SB449: Bill Text

November 22, 2005 - Introduced by Senators Kanavas, Plale, Stepp and Roessler, cosponsored by Representatives Vos, Nischke, Owens, Townsend, Gunderson, Hahn and Musser. Referred to Committee on Job Creation, Economic Development and Consumer Affairs.

SB449,1,5 An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2) (a) 10. and 77.92 (4); and to create 71.07 (5e), 71.10 (4) (gwd), 71.28 (5e), 71.30 (3) (eor), 71.47 (5e), 71.49 (1) (eor) and 560.206 of the statutes; relating to: creating an income and franchise tax credit for eligible innovation projects and project facilities.

Analysis by the Legislative Reference Bureau

Under this bill, a person may claim an income and franchise tax credit that is equal to 20 percent of the costs that the person paid in the taxable year related to creating and operating a project facility or to creating and maintaining an eligible innovation project. The amount that a claimant may claim in any taxable year may not exceed $250,000, and the total amount of all claims in each year may not exceed $10,000,000. Under the bill, a project facility is any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the Department of Commerce. The bill defines an eligible innovation project as any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

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:

SB449, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB449,2,6 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b), and (5d), and (5e) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).

SB449, s. 2 Section 2. 71.07 (5e) of the statutes is created to read:

SB449,2,9 71.07 (5e) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB449,2,14 1. "Allowable innovation costs" means the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, improving, or equipping a project facility or eligible innovation project and the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB449,2,17 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB449,2,18 b. Site clearance and preparation.

SB449,2,19 c. Architectural, engineering, or legal services.

SB449,2,20 d. Research and development.

SB449,2,21 e. Computer software or hardware.

SB449,3,1 f. Product testing and other quality control activities.

SB449,3,2 g. Perfecting and marketing products.

SB449,3,3 h. Creating and protecting intellectual property.

SB449,3,5 2. "Claimant" means a person who is certified to receive tax credits under s. 560.206 and who files a claim under this subsection.

SB449,3,8 3. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB449,3,12 4. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB449,3,17 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.206, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of the tax, an amount that is equal to 20 percent of the allowable innovation costs paid by the claimant in the taxable year.

SB449,3,19 (c) Limitations. 1. The maximum amount of the credit that a claimant may claim under this subsection in a taxable year is $250,000.

SB449,3,21 2. The maximum amount of the credits that may be awarded under this subsection and ss. 71.28 (5e) and 71.47 (5e) in each year is $10,000,000.

SB449,4,4 3. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interests.

SB449,4,6 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB449, s. 3 Section 3. 71.10 (4) (gwd) of the statutes is created to read:

SB449,4,8 71.10 (4) (gwd) Innovation projects and facilities credit under s. 71.07 (5e).

SB449, s. 4 Section 4. 71.21 (4) of the statutes is amended to read:

SB449,4,12 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), and (5b), and (5e) and passed through to partners shall be added to the partnership's income.

SB449, s. 5 Section 5. 71.26 (2) (a) of the statutes is amended to read:

SB449,5,6 71.26 (2) (a) Corporations in general. The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c) 7., the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), (3n), (3t), and (5b), and (5e) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or other disposition of assets the gain from which would be wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and minus deductions, as computed under the Internal Revenue Code as modified under sub. (3), plus or minus, as appropriate, an amount equal to the difference between the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).

SB449, s. 6 Section 6. 71.28 (5e) of the statutes is created to read:

SB449,5,9 71.28 (5e) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB449,5,14 1. "Allowable innovation costs" means the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, improving, or equipping a project facility or eligible innovation project and the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB449,5,17 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB449,5,18 b. Site clearance and preparation.

SB449,5,19 c. Architectural, engineering, or legal services.

SB449,5,20 d. Research and development.

SB449,5,21 e. Computer software or hardware.

SB449,5,22 f. Product testing and other quality control activities.

SB449,5,23 g. Perfecting and marketing products.

SB449,5,24 h. Creating and protecting intellectual property.

SB449,6,2 2. "Claimant" means a person who is certified to receive tax credits under s. 560.206 and who files a claim under this subsection.

SB449,6,5 3. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB449,6,9 4. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB449,6,14 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.206, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of the tax, an amount that is equal to 20 percent of the allowable innovation costs paid by the claimant in the taxable year.

SB449,6,16 (c) Limitations. 1. The maximum amount of the credit that a claimant may claim under this subsection in a taxable year is $250,000.

SB449,6,18 2. The maximum amount of the credits that may be awarded under this subsection and ss. 71.07 (5e) and 71.47 (5e) in each year is $10,000,000.

SB449,7,2 3. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interests.

SB449,7,4 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB449, s. 7 Section 7. 71.30 (3) (eor) of the statutes is created to read:

SB449,7,6 71.30 (3) (eor) Innovation projects and facilities credit under s. 71.28 (5e).

SB449, s. 8 Section 8. 71.34 (1) (g) of the statutes is amended to read:

SB449,7,10 71.34 (1) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g), (3n), (3t), and (5b), and (5e) and passed through to shareholders.

SB449, s. 9 Section 9. 71.45 (2) (a) 10. of the statutes is amended to read:

SB449,7,17 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3n), and (5b), and (5e) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4), and (5).

SB449, s. 10 Section 10. 71.47 (5e) of the statutes is created to read:

SB449,7,20 71.47 (5e) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB449,7,25 1. "Allowable innovation costs" means the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, improving, or equipping a project facility or eligible innovation project and the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB449,8,3 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB449,8,4 b. Site clearance and preparation.

SB449,8,5 c. Architectural, engineering, or legal services.

SB449,8,6 d. Research and development.

SB449,8,7 e. Computer software or hardware.

SB449,8,8 f. Product testing and other quality control activities.

SB449,8,9 g. Perfecting and marketing products.

SB449,8,10 h. Creating and protecting intellectual property.

SB449,8,12 2. "Claimant" means a person who is certified to receive tax credits under s. 560.206 and who files a claim under this subsection.

SB449,8,15 3. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB449,8,19 4. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB449,8,24 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.206, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of the tax, an amount that is equal to 20 percent of the allowable innovation costs paid by the claimant in the taxable year.

SB449,9,2 (c) Limitations. 1. The maximum amount of the credit that a claimant may claim under this subsection in a taxable year is $250,000.

SB449,9,4 2. The maximum amount of the credits that may be awarded under this subsection and ss. 71.07 (5e) and 71.28 (5e) in each year is $10,000,000.

SB449,9,12 3. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interests.

SB449,9,14 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB449, s. 11 Section 11. 71.49 (1) (eor) of the statutes is created to read:

SB449,9,16 71.49 (1) (eor) Innovation projects and facilities credit under s. 71.47 (5e).

SB449, s. 12 Section 12. 77.92 (4) of the statutes is amended to read:

SB449,9,25 77.92 (4) "Net business income," with respect to a partnership, means taxable income as calculated under section 703 of the Internal Revenue Code; plus the items of income and gain under section 702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section 702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section 707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s), (3n), (3t), and (5b), and (5e); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain, loss, and deductions from farming. "Net business income," with respect to a natural person, estate, or trust, means profit from a trade or business for federal income tax purposes and includes net income derived as an employee as defined in section 3121 (d) (3) of the Internal Revenue Code.

SB449, s. 13 Section 13. 560.206 of the statutes is created to read:

SB449,10,16 560.206 Innovation projects and facilities program. (1) Innovation projects and facilities tax credits. The department shall implement a program to certify businesses for purposes of ss. 71.07 (5e), 71.28 (5e), and 71.47 (5e). A business desiring certification shall submit an application to the department in each taxable year for which the business desires certification. Unless otherwise provided under the rules of the department, a business may be certified under this subsection, and may maintain such certification, only if the business satisfies all of the following conditions:

SB449,10,17 (a) It conducts business in this state.

SB449,10,19 (b) At least 51 percent of the employees employed by the business are employed in this state.

SB449,10,22 (c) It is engaged in, or has committed to engage in, manufacturing, agriculture, or processing or assembling products and conducting research and development or developing a new product or business process.