2009 Wisconsin Act 2

71.47 (4) (ad) 1. Except as provided in subds. 2. and 3., any corporation may credit against taxes otherwise due under this chapter an amount equal to 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (d), (df), and 1. and 2., (dh) 1., 2., and 3., (dj) 1., and (dk) 1. Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

2,193 Section 193. 71.47 (4) (ad) 2. of the statutes is amended to read:

71.47 (4) (ad) 2. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d), (df) 1. and 2., (dh) 1., 2., and 3., (dj) 1., and (dk) 1. Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

2,194 Section 194. 71.47 (4) (ad) 3. of the statutes is amended to read:

71.47 (4) (ad) 3. For taxable years beginning after June 30, 2007, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to the design and manufacturing of energy efficient lighting systems, building automation and control systems, or automotive batteries for use in hybrid-electric vehicles, that reduce the demand for natural gas or electricity or improve the efficiency of its use, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d), (df) 1. and 2., (dh) 1., 2., and 3., (dj) 1., and (dk) 1. Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

2,195 Section 195. 71.47 (4) (am) of the statutes is amended to read:

71.47 (4) (am) Development zone additional research credit. In addition to the credit under par. (ad), any corporation may credit against taxes otherwise due under this chapter an amount equal to 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" include only expenses incurred by the claimant in a development zone under subch. VI of ch. 560, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation and except that "qualified research expenses" do not include compensation used in computing the credit under sub. (1dj) nor research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, in a development zone, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2., (d), (df), and 1. and 2., (dh) 1., 2., and 3., (dj) 1., and (dk) 1. and research expenses used in calculating the base amount include research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), in a development zone, if the claimant submits with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.765 (3) and a statement from the department of commerce verifying the claimant's qualified research expenses for research conducted exclusively in a development zone. The rules under s. 73.03 (35) apply to the credit under this paragraph. The rules under sub. (1di) (f) and (g) as they apply to the credit under that subsection apply to claims under this paragraph. Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph. No credit may be claimed under this paragraph for taxable years that begin on January 1, 1998, or thereafter. Credits under this paragraph for taxable years that begin before January 1, 1998, may be carried forward to taxable years that begin on January 1, 1998, or thereafter.

2,196 Section 196. 71.47 (5b) (c) 1. of the statutes is repealed.

2,197 Section 197. 71.47 (5b) (c) 2. of the statutes is renumbered 71.47 (5b) (c).

2,198 Section 198. 71.47 (5e) (b) of the statutes is amended to read:

71.47 (5e) (b) Filing claims. Subject to the limitations provided in this subsection and subject to 2005 Wisconsin Act 479, section 17, beginning in the first taxable year following the taxable year in which the claimant claims an exemption a deduction under s. 77.54 (48) 77.585 (9), a claimant may claim as a credit against the taxes imposed under s. 71.43, up to the amount of those taxes, in each taxable year for 2 years, the amount of sales and use tax certified by the department of commerce that resulted from the claimant claimed as an exemption claiming a deduction under s. 77.54 (48) 77.585 (9).

2,199 Section 199. 71.47 (5e) (c) 1. of the statutes is amended to read:

71.47 (5e) (c) 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48) 77.585 (9).

2,200 Section 200. 71.47 (5e) (c) 3. of the statutes is amended to read:

71.47 (5e) (c) 3. The total amount of the credits and exemptions the sales and use tax resulting from the deductions claimed under s. 77.585 (9) that may be claimed by all claimants under this subsection and ss. 71.07 (5e), 71.28 (5e), and 77.54 (48) 77.585 (9) is $7,500,000, as determined by the department of commerce.

2,201 Section 201. 71.49 (1) (em) of the statutes is renumbered 71.49 (1) (eh).

2,202 Section 202. 71.49 (1) (ema) of the statutes is created to read:

71.49 (1) (ema) Economic development tax credit under s. 71.47 (1dy).

2,203 Section 203. 71.49 (1) (emb) of the statutes is renumbered 71.49 (1) (ei).

2,204 Section 204. 71.49 (1) (en) of the statutes is renumbered 71.49 (1) (ej).

2,205 Section 205. 71.49 (1) (eo) of the statutes is renumbered 71.49 (1) (ek).

2,206 Section 206. 71.49 (1) (eom) of the statutes is renumbered 71.49 (1) (eL).

2,207 Section 207. 71.49 (1) (f) of the statutes is amended to read:

71.49 (1) (f) The total of farmers' drought property tax credit under s. 71.47 (1fd), farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.47 (2m), dairy manufacturing facility investment credit under s. 71.47 (3p), meat processing facility investment credit under s. 71.47 (3r), enterprise zone jobs credit under s. 71.47 (3w), film production services credit under s. 71.47 (5f) (b) 2., and estimated tax payments under s. 71.48.

2,208 Section 208. 71.80 (1) (b) of the statutes is amended to read:

71.80 (1) (b) In any case of 2 or more organizations, trades or businesses (whether or not incorporated, whether or not organized in the United States and, whether or not affiliated, and whether or not unitary) owned or controlled directly or indirectly by the same interests, the secretary or the secretary's delegate may distribute, apportion or allocate gross income, deductions, credits or allowances between or among such organizations, trades or businesses, if the secretary determines that such distribution, apportionment or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades or businesses. The authority granted under this subsection is in addition to, and not a limitation of or dependent on, the provisions of sub. (23) and ss. 71.05 (6) (a) 24. and (b) 45., 71.26 (2) (a) 7. and 8., 71.34 (1k) (j) and (k), and 71.45 (2) (a) 16. and 17.

2,209 Section 209. 71.80 (1m) of the statutes is created to read:

71.80 (1m) Transactions without economic substance. (a) If any person, directly or indirectly, engages in a transaction or series of transactions without economic substance to create a loss or to reduce taxable income or to increase credits allowed in determining Wisconsin tax, the department shall determine the amount of a taxpayer's taxable income or tax so as to reflect what would have been the taxpayer's taxable income or tax if not for the transaction or transactions without economic substance causing the reduction in taxable income or tax.

(b) A transaction has economic substance only if the taxpayer shows both of the following:

1. The transaction changes the taxpayer's economic position in a meaningful way, apart from federal, state, local, and foreign tax effects.

2. The taxpayer has a substantial nontax purpose for entering into the transaction and the transaction is a reasonable means of accomplishing the substantial nontax purpose. A transaction has a substantial nontax purpose if it has substantial potential for profit, disregarding any tax effects.

(c) With respect to transactions between members of a controlled group as defined in section 267 (f) (1) of the Internal Revenue Code, such transactions shall be presumed to lack economic substance and the taxpayer shall bear the burden of establishing by clear and convincing evidence that a transaction or a series of transactions between the taxpayer and one or more members of the controlled group has economic substance.

2,210 Section 210. 71.80 (23) (a) (intro.) of the statutes is amended to read:

71.80 (23) (a) (intro.) The deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall be allowed for any interest expenses or, rental expenses, intangible expenses, or management fees described in ss. 71.05 (6) (a) 24., 71.26 (2) (a) 7., 71.34 (1k) (j), or 71.45 (2) (a) 16. if any of the following applies to the interest expenses or, rental expenses, intangible expenses, or management fees:

2,211 Section 211. 71.80 (23) (a) 1. of the statutes is amended to read:

71.80 (23) (a) 1. The related entity to which the taxpayer paid, accrued, or incurred the interest expenses or , rental expenses, intangible expenses, or management fees during the taxable year directly or indirectly paid, accrued, or incurred such amounts in the same taxable year to a person who is not a related entity or the related entity to which the taxpayer paid, accrued, or incurred such expenses or fees is a holding company or a direct or indirect subsidiary of a holding company, as defined in 12 USC 1841 (a) or (l) or 12 USC 1467a (a) (1) (D), not including any entity that is organized under the laws of another jurisdiction and that primarily holds and manages investments of a bank, subsidiary, or affiliate. For purposes of this subdivision, "interest" does not include interest that is paid in connection with any debt that is incurred to acquire the taxpayer's assets or stock under section 368 of the Internal Revenue Code. If a portion of such an interest expense or, rental expense, intangible expense, or management fee is paid, accrued, or incurred in the same taxable year to a person who is not a related entity, that portion shall be allowed as a deduction to the taxpayer.

2,212 Section 212. 71.80 (23) (a) 2. of the statutes is amended to read:

71.80 (23) (a) 2. The related entity was subject to tax on, or measured by, its net income or receipts in this state or any state, U.S. possession, or foreign country; the related entity's tax base in such state, U.S. possession, or foreign country included the income received from the taxpayer for the interest expenses or, rental expenses, intangible expenses, or management fees; the related entity's aggregate effective tax rate applied to such income or receipts was at least 80 percent of the taxpayer's aggregate effective tax rate; and the related entity is not a real estate investment trust under section 856 of the Internal Revenue Code, other than a qualified real estate investment trust. For purposes of this subdivision, "any state, U.S. possession, or foreign country" does not include any state, U.S. possession, or foreign country under the laws of which the taxpayer files with the related entity, or the related entity files with another entity, a combined income tax report or return, a consolidated income tax report or return, or any other report or return that is due because of the imposition of a tax that is measured on or by income or receipts, if the report or return results in eliminating the tax effects of transactions, directly or indirectly, between either the taxpayer and the related entity or between the related entity and another entity.

2,213 Section 213. 71.80 (23) (a) 3. of the statutes is amended to read:

71.80 (23) (a) 3. The taxpayer establishes that the transaction satisfies any other conditions that the department considers relevant, based on the facts and circumstances, to determine that the primary motivation for the transaction was one or more business purposes other than the avoidance or reduction of state income or franchise taxes; that the transaction changed the economic position of the taxpayer in a meaningful way apart from tax effects; and that the interest expenses or, rental expenses, intangible expenses, or management fees were paid, accrued, or incurred using terms that reflect an arm's-length relationship.

2,214 Section 214. 71.80 (23) (b) of the statutes is amended to read:

71.80 (23) (b) Notwithstanding par. (a), the deductions provided under ss. 71.05 (6) (b) 45., 71.26 (2) (a) 8., 71.34 (1k) (k), and 71.45 (2) (a) 17. shall not be allowed for any interest expenses or, rental expenses, intangible expenses, or management fees that are directly or indirectly paid, accrued, or incurred to, or in connection directly or indirectly with one or more direct or indirect transactions with, one or more related entities, if the aggregate amount paid, accrued, or incurred for those related entity transactions is not disclosed on a separate form prescribed by the department in the manner prescribed by the department.

2,215 Section 215. 73.03 (28e) of the statutes is created to read:

73.03 (28e) To participate as a member state of the streamlined sales tax governing board which administers the agreement, as defined in s. 77.65 (2) (a), and includes having the governing board enter into contracts that are necessary to implement the agreement on behalf of the member states, and to allocate a portion of the amount collected under ch. 77 through the agreement to the appropriation under s. 20.566 (1) (ho) to pay the dues necessary to participate in the governing board. The department shall allocate the remainder of such collections to the general fund.

2,216 Section 216. 73.03 (50) (d) of the statutes is amended to read:

73.03 (50) (d) In the case of a sole proprietor, signs the form or, in the case of other persons, has an individual who is authorized to act on behalf of the person sign the form, or, in the case of a single-owner entity that is disregarded as a separate entity under section 7701 of the Internal Revenue Code, the person is the owner. Any person who may register under this subsection may designate an agent, as defined in s. 77.524 (1) (ag), to register with the department under this subsection in the manner prescribed by the department. In this paragraph, "sign" has the meaning given in s. 77.51 (17r).

2,217 Section 217. 73.03 (50b) of the statutes is created to read:

73.03 (50b) To waive the fee established under sub. (50) for applying for and renewing the business tax registration certificate, if the person who is applying for or renewing the certificate is not required for purposes of ch. 77 to hold such a certificate.

2,218 Section 218. 73.03 (61) of the statutes is created to read:

73.03 (61) To do all of the following related to the Uniform Sales and Use Tax Administration Act:

(a) Certify compliance with the agreement, as defined in s. 77.65 (2) (a).

(b) Pursuant to the agreement, as defined in s. 77.65 (2) (a), certify certified service providers, as defined in s. 77.51 (1g), and certified automated systems, as defined in s. 77.524 (1) (am).

(c) Consistent with the agreement, as defined in s. 77.65 (2) (a), establish performance standards and eligibility criteria for a seller that sells tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or taxable services in at least 5 states that are signatories to the agreement, as defined in s. 77.65 (2) (a); that has total annual sales revenue of at least $500,000,000; that has a proprietary system that calculates the amount of tax owed to each taxing jurisdiction in which the seller sells tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d) or taxable services; and that has entered into a performance agreement with the states that are signatories to the agreement, as defined in s. 77.65 (2) (a). For purposes of this paragraph, "seller" includes an affiliated group of sellers using the same proprietary system to calculate the amount of tax owed in each taxing jurisdiction in which the sellers sell tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or taxable services.

(d) Issue a tax identification number to a person who claims an exemption under subch. III or V of ch. 77 and who is not required to register with the department for the purposes of subch. III or V of ch. 77 and establish procedures for the registration of such a person.

(e) Maintain a database that is accessible to sellers and certified service providers, as defined in s. 77.51 (1g), that indicates whether items defined in accordance with the agreement, as defined in s. 77.65 (2) (a), are taxable or nontaxable.

(f) Maintain a database that is accessible to sellers and certified service providers, as defined in s. 77.51 (1g), and available in a downloadable format approved by the governing board of the agreement, as defined in s. 77.65 (2) (a), that indicates tax rates, taxing jurisdiction boundaries, and zip code or address assignments related to the administration of taxes imposed under subchs. III and V of ch. 77. The database shall be provided at no cost and be available to sellers and certified service providers, as defined in s. 77.51 (1g), no later than the first day of the month prior to the first day of the calendar quarter.

(g) Set forth the information that the seller shall provide to the department for tax exemptions claimed by purchasers and establish the manner in which a seller shall provide such information to the department.

(h) Provide monetary allowances, in addition to the retailer's discount provided under s. 77.61 (4) (c), to certified service providers, as defined in s. 77.51 (1g), and sellers that use certified automated systems, as defined in s. 77.524 (1) (am), or proprietary systems, pursuant to the agreement, as defined in s. 77.65 (2) (a).

2,219 Section 219. 73.03 (63) of the statutes is amended to read:

73.03 (63) Notwithstanding the amount limitations specified under ss. 71.07 (5b) (c) 1. and (5d) (c) 1., 71.28 (5b) (c) 1., 71.47 (5b) (c) 1., and 560.205 (3) (d), in consultation with the department of commerce, to carry forward to subsequent taxable years unclaimed credit amounts of the early stage seed investment credits under ss. 71.07 (5b), 71.28 (5b), and 71.47 (5b), and 76.638 and the angel investment credit under s. 71.07 (5d). Annually, no later than July 1, the department of commerce shall submit to the department of revenue its recommendations for the carry forward of credit amounts as provided under this subsection.

2,220 Section 220. 73.0301 (1) (d) 6. of the statutes is amended to read:

73.0301 (1) (d) 6. A license or certificate of registration issued by the department of financial institutions, or a division of it, under ss. 138.09, 138.12, 217.06, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, 224.725, 224.93 or under subch. IV of ch. 551.

2,221 Section 221. 76.07 (4g) (b) 8. of the statutes is amended to read:

76.07 (4g) (b) 8. Determine transport-related revenue by adding public service revenue allocated to this state on the basis of routes for which the company is authorized to receive subsidy payments, mutual aid allocated to this state on the basis of the ratio of transport revenues allocated to this state to transport revenues everywhere in the previous year, in-flight sales allocated to this state as they are allocated under s. 77.51 (14r) 77.522 and all other transport-related revenues from sales made in this state.

2,222 Section 222. 76.637 of the statutes is created to read:

76.637 Economic development credit. (1) Definition. In this section, "claimant" means an insurer who files a claim under this section and is certified under s. 560.701 (2) and authorized to claim tax benefits under s. 560.703.

(2) Filing claims. Subject to the limitations under this section and ss. 560.701 to 560.706, for taxable years beginning after December 31, 2008, a claimant may claim as a credit against the fees due under s. 76.60, 76.63, 76.65, 76.66, or 76.67 the amount authorized for the claimant under s. 560.703.

(3) Limitations. No credit may be allowed under this section unless the insurer includes with the insurer's annual return under s. 76.64 a copy of the claimant's certification under s. 560.701 (2) and a copy of the claimant's notice of eligibility to receive tax benefits under s. 560.703 (3).

(4) Administration. If an insurer's certification is revoked under s. 560.705, or if an insurer becomes ineligible for tax benefits under s. 560.702, the insurer may not claim credits under this section for the taxable year that includes the day on which the certification is revoked; the taxable year that includes the day on which the insurer becomes ineligible for tax benefits; or succeeding taxable years and the insurer may not carry over unused credits from previous years to offset the fees imposed under ss. 76.60, 76.63, 76.65, 76.66, or 76.67 for the taxable year that includes the day on which certification is revoked; the taxable year that includes the day on which the insurer becomes ineligible for tax benefits; or succeeding taxable years.

2,223 Section 223. 76.638 of the statutes is created to read:

76.638 Early stage seed investment credit. (1) Definitions. In this section, "fund manager" means an investment fund manager certified under s. 560.205 (2).

(2) Filing claims. For taxable years beginning after December 31, 2008, subject to the limitations provided under this subsection and s. 560.205, an insurer may claim as a credit against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67, 25 percent of the insurer's investment paid to a fund manager that the fund manager invests in a business certified under s. 560.205 (1).

(3) Investment basis. The Wisconsin adjusted basis of any investment for which a credit is claimed under sub. (2) shall be reduced by the amount of the credit that is offset against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67.

(4) Carry-forward. If the credit under sub. (2) is not entirely offset against the fees under s. 76.60, 76.63, 76.65, 76.66, or 76.67 otherwise due, the unused balance may be carried forward and credited against those fees for the following 15 years to the extent that it is not offset by those fees otherwise due in all the years between the year in which the expense was made and the year in which the carry-forward credit is claimed.

2,224 Section 224. 76.67 (2) of the statutes is amended to read:

76.67 (2) If any domestic insurer is licensed to transact insurance business in another state, this state may not require similar insurers domiciled in that other state to pay taxes greater in the aggregate than the aggregate amount of taxes that a domestic insurer is required to pay to that other state for the same year less the credits under ss. 76.635, 76.636, and 76.655, except that the amount imposed shall not be less than the total of the amounts due under ss. 76.65 (2) and 601.93 and, if the insurer is subject to s. 76.60, 0.375% of its gross premiums, as calculated under s. 76.62, less offsets allowed under s. 646.51 (7) or under ss. 76.635, 76.636, 76.637, 76.638, and 76.655 against that total, and except that the amount imposed shall not be less than the amount due under s. 601.93.

2,225 Section 225. 77.51 (1) of the statutes is renumbered 77.51 (1fd) and amended to read:

77.51 (1fd) "Business" includes any activity engaged in by any person or caused to be engaged in by any person with the object of gain, benefit or advantage, either direct or indirect, and includes also the furnishing and distributing of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or taxable services for a consideration by social clubs and fraternal organizations to their members or others.

2,226 Section 226. 77.51 (1a) of the statutes is created to read:

77.51 (1a) (a) "Additional digital goods" means all of the following, if they are transferred electronically:

1. Greeting cards.

2. Finished artwork.

3. Periodicals.

4. Video or electronic games.

(b) For purposes of this subchapter, the sale of or the storage, use, or other consumption of a digital code is treated the same as the sale of or the storage, use, or other consumption of any additional digital goods for which the digital code relates.

2,227 Section 227. 77.51 (1b) of the statutes is created to read:

77.51 (1b) "Alcoholic beverage" means a beverage that is suitable for human consumption and that contains 0.5 percent or more of alcohol by volume.

2,228 Section 228. 77.51 (1ba) of the statutes is created to read:

77.51 (1ba) "Ancillary services" means services that are associated with or incidental to providing telecommunications services, including detailed telecommunications billing, directory assistance, vertical service, and voice mail services.