2.67 Combined returns. (1) SCOPE. This section

provides rules relating to the filing of combined returns by corpo- rations required to use combined reporting under s. 71.255, Stats. This section explains the filing requirements for combined re- turns, provides rules relating to defining the taxable year included in a combined return, and describes how interest, penalties, and statutes of limitations apply to combined returns. (2) FILING REQUIREMENTS FOR COMBINED RETURNS. (a) General. The designated agent of a combined group shall file a combined return on behalf of the group. For each combined group member included in the combined return, the combined re- turn satisfies the member[s requirement for filing returns under ss. 71.24 (1) or (1m) or 71.44 (1) or (1m), Stats., as applicable. The combined return shall be filed by the date provided in ss. 71.24 (1), (1m), and (7) or 71.44 (1), (1m), and (3), Stats., as applicable. (b) Electronic filing. All combined returns shall be filed elec- tronically. The secretary of revenue may waive the requirement to file a combined return electronically when the secretary deter- mines that the requirement causes an undue hardship, if the per- son requests the waiver in writing and clearly indicates why the requirement causes an undue hardship. In determining whether the electronic filing requirement causes an undue hardship, the secretary of revenue may consider the following factors: 1. Unusual circumstances that may prevent the person from filing electronically. Example: The person does not have access to a computer that is connected to the Internet. 2. Any other factor that the secretary determines is pertinent. Note: Written requests should be e-mailed to DORWaiverRequest@wiscon- sin.gov, faxed to (608) 224-5761, or addressed to Mandate Waiver Request, Wiscon- sin Department of Revenue, PO Box 8902, Madison, WI 53708-8902. Note: Forms not filed electronically may be delivered in person to the Depart- ment of Revenue at 2135 Rimrock Road, Madison, Wisconsin or mailed to the ad- dress specified on the form or in the instructions. (c) Components of combined return. A combined return shall include the following items, and shall be considered incomplete if any of these items are excluded: 1. One Wisconsin Form 6, Income or Franchise Tax Return, for the combined group as a whole. 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. WISCONSIN ADMINISTRATIVE CODE 4. If the combined group is using apportionment, one of the following forms, per member as applicable: a. Schedule A-01, Wisconsin Single Sales Factor Apportion- ment Data for Nonspecialized Industries. b. Schedule A-02, Wisconsin Apportionment Percentage for Interstate Financial Institutions. c. Schedule A-03, Wisconsin Apportionment Percentage for Interstate Motor Carriers. d. Schedule A-04, Wisconsin Apportionment Percentage for Interstate Telecommunications Companies. e. Schedule A-05, Wisconsin Premium Factor for Insurance Companies. f. Schedule A-06, Wisconsin Receipts Factor for Interstate Brokers-Dealers, Investment Advisors, Investment Companies, and Underwriters. g. Schedule A-07, Wisconsin Apportionment Percentage for Interstate Air Carriers. h. Schedule A-08, Wisconsin Apportionment Percentage for Broadcasters. i. Schedule A-09, Wisconsin Apportionment Percentage for Interstate Railroads. j. Schedule A-10, Wisconsin Apportionment Percentage for Interstate Pipeline Companies. k. Schedule A-11, Wisconsin Apportionment Percentage for Interstate Air Freight Forwarders Affiliated with a Direct Air Carrier. 5. Any other required supporting forms and schedules listed in s. Tax 2.03, as applicable. Unless stated otherwise in the in- structions, supporting forms and schedules shall be prepared sep- arately for each combined group member. 6. A copy of the complete federal return for each combined group member, including all supporting schedules and any amended returns, for the member[s taxable year included in the combined return. For combined group members that also file in a federal consolidated return, any of the following alternatives shall be considered to satisfy this requirement: a. A copy of the federal consolidated return, including all supporting forms, schedules, and statements for each corporation included in the consolidated return, as submitted to the internal revenue service. b. Pro forma federal returns prepared separately for each combined group member, including all supporting forms and schedules prepared separately for each combined group member. c. A spreadsheet showing the line-by-line computation of taxable income of each combined group member included in the federal consolidated return, including consolidating adjustments, plus the supporting forms, schedules, and statements filed with the internal revenue service pertaining to each member. The sup- porting statements shall include balance sheets as of the begin- ning and end of the tax year, a reconciliation of income per books with income per return, and a reconciliation of retained earnings, to the extent the member was required to submit these items to the internal revenue service. 7. For combined groups that also file in a federal consoli- dated return, a copy of federal Form 851, Affiliations Schedule. (d) Separate entity items. 1. Subject to the provisions of s. Tax 2.65 (3) (b), if any combined group member has separate en- tity items, the designated agent shall include those separate entity items in the combined return. If a corporation that would other- wise be a combined group member has no items that are subject to combination under the water[s edge rules of s. Tax 2.61 (4), the designated agent may include that corporation[s separate entity items in the combined return, in which case the combined return shall include the items specified in sub. (2) (c) 5. and 6. and subd. 3. for that corporation as if it is a combined group member. Al- ternatively, the corporation may file a separate Wisconsin return to report those items. 2. The joint and several liability provisions of s. Tax 2.65 (3) (f) do not apply to any tax, interest, or penalty attributable to sep- arate entity items. Although the department may send correspon- dence, notices, refunds, assessments, or other documents relating to any combined group member[s separate entity items to the des- ignated agent, and the designated agent may choose to pay any tax, interest, or penalty on behalf of a combined group member, the tax, interest, or penalty attributable to separate entity items is ultimately the responsibility of the combined group member or members to which the separate entity items are attributable. 3. The separate entity net income or loss and apportionment factors included in the combined return shall be reported on Wis- consin Form N, Nonapportionable and Separately Apportioned Income. The designated agent shall complete and submit Form N with the combined return for each applicable corporation and carry forward the total Form N amounts to the appropriate line on Form 6. For purposes of the requirement of s. 71.255 (2) (d), Stats., separate entity items reported on Form N shall be consid- ered filed on a separate return. However, for purposes of deter- mining a combined group member[s net income, tax, interest, un- derpayment interest, economic development surcharge, and the statute of limitations, the separate entity amounts shall be added to its amounts, if any, computed in the unitary combination. 4. If a corporation is a member of more than one combined group at the same time, the corporation shall include its separate entity items, if any, in the combined return of only one group. (e) Amended returns. If a corporation erroneously fails to join in the filing of a combined return, the designated agent shall file an amended combined return adding the corporation and, if a separate return was filed by the corporation, the corporation shall file an amended separate return showing no net income, overpay- ment, or underpayment, and stating that the corporation has joined in the filing of a combined return and identifying the des- ignated agent of the combined group in which the corporation has been included. (3) TAXABLE YEAR OF COMBINED RETURN. The taxable year included in a combined return is the combined group[s taxable year as determined in s. 71.255 (8), Stats. For purposes of deter- mining the taxable year and the items includable in the combined group[s taxable year, the following rules apply: (a) Combined group[s taxable year. If two or more members of the combined group file in a federal consolidated return, the combined group[s taxable year is the taxable year of that federal consolidated return. If no federal consolidated return applies or there is more than one federal consolidated return, the combined group[s taxable year is the taxable year of the designated agent. In any case, s. Tax 2.65 (2) (a) requires that the designated agent[s taxable year shall be the same as the combined group[s taxable year. (b) Methods for members with differing taxable years. If the taxable year of a combined group member differs from the tax- able year of the combined group, the designated agent shall in- clude that member[s net income or loss and apportionment fac- tors in the combined return by using one of the following methods: 1. Preparing a separate income statement from the member[s books and records for the months included in the combined group[s taxable year and using that income statement to deter- mine the amounts includable in the combined return. 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. 2. Using the net income or loss for the member[s taxable year that ends during the combined group[s taxable year to determine the amounts includable in the combined return. (c) Election of method. If the designated agent converts a combined group member[s taxable year to the combined group[s taxable year as described in par. (b) 1. or 2., it shall use the same method for each combined group member subject to the election. Once the designated agent files the first combined return includ- ing a member whose taxable year is properly converted, the des- ignated agent may not file an amended return to change the elec- tion, except that if the original return was not filed under exten- sion, the designated agent may file an amended return to change the election on or before the end of the automatic seven-month extension period provided in ss. 71.24 (7) or 71.44 (3), Stats., as applicable. The designated agent shall use the same method in each subsequent taxable year unless it obtains written approval from the department to use the other method. Note: Send written requests for approval to change the election to: Audit Bureau, Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906. (d) Part-year members. If, during a combined group[s taxable year, a corporation ceases to be a member of the combined group or a new corporation becomes a member, the designated agent shall include that corporation[s items attributable to the portion of the taxable year that the corporation was a member in the com- bined return covering the combined group[s entire taxable year. For the portion of the taxable year when the corporation was not a member of the combined group, the corporation shall file a sep- arate return or file in the combined return of another combined group, as applicable. (4) INTEREST, PENALTIES, AND STATUTES OF LIMITATIONS. (a) Interest. For purposes of computing interest on late payments by or on behalf of combined group members, the following rules apply: 1. Interest shall be assessed to the designated agent of a com- bined group based upon the combined tax liability or deficiency shown on the combined return for the combined group[s taxable year. However, the joint and several liability provisions of s. Tax 2.65 (3) (f) do not apply to any interest attributable to separate entity items. If a notice of an interest amount due is attributable to separate entity items of a combined group member other than the designated agent, the designated agent may pay the amount due or may submit a written request to the department to reissue the notice or a portion of the amount assessed to the combined group member responsible for the separate entity items. The des- ignated agent shall submit the written request on or before the due date shown on the notice. Note: Send written requests to reissue notices relating to separate entity items to: Mail Stop 3-107, Wisconsin Department of Revenue, PO Box 8906, Madison, WI 53708-8906. 2. An extension filed by the designated agent shall be consid- ered an extension filed by all members of the combined group. However, the extension filed by the designated agent does not ap- ply to affiliated corporations that are not combined group mem- bers, even if those corporations will be included in the combined return under the provisions of par. (d) 2. 3. Interest due to underpayment of estimated taxes shall be computed based on the estimated tax requirements and other pro- visions described in s. Tax 2.66. 4. If a corporation erroneously fails to join in the filing of the combined return, all payments, credits, and other amounts col- lected from the corporation which are properly attributable to the combined group[s taxable year and attributable to a period of time that the corporation was a member of the combined group shall be treated as having been paid by the combined group. (b) Late filing fees. If a combined group fails to timely file a combined return and the late filing fee under s. 71.83 (3), Stats., applies, the amount of the late filing fee shall be the amount pro- vided in s. 71.83 (3), Stats., regardless of the number of combined group members. (c) Failure to file. For purposes of the penalty provided in s. 71.83 (1) (a) 1., Stats., the following rules apply: 1. A corporation which erroneously fails to join in the filing of a combined return, but which timely files a separate Wisconsin return or joins in the timely filing of a combined return for an- other combined group, may not be subject to a penalty for failure to file. In determining whether the return is timely filed, the tax- able year of the erroneously filed return shall be used, rather than the taxable year of the combined group with which the corpora- tion should have filed. 2. A corporation which erroneously fails to join in the filing of a combined return and which fails, without reasonable cause, to timely file a separate Wisconsin return or join in the timely fil- ing of a combined return for another combined group, shall be subject to the penalty computed based on its share of tax required to be reported on the combined return for its proper combined group, including its tax attributable to separate entity items. Ex- cept as provided in sub. (2) (d) 2., the members of the combined group shall be jointly and severally liable for the penalty because under s. 71.255 (1) (n), Stats., joint and several liability may ap- ply to penalties and it is the duty of the designated agent to in- clude the corporation in the combined return. The department may send a notice of assessment of the penalty to the designated agent instead of the corporation which was erroneously omitted from the combined return. (d) Statutes of limitations. 1. The designated agent[s filing of a combined return shall be considered to be a return filed by each combined group member whose items are included in the com- bined unitary income reported on that return. 2. If a combined return includes separate entity items of a corporation that would otherwise be a combined group member but for the water[s edge rules of s. Tax 2.61 (4), the designated agent[s filing of the combined return shall be considered to be a return filed by that corporation. 3. For purposes of the statute of limitations in s. 71.77 (7) (a), Stats., allowing the department to make an assessment within six years after the filing of a return, the statute of limitations shall be determined for each combined group member separately based on its total net income reported on its return, which is its net income or loss from the unitary combination as included in the combined return, plus its net income or loss from separate en- tity items. The six-year statute of limitations applies if a com- bined group member[s total net income reported on its return is less than 75 percent of the net income properly assessable and the tax attributable to the additional income is in excess of $100. The designated agent shall be responsible for any combined group member[s return that is open under the 6-year statute of limitations, subject to the provisions of s. Tax 2.65 (3) (f), even if the designated agent[s return, as included in the combined return, is not open under the six-year statute of limitations. Note: Section Tax 2.67 interprets ss. 71.24 (1), (1m), and (7), 71.255 (1) (b), (7) (b), (8), and (9), 71.44 (1), (1m), and (3), 71.77, 71.82, and 71.83, Stats. History: EmR1001: emerg. cr. eff. 1-15-10; CR 09-064: cr. Register April 2010 No. 652, eff. 5-1-10; CR 12-011: am. (2) (d) 3. Register July 2012 No. 679, eff. 8-1- 12; CR 16-046: am. (2) (c) 1., r. (2) (c) 2., 3., am. (2) (c) 4., (d) 1., 3. Register Janu- ary 2018 No. 745, eff. 2-1-18; CR 22-044: cr. (2) (c) 4. Register June 2023 No. 810, eff. 7-1-23. Cross References: See s. Tax 2.60 for definitions that relate to this section. See s. Tax 2.65 for more information on the duties of the designated agent. See s. Tax 2.66 for more information on combined estimated tax requirements. 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. WISCONSIN ADMINISTRATIVE CODE