the federal Job Creation and Worker Assistance Act of 2002 (Public Law 107-147, enacted March 9, 2002), the Jobs and Growth Tax Relief Reconcilliation Act of 2003 (Public Law 108-27, enacted May 28, 2003), and the Working Families Tax Relief Act of 2004 (Public Law 108-311, enacted October 4, 2004). The 50% additional first-year depreciation deduction allowed by the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27, enacted May 28, 2003) may not be claimed for 50% bonus property acquired after May 5, 2003.

Corporations should provide schedules detailing any differences between the federal and Wisconsin depreciation amounts and report the net difference as an adjustment to federal income.

  1. What is the maximum section 179 expense deduction allowable for tax years beginning in 2003 or after?

    The maximum amount of section 179 expense deduction allowable for Wisconsin purposes is $25,000.

Wisconsin has not adopted the federal changes to the section 179 expense deduction made by the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 (Public Law 108-27, enacted May 28, 2003) and the American Jobs Creation Act of 2004 (Public Law 108-357, enacted October 22, 2004). These changes include the following:

Corporations should provide schedules detailing any differences between the federal and Wisconsin amounts and report the net difference as an adjustment to federal income.
  1. Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. I have a section 179 expense deduction carryover that I could not use on my federal return. Can I use this section 179 expense deduction carryover to offset the additional income I am reporting for Wisconsin?

No. The depreciation difference is a modification to federal taxable income required by section 71.26(3)(y), Wis. Stats. Wisconsin law does not provide a modification to recompute your section 179 expense deduction in this situation. Therefore, your Wisconsin section 179 expense deduction is limited to the amount allowable in computing your federal taxable income.

  1. Since Wisconsin does not allow the deduction for the federal 30% or 50% bonus depreciation, my Wisconsin income is higher than my federal income. Can I recompute my deduction for charitable contributions on my Wisconsin return?

    No. The depreciation difference is a modification to federal taxable income required by section 71.26(3)(y), Wis. Stats. Wisconsin law does not provide a modification to recompute your deduction for charitable contributions in this situation. Therefore, your Wisconsin deduction for charitable contributions is limited to the amount allowable in computing your federal taxable income.

  1. The “Additional Information Required” section of Wisconsin Form 4 and Form 5, requires me to provide related party information on line 4. How does Wisconsin define “related party” for purposes of completing line 4?

    Wisconsin follows the definition of “related party” as used in Internal Revenue Code (IRC) sec. 267(b).

  2. Does “related party” include partnerships and limited liability companies (LLCs)?

A partnership or LLC is considered a related party if the corporation owns directly or indirectly more than 50 percent of the capital interest, or profits interest, in the partnership or LLC.

  1. Is a “related party” limited to other entities that have nexus with Wisconsin?

No. A related party includes all related entities as defined in sec. 267(b), IRC.

  1. Am I required to include transactions with an international related entity?

Yes. You must provide information on all transactions between related parties, no matter where the related party is located.

  1. What transactions should be reported on line 4 of the “Additional Information Required” section?

You must report the amount of sales made to related parties and purchases made from related parties. Management fees, interest expense, and royalties paid to related parties and interest income received from related parties should also be reported in the appropriate spaces.

  1. What is included in “royalties paid”?

“Royalties paid” include any remuneration paid for the use of trademarks, patents or other intangible assets, whether called a royalty or any other name.

  1. Am I subject to the recycling surcharge?

The recycling surcharge applies to companies with gross receipts from all activities of $4 million or more for taxable years beginning on or after January 1, 2000. Corporations that must file Wisconsin franchise or income tax returns must pay the recycling surcharge, with certain exceptions. The surcharge doesn't apply to:

For more information, refer to Publication 400, Wisconsin's Recycling Surcharge.

  1. How do I amend my Wisconsin franchise or income tax return?

    To file an amended Wisconsin return, use Form 4, 4I, 4T, 5, or 5S, as appropriate, and check the "amended return" box on the front of the return. Attach an explanation of any changes made. Show computations in detail. If the change involves an item of income, deduction, or credit that you were required to support with a form or schedule on your original return, attach the corrected form or schedule.

    If you file an amended federal return and the changes affect the Wisconsin net tax payable, the amount of a Wisconsin credit, a Wisconsin net business loss carryforward, or a Wisconsin capital loss carryforward, you must file an amended Wisconsin return with the Department of Revenue within 90 days after filing the amended federal return.

    You may file an amended return only after the corporation has filed a complete original return. A claim for refund must be filed within 4 years of the unextended due date of the return. However, a claim for refund to recover all or part of any tax or credit paid as a result of an office or field audit must be filed within 2 years after such an assessment for taxable years beginning before 2000 and within 4 years after such an assessment for taxable years beginning after 1999. That assessment must have been paid and must not have been protested by filing a petition for redetermination.

  2. What type of permits do I need if I am starting a new business in Wisconsin, and should I be aware of special Wisconsin taxes for corporations?

    Corporations doing business in Wisconsin are required to be registered with the Department of Financial Institutions (DFI). For more information, you may visit the DFI web site or call them at (608) 261-7577.

    Sales, use, and withholding taxes are common taxes for businesses which require a permit from the Department of Revenue. To obtain more information about these business taxes, you may contact any Department of Revenue office or call (608) 266-2776.

    If a corporation's franchise or income tax due (including the recycling surcharge) is $500 or more, it generally must make quarterly estimated tax payments using Wisconsin Form 4-ES. Failure to make required estimated tax payments may result in an interest charge. For more information regarding underpayment interest, see Wisconsin Form 4U, Underpayment of Estimated Tax by Corporations.

    If you have questions about what other permits may be needed for your business, or need assistance in obtaining a permit, call the Department of Commerce Permit Information Center at 1-800-HELPBUS (1-800-435-7287).

  1. If I close my business, should I notify the Wisconsin Department of Revenue?

    If a corporation liquidated during the taxable year, check the box on the front of the return marked "Final return - corporation dissolved." Attach a copy of the corporation's plan of liquidation along with a copy of federal Form 966 to the Wisconsin return. Generally, the final return is due on or before the federal due date. In most cases, this is the 15th day of the 3rd month after the date the corporation dissolved. The tax is payable by the 15th day of the 3rd month after the date of dissolution, regardless of the due date of the final return.

  2. How can I send in money if I do not have the proper Wisconsin forms?

    You can send the payment along with a letter which contains the following information: the corporation's name, federal employer identification number, current address, name and telephone number of a person we can contact regarding the payment, and a detailed explanation of why you are sending the payment. Send the letter and payment to:

    Wisconsin Department of Revenue
    P.O. Box 8908
    Madison, WI 53708-8908

    Note: Never send cash through the mail.

  3. What records should I keep for Wisconsin tax purposes, and how long should I keep them?

    You must keep accurate records to verify items of income, deductions, and credits claimed on your franchise or income tax return. Maintain records in a manner that will allow the Department to determine your correct tax liability if requested during an audit.

    You should keep copies of your tax returns as part of your tax records. Following is a listing of some of the tax records you should maintain:

    • Income: Keep sales journals, sales invoices, cash register tapes, financial statements, bank statements, contracts, and other documents to verify income reported on your returns.

    • Deductions: Keep purchase journals, purchase invoices, check registers, cancelled checks, bank statements, and other documents to verify expenses claimed on your returns.

    • Apportionment Percentages and Credits: Keep all supporting workpapers and other documents used in computing the apportionment percentages and credits claimed on your returns.

    Generally, you must keep your tax records at least until the statute of limitations expires for the tax return on which any of those items of income, deductions, apportionment percentages or credits appear. Usually this is 4 years from the due date of the return or the date filed, whichever is later.

    If you under report your income on your return by 25% or more, the statute of limitations is 6 years from the due date of the return or the date filed, whichever is later. If the return is false or fraudulent, or if no return is filed, there is no statute of limitations and departmental action can generally be brought at any time.

    There are times you should keep records longer:

    • You should keep records relating to property you own as long as they are needed to figure the basis of the original or replacement property and for 4 years after a return is filed on which you report any sales or other disposition of the property.

    • Net business losses may be carried forward up to 15 years. Taxable years which are otherwise closed to adjustment may be audited for purposes of determining the correctness of a net business loss which is claimed as an offset against income in an open year. If you are claiming a net business loss, you should keep your records for the year of the loss and all subsequent years in which you are claiming a net business loss carryforward. These records should be kept until 4 years after the extended due date or the date filed, whichever is later, of the return on which the last of the net business loss carryforward was claimed.

    You should retain a copy of your tax returns indefinitely.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Corporation Franchise/Income Tax Assistance
P.O. Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
E-Mail Additional Questions

Last updated February 27, 2008