LRB-2600/4
JK:cmh:jf
1999 - 2000 LEGISLATURE
June 24, 1999 - Introduced by Representatives Hoven, Huebsch, Ainsworth,
Spillner, Hasenohrl, Plouff, F. Lasee, Kaufert, Kelso, Plale, Jeskewitz,
Albers, Goetsch, Sykora, Waukau, Gunderson and Bock, cosponsored by
Senators Risser, Darling, Drzewiecki, Panzer, Schultz, Roessler, Robson,
Wirch and Clausing. Referred to Committee on Ways and Means.
AB393,1,5
1An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.10 (4) (i), 71.21 (4), 71.26
2(2) (a), 71.30 (3) (f), 71.34 (1) (g), 71.45 (2) (a) 10., 71.49 (1) (f) and 77.92 (4); and
3to create 71.07 (5d), 71.28 (5d) and 71.47 (5d) of the statutes;
relating to:
4income and franchise tax credits for a business to construct, equip and operate
5a day care center for the children of employes.
Analysis by the Legislative Reference Bureau
This bill creates an income tax and franchise tax credit for a corporation that
constructs and equips a day care center or pays a day care center to care for the
children of the corporation's employes during the employes' working hours. 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 50% of the amount paid by the corporation
during a taxable year to construct and equip a day care center that is owned and
operated by the corporation or an amount equal to 50% of the amount paid by the
corporation during a taxable year to a day care center to care for the children of the
corporation's employes during the employes' working hours. A corporation may also
claim a credit equal to 50% of the amount paid by the corporation to operate the
corporation's day care center for a taxable year, less any amount paid by the
corporation's employes to operate the corporation's day care center.
If the credit claimed by a corporation exceeds the corporation's tax liability, the
state will not issue a refund check, but the corporation may carry forward any
remaining credit to the next five taxable years. If a day care center that is
constructed and equipped by a corporation ceases its operation within five years from
the date that construction of the day care center was completed, the corporation must
pay back the credit received in proportion to the period of time that the day care
center operated.
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:
AB393, s. 1
1Section
1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB393,2,62
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dr), (2ds), (2dx)
and, (3s)
and (5d) and not passed through by a
4partnership, limited liability company or tax-option corporation that has added that
5amount to the partnership's, company's or tax-option corporation's income under s.
671.21 (4) or 71.34 (1) (g).
AB393, s. 2
7Section
2. 71.07 (5d) of the statutes is created to read:
AB393,2,98
71.07
(5d) Day care center credit. (a) In this subsection, "claimant" means
9a person who files a claim under this subsection.
AB393,2,1110
(b) A claimant may claim as a credit against the tax imposed under s. 71.02 any
11of the following:
AB393,2,1512
1. An amount equal to 50% of the amount paid or incurred by the claimant
13during the taxable year to construct and equip a licensed day care center under s.
1448.65, that is owned and operated by the claimant, to care for the children of the
15claimant's employes during the employes' working hours.
AB393,3,216
2. An amount equal to 50% of the amount paid by the claimant to operate the
17claimant's day care center under subd. 1. for the taxable year, less any amount paid
1by the claimant's employes to operate the claimant's day care center under subd. 1.
2for the taxable year.
AB393,3,63
3. An amount equal to 50% of the amount paid by the claimant during the
4taxable year to a licensed day care center under s. 48.65, other than a day care center
5under subd. 1., to provide care for the children of the claimant's employes during the
6employes' working hours.
AB393,3,97
(c) The amount of the credit under this subsection shall not exceed $50,000 in
8a taxable year for each claimant and the total amount of the credit under this
9subsection for all claimants shall not exceed $1,500,000 in a fiscal year.
AB393,3,1610
(d) No credit may be allowed under this subsection unless the claimant files an
11application with the department of revenue before the end of the taxable year in
12which amounts are paid or expenses are incurred under par. (b) and includes with
13that application a statement from the department of health and family services that
14verifies that the day care center under par. (b) is licensed under s. 48.65. No credit
15may be allowed under this subsection after the department of revenue has awarded
16the total amount of the credit for all claimants under par. (c).
AB393,3,1817
(e) Section 71.28 (4) (e), as it applies to the credit under s. 71.28 (4), applies to
18the credit under this subsection.
AB393,3,2419
(f) If a credit computed under this subsection is not entirely offset against
20income or franchise taxes otherwise due, the unused balance may be carried forward
21and credited against income or franchise taxes otherwise due for the following 5
22taxable years to the extent not offset by those taxes otherwise due in all intervening
23years between the year in which the expense was incurred and the year in which the
24carry-forward credit is claimed.
AB393,4,8
1(g) Partnerships, limited liability companies and tax-option corporations may
2not claim the credit under this subsection, but the eligibility for, and the amount of,
3the credit are based on the amount paid or incurred under par. (b). A partnership,
4limited liability company or tax-option corporation shall compute the amount of
5credit that each of its partners, members or shareholders may claim and shall
6provide that information to each of them. Partners, members of limited liability
7companies and shareholders of tax-option corporations may claim the credit in
8proportion to their ownership interest.
AB393,4,109
(h) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4),
10applies to the credit under this subsection.
AB393,4,1611
(i) Except as provided under par. (j), if the operation of a day care center under
12par. (b) 1. ceases within 5 years after the date on which the construction of the day
13care center is completed, a claimant who receives credits under par. (b) 1. and 2. for
14the construction and operation of such a day care center shall add to the claimant's
15liability for taxes imposed under s. 71.02 an amount equal to the total amount of the
16credits received under par. (b) 1. and 2. multiplied by the following percentage:
AB393,4,1817
1. If the operation of the day care center ceases during the first year after the
18date on which the construction of the day care center is completed, 100%.
AB393,4,2019
2. If the operation of the day care center ceases during the 2nd year after the
20date on which the construction of the day care center is completed, 80%.
AB393,4,2221
3. If the operation of the day care center ceases during the 3rd year after the
22date on which the construction of the day care center is completed, 60%.
AB393,4,2423
4. If the operation of the day care center ceases during the 4th year after the
24date on which the construction of the day care center is completed, 40%.
AB393,5,2
15. If the operation of the day care center ceases during the 5th year after the
2date on which the construction of the day care center is completed, 20%.
AB393,5,73
(j) Paragraph (i) does not apply to a claimant whose business ceases operation
4within 5 years after the date on which the construction of the claimant's day care
5center is completed or to a claimant who presents evidence to the department of
6revenue that the majority of the claimant's employes do not want to enroll their
7children in the claimant's day care center.
AB393, s. 3
8Section
3. 71.08 (1) (intro.) of the statutes is amended to read:
AB393,5,179
71.08
(1) Imposition. (intro.) If the tax imposed on a natural person, married
10couple filing jointly, trust or estate under s. 71.02, not considering the credits under
11ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s),
(5d), 12(6) and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m)
and, (3)
and
13(5d) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m)
and, (3)
and (5d) 14and subchs. VIII and IX and payments to other states under s. 71.07 (7), is less than
15the tax under this section, there is imposed on that natural person, married couple
16filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative
17minimum tax computed as follows:
AB393, s. 4
18Section
4. 71.10 (4) (i) of the statutes is amended to read:
AB393,5,2419
71.10
(4) (i) The total of claim of right credit under s. 71.07 (1), farmland
20preservation credit under subch. IX, homestead credit under subch. VIII, farmland
21tax relief credit under s. 71.07 (3m), farmers' drought property tax credit under s.
2271.07 (2fd),
day care center credit under s. 71.07 (5d), earned income tax credit under
23s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under
24subch. X.
AB393, s. 5
25Section
5. 71.21 (4) of the statutes is amended to read:
AB393,6,3
171.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
2(2dj), (2dL), (2ds), (2dx)
and, (3s)
and (5d) and passed through to partners shall be
3added to the partnership's income.
AB393, s. 6
4Section
6. 71.26 (2) (a) of the statutes is amended to read:
AB393,6,195
71.26
(2) (a)
Corporations in general. The "net income" of a corporation means
6the gross income as computed under the internal revenue code as modified under
7sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
8computed under s. 71.28 (1) and (3) to (5) plus the amount of the credit computed
9under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds)
and
, (1dx)
and (5d) and not passed
10through by a partnership, limited liability company or tax-option corporation that
11has added that amount to the partnership's, limited liability company's or tax-option
12corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from
13the sale or other disposition of assets the gain from which would be wholly exempt
14income, as defined in sub. (3) (L), if the assets were sold or otherwise disposed of at
15a gain and minus deductions, as computed under the internal revenue code as
16modified under sub. (3), plus or minus, as appropriate, an amount equal to the
17difference between the federal basis and Wisconsin basis of any asset sold,
18exchanged, abandoned or otherwise disposed of in a taxable transaction during the
19taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
AB393, s. 7
20Section
7. 71.28 (5d) of the statutes is created to read:
AB393,6,2221
71.28
(5d) Day care center credit. (a) In this subsection, "claimant" means
22a person who files a claim under this subsection.
AB393,6,2423
(b) A claimant may claim as a credit against the tax imposed under s. 71.23 any
24of the following:
AB393,7,4
11. An amount equal to 50% of the amount paid or incurred by the claimant
2during the taxable year to construct and equip a licensed day care center under s.
348.65, that is owned and operated by the claimant, to care for the children of the
4claimant's employes during the employes' working hours.
AB393,7,85
2. An amount equal to 50% of the amount paid by the claimant to operate the
6claimant's day care center under subd. 1. for the taxable year, less any amount paid
7by the claimant's employes to operate the claimant's day care center under subd. 1.
8for the taxable year.
AB393,7,129
3. An amount equal to 50% of the amount paid by the claimant during the
10taxable year to a licensed day care center under s. 48.65, other than a day care center
11under subd. 1., to provide care for the children of the claimant's employes during the
12employes' working hours.
AB393,7,1513
(c) The amount of the credit under this subsection shall not exceed $50,000 in
14a taxable year for each claimant, and the total amount of the credit under this
15subsection for all claimants shall not exceed $1,500,000 in a fiscal year.
AB393,7,2216
(d) No credit may be allowed under this subsection unless the claimant files an
17application with the department of revenue before the end of the taxable year in
18which amounts are paid or expenses are incurred under par. (b) and includes with
19that application a statement from the department of health and family services that
20verifies that the day care center under par. (b) is licensed under s. 48.65. No credit
21may be allowed under this subsection after the department of revenue has awarded
22the total amount of the credit for all claimants under par. (c).
AB393,7,2423
(e) Subsection (4) (e), as it applies to the credit under sub. (4), applies to the
24credit under this subsection.
AB393,8,6
1(f) If a credit computed under this subsection is not entirely offset against
2income or franchise taxes otherwise due, the unused balance may be carried forward
3and credited against income or franchise taxes otherwise due for the following 5
4taxable years to the extent not offset by those taxes otherwise due in all intervening
5years between the year in which the expense was incurred and the year in which the
6carry-forward credit is claimed.
AB393,8,147
(g) Partnerships, limited liability companies and tax-option corporations may
8not claim the credit under this subsection, but the eligibility for, and the amount of,
9the credit are based on the amount paid or incurred under par. (b). A partnership,
10limited liability company or tax-option corporation shall compute the amount of
11credit that each of its partners, members or shareholders may claim and shall
12provide that information to each of them. Partners, members of limited liability
13companies and shareholders of tax-option corporations may claim the credit in
14proportion to their ownership interest.
AB393,8,1615
(h) Subsection (4) (g) and (h), as it applies to the credit under sub. (4), applies
16to the credit under this subsection.
AB393,8,2217
(i) Except as provided in par. (j), if the operation of a day care center under par.
18(b) 1. ceases within 5 years after the date on which the construction of the day care
19center is completed, a claimant who receives credits under par. (b) 1. and 2. for the
20construction and operation of such a day care center shall add to the claimant's
21liability for taxes imposed under s. 71.23 an amount equal to the total amount of the
22credits received under par. (b) 1. and 2. multiplied by the following percentage:
AB393,8,2423
1. If the operation of the day care center ceases during the first year after the
24date on which the construction of the day care center is completed, 100%.
AB393,9,2
12. If the operation of the day care center ceases during the 2nd year after the
2date on which the construction of the day care center is completed, 80%.
AB393,9,43
3. If the operation of the day care center ceases during the 3rd year after the
4date on which the construction of the day care center is completed, 60%.
AB393,9,65
4. If the operation of the day care center ceases during the 4th year after the
6date on which the construction of the day care center is completed, 40%.
AB393,9,87
5. If the operation of the day care center ceases during the 5th year after the
8date on which the construction of the day care center is completed, 20%.
AB393,9,139
(j) Paragraph (i) does not apply to a claimant whose business ceases operation
10within 5 years after the date on which the construction of the claimant's day care
11center is completed or to a claimant who presents evidence to the department of
12revenue that the majority of the claimant's employes do not want to enroll their
13children in the claimant's day care center.
AB393, s. 8
14Section
8. 71.30 (3) (f) of the statutes is amended to read:
AB393,9,1815
71.30
(3) (f) The total of farmers' drought property tax credit under s. 71.28
16(1fd), farmland preservation credit under subch. IX, farmland tax relief credit under
17s. 71.28 (2m)
, day care center credit under s. 71.28 (5d) and estimated tax payments
18under s. 71.29.
AB393, s. 9
19Section
9. 71.34 (1) (g) of the statutes is amended to read:
AB393,9,2220
71.34
(1) (g) An addition shall be made for credits computed by a tax-option
21corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx)
and, (3)
and (5d) 22and passed through to shareholders.
AB393, s. 10
23Section
10. 71.45 (2) (a) 10. of the statutes is amended to read:
AB393,9,2524
71.45
(2) (a) 10. By adding to federal taxable income the amount of credit
25computed under s. 71.47 (1dd) to (1dx)
and (5d) and not passed through by a
1partnership, limited liability company or tax-option corporation that has added that
2amount to the partnership's, limited liability company's or tax-option corporation's
3income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under
4s. 71.47 (1), (3), (4) and (5).