Offsetting Losses. The tax reduction outlined above was due to differences in the income tax laws between Wis- consin and other states. However, even if the tax laws of the two states were identical, income tax reductions could occur for certain taxpayers un- der reciprocity. As an example, assume that a Wisconsin resident has wage income of $50,000 earned in another state and a $10,000 farm or business loss in Wisconsin. For simplicity, as- sume that this taxpayer would be subject to an effective tax rate of 5% on income earned in ei- ther state. With reciprocity, after deducting the $10,000 loss, this individual would have a Wisconsin tax liability of $2,000 [($50,000 - $10,000) x 5%]. Without reciprocity, this taxpayer would pay a tax of $2,500 to the other state on the entire $50,000 earned in that state and no taxes would be paid to Wisconsin. Because the Wisconsin loss would not be considered in determining tax- able income in the other state and assuming the credit for taxes paid in other states is not refund- able, no offsetting tax reduction for the Wiscon- sin loss would be allowed. Thus, this hypothetical taxpayer receives a reduction of $500 under reci- procity even though the tax provisions of the oth- er state and Wisconsin are assumed to be identi- cal. Reciprocity Payment Agreement With Illinois Wisconsin has had an income tax reciprocity agreement with Illinois since 1973. A payment provision that applies to Illinois was enacted in 1997 Wisconsin Act 63 on April 1, 1998. Act 63 authorized Wisconsin's Secretary of the Depart- ment of Revenue (DOR) to enter into agreements with the State of Illinois specifying the reciproci- ty payment due date, conditions constituting de- linquency, interest rates, and the method of com- puting interest due on delinquent payments.
Offsetting Losses. The tax reduction outlined above was due to differ- ences in the income tax laws between Wisconsin and other states. However, even if the tax laws of the two states were identical, income tax reductions could occur for certain taxpayers under reciprocity. As an example, assume that a Minnesota resident has wage income of $50,000 earned in Wisconsin and a $10,000 farm or business loss in Minnesota. For simplicity, assume that this taxpayer would be subject to an effective tax rate of 5% on income earned in either state. With reciprocity, after deducting the $10,000 loss, this individual would have a Minnesota tax liability of $2,000 [($50,000 - $10,000) X 5%]. Without reciproc- ity, this taxpayer would pay a tax of $2,500 to Wiscon- sin on the entire $50,000 earned in this state and no taxes would be paid to Minnesota. Because the Minne- sota loss would not be considered in determining Wis- consin taxable income and the Minnesota credit for taxes paid in other states is not refundable, no offsetting tax reduction for the Minnesota loss would be allowed. Thus, this hypothetical taxpayer receives a reduction of $500 under reciprocity even though the tax provisions of Minnesota and Wisconsin are assumed to be identical. It should be noted, however, that if the situation de- scribed above were reversed, and the taxpayer was a Wisconsin resident who worked in Minnesota, the farm or business loss incurred in Wisconsin would be de- ductible under Minnesota's tax laws. Unlike Wiscon- sin, Minnesota permits losses incurred on out-of-state businesses to be deducted from wage income earned by nonresidents who work in that state. (Revised October, 2009)
Offsetting Losses. The tax reduction outlined above was due to differences in the income tax laws between Wis- consin and other states. However, even if the tax laws of the two states were identical, income tax reductions could occur for certain taxpayers under reciprocity. As an exampl e, assume that a Wiscon- sin resident has wage income of $45,000 earned in Minnesota and a $10,000 farm or business loss in Wisconsin. For simplicity, assume that this tax- payer would be subject to an effective tax rate of 5% on income earned in either state. With reciprocity, after deducting the $10,000 loss, this individual would have a Wisconsin tax liability of $1,750 [($45,000 - $10,000) X 5%]. With- out reciprocity, this taxpayer would pay a tax of $2,250 to Minnesota on the entire $45,000 earned in that state and no taxes woul d be paid to Wisconsin. Because the Wisconsin loss would not be consid- ered in determining Minnesota taxable income and the Wisconsin credit for taxe s paid in other states is not refundable, no offsetting tax reduction for the Wisconsin loss would be allowed. Thus, this hypo- thetical taxpayer receives a reduction of $500 under reciprocity even though th e tax provisions of Min- nesota and Wisconsin are assumed to be identical.
Offsetting Losses. Notwithstanding anything in this Agreement to the contrary, the amount of any Losses for which indemnification is provided under this Section 8 shall be reduced by (A) any related recoveries actually received by an Indemnified Party under insurance policies, and (B) any other related payments actually received by an Indemnified Party from third parties. 21 (j) Notwithstanding anything in this Agreement to the contrary, Group 1 shall not be entitled to indemnification under this Section 8 for any Losses related to the collection of an account receivable, unless and until Group 1 has (i) expended commercially reasonable efforts to collect such account receivable, and (ii) offered to assign such account receivable to TriSense. (k)
