Section 3.095. Income tax status of interest and dividends received from government and other securities by individuals and fiduciaries.

 

(1)   Purpose. This section lists federal, state, municipal and other government securities, and certain nongovernment securities, and specifies whether interest and dividends payable on those securities are exempt from or subject to the Wisconsin income tax on individuals and fiduciaries. The lists are not all-inclusive.

(2)   Definitions. In this section:

(a) "CHAP" means "Community Housing Alternatives Program."

(b) "Federal securities" means only securities which are direct and primary obligations of the United States and securities the interest on which federal law prohibits states from taxing. Federal securities do not include securities for which the United States is merely a guarantor and, therefore, has an obligation which is secondary and contingent to that of the issuer of the security.

(c) "Public housing agency" means any state, county, municipality or other governmental entity or public body, or agency or instrumentality thereof, which is authorized to engage in or assist in the development or operation of lower income housing, under 42 USC 1437a (b) (6).

(d) "WHEDA" means "Wisconsin Housing and Economic Development Authority."

(e) "WHEFA" means "Wisconsin Health and Educational Facilities Authority."

(3)   General.

(a) Under s. 71.05 (6) (a) 1. , Stats., interest income which is subject to the Wisconsin income tax on individuals and fiduciaries, but which is not included in federal adjusted gross income, shall be added to federal adjusted gross income in computing Wisconsin taxable income.

(b) Under s. 71.05 (6) (b) 1. , Stats., interest and dividend income which is included in federal adjusted gross income but which is by federal law exempt from state income taxation, shall be subtracted from federal adjusted gross income in computing Wisconsin taxable income.

(4)   Exempt securities. Interest and dividends payable on the following securities shall be exempt from the Wisconsin income tax on individuals and fiduciaries:

(a) Exempt state, municipal and other government securities.

1. District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to s. 103 of the internal revenue code.

2. Higher education bonds issued by the state of Wisconsin, s. 71.05 (6) (a) 1. , Stats.

3. Public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to s. 103 of the internal revenue code.

4. Public housing authority bonds issued by municipalities located in Wisconsin, s. 66.1201 (14) (a) , Stats.

5. Redevelopment authority bonds issued by municipalities located in Wisconsin, s. 66.1333 (5) (a) 4. c. , Stats.

6. Stripped general obligation bond certificates attributable to certain District of Columbia general obligation bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation under section 1286 of the internal revenue code and D.C. Code Ann. 47-332.

7. Virgin Island Housing Authority bonds issued on or prior to January 28, 1987, where the interest from the bonds qualifies for exemption from federal income taxation for a reason other than or in addition to section 103 of the internal revenue code.

8. WHEDA bonds issued on or prior to January 28, 1987, except business development revenue bonds, economic development revenue bonds and CHAP housing revenue bonds issued by WHEDA.

10. WHEDA bonds issued under s. 234.65 , Stats., to fund an economic development loan to finance construction, renovation or development of property that would be exempt under s. 70.11 (36) , Stats.

11. Wisconsin Housing Finance Authority bonds, 42 USC 1437i (b).

12. WHEDA bonds or notes issued under s. 234.08 or 234.61 , Stats., on or after January 1, 2004, if the bonds or notes are issued to fund multifamily affordable housing projects or elderly housing projects.

13. Bonds or notes issued by a local exposition district created under subch. II of ch. 229 , Stats.

14. Bonds or notes issued by a local professional baseball park district created under subch. III of ch. 229 , Stats.

15. Bonds or notes issued by a local professional football stadium district created under subch. IV of ch. 229 , Stats.

16. Bonds or notes issued by a local cultural arts district created under subch. V of ch. 229 , Stats.

17. Bonds or notes issued by the Wisconsin Aerospace Authority.

18. Wisconsin Health and Educational Facilities Authority bonds or notes issued under s. 231.03 (6) , Stats., on or after October 27, 2007, if the proceeds from the bonds or notes that are issued are used by a health facility, as defined in s. 231.01 (5) , Stats., to fund the acquisition of information technology hardware or software.

19. Bonds or notes issued by a commission created under s. 66.0304 , Stats., if any of the following applies:

a. The bonds or notes are used to fund multifamily affordable housing projects or elderly housing projects in this state, and WHEDA has the authority to issue its bonds or notes for the project being funded.

b. The bonds or notes are used by a health facility, as defined in s. 231.01 (5) , Stats., to fund the acquisition of information technology hardware or software, in this state, and the Wisconsin Health and Educational Facilities Authority has the authority to issue its bonds or notes for the project being funded.

c. The bonds or notes are issued to fund a redevelopment project in this state or a housing project in this state, and the authority exists for bonds or notes to be issued by an entity described under s. 66.1201 , 66.1333 , or 66.1335 , Stats.

20. WHEDA bonds or notes, if the bonds or notes are issued to provide loans to a public affairs network under s. 234.75 (4) , Stats.

21. WHEFA bonds or notes, if the bonds or notes are issued for the benefit of a person who is eligible to receive the proceeds of bonds or notes from another entity for the same purpose for which the bonds or notes are issued and the interest income received from the other bonds or notes is exempt from taxation under subch. I of ch. 71 , Stats.

(b) Exempt federal securities.

1. Armed Services Housing Mortgage Insurance debentures, 12 USC 1748b (f).

2. Bank for Cooperative debentures, 12 USC 2134 .

3. Bank repurchase agreements for U.S. Government treasury bills, notes and bonds, if interest is paid by the federal government directly to the taxpayer.

4. Commodity Credit Corporation bonds, 15 USC 713a-5 .

5. Commonwealth of Puerto Rico public improvement bonds, 48 USC 745 .

6. Farm Credit System Financial Assistance Corporation notes, bonds and debentures, 12 USC 2278b-10 (b).

7. Federal Deposit Insurance Corporation bonds, 12 USC 1825 .

8. Federal Farm Credit Banks Consolidated Systemwide Securities, 12 USC 2055 .

9. Federal Home Loan Bank bonds, debentures and notes, 12 USC 1433 .

10. Federal Housing Authority debentures, 12 USC 1710 (d) and 1747g (g).

11. Federal Intermediate Credit Bank debentures, 12 USC 2079 .

12. Federal Land Bank Association bonds, notes and debentures, 12 USC 2055 .

13. Federal Land Bank bonds, 12 USC 2055 .

14. Federal Reserve Bank dividends, 12 USC 531 .

15. Federal Savings and Loan Insurance Corporation bonds, 12 USC 1725 (e).

16. Financial Assistance Corporation bonds, notes and debentures, 12 USC 2278b .

17. Financing Corporation obligations, 12 USC 1441 .

18. General Insurance Fund debentures issued to acquire housing projects, 12 USC 1747g (g).

19. General Insurance Fund debentures issued under the War Housing Insurance Law, 12 USC 1739 (d).

20. General Services Administration Public Building Trust Participation certificates, 31 USC 3124 .

21. Guam bonds, 48 USC 1423a .

22. Industrial Development bonds of East Samoa, 48 USC 1670 .

23. Panama Canal Zone bonds, 31 USC 743-745 .

24. Production Credit Association debentures, 12 USC 2098 .

25. Proprietary zero-coupon certificates, 31 USC 3124 .

26. Puerto Rico Aqueduct and Sewer Authority revenue bonds, 48 USC 745 .

27. Puerto Rico Electric Power Authority electric revenue bonds, 48 USC 745 .

28. Puerto Rico Electric Power Authority power revenue bonds, 48 USC 745 .

29. Puerto Rico Highway Authority revenue bonds, 48 USC 745 .

30. Puerto Rico Industrial Development Company bonds, 48 USC 745 .

31. Puerto Rico Municipal Finance Agency 1974 Series A bonds, 48 USC 745 .

32. Puerto Rico Ports Authority revenue bonds, 48 USC 745 .

33. Puerto Rico Public Buildings Authority public education and health facility bonds, 48 USC 745 .

34. Puerto Rico Public Buildings Authority revenue bonds, 48 USC 745 .

35. Puerto Rico Telephone Authority revenue bonds, 48 USC 745 .

36. Puerto Rico Water Resource Authority Series B debentures, 48 USC 745 .

37. Resolution Funding Corporation bonds, 12 USC 1441b (f) (7).

38. Student Loan Marketing Association obligations, 20 USC 1087-21 .

39. Tennessee Valley Authority bonds, 16 USC 831n-4 (d).

40. Territory of Hawaii bonds.

41. Territory of Puerto Rico bonds, 48 USC 745 .

42. United States Postal Service bonds, 39 USC 2005 .

43. United States savings bonds, 31 USC 3124 .

44. United States Treasury bills and notes, 31 USC 3124 .

45. University of Puerto Rico university system revenue bonds, 48 USC 745 .

46. Virgin Islands general obligation bonds, 48 USC 1574 (b) (ii) (A).

47. Virgin Islands Public Improvement bonds, 48 USC 1574 (b) (i).

(5)   Taxable securities. Interest and dividends payable on the following securities shall be subject to the Wisconsin income tax on individuals and fiduciaries:

(a) Taxable state and municipal government securities.

1. District of Columbia Development Land Agency bonds, 42 USC 1452 .

2. District of Columbia general obligation bonds issued after January 28, 1987, D.C. Code 47-33.

3. Municipal bonds.

4. Public housing agency bonds issued after January 28, 1987, and by agencies located outside Wisconsin. Public housing agency bonds issued on or prior to January 28, 1987, by agencies located outside Wisconsin where the interest from the bonds qualifies for exemption from federal income taxation solely because of section 103 of the internal revenue code.

5. Robert F. Kennedy Stadium bonds, D.C. Code 2-1720 et seq.

6. Transit bonds of the Washington Metropolitan Area Transit Authority.

7. Wisconsin Health Education Assistance Loan revenue obligation bonds, s. 39.374 , Stats.

8. WHEDA bonds issued after January 28, 1987, and all business development revenue bonds, economic development revenue bonds and CHAP housing revenue bonds issued by WHEDA, regardless of when issued, unless specifically exempt by law, ch. 234 , Stats.

(b) Other taxable securities.

1. Asian Development Bank bonds, 22 USC 290i-9 .

2. College Construction Loan Insurance Association obligations, 20 USC 1132 .

3. Environmental Financing Authority obligations, 33 USC 1281 .

4. Export-Import Bank of the United States debentures, 12 USC 635 .

5. Farmer's Home Administration insured notes, 7 USC 1928 and 1929 .

6. Federal Assets Financing Trust participation certificates, 12 USC 1717 (c).

7. Federal Financing Bank bonds, 12 USC 2288 .

8. Federal Home Loan Bank dividends, 12 USC 1426 and 1436 .

9. Federal Home Loan Mortgage Corporation obligations, 12 USC 1455 .

10. Federal National Mortgage Association certificates, 12 USC 1718 .

11. Federal National Mortgage Association dividends, 12 USC 1719 .

12. Government National Mortgage Association, or Ginnie Mae, bonds, 12 USC 1720 and 1721 .

13. HUD/New Communities Program obligations, 42 USC 4514 .

14. Insured Merchant Marine bonds, 46 USC 1273 .

15. Inter-American Development Bank bonds, 22 USC 283 .

16. Interest paid on deposits in any federal bank or agency.

17. International Bank for Reconstruction and Development bonds, also known as World Bank bonds, 22 USC 286 .

18. Rural Telephone debentures, 7 USC 947 (a).

19. Small Business Administration notes, 15 USC 633 .

20. Small Business Investment Company debentures, 15 USC 683 and 687 .

21. Tennessee Valley Authority bonds, 16 USC 831n-3 .

22. Virgin Islands Housing Authority bonds issued after January 28, 1987, 48 USC 1408 (a).

23. World Bank bonds, also known as International Bank for Reconstruction and Development bonds, 22 USC 286 .

History: Cr. Register, August, 1976, No. 248 , eff. 9-1-76; emerg. cr. (1) (g) to (i), am. (2) (intro.), r. (2) (b), (h) and (j), eff. 7-31-87; r. and recr. Register, April, 1988, No. 388 , eff. 5-1-88; emerg. am. (3) (intro.) and (c), cr. (3) (g), r. and recr. (4) (b), eff. 1-1-89; am. (2) (intro.), (3) (intro.), (c), (f), (4) (intro.) and (b), cr. (4) (c) to (f), Register, August, 1989, No. 404 , eff. 9-28-89; cr. (1) (a), (b), (f), (g), (i), (q), (r) and (v), (2) (a), (d), (f), (g), (m), (o), (p) to (u), (w), (zh), (zq) and (zr), (4) (b) and (e); renum. (1) (a) to (n), (2) (a) to (zb), (4) (a), (b), (d) and (e) to be (1) (c) to (e), (h), (j) to (p), (s) to (u), (2) (b), (c), (e), (h) to (l), (n), (v), (x) to (zd), (zf), (ze), (zg), (zi) to (zp), (4) (d), (h), (g) and (a) and am. (1) (p), Register, June, 1991, No. 426 , eff. 7-1-91; r. and recr. Register, January, 1994, No. 457 , eff. 2-1-94; corrections in (4) (a) 4. and 5. made under s. 13.93 (2m) (b) 7., Stats., Register October 2002 No. 562 ; CR 12-011 : r. (4) (a) 9., cr. (4) (a) 12. to 20. Register July 2012 No. 679 , eff. 8-1-12; CR 14-005 : cr. (2) (e), (4) (a) 21. Register August 2014 No. 704 , eff. 9-1-14.

Note

Information regarding the income tax status of interest and dividends received from securities not listed in this section may be obtained by writing to Wisconsin Department of Revenue, Technical Services Staff, P.O. Box 8933, Madison, WI 53708-8933. Microsoft Windows NT 6.1.7601 Service Pack 1 Section 71.05 (1) (a) 1., 1985 Stats., was amended by 1987 Wis. Act 27 , to provide for the addition to federal adjusted gross income, of any interest not included in federal adjusted gross income which is not specifically exempted from state taxation. This change applies only to securities issued after January 28, 1987. Prior to enactment of 1987 Wis. Act 27 , the addition applied only to interest excluded from federal adjusted gross income solely by s. 103 of the internal revenue code. Section 71.05 (1) (a) 1., 1985 Stats., was renumbered s. 71.05 (6) (a) 1., Stats., by 1987 Wis. Act 312 , effective January 1, 1989. Microsoft Windows NT 6.1.7601 Service Pack 1 Stripped general obligation bond certificates meeting the criteria of subd. 6. include Stripped Tax-Exempt Participations, or`STEPS.' Microsoft Windows NT 6.1.7601 Service Pack 1 Under par. (a), interest and dividends payable on certain securities issued on or before January 28, 1987, is exempt from Wisconsin income tax. This is because prior to enactment of 1987 Wis. Act 27 , which amended s. 71.05 (1) (a) 1., 1985 Stats., effective with securities issued after January 28, 1987, no modification was provided to add to federal adjusted gross income interest and dividends which were excludable from federal adjusted gross income for any reason other than or in addition to s. 103 of the internal revenue code. Section 71.05 (1) (a) 1., 1985 Stats., was renumbered s. 71.05 (6) (a) 1., Stats., by 1987 Wis. Act 312 , effective January 1, 1989. Microsoft Windows NT 6.1.7601 Service Pack 1 Proprietary zero-coupon certificates include CATS, TIGRs, Cougars, ETRs, Lions, STARs, Zebras, etc. Microsoft Windows NT 6.1.7601 Service Pack 1 In 1968, the Federal National Mortgage Association became 2 separate corporations. One corporation retained the original name and the other is known as the Government National Mortgage Association. Microsoft Windows NT 6.1.7601 Service Pack 1 This section interprets s. 71.05 (6) (a) 1. and (b) 1. , Stats. Microsoft Windows NT 6.1.7601 Service Pack 1