The Highest Applicable Tax Rates For Estimated Payments Are 7.75 And 7.9% Sheet printable pdf download

The Highest Applicable Tax Rates

for Estimated Payments are 7.75

and 7.9%

Section 71.775(2), Wis. Stats., provides for the withholding tax rates

applicable to income distributable to a nonresident partner, member,

shareholder, or beneficiary. For an individual, estate, or trust, the

applicable withholding tax rate is the highest tax rate for a single

individual for the taxable year under s. 71.06, Stats., or 7.75%. For a

partnership, limited liability company, or corporation, the applicable

withholding tax rate is the highest tax rate for the taxable year under

s. 71.27, Stats., or 7.9%.

The 2009 Wisconsin Act 28 changed the highest tax rate applicable to

a single individual (and thus to pass-through entities) from 6.75 to

7.75%. Act 28 also made it a requirement for pass-through entities to

make estimated quarterly withholding tax payments. Taxpayers need

to be aware that a PW-1 and associated quarterly estimated

withholding tax payments are required irrespective of whether a 1CNS

or 1CNP is filed.

For taxable years beginning prior to January 1, 2005, Form CN-ES,

Composite Estimated Tax Voucher, was a convenient vehicle for

making estimated tax payments on Wisconsin income allocable to

nonresident partners or shareholders. The 2005 Wisconsin Act 25

created sec. 71.775, Wis. Stats., effective for taxable years beginning

on or after January 1, 2005. The new section required pass-through

entities to pay a withholding tax on income allocable to nonresident

partners, members, shareholders, or beneficiaries. Thus, the CN-ES

voucher was discontinued (as reported on

Wisconsin Tax Bulletin 148,

18) and quarterly withholding payments were not required (as

reported on

Wisconsin Tax Bulletin 150, p.

8). The PW-1, Nonresident

Income or Franchise Tax Withholding on Pass-Through Entity Income,

replaced the composite return filers' obligation to make quarterly

estimated tax payments (as reported on

Wisconsin Tax Bulletin 151,

4).

Changes made by 2009 Wisconsin Act 28, enacted on June 29, 2009,

now require pass-through entities to make quarterly estimated

withholding tax payments. The estimated quarterly withholding tax

payments for the entire taxable year beginning on or after January 1,

2009, are based on the new 7.75% tax rate. Additional details on this

change can be found in

Wisconsin Tax Bulletin 162, p.

12. Therefore,

the 7.75% rate applies to the entire taxable year period. To address

situations where pass-through entities had already made payments

based on the old 6.75% rate, sec. 71.775(4)(L), Wis. Stats., provides

for transitional "catching up" provisions. The transitional provisions

allow pass-through entities to make up for the difference in payment

between the old and new rates. Additional details on this transitional

provision can be found in

Wisconsin Tax Bulletin 162, p.

31-32.

Last updated December 10, 2009

The Highest Applicable Tax Rates For Estimated Payments Are 7.75 And 7.9% Sheet

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