Amendment SSA2-SB103

LRBs0100/3

JK:kjf:rs

2005 - 2006 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 2, TO 2005 SENATE BILL 103

May 13, 2005 - Offered by Senator Kanavas.

SB103-SSA2,1,6 An Act to renumber and amend 71.28 (4) (a), 71.28 (5) (a), 71.47 (4) (a) and 71.47 (5) (a); to amend 71.28 (4) (am) 1. and 71.47 (4) (am); and to create 71.28 (4) (ab), 71.28 (4) (ad) 2., 71.28 (4) (af), 71.28 (5) (ab), 71.28 (5) (ad) 2., 71.47 (4) (ab), 71.47 (4) (ad) 2., 71.47 (4) (af), 71.47 (5) (ab) and 71.47 (5) (ad) 2. of the statutes; relating to: the income and franchise tax credit for research and research facilities.

Analysis by the Legislative Reference Bureau

Under current law, a corporation may claim an income and franchise tax credit in an amount equal to 5 percent of its qualified research expenses, as defined by the Internal Revenue Code for research conducted in this state. In addition, a corporation may claim an income and franchise tax credit equal to 5 percent of the amount it paid in the taxable year to construct and equip new facilities or expand existing facilities used in this state for qualified research, as defined by the Internal Revenue Code. Under this substitute amendment, a corporation may claim an income and franchise tax credit in an amount equal to 10 percent of its qualified research expenses related to engine and vehicle design for research conducted in this state and 10 percent of the amount it paid in the taxable year to construct and equip new facilities or expand existing facilities used in this state for qualified research related to designing internal combustion engines, including expenses related to designing vehicles that are powered by such engines.

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:

SB103-SSA2, s. 1 Section 1. 71.28 (4) (a) of the statutes is renumbered 71.28 (4) (ad) 1. and amended to read:

SB103-SSA2,2,18 71.28 (4) (ad) Credit. 1. Any Except as provided in subd. 2., any corporation may credit against taxes otherwise due under this chapter an amount equal to 5% 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the internal revenue code Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the internal revenue code Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section 41 (h) of the internal revenue code Internal Revenue Code does not apply to the credit under this paragraph.

SB103-SSA2, s. 2 Section 2. 71.28 (4) (ab) of the statutes is created to read:

SB103-SSA2,3,1 71.28 (4) (ab) Definitions. In this subsection:

SB103-SSA2,3,2 1. "Frame" includes:

SB103-SSA2,3,3 a. Every part of a motorcycle, except the tires.

SB103-SSA2,3,5 b. In the case of a truck, the control system and the fuel and drive train, excluding any comfort features located in the cab or the tires.

SB103-SSA2,3,8 c. In the case of a generator, the control modules, fuel train, fuel scrubbing process, fuel mixers, generator, heat exchangers, exhaust train, and similar components.

SB103-SSA2,3,10 2. "Internal combustion engine" includes substitute products such as fuel cell, electric, and hybrid drives.

SB103-SSA2,3,16 3. "Vehicle" means any vehicle or frame, including parts, accessories, and component technologies, in which or on which an engine is mounted for use in mobile or stationary applications. "Vehicle" includes any truck, tractor, motorcycle, snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction equipment, lawn and garden maintenance equipment, automobile, van, sports utility vehicle, motor home, bus, or aircraft.

SB103-SSA2, s. 3 Section 3. 71.28 (4) (ad) 2. of the statutes is created to read:

SB103-SSA2,4,9 71.28 (4) (ad) 2. For taxable years beginning after December 31, 2006, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.

SB103-SSA2, s. 4 Section 4. 71.28 (4) (af) of the statutes is created to read:

SB103-SSA2,4,14 71.28 (4) (af) Computation. If in any taxable year a corporation claims a credit under both par. (ad) 1. and 2., the corporation may use a different computation method under par. (ad) 2. than it uses under par. (ad) 1. and may choose to change the computation method once for each credit without the department's approval.

SB103-SSA2, s. 5 Section 5. 71.28 (4) (am) 1. of the statutes is amended to read:

SB103-SSA2,5,15 71.28 (4) (am) 1. In addition to the credit under par. (a) (ad), any corporation may credit against taxes otherwise due under this chapter an amount equal to 5% 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the internal revenue code Internal Revenue Code, except that "qualified research expenses" include only expenses incurred by the claimant in a development zone under subch. VI of ch. 560, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation and except that "qualified research expenses" do not include compensation used in computing the credit under sub. (1dj) nor research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), the corporation's base amount, as defined in section 41 (c) of the internal revenue code Internal Revenue Code, in a development zone, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d) and research expenses used in calculating the base amount include research expenses incurred before the claimant is certified for tax benefits under s. 560.765 (3), in a development zone, if the claimant submits with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.765 (3) and a statement from the department of commerce verifying the claimant's qualified research expenses for research conducted exclusively in a development zone. The rules under s. 73.03 (35) apply to the credit under this subdivision. The rules under sub. (1di) (f) and (g) as they apply to the credit under that subsection apply to claims under this subdivision. Section 41 (h) of the internal revenue code Internal Revenue Code does not apply to the credit under this subdivision.

SB103-SSA2, s. 6 Section 6. 71.28 (5) (a) of the statutes is renumbered 71.28 (5) (ad) 1. and amended to read:

SB103-SSA2,5,25 71.28 (5) (ad) Credit. 1. For Except as provided in subd. 2., for taxable year 1986 and subsequent years, any corporation may credit against taxes otherwise due under this chapter an amount equal to 5% 5 percent of the amount paid or incurred by that corporation during the taxable year to construct and equip new facilities or expand existing facilities used in this state for qualified research, as defined in section 41 of the internal revenue code Internal Revenue Code. Eligible amounts include only amounts paid or incurred for tangible, depreciable property but do not include amounts paid or incurred for replacement property.

SB103-SSA2, s. 7 Section 7. 71.28 (5) (ab) of the statutes is created to read:

SB103-SSA2,6,2 71.28 (5) (ab) Definitions. In this subsection:

SB103-SSA2,6,3 1. "Frame" includes:

SB103-SSA2,6,4 a. Every part of a motorcycle, except the tires.

SB103-SSA2,6,6 b. In the case of a truck, the control system and the fuel and drive train, excluding any comfort features located in the cab or the tires.

SB103-SSA2,6,9 c. In the case of a generator, the control modules, fuel train, fuel scrubbing process, fuel mixers, generator, heat exchangers, exhaust train, and similar components.

SB103-SSA2,6,11 2. "Internal combustion engine" includes substitute products such as fuel cell, electric, and hybrid drives.

SB103-SSA2,6,17 3. "Vehicle" means any vehicle or frame, including parts, accessories, and component technologies, in which or on which an engine is mounted for use in mobile or stationary applications. "Vehicle" includes any truck, tractor, motorcycle, snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction equipment, lawn and garden maintenance equipment, automobile, van, sports utility vehicle, motor home, bus, or aircraft.

SB103-SSA2, s. 8 Section 8. 71.28 (5) (ad) 2. of the statutes is created to read:

SB103-SSA2,7,5 71.28 (5) (ad) 2. For taxable years beginning after December 31, 2006, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount paid or incurred by that corporation during the taxable year to construct and equip new facilities or expand existing facilities used in this state for qualified research, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses paid or incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles. Eligible amounts include only amounts paid or incurred for tangible, depreciable property but do not include amounts paid or incurred for replacement property.

SB103-SSA2, s. 9 Section 9. 71.47 (4) (a) of the statutes is renumbered 71.47 (4) (ad) 1. and amended to read:

SB103-SSA2,7,23 71.47 (4) (ad) Credit. 1. Any Except as provided in subd. 2., any corporation may credit against taxes otherwise due under this chapter an amount equal to 5% 5 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the internal revenue code Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the internal revenue code Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section 41 (h) of the internal revenue code Internal Revenue Code does not apply to the credit under this paragraph.

SB103-SSA2, s. 10 Section 10. 71.47 (4) (ab) of the statutes is created to read:

SB103-SSA2,7,25 71.47 (4) (ab) Definitions. In this subsection:

SB103-SSA2,8,1 1. "Frame" includes:

SB103-SSA2,8,2 a. Every part of a motorcycle, except the tires.

SB103-SSA2,8,4 b. In the case of a truck, the control system and the fuel and drive train, excluding any comfort features located in the cab or the tires.

SB103-SSA2,8,7 c. In the case of a generator, the control modules, fuel train, fuel scrubbing process, fuel mixers, generator, heat exchangers, exhaust train, and similar components.

SB103-SSA2,8,9 2. "Internal combustion engine" includes substitute products such as fuel cell, electric, and hybrid drives.

SB103-SSA2,8,15 3. "Vehicle" means any vehicle or frame, including parts, accessories, and component technologies, in which or on which an engine is mounted for use in mobile or stationary applications. "Vehicle" includes any truck, tractor, motorcycle, snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction equipment, lawn and garden maintenance equipment, automobile, van, sports utility vehicle, motor home, bus, or aircraft.

SB103-SSA2, s. 11 Section 11. 71.47 (4) (ad) 2. of the statutes is created to read:

SB103-SSA2,9,8 71.47 (4) (ad) 2. For taxable years beginning after December 31, 2006, any corporation may credit against taxes otherwise due under this chapter an amount equal to 10 percent of the amount obtained by subtracting from the corporation's qualified research expenses, as defined in section 41 of the Internal Revenue Code, except that "qualified research expenses" includes only expenses incurred by the claimant for research related to designing internal combustion engines for vehicles, including expenses related to designing vehicles that are powered by such engines and improving production processes for such engines and vehicles, incurred for research conducted in this state for the taxable year, except that a taxpayer may elect the alternative computation under section 41 (c) (4) of the Internal Revenue Code and that election applies until the department permits its revocation, except as provided in par. (af), and except that "qualified research expenses" does not include compensation used in computing the credit under subs. (1dj) and (1dx), the corporation's base amount, as defined in section 41 (c) of the Internal Revenue Code, except that gross receipts used in calculating the base amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9) (b) 1. and 2. and (d). Section 41 (h) of the Internal Revenue Code does not apply to the credit under this paragraph.