LRB-3992/3
TKK&JK:cs:pg
2007 - 2008 LEGISLATURE
February 12, 2008 - Introduced by Senators Lassa, Sullivan, Roessler, Vinehout,
Darling and Kapanke, cosponsored by Representatives Strachota,
Jeskewitz, Vos, A. Ott, Townsend, Kleefisch, Ballweg, Hahn and Mursau.
Referred to Committee on Economic Development.
SB480,2,6
1An Act to repeal 49.149 (4), 234.63, 560.605 (2m) (g) and 560.605 (7) (b) 5.;
to
2renumber 71.30 (3) (em), 71.30 (3) (emb), 71.30 (3) (en), 71.30 (3) (eo), 71.30 (3)
3(eom), 71.49 (1) (em), 71.49 (1) (emb), 71.49 (1) (en), 71.49 (1) (eo) and 71.49 (1)
4(eom);
to renumber and amend 560.70 (2m) and 560.7995 (4) (b);
to amend
513.94 (4) (a) 1., 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.21 (4), 71.26 (2) (a), 71.34
6(1) (g), 71.45 (2) (a) 10., 76.67 (2), 77.92 (4), 234.03 (2m), 234.03 (11), 234.08 (1),
7234.265 (2), 234.40 (4), 234.50 (4), 234.60 (2), 234.61 (1), 234.66 (3) (b), 560.70
8(7) (a), 560.74 (1), 560.745 (1) (b), 560.745 (2) (am), 560.78 (3) (a), 560.797 (2)
9(a) (intro.), 560.797 (2) (bg) (intro.), 560.797 (4) (a), 560.798 (2) (a), 560.798 (3)
10(a), 560.7995 (2) (a) (intro.), 560.84 (2) (c) 2., 560.96 (2) (a) and 560.96 (3) (a)
11(intro.);
to repeal and recreate subchapter VI (title) of chapter 560 [precedes
12s. 560.70]; and
to create 13.94 (1) (ms), 71.07 (2dy), 71.10 (4) (gv), 71.28 (1dy),
1371.30 (3) (ema), 71.47 (1dy), 71.49 (1) (ema), 76.637, 560.01 (2) (am), 560.70 (2g),
14560.70 (2m) (b), 560.70 (4m), 560.70 (7) (d), 560.701, 560.702, 560.703, 560.704,
1560.705, 560.706, 560.71 (4), 560.737 (4), 560.74 (6), 560.78 (1m), 560.78 (3) (c),
2560.797 (2) (e), 560.797 (3) (c), 560.797 (4) (h), 560.798 (2) (c), 560.798 (3) (c),
3560.7995 (2) (d), 560.7995 (4) (am), 560.7995 (4) (b) 2., 560.96 (2) (c) and 560.96
4(3) (e) of the statutes;
relating to: changes to economic development tax benefit
5programs, providing an exemption from emergency rule procedures, and
6requiring the exercise of rule-making authority.
Analysis by the Legislative Reference Bureau
Consolidation of economic development zone programs
Under current law, the Department of Commerce (Commerce) may designate
a portion of the state as a development zone, a development opportunity zone, an
enterprise development zone, an agricultural development zone, an enterprise zone,
an airport development zone, or a technology zone. Commerce may also certify
persons who agree to undertake certain eligible activities in one of the designated
zones. Eligible activities include job creation, environmental remediation, and
capital investment. Persons who obtain certification are then eligible for tax
benefits.
This bill consolidates the development zones, enterprise development zones,
agricultural development zones, technology zones, and airport development zones
(five development zone programs) into a program that awards tax benefits to persons
who enter into a contract with Commerce to undertake eligible activities anywhere
in the state. Eligible activities under the bill include all of the following:
1. Job creation projects that result in the creation and maintenance of jobs
paying wages and providing benefits at a level approved by Commerce.
2. Projects that involve a significant investment of capital, as determined by
Commerce by rule, by the person in new equipment, machinery, real property, or
depreciable personal property.
3. Projects that involve significant investments in the training or reeducation
of employees for the purpose of improving the productivity or competitiveness of the
business of the person.
4. Projects that will result in the location or retention of a person's corporate
headquarters in Wisconsin or that will result in the retention of employees if the
person's corporate headquarters are located in Wisconsin.
Commerce may allocate tax benefits under the consolidated program up to the
total amount remaining to be allocated under the five development zone programs
on the effective date of this bill. Tax benefits are awarded under the bill only after
the person has verified to Commerce that the person has met the performance
obligations established under the contract.
The value of tax benefits for which a person is eligible under the new tax credit
program depends on the number of jobs created by the person, the amount of the
capital investment made by the person, the amount of training or reeducation
provided to the employees of a person, or the number of jobs retained by the person
having its corporate headquarters located in Wisconsin.
Under the bill, Commerce may award additional tax benefits to a person that
conducts eligible activities in an economically distressed area or if the eligible
activities benefit members of a target group. The department is required by the bill
to define "economically distressed area." The bill defines "member of a target group"
as a person who resides in an area designated by the federal government as an
economic revitalization area, a person who is employed in an unsubsidized job but
meets certain eligibility requirements for a Wisconsin Works employment position,
a person who is employed in a trial job or in a real work real pay project position, a
person who is eligible for child care assistance, a person who is a vocational
rehabilitation referral, an economically disadvantaged youth, an economically
disadvantaged veteran, a supplemental security income recipient, a general
assistance recipient, an economically disadvantaged ex-convict, a dislocated worker,
as defined under federal law, or a food stamp recipient, if the person has been
certified by a designated local agency.
Changes to reporting requirements
Under current law, Commerce must submit a biennial report to the legislature
on the performance and operations of Commerce in the preceding biennium.
The bill requires Commerce to annually submit a comprehensive report
assessing economic development programs administered by Commerce to the Joint
Legislative Audit Committee and to the appropriate standing committees of the
assembly and the senate. The comprehensive annual report must include
information about the number of grants and loans made by Commerce in each year;
the amount of each grant and loan; the name of the recipient of each grant and loan;
and the sum total of all grants and loans received by each recipient. Commerce must
make the reported information available to the public via the Internet.
Audit by the Legislative Audit Bureau
The bill requires the Legislative Audit Bureau to prepare a financial and
program evaluation audit of the consolidated economic development tax benefit
program created by the bill no later than July 1, 2012.
For further information see the state and local 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:
SB480, s. 1
1Section
1. 13.94 (1) (ms) of the statutes is created to read:
SB480,4,4
113.94
(1) (ms) No later than July 1, 2012, prepare a financial and performance
2evaluation audit of the economic development tax benefit program under ss. 560.701
3to 560.706. The legislative audit bureau shall file a copy of the report of the audit
4under this paragraph with the distributees specified in par. (b).
SB480, s. 2
5Section
2. 13.94 (4) (a) 1. of the statutes is amended to read:
SB480,4,216
13.94
(4) (a) 1. Every state department, board, examining board, affiliated
7credentialing board, commission, independent agency, council or office in the
8executive branch of state government; all bodies created by the legislature in the
9legislative or judicial branch of state government; any public body corporate and
10politic created by the legislature including specifically the Fox River Navigational
11System Authority and the Wisconsin Aerospace Authority, a professional baseball
12park district, a local professional football stadium district, a local cultural arts
13district and a family care district under s. 46.2895; every Wisconsin works agency
14under subch. III of ch. 49; every provider of medical assistance under subch. IV of ch.
1549; technical college district boards
; development zones designated under s. 560.71;
16every county department under s. 51.42 or 51.437; every nonprofit corporation or
17cooperative or unincorporated cooperative association to which moneys are
18specifically appropriated by state law; and every corporation, institution, association
19or other organization which receives more than 50% of its annual budget from
20appropriations made by state law, including subgrantee or subcontractor recipients
21of such funds.
SB480, s. 3
22Section
3. 49.149 (4) of the statutes is repealed.
SB480,5,6
171.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
2(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx),
(2dy), (3g), (3h), (3n), (3p), (3s), (3t), (3w),
3(5e), (5f), (5h), (5i), (5j), and (5k) and not passed through by a partnership, limited
4liability company, or tax-option corporation that has added that amount to the
5partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or
671.34 (1) (g).
SB480, s. 5
7Section
5. 71.07 (2dy) of the statutes is created to read:
SB480,5,108
71.07
(2dy) Economic development tax credit. (a)
Definition. In this
9subsection, "claimant" means a person who files a claim under this subsection and
10is certified under s. 560.701 (2) and authorized to claim tax benefits under s. 560.703.
SB480,5,1411
(b)
Filing claims. Subject to the limitations under this subsection and ss.
12560.701 to 560.706, for taxable years beginning after December 31, 2007, a claimant
13may claim as a credit against the tax imposed under s. 71.02, up to the amount of the
14tax, the amount authorized for the claimant under s. 560.703.
SB480,5,1815
(c)
Limitations. 1. No credit may be allowed under this subsection unless the
16claimant includes with the claimant's return a copy of the claimant's certification
17under s. 560.701 (2) and a copy of the claimant's notice of eligibility to receive tax
18benefits under s. 560.703 (3).
SB480,6,219
2. Partnerships, limited liability companies, and tax-option corporations may
20not claim the credit under this subsection, but the eligibility for, and the amount of,
21the credit are based on their authorization to claim tax benefits under s. 560.703.
22A partnership, limited liability company, or tax-option corporation shall compute
23the amount of credit that each of its partners, members, or shareholders may claim
24and shall provide that information to each of them. Partners, members of limited
1liability companies, and shareholders of tax-option corporations may claim the
2credit in proportion to their ownership interests.
SB480,6,53
(d)
Administration. 1. Except as provided in subd. 2., section 71.28 (4) (e) and
4(f), as it applies to the credit under s. 71.28 (4), applies to the credit under this
5subsection.
SB480,6,146
2. If a claimant's certification is revoked under s. 560.705, or if a claimant
7becomes ineligible for tax benefits under s. 560.702, the claimant may not claim
8credits under this subsection for the taxable year that includes the day on which the
9certification is revoked; the taxable year that includes the day on which the claimant
10becomes ineligible for tax benefits; or succeeding taxable years and the claimant may
11not carry over unused credits from previous years to offset the tax imposed under s.
1271.02 for the taxable year that includes the day on which certification is revoked; the
13taxable year that includes the day on which the claimant becomes ineligible for tax
14benefits; or succeeding taxable years.
SB480,6,1615
3. Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4),
16applies to the credit under this subsection.
SB480,7,319
71.08
(1) Imposition. (intro.) If the tax imposed on a natural person, married
20couple filing jointly, trust, or estate under s. 71.02, not considering the credits under
21ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx),
(2dy), (2fd), (3m), (3n),
22(3p), (3s), (3t), (3w), (5b), (5d), (5e), (6), (6e), and (9e), 71.28 (1dd), (1de), (1di), (1dj),
23(1dL), (1ds), (1dx),
(1dy), (1fd), (2m), (3), (3n), (3t), and (3w), and 71.47 (1dd), (1de),
24(1di), (1dj), (1dL), (1ds), (1dx),
(1dy), (1fd), (2m), (3), (3n), (3t), and (3w), and subchs.
25VIII and IX and payments to other states under s. 71.07 (7), is less than the tax under
1this section, there is imposed on that natural person, married couple filing jointly,
2trust or estate, instead of the tax under s. 71.02, an alternative minimum tax
3computed as follows:
SB480, s. 7
4Section
7. 71.10 (4) (gv) of the statutes is created to read:
SB480,7,55
71.10
(4) (gv) Economic development tax credit under s. 71.07 (2dy).
SB480,7,118
71.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
9(2dj), (2dL), (2dm), (2ds), (2dx),
(2dy), (3g), (3h), (3n), (3p), (3s), (3t), (3w), (5e), (5f),
10(5g), (5h), (5i), (5j), and (5k) and passed through to partners shall be added to the
11partnership's income.
SB480,8,614
71.26
(2) (a)
Corporations in general. The "net income" of a corporation means
15the gross income as computed under the Internal Revenue Code as modified under
16sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
17computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
187., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
19under this paragraph at the time that the taxpayer first claimed the credit plus the
20amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
21(1ds), (1dx),
(1dy), (3g), (3h), (3n), (3p), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and
22(5k) and not passed through by a partnership, limited liability company, or
23tax-option corporation that has added that amount to the partnership's, limited
24liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1)
25(g) plus the amount of losses from the sale or other disposition of assets the gain from
1which would be wholly exempt income, as defined in sub. (3) (L), if the assets were
2sold or otherwise disposed of at a gain and minus deductions, as computed under the
3Internal Revenue Code as modified under sub. (3), plus or minus, as appropriate, an
4amount equal to the difference between the federal basis and Wisconsin basis of any
5asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction
6during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
SB480, s. 10
7Section
10. 71.28 (1dy) of the statutes is created to read:
SB480,8,108
71.28
(1dy) Economic development tax credit. (a)
Definition. In this
9subsection, "claimant" means a person who files a claim under this subsection and
10is certified under s. 560.701 (2) and authorized to claim tax benefits under s. 560.703.
SB480,8,1411
(b)
Filing claims. Subject to the limitations under this subsection and ss.
12560.701 to 560.706, for taxable years beginning after December 31, 2007, a claimant
13may claim as a credit against the tax imposed under s. 71.23, up to the amount of the
14tax, the amount authorized for the claimant under s. 560.703.
SB480,8,1815
(c)
Limitations. 1. No credit may be allowed under this subsection unless the
16claimant includes with the claimant's return a copy of the claimant's certification
17under s. 560.701 (2) and a copy of the claimant's notice of eligibility to receive tax
18benefits under s. 560.703 (3).
SB480,9,219
2. Partnerships, limited liability companies, and tax-option corporations may
20not claim the credit under this subsection, but the eligibility for, and the amount of,
21the credit are based on their authorization to claim tax benefits under s. 560.703.
22A partnership, limited liability company, or tax-option corporation shall compute
23the amount of credit that each of its partners, members, or shareholders may claim
24and shall provide that information to each of them. Partners, members of limited
1liability companies, and shareholders of tax-option corporations may claim the
2credit in proportion to their ownership interests.
SB480,9,43
(d)
Administration. 1. Except as provided in subd. 2., sub. (4) (e) and (f), as it
4applies to the credit under sub. (4), applies to the credit under this subsection.
SB480,9,135
2. If a claimant's certification is revoked under s. 560.705, or if a claimant
6becomes ineligible for tax benefits under s. 560.702, the claimant may not claim
7credits under this subsection for the taxable year that includes the day on which the
8certification is revoked; the taxable year that includes the day on which the claimant
9becomes ineligible for tax benefits; or succeeding taxable years and the claimant may
10not carry over unused credits from previous years to offset the tax imposed under s.
1171.23 for the taxable year that includes the day on which certification is revoked; the
12taxable year that includes the day on which the claimant becomes ineligible for tax
13benefits; or succeeding taxable years.
SB480,9,1514
3. Subsection (4) (g) and (h), as it applies to the credit under sub. (4), applies
15to the credit under this subsection.