SB63: Bill Text

LRB-1550/3

JK:jld:md

2009 - 2010 LEGISLATURE

2009 Senate BILL 63

February 18, 2009 - Introduced by Senators Lassa, Darling, Kreitlow, Coggs, Taylor, Plale, Harsdorf, Lazich, Hopper and Schultz, cosponsored by Representatives Fields, Zipperer, Hebl, Strachota, Sinicki, Ballweg, Davis, A. Ott and Nass. Referred to Committee on Economic Development.

SB63,1,4 An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a) 4., 71.34 (1k) (g), 71.45 (2) (a) 10. and 77.92 (4); and to create 71.07 (5r), 71.10 (4) (cd), 71.28 (5r), 71.30 (3) (cd), 71.47 (5r) and 71.49 (1) (cd) of the statutes; relating to: a postsecondary education tax credit for businesses.

Analysis by the Legislative Reference Bureau

This bill creates an income tax and franchise tax credit for businesses that pay tuition for an individual to attend a university, college, or technical college. Sole proprietorships, corporations, and insurers may claim the credit. Partnerships, limited liability companies, and tax-option corporations compute the credit but pass it on to the partners, members, and shareholders in proportion to their ownership interests. The credit is an amount equal to: 1) 25 percent of the tuition paid by a business for an individual to attend school, if the individual is enrolled in a course of instruction approved by the Educational Approval Board; and 2) 30 percent of the tuition paid by a business for an individual to attend school, if the individual is enrolled in a course of instruction that relates to a projected worker shortage in this state. The taxpayer claims the total amount of the tuition paid for the individual for the taxable year in which the individual graduates from the course of instruction. If the credit claimed by a business exceeds the business's tax liability, the state will not issue a refund check, but the business may carry forward any remaining credit to subsequent taxable years.

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:

SB63, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB63,2,7 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), (3h), (3n), (3p), (3s), (3t), (3w), (5e), (5f), (5h), (5i), (5j), and, (5k), and (5r) 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 (1k) (g).

SB63, s. 2 Section 2. 71.07 (5r) of the statutes is created to read:

SB63,2,10 71.07 (5r) Postsecondary education credit. (a) Definitions. In this subsection:

SB63,2,13 1. "Claimant" means a sole proprietor, a partner, a member of a limited liability company, or a shareholder of a tax-option corporation who files a claim under this subsection.

SB63,2,15 2. "Course of instruction" means a course of instruction, as defined in s. 38.50 (1) (c), that is approved by the educational approval board under s. 38.50.

SB63,2,16 3. "Family member" has the meaning given in s. 157.061 (7).

SB63,2,19 4. "Managing employee" means an individual who wholly or partially exercises operational or managerial control over, or who directly or indirectly conducts, the operation of the claimant's business.

SB63,2,21 5. "Paid or incurred" includes any amount paid by the claimant to reimburse an individual for the tuition that the individual paid or incurred.

SB63,3,1 6. "Qualified postsecondary institution" means all of the following:

SB63,3,4 a. A University of Wisconsin System institution, a technical college system institution, or a regionally accredited 4-year nonprofit college or university having its regional headquarters and principal place of business in this state.

SB63,3,6 b. A school approved under s. 38.50, if the delivery of education occurs in this state.

SB63,3,9 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 an amount equal to the following:

SB63,3,12 1. Twenty-five percent of the tuition that the claimant paid or incurred for an individual to participate in an education program of a qualified postsecondary institution, if the individual was enrolled in a course of instruction.

SB63,3,17 2. Thirty percent of the tuition that the claimant paid or incurred for an individual to participate in an education program of a qualified postsecondary institution, if the individual was enrolled in a course of instruction that relates to a projected worker shortage in this state, as determined by the local workforce development boards established under 29 USC 2832.

SB63,3,20 (c) Limitations. 1. No credit may be allowed under par. (b) unless the claimant certifies to the department of revenue that the claimant will not be reimbursed for any amount of tuition for which the claimant claims a credit under par. (b).

SB63,3,23 2. A claimant may not claim the credit under par. (b) for any tuition amounts that the claimant excluded under s. 71.05 (6) (b) 28. or under section 127 of the Internal Revenue Code.

SB63,4,3 3. A claimant may not claim the credit under par. (b) for any tuition amounts that the claimant paid or incurred for a family member of the claimant or for a family member of a managing employee unless all of the following apply:

SB63,4,7 a. The family member was employed an average of at least 20 hours per week as an employee of the claimant, or the claimant's business, during the one-year period prior to commencing participation in the education program in connection with which the claimant claims a credit under par. (b).

SB63,4,9 b. The family member is enrolled in a course of instruction that is substantially related to the claimant's business.

SB63,4,13 4. The claimant shall claim the credit for the taxable year in which the individual graduates from a course of instruction in an amount equal to the total amount the claimant paid or incurred under par. (b) for all taxable years in which the claimant paid or incurred such amounts related to that individual.

SB63,4,21 5. 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 tuition 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 interest.

SB63,4,23 (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.

SB63, s. 3 Section 3. 71.10 (4) (cd) of the statutes is created to read:

SB63,4,25 71.10 (4) (cd) Postsecondary education credit under s. 71.07 (5r).

SB63, s. 4 Section 4. 71.21 (4) of the statutes is amended to read:

SB63,5,5 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3h), (3n), (3p), (3s), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and, (5k), and (5r) and passed through to partners shall be added to the partnership's income.

SB63, s. 5 Section 5. 71.26 (2) (a) 4. of the statutes is amended to read:

SB63,5,12 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), (3h), (3n), (3p), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and, (5k), and (5r) 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 (1k) (g).

SB63, s. 6 Section 6. 71.28 (5r) of the statutes is created to read:

SB63,5,15 71.28 (5r) Postsecondary education credit. (a) Definitions. In this subsection:

SB63,5,16 1. "Claimant" means a corporation that files a claim under this subsection.

SB63,5,18 2. "Course of instruction" means a course of instruction, as defined in s. 38.50 (1) (c), that is approved by the educational approval board under s. 38.50.

SB63,5,19 3. "Family member" has the meaning given in s. 157.061 (7).

SB63,5,22 4. "Managing employee" means an individual who wholly or partially exercises operational or managerial control over, or who directly or indirectly conducts, the operation of the claimant's business.

SB63,5,24 5. "Paid or incurred" includes any amount paid by the claimant to reimburse an individual for the tuition that the individual paid or incurred.

SB63,5,25 6. "Qualified postsecondary institution" means all of the following:

SB63,6,3 a. A University of Wisconsin System institution, a technical college system institution, or a regionally accredited 4-year nonprofit college or university having its regional headquarters and principal place of business in this state.

SB63,6,5 b. A school approved under s. 38.50, if the delivery of education occurs in this state.