1995 - 1996 LEGISLATURE
January 2, 1996 - Introduced by Representatives Brancel, Freese, Hahn, Otte,
Ainsworth, Harsdorf, Zukowski, Ziegelbauer, Foti, Skindrud, Musser,
Goetsch, Grothman, Schneiders, Klusman, Underheim, Olsen, Springer
and
Albers, cosponsored by Senators Fitzgerald, Schultz, Welch and Buettner.
Referred to Committee on Ways and Means.
AB761,1,8 1An Act to repeal 71.07 (10) (a), 71.28 (3) (d), 71.34 (1) (e), 71.365 (3) (b) and 71.47
2(3) (d); to renumber 71.07 (10) (b), 71.28 (3) (c), 71.365 (3) (a) and 71.47 (3) (c);
3to amend 71.05 (6) (a) 15., 71.21 (4), 71.28 (3) (b), 71.34 (1) (g) and 71.47 (3) (b);
4and to create 71.07 (3s), 71.10 (4) (de), 71.28 (3) (c) 2. to 6. and 71.47 (3) (c) 2.
5to 6. of the statutes; relating to: allowing individuals, shareholders in
6tax-option corporations and partners to claim the income tax and franchise tax
7credit for sales taxes and use taxes paid on fuel and electricity that are used in
8manufacturing.
Analysis by the Legislative Reference Bureau
Under current law, corporations, except tax-option corporations, may claim an
income tax or franchise tax credit for the sales tax and use tax that they pay on fuel
and electricity used in manufacturing. This bill extends that credit to the
shareholders of tax-option corporations, partners and individuals.For further
information see the state fiscal estimate, which will be printed as an appendix to this
bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB761, s. 1 9Section 1. 71.05 (6) (a) 15. of the statutes, as affected by 1995 Wisconsin Act
1027
, is amended to read:
AB761,2,5
171.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
2(2di), (2dj), (2dL) and, (2ds) and (3s) and not passed through by a partnership, limited
3liability company or tax-option corporation that has added that amount to the
4partnership's, company's or tax-option corporation's income under s. 71.21 (4) or
571.34 (1) (g).
AB761, s. 2 6Section 2. 71.07 (3s) of the statutes is created to read:
AB761,2,77 71.07 (3s) Manufacturing sales tax credit. (a) In this subsection:
AB761,2,88 1. "Manufacturing" has the meaning given in s. 77.54 (6m).
AB761,2,129 2. "Sales and use tax under ch. 77 paid by the person" includes use taxes paid
10directly by the person and sales and use taxes paid by the person's supplier and
11passed on to the person whether separately stated on the invoice or included in the
12total price.
AB761,2,2113 (b) The tax imposed under s. 71.02 shall be reduced by an amount equal to the
14sales and use tax under ch. 77 paid by the person in such taxable year on fuel and
15electricity consumed in manufacturing tangible personal property in this state.
16Shareholders in a tax-option corporation and partners may claim the credit under
17this subsection, based on eligible sales and use taxes paid by the partnership or
18tax-option corporation, in proportion to the ownership interest of each partner or
19shareholder. The partnership or tax-option corporation shall calculate the amount
20of the credit which may be claimed by each partner or shareholder and shall provide
21that information to the partner or shareholder.
AB761,3,422 (c) 1. The credit under par. (b), including any credits carried over, may be offset
23only against the amount of the tax imposed upon or measured by the business
24operations of the claimant in which the fuel and electricity are consumed. If the
25credit computed is not entirely offset against taxes otherwise due, the unused

1balance shall be carried forward and credited against taxes otherwise due for the
2following 15 taxable years to the extent not offset by taxes otherwise due in all
3intervening years between the year in which the expense was incurred and the year
4in which the carry-forward credit is claimed.
AB761,3,75 2. For shareholders in a tax-option corporation, the credit may be offset only
6against the tax imposed on the shareholder's prorated share of the tax-option
7corporation's income.
AB761,3,98 3. For partners, the credit may be offset only against the tax imposed on the
9partner's distributive share of partnership income.
AB761,3,1210 4. If a tax-option corporation becomes liable for tax, the corporation may offset
11the credit against the tax due, with any remaining credit passing through to the
12shareholders.
AB761,3,1613 5. If a corporation that is not a tax-option corporation has a carry-over credit
14and becomes a tax-option corporation before the credit carried over is used, the
15unused portion of the credit may be used by the tax-option corporation's
16shareholders on a prorated basis.
AB761,3,2117 6. If the shareholders of a tax-option corporation have carry-over credits and
18the corporation becomes a corporation other than a tax-option corporation after the
19effective date of this subdivision .... [revisor inserts date], and before the credits
20carried over are used, the unused portion of the credits may be used by the
21corporation that is not a tax-option corporation.
AB761, s. 3 22Section 3. 71.07 (10) (a) of the statutes is repealed.
AB761, s. 4 23Section 4. 71.07 (10) (b) of the statutes is renumbered 71.07 (10).
AB761, s. 5 24Section 5. 71.10 (4) (de) of the statutes is created to read:
AB761,3,2525 71.10 (4) (de) The manufacturing sales tax credit under s. 71.07 (3s).
AB761, s. 6
1Section 6. 71.21 (4) of the statutes, as affected by 1995 Wisconsin Act 27, is
2amended to read:
AB761,4,53 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
4(2dj), (2dL) and, (2ds) and (3s) and passed through to partners or members shall be
5added to the partnership's or limited liability company's income.
AB761, s. 7 6Section 7. 71.28 (3) (b) of the statutes is amended to read:
AB761,4,167 71.28 (3) (b) The tax imposed upon or measured by corporation Wisconsin net
8income under s. 71.23 (1) or (2) shall be reduced by an amount equal to the sales and
9use tax under ch. 77 paid by the corporation in such taxable year on fuel and
10electricity consumed in manufacturing tangible personal property in this state.
11Shareholders of a tax-option corporation and partners may claim the credit under
12this subsection, based on eligible sales and use taxes paid by the tax-option
13corporation or partnership, in proportion to the ownership interest of each
14shareholder or partner. The tax-option corporation or partnership shall calculate
15the amount of the credit that may be claimed by each shareholder or partner and
16shall provide that information to the shareholder or partner.
AB761, s. 8 17Section 8. 71.28 (3) (c) of the statutes is renumbered 71.28 (3) (c) 1.
AB761, s. 9 18Section 9. 71.28 (3) (c) 2. to 6. of the statutes are created to read:
AB761,4,2119 71.28 (3) (c) 2. For shareholders in a tax-option corporation, the credit may be
20offset only against the tax imposed on the shareholder's prorated share of the
21tax-option corporation's income.
AB761,4,2322 3. For partners, the credit may be offset only against the tax imposed on the
23partner's distributive share of partnership income.
AB761,5,3
14. If a tax-option corporation becomes liable for tax, the corporation may offset
2the credit against the tax due, with any remaining credit passing through to the
3shareholders.
AB761,5,74 5. If a corporation that is not a tax-option corporation has a carry-over credit
5and becomes a tax-option corporation before the credit carried over is used, the
6unused portion of the credit may be used by the tax-option corporation's
7shareholders on a prorated basis.
AB761,5,128 6. If the shareholders of a tax-option corporation have carry-over credits and
9the corporation becomes a corporation other than a tax-option corporation after the
10effective date of this subdivision .... [revisor inserts date], and before the credits
11carried over are used, the unused portion of the credits may be used by the
12corporation that is not a tax-option corporation.
AB761, s. 10 13Section 10. 71.28 (3) (d) of the statutes is repealed.
AB761, s. 11 14Section 11. 71.34 (1) (e) of the statutes is repealed.
AB761, s. 12 15Section 12. 71.34 (1) (g) of the statutes, as affected by 1995 Wisconsin Act 27,
16is amended to read:
AB761,5,1917 71.34 (1) (g) An addition shall be made for credits computed by a tax-option
18corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL) and, (1ds) and (3s) and
19passed through to shareholders.
AB761, s. 13 20Section 13. 71.365 (3) (a) of the statutes is renumbered 71.365 (3).
AB761, s. 14 21Section 14. 71.365 (3) (b) of the statutes is repealed.
AB761, s. 15 22Section 15. 71.47 (3) (b) of the statutes is amended to read:
AB761,6,723 71.47 (3) (b) The tax imposed upon or measured by corporation Wisconsin net
24income under s. 71.43 (1) or (2) shall be reduced by an amount equal to the sales and
25use tax under ch. 77 paid by the corporation in such taxable year on fuel and

1electricity consumed in manufacturing tangible personal property in this state.
2Shareholders of a tax-option corporation and partners may claim the credit under
3this subsection, based on eligible sales and use taxes paid by the tax-option
4corporation or partnership, in proportion to the ownership interest of each
5shareholder or partner. The tax-option corporation or partnership shall calculate
6the amount of the credit that may be claimed by each shareholder or partner and
7shall provide that information to the shareholder or partner.
AB761, s. 16 8Section 16. 71.47 (3) (c) of the statutes is renumbered 71.47 (3) (c) 1.
AB761, s. 17 9Section 17. 71.47 (3) (c) 2. to 6. of the statutes are created to read:
AB761,6,1210 71.47 (3) (c) 2. For shareholders in a tax-option corporation, the credit may be
11offset only against the tax imposed on the shareholder's prorated share of the
12tax-option corporation's income.
AB761,6,1413 3. For partners, the credit may be offset only against the tax imposed on the
14partner's distributive share of partnership income.
AB761,6,1715 4. If a tax-option corporation becomes liable for tax, the corporation may offset
16the credit against the tax due, with any remaining credit passing through to the
17shareholders.
AB761,6,2118 5. If a corporation that is not a tax-option corporation has a carry-over credit
19and becomes a tax-option corporation before the credit carried over is used, the
20unused portion of the credit may be used by the tax-option corporation's
21shareholders on a prorated basis.
AB761,7,222 6. If the shareholders of a tax-option corporation have carry-over credits and
23the corporation becomes a corporation other than a tax-option corporation after the
24effective date of this subdivision .... [revisor inserts date], and before the credits

1carried over are used, the unused portion of the credits may be used by the
2corporation that is not a tax-option corporation.
AB761, s. 18 3Section 18. 71.47 (3) (d) of the statutes is repealed.
AB761, s. 19 4Section 19. Initial applicability.
AB761,7,6 5(1) This act first applies to taxable years beginning on the January 1 after
6publication.
AB761,7,77 (End)
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