Amendment ASA2-AB892

LRBs0530/2

JK&CTS:lmk/wlj/jld:rs

2005 - 2006 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 2, TO 2005 ASSEMBLY BILL 892

February 27, 2006 - Offered by Representatives Davis, Rhoades and Montgomery.

AB892-ASA2,1,5 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) (gy), 71.28 (5e), 71.30 (3) (es), 71.47 (5e), 71.49 (1) (es), 77.51 (6m) and 77.54 (48) of the statutes; relating to: an income and franchise tax credit and a sales and use tax exemption for Internet equipment used in the broadband market.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB892-ASA2, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

AB892-ASA2,1,11 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).

AB892-ASA2, s. 2 Section 2. 71.07 (5e) of the statutes is created to read:

AB892-ASA2,2,1 71.07 (5e) Internet equipment credit. (a) Definitions. In this subsection:

AB892-ASA2,2,2 1. "Claimant" means a person who files a claim under this subsection.

AB892-ASA2,2,5 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

AB892-ASA2,2,11 (b) Filing claims. Subject to the limitations provided in this subsection, beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), a claimant may claim as a credit against the taxes imposed under ss. 71.02 and 71.08, up to the amount of those taxes, in each taxable year for 2 years, the amount certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

AB892-ASA2,2,13 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

AB892-ASA2,2,21 2. 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 the amounts described 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.

AB892-ASA2,2,24 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.28 (5e), 71.47 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

AB892-ASA2,3,2 (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.

AB892-ASA2, s. 3 Section 3. 71.10 (4) (gy) of the statutes is created to read:

AB892-ASA2,3,4 71.10 (4) (gy) Internet equipment credit under s. 71.07 (5e).

AB892-ASA2, s. 4 Section 4. 71.21 (4) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

AB892-ASA2,3,9 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b), (5e), and (5g) and passed through to partners shall be added to the partnership's income.

AB892-ASA2, s. 5 Section 5. 71.26 (2) (a) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

AB892-ASA2,4,4 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), (5b), (5e), and (5g) 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).

AB892-ASA2, s. 6 Section 6. 71.28 (5e) of the statutes is created to read:

AB892-ASA2,4,6 71.28 (5e) Internet equipment credit. (a) Definitions. In this subsection:

AB892-ASA2,4,7 1. "Claimant" means a person who files a claim under this subsection.

AB892-ASA2,4,10 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

AB892-ASA2,4,16 (b) Filing claims. Subject to the limitations provided in this subsection, beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), a claimant may claim as a credit against the taxes imposed under s. 71.23, up to the amount of those taxes, in each taxable year for 2 years, the amount certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

AB892-ASA2,4,18 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

AB892-ASA2,5,2 2. 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 the amounts described 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.

AB892-ASA2,5,5 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.07 (5e), 71.47 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

AB892-ASA2,5,7 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

AB892-ASA2, s. 7 Section 7. 71.30 (3) (es) of the statutes is created to read:

AB892-ASA2,5,9 71.30 (3) (es) Internet equipment credit under s. 71.28 (5e).

AB892-ASA2, s. 8 Section 8. 71.34 (1) (g) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

AB892-ASA2,5,14 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), (5b), (5e), and (5g) and passed through to shareholders.

AB892-ASA2, s. 9 Section 9. 71.45 (2) (a) 10. of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

AB892-ASA2,5,22 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3n), (5b), (5e), and (5g) 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).

AB892-ASA2, s. 10 Section 10. 71.47 (5e) of the statutes is created to read:

AB892-ASA2,5,24 71.47 (5e) Internet equipment credit. (a) Definitions. In this subsection:

AB892-ASA2,5,25 1. "Claimant" means a person who files a claim under this subsection.

AB892-ASA2,6,3 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

AB892-ASA2,6,9 (b) Filing claims. Subject to the limitations provided in this subsection, beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), 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 certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

AB892-ASA2,6,11 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

AB892-ASA2,6,19 2. 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 the amounts described 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.

AB892-ASA2,6,22 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.07 (5e), 71.28 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

AB892-ASA2,6,24 (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.

AB892-ASA2, s. 11 Section 11. 71.49 (1) (es) of the statutes is created to read:

AB892-ASA2,7,1 71.49 (1) (es) Internet equipment credit under s. 71.47 (5e).

AB892-ASA2, s. 12 Section 12. 77.51 (6m) of the statutes is created to read:

AB892-ASA2,7,5 77.51 (6m) For purposes of s. 77.54 (48), "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

AB892-ASA2, s. 13 Section 13. 77.54 (48) of the statutes is created to read:

AB892-ASA2,7,16 77.54 (48) (a) The gross receipts from the sale of and the storage, use, or other consumption of Internet equipment used in the broadband market, if the purchaser certifies to the department of commerce, in the manner prescribed by the department, that the purchaser will, within 24 months after the effective date of this paragraph .... [revisor inserts date], make an investment that is reasonably calculated to increase broadband Internet availability in this state and in an amount equal to at least 20 percent of the amount the purchaser would have paid in taxes imposed under this subchapter for Internet equipment used in the broadband market during the 12-month period beginning on the effective date of this paragraph .... [revisor inserts date].

AB892-ASA2,7,22 (b) Every person who is required to make the investment under par. (a) shall, within 60 days after the end of the year in which the investment is made, file a report with the department of commerce that provides a detailed description of the investment, including the amount invested. The department of commerce shall provide copies of the report to the department of administration, the department of revenue, and the public service commission.

AB892-ASA2, s. 14 Section 14. 77.92 (4) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

AB892-ASA2,8,15 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), (5b), (5e), and (5g); 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.

AB892-ASA2, s. 15 Section 15. Nonstatutory provisions.

AB892-ASA2,8,17 (1) Internet equipment credit and exemption program.