2.502 Apportionment of apportionable income

of interstate telecommunications companies. (1) SCOPE. A telecommunications company that is engaged in busi- ness both in and outside this state shall apportion its apportion- able income as provided in this section, except if the telecommu- nications company is in a combined group, its Wisconsin share of the combined group[s apportionable income is computed as pro- vided 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 com- bined 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) XCable television serviceY means cable service as defined in 47 USC 522(6) when provided over a cable system as defined in 47 USC 522(7). (am) XEngaged in business in and outside this stateY has the same meaning as in s. Tax 2.39 (2) (b). (b) XPayroll factorY means the payroll fraction computed un- der s. 71.04 (6) or 71.25 (8), 2001 Stats., and s. Tax 2.39. (c) XProperty factorY means the property fraction computed under s. 71.04 (5) or 71.25 (7), 2001 Stats., and s. Tax 2.39. (d) XTelecommunications companyY means any person that owns, operates, manages, or controls any plant or equipment used to furnish telecommunications services and cable television ser- vices within this state directly or indirectly to the public and de- rives 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 in- come does not include interest, dividends, rents, royalties, capital gains or ordinary gains from asset dispositions, other than in the normal course of business. XTelecommunications companyY 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. XAncillary servicesY (s. 77.51 (1ba), Stats.). 2. XCall-by-call basisY (s. 77.522 (4) (a) 2., Stats.). 3. XCommunications channelY (s. 77.522 (4) (a) 3., Stats.). 4. XCustomerY (s. 77.522 (4) (a) 4., Stats.). 5. XCustomer channel termination pointY (s. 77.522 (4) (a) 5., Stats.). 6. XHome service providerY (s. 77.522 (4) (a) 7., Stats.). 7. XInterstate telecommunications servicesY (s. 77.51 (5n), Stats.). 8. XIntrastate telecommunications servicesY (s. 77.51 (5r), Stats.). 9. XMobile telecommunications serviceY (s. 77.522 (4) (a) 8., Stats.). 10. XPlace of primary useY (s. 77.522 (4) (a) 9., Stats.). 11. XPostpaid calling serviceY (s. 77.522 (4) (a) 10., Stats.). 12. XPrepaid calling serviceY (s. 77.51 (10d), Stats.). 13. XPrepaid wireless calling serviceY (s. 77.51 (10f), Stats.). 14. XPrivate communication serviceY (s. 77.51 (11c), Stats.). 15. XService addressY (s. 77.51 (17m), Stats.). 16. XTelecommunications servicesY (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 pur- poses as provided in this section. The telecommunications com- pany shall first deduct from its total net income its nonapportion- able 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 fac- tor, 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 pur- poses of computing the numerator of a telecommunications com- pany[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 cus- tomer[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 follow- ing 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 identi- fied by information received by the seller from its service provider, is located in this state. (d) Private communication services. The following gross re- ceipts from the sale of private communication services are in this state: 1. Any separate charge attributable to a customer channel ter- mination point located within this state. 2. If all customer channel termination points are located en- tirely in this state, the gross receipts attributable to those cus- tomer 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 termi- nation points is located in this state. 4. If the segments are not charged separately, the gross re- ceipts attributable to segments of a communications channel that is located in this state and in more than one other state or equiva- lent 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 ancil- lary services are in this state if the customer[s place of primary use is in this state. Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published. (f) Carrier network access and sales for resale. The follow- ing 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 re- ceipts from access fees attributable to interstate telecommunica- tions 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 re- seller[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 consis- tent method to determine the amount of gross receipts from sales for resale that are derived from Wisconsin, based on the informa- tion 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 con- vert the arithmetical average of these factors to the modified sales factor. The mod- ified 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. Note: Section Tax 2.502 interprets ss. 71.04 (8) (b) and (c) and 71.25 (10) (b) and (c), Stats. History: Emerg. cr., eff. 12-5-05; CR 05-117: cr. Register June 2006 No. 606, eff. 7-1-06; corrections in (1) and (3) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register April 2010 No. 652; EmR0943: eff. 12-31-09 and CR 10-001: am. (1) and (3), cr. (2) (am), (e), (4) and (5), r. (2) (d) and (f), renum. (2) (e) to be (2) (d) and am. Register June 2010 No. 654, eff. 7-1-10; correction in (5) (f) 3. made under s. 13.92 (4) (b) 4., Stats., Register June 2010 No. 654; correction in (2) (e) 14. made under s. 13.92 (4) (b) 7., Stats., Register June 2018 No. 750.