Section 3.02. Pass-through entity withholding.

 

(1)   Purpose . This section provides additional guidance with respect to the treatment of withholding tax for pass-through entities.

(2)   Credit for nonresident entertainer, lottery, and pari-mutuel withholding . A pass-through entity may elect to allocate nonresident entertainer, lottery, and pari-mutuel withholding to its nonresident partners, members, shareholders, or beneficiaries, but only to the extent the income subject to withholding is allocated to those partners, members, shareholders, or beneficiaries. A pass-through entity may credit amounts withheld under ss. 71.64 (5) and 71.67 (4) and (5) , Stats., or amounts paid or deposited under s. 71.80 (15) (b) or (c) , Stats., against the withholding amounts required under s. 71.775 (2) , Stats., to such extent, in the manner and form prescribed by the department.

Example: Basement Rockers is a four-member rock band. Basement Rockers is a tax-option (S) corporation and its four rock stars are the corporation's shareholders. They are nonresidents of Wisconsin. The band plays in three different venues in Wisconsin during the taxable year and each venue pays the band $10,000. For Venue 1, neither a surety bond is filed nor cash deposited. The venue withholds 6% and immediately pays the amount withheld to the department. For Venue 2, a bond is not filed, cash is not deposited, and no amounts are withheld. For Venue 3, Basement Rockers files a surety bond for 6% of the total contract price. Basement Rockers may only elect to allocate to its shareholders the amounts for Venue 1 and Venue 3.

History: CR 10-095 : cr. Register November 2010 No. 659 , eff. 12-1-10.