(1) SCOPE. A telecommunications company that
is engaged in business both in and outside this state shall apportion its
apportionable income as provided in this section, except if the
telecommunications company is in a combined group, its Wisconsin share of the
combined group's apportionable income is computed as provided in s.
71.255(5),
Stats., and further detailed in s.
Tax
2.61(7). Nonapportionable income
shall be allocated as provided in s.
71.25(5)
(b), Stats.
Note: A telecommunications company that is a
corporation may be in a combined group for taxable years beginning on or after
January 1, 2009. See s.
Tax
2.61(2) for a description of
corporations required to use combined reporting.
(2) DEFINITIONS. In this section:
(a) "Cable television service" means cable
service as defined in
47
USC 522(6) when provided
over a cable system as defined in
47
USC 522(7).
(am) "Engaged in business in and outside this
state" has the same meaning as in s.
Tax
2.39(2) (b).
(b) "Payroll factor" means the payroll
fraction computed under s.
71.04(6)
or
71.25(8),
2001 Stats., and s.
Tax
2.39.
(c)
"Property factor" means the property fraction computed under s.
71.04(5)
or
71.25(7),
2001 Stats., and s.
Tax
2.39.
(d)
"Telecommunications company" means any person that owns, operates, manages, or
controls any plant or equipment used to furnish telecommunications services and
cable television services within this state directly or indirectly to the
public and derives at least 70% of its gross income for the current taxable
year from the provision of telecommunications services and cable television
services, excluding internet service and the resale of telecommunications by
telecommunications resellers as defined in s.
196.01(9),
Stats. For purposes of the 70% test, gross income does not include interest,
dividends, rents, royalties, capital gains or ordinary gains from asset
dispositions, other than in the normal course of business. "Telecommunications
company" does not include internet service providers.
(e) The following terms have the same
definitions as provided in ss.
77.51
and
77.522(4)
(a), Stats.:
1. "Ancillary services" (s.
77.51(1ba),
Stats.).
2. "Call-by-call basis"
(s.
77.522(4) (a)
2, Stats.).
3. "Communications channel" (s.
77.522(4) (a)
3, Stats.).
4. "Customer" (s.
77.522(4) (a)
4, Stats.).
5. "Customer channel termination point" (s.
77.522(4) (a)
5, Stats.).
6. "Home service provider" (s.
77.522(4) (a)
7, Stats.).
7. "Interstate telecommunications services"
(s.
77.51(5n),
Stats.).
8. "Intrastate
telecommunications services" (s.
77.51(5r),
Stats.).
9. "Mobile
telecommunications service" (s.
77.522(4) (a)
8, Stats.).
10. "Place of primary use" (s.
77.522(4) (a)
9, Stats.).
11. "Postpaid calling service" (s.
77.522(4)
(a) 10., Stats.).
12. "Prepaid calling service" (s.
77.51(10d),
Stats.).
13. "Prepaid wireless
calling service" (s.
77.51(10f),
Stats.).
14. "Private communication
service" (s.
77.51(11c),
Stats.).
15. "Service address" (s.
77.51(17m),
Stats.).
16. "Telecommunications
services" (s.
77.51(21n),
Stats.).
(3)
APPORTIONMENT FORMULA COMPUTATION. For taxable years beginning after December
31, 2004, a telecommunications company that is engaged in business in and
outside this state shall determine its net income for state franchise or income
tax purposes as provided in this section. The telecommunications company 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), Stats. The telecommunications company
shall apportion its remaining net income to this state using an apportionment
fraction obtained by taking the arithmetical average of the property factor,
payroll factor, and sales factor. The sales factor is determined as prescribed
in subs. (4) and (5), as applicable.
(4) SALES FACTOR FOR TAXABLE YEARS BEGINNING
BEFORE JANUARY 1, 2009. For taxable years beginning before January 1, 2009, the
sales factor is the sales factor as would be determined under s.
71.25(9),
2001 Stats.
(5) SALES FACTOR FOR
TAXABLE YEARS BEGINNING ON OR AFTER JANUARY 1, 2009. For taxable years
beginning on or after January 1, 2009, the sales factor is determined as
provided in s.
71.25(9),
Stats., as effective for the current taxable year. For purposes of computing
the numerator of a telecommunications company's sales factor under this
subsection, the following rules apply:
(a)
General. Except as provided otherwise in par. (b) to (f),
gross receipts from the sale of a telecommunications service or mobile
telecommunications service are in this state if the customer's place of primary
use of the service is in this state.
(b)
Telecommunications services on
call-by-call basis. Gross receipts from the sale of telecommunications
services sold on an individual call-by-call basis are in this state if either
of the following applies:
1. The call both
originates and terminates in this state.
2. The call either originates or terminates
in this state and the service address is located in this
state.
(c)
Postpaid calling services, prepaid calling services, and prepaid
wireless calling services. Gross receipts from the sale of postpaid
calling services, prepaid calling services, and prepaid wireless calling
services are in this state if the origination point of the telecommunication
signal, as first identified by the service provider's telecommunication system
or, if the system used to transport telecommunication signals is not the
seller's, as identified by information received by the seller from its service
provider, is located in this state.
(d)
Private communication
services. The following gross receipts from the sale of private
communication services are in this state:
1.
Any separate charge attributable to a customer channel termination point
located within this state.
2. If
all customer channel termination points are located entirely in this state, the
gross receipts attributable to those customer channel termination
points.
3. Fifty percent of the
gross receipts attributable to segments of a channel between two customer
channel termination points located in different states, if one of those
customer channel termination points is located in this state.
4. If the segments are not charged
separately, the gross receipts attributable to segments of a communications
channel that is located in this state and in more than one other state or
equivalent jurisdiction, computed based on a percentage determined by dividing
the number of customer channel termination points in this state by the total
number of customer channel termination points in all jurisdictions where
segments of the communications channel are located.
(e)
Ancillary services.
Gross receipts from the sale of ancillary services are in this state if the
customer's place of primary use is in this state.
(f)
Carrier network access and sales
for resale. The following gross receipts from carrier network access
and from the sale of telecommunications services for resale are in this state:
1. Gross receipts from access fees
attributable to intrastate telecommunications service that both originates and
terminates in this state.
2. Where
subd. 1. does not apply, 50 percent of the gross receipts from access fees
attributable to interstate telecommunications service if the interstate call
either originates or terminates in this state.
3. Gross receipts from interstate end user
access line charges, including the surcharge approved by the federal
communications commission and levied pursuant to 47 CFR 69, if the customer's
service address is in this state.
4. Gross receipts from sales of
telecommunications services to other telecommunication service providers for
resale if the reseller's sale to the customer would be sourced to this state
under the rules of this subsection, provided the information is readily
available to make that determination. If the information is not readily
available, the taxpayer must use a reasonable and consistent method to
determine the amount of gross receipts from sales for resale that are derived
from Wisconsin, based on the information that is available.
(g)
Other sales. Sales other
than those described in pars. (a) to (f) are in this state if so determined
under s.
71.25(9),
Stats., and s.
Tax
2.39.
Note: Telecommunications companies that are in
combined groups must adjust the numerator and denominator of each of their
apportionment factors and then convert the arithmetical average of these
factors to the modified sales factor. The modified sales factor then determines
the company's Wisconsin share of the combined group's apportionable income. See
s.
71.255(5),
Stats., and s.
Tax
2.61(7) for details.
Note: The provisions of s. Tax 2.502 first apply
for taxable years beginning on January 1, 2005.
Section Tax 2.502 interprets ss.
71.04(8)
(b) and (c) and
71.25(10)
(b) and (c),
Stats.
