SB556: Bill Text

LRB-4091/1

JK:lmk:rs

2007 - 2008 LEGISLATURE

2007 Senate BILL 556

March 4, 2008 - Introduced by Senators Plale, Kanavas, Kapanke, Darling, Roessler, Schultz and Hansen, cosponsored by Representatives Strachota, Zepnick, Molepske, Vos, F. Lasee, Sheridan, Berceau, Moulton, Van Roy, Seidel and Hahn. Referred to Committee on Commerce, Utilities and Rail.

SB556,1,5 An Act to amend 71.07 (5f) (b) 1., 71.28 (5f) (b) 1. and 71.47 (5f) (b) 1.; and to create 71.07 (5f) (e) and (f), 71.07 (5h) (e) and (f), 71.28 (5f) (e) and (f), 71.28 (5h) (e) and (f), 71.47 (5f) (e) and (f), 71.47 (5h) (e) and (f) and 560.206 (5) of the statutes; relating to: the transfer of, and the and residency requirements under, the film production tax credits.

Analysis by the Legislative Reference Bureau

Under current law, a film production company may claim income and franchise tax credits for expenses related to film production services, including a percentage of the salary or wages paid to the company's employees in this state, and for capital investments made in this state by the film production company. This bill allows a film production company to transfer its film production tax credits to other taxpayers who may claim the credits against their state income and franchise tax liability.

Under current law, the amount of the credit that a film production company may claim for salary or wages is limited to the first $25,000 paid to each of the company's employees who were residents of this state at the time that they were paid. Under the bill, for taxable years beginning after December 31, 2007, and before January 1, 2010, the company may claim credits for employees who are not residents of this state at the time that they were paid. However, for taxable years beginning after December 31, 2009, and before January 1, 2014, a film production company may claim credits for employees who are not residents of this state at the time that they were paid, only if the Department of Commerce (Commerce) certifies that at least 25 percent of the company's employees were residents of this state at the time that they were paid. For taxable years beginning on or after January 1, 2014, a film production company may claim credits for employees who are not residents of this state at the time that they were paid, only if Commerce certifies that at least 50 percent of the company's employees were residents of this state at the time that they were paid.

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:

SB556, s. 1 Section 1. 71.07 (5f) (b) 1. of the statutes is amended to read:

SB556,2,5 71.07 (5f) (b) 1. An amount equal to 25 percent of the salary or wages paid by the claimant to the claimant's employees in the taxable year for services rendered in this state to produce an accredited production and, subject to s. 560.206 (5), paid to employees who were residents of this state at the time that they were paid.

SB556, s. 2 Section 2. 71.07 (5f) (e) and (f) of the statutes are created to read:

SB556,2,10 71.07 (5f) (e) Transfer of credits. 1. Any person who is eligible to claim a credit under this subsection, as approved by the department of commerce, may, instead of claiming the credit, transfer the credit amount, in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43.

SB556,2,13 2. A person who transfers credit amounts under subd. 1. may make no more than 3 such transfers in any calendar year, but a single transfer may involve one or more transferees.

SB556,3,17 3. A person who intends to transfer credit amounts under subd. 1. shall submit to the department of revenue an application that provides the transferor's tax credit balance under this subsection before and after the requested transfer, all tax identification numbers for the transferor and the transferee, the intended date of the transfer, the amount transferred, and any other information required by the department. The intended transferee of such credits shall submit to the department of revenue an application that provides any information required by the department. The person requesting to transfer the credits and the requesting transferee shall each pay to the department of revenue a fee in an amount equal to 1 percent of the credit amounts requested to be transferred or $500, whichever is less. The person requesting to transfer the credits shall pay to the department of commerce a fee in an amount equal to 2 percent of the credit amounts requested to be transferred or $5,000, whichever is less. The department of revenue shall certify the transfer before the transfer takes place. The department of revenue shall not issue a certification to either party if either the transferor or transferee has not met all Wisconsin tax return filing, withholding, and payment obligations. The transferor and transferee shall, at the time that each of them file a Wisconsin income or franchise tax return for the taxable year in which the transfer takes place, attach a copy of the certification to the return and submit a copy of the certification to the department of commerce. The transferee shall attach a copy of the certification to its Wisconsin income or franchise tax return for each taxable year in which the transferee claims the credit transferred pursuant to this subdivision.

SB556,3,21 4. The transfer of any credit amount under subd. 1. does not extend the time in which the credit may be claimed and the carry-forward period for any credit amount that is transferred begins with the first taxable year in which the transferor is eligible to receive the credit on which the transfer is based.

SB556,4,2 5. A transferee shall have only such rights to claim the credit amounts that were available to the transferor at the time of the transfer. To the extent that the transferor was not eligible to claim the credit at the time of the transfer, the department of revenue shall disallow the credit amount claimed by the transferee or recapture the credit amount from the transferee and the transferee shall have no recourse against the department of revenue or the department of commerce.

SB556,4,7 6. Any consideration paid for a transfer of credit amounts under subd. 1. shall not be deducted from income, and any consideration received from the transfer shall not be included as income. The transferor may not subtract any amount of credit previously added back to income under s. 71.05 (6) (a) 15., 71.26 (2) (a), 71.45 (2) (a) 10., or 77.92 (4).

SB556,4,12 (f) Reports. Annually, no later than April 1, the department of revenue shall, in consultation with the department of commerce, submit to the joint committee on finance a report assessing the use of the credit under this subsection, including the provisions allowing a claimant to transfer such credits to another person. The report shall contain all of the following information, subject to s. 71.78:

SB556,4,15 1. The number of persons who obtained the credit in the previous fiscal year without transferring such credit, regardless of whether the person was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,4,19 2. The number of persons who received the credit in the previous fiscal year that was transferred from another person, regardless of when the credits were originally obtained by the transferor and regardless of whether the transferee was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,4,21 3. The total amount of the credit that was claimed as an offset against the tax liability of persons described in subd. 1. in the previous fiscal year.

SB556,4,23 4. The total amount of credit that was claimed as an offset against the tax liability of persons described in subd. 2. in the previous fiscal year.

SB556,5,3 5. A description of any material noncompliance identified by the department of revenue or the department of commerce regarding the claiming of the credit by persons described in subds. 1. and 2.

SB556, s. 3 Section 3. 71.07 (5h) (e) and (f) of the statutes are created to read:

SB556,5,8 71.07 (5h) (e) Transfer of credits. 1. Any person who is eligible to claim a credit under this subsection, as approved by the department of commerce, may, instead of claiming the credit, transfer the credit amount, in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43.

SB556,5,11 2. A person who transfers credit amounts under subd. 1. may make no more than 3 such transfers in any calendar year, but a single transfer may involve one or more transferees.

SB556,6,8 3. A person who intends to transfer credit amounts under subd. 1. shall submit to the department of revenue an application that provides the transferor's tax credit balance under this subsection before and after the requested transfer, all tax identification numbers for the transferor and the transferee, the intended date of the transfer, the amount transferred, and any other information required by the department. The intended transferee of such credits shall submit to the department of revenue an application that provides any information required by the department. The person requesting to transfer the credits and the requesting transferee shall each pay to the department of revenue a fee in an amount equal to 1 percent of the credit amounts requested to be transferred or $500, whichever is less. The person requesting to transfer the credits shall pay to the department of commerce a fee in an amount equal to 2 percent of the credit amounts requested to be transferred or $5,000, whichever is less. The department of revenue shall certify the transfer before the transfer takes place. The department of revenue shall not issue a certification to either party if either the transferor or transferee has not met all Wisconsin tax return filing, withholding, and payment obligations. The transferor and transferee shall, at the time that each of them file a Wisconsin income or franchise tax return for the taxable year in which the transfer takes place, attach a copy of the certification to the return and submit a copy of the certification to the department of commerce. The transferee shall attach a copy of the certification to its Wisconsin income or franchise tax return for each taxable year in which the transferee claims the credit transferred pursuant to this subdivision.

SB556,6,12 4. The transfer of any credit amount under subd. 1. does not extend the time in which the credit may be claimed and the carry-forward period for any credit amount that is transferred begins with the first taxable year in which the transferor is eligible to receive the credit on which the transfer is based.

SB556,6,18 5. A transferee shall have only such rights to claim the credit amounts that were available to the transferor at the time of the transfer. To the extent that the transferor was not eligible to claim the credit at the time of the transfer, the department of revenue shall disallow the credit amount claimed by the transferee or recapture the credit amount from the transferee and the transferee shall have no recourse against the department of revenue or the department of commerce.

SB556,6,23 6. Any consideration paid for a transfer of credit amounts under subd. 1. shall not be deducted from income, and any consideration received from the transfer shall not be included as income. The transferor may not subtract any amount of credit previously added back to income under s. 71.05 (6) (a) 15., 71.26 (2) (a), 71.45 (2) (a) 10., or 77.92 (4).

SB556,7,3 (f) Reports. Annually, no later than April 1, the department of revenue shall, in consultation with the department of commerce, submit to the joint committee on finance a report assessing the use of the credit under this subsection, including the provisions allowing a claimant to transfer such credits to another person. The report shall contain all of the following information, subject to s. 71.78:

SB556,7,6 1. The number of persons who obtained the credit in the previous fiscal year without transferring such credit, regardless of whether the person was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,7,10 2. The number of persons who received the credit in the previous fiscal year that was transferred from another person, regardless of when the credits were originally obtained by the transferor and regardless of whether the transferee was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,7,12 3. The total amount of the credit that was claimed as an offset against the tax liability of persons described in subd. 1. in the previous fiscal year.

SB556,7,14 4. The total amount of credit that was claimed as an offset against the tax liability of persons described in subd. 2. in the previous fiscal year.

SB556,7,17 5. A description of any material noncompliance identified by the department of revenue or the department of commerce regarding the claiming of the credit by persons described in subds. 1. and 2.

SB556, s. 4 Section 4. 71.28 (5f) (b) 1. of the statutes is amended to read:

SB556,7,22 71.28 (5f) (b) 1. An amount equal to 25 percent of the salary or wages paid by the claimant to the claimant's employees in the taxable year for services rendered in this state to produce an accredited production and, subject to s. 560.206 (5), paid to employees who were residents of this state at the time that they were paid.

SB556, s. 5 Section 5. 71.28 (5f) (e) and (f) of the statutes are created to read:

SB556,8,2 71.28 (5f) (e) Transfer of credits. 1. Any person who is eligible to claim a credit under this subsection, as approved by the department of commerce, may, instead of claiming the credit, transfer the credit amount, in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43.

SB556,8,5 2. A person who transfers credit amounts under subd. 1. may make no more than 3 such transfers in any calendar year, but a single transfer may involve one or more transferees.

SB556,9,2 3. A person who intends to transfer credit amounts under subd. 1. shall submit to the department of revenue an application that provides the transferor's tax credit balance under this subsection before and after the requested transfer, all tax identification numbers for the transferor and the transferee, the intended date of the transfer, the amount transferred, and any other information required by the department. The intended transferee of such credits shall submit to the department of revenue an application that provides any information required by the department. The person requesting to transfer the credits and the requesting transferee shall each pay to the department of revenue a fee in an amount equal to 1 percent of the credit amounts requested to be transferred or $500, whichever is less. The person requesting to transfer the credits shall pay to the department of commerce a fee in an amount equal to 2 percent of the credit amounts requested to be transferred or $5,000, whichever is less. The department of revenue shall certify the transfer before the transfer takes place. The department of revenue shall not issue a certification to either party if either the transferor or transferee has not met all Wisconsin tax return filing, withholding, and payment obligations. The transferor and transferee shall, at the time that each of them file a Wisconsin income or franchise tax return for the taxable year in which the transfer takes place, attach a copy of the certification to the return and submit a copy of the certification to the department of commerce. The transferee shall attach a copy of the certification to its Wisconsin income or franchise tax return for each taxable year in which the transferee claims the credit transferred pursuant to this subdivision.

SB556,9,6 4. The transfer of any credit amount under subd. 1. does not extend the time in which the credit may be claimed and the carry-forward period for any credit amount that is transferred begins with the first taxable year in which the transferor is eligible to receive the credit on which the transfer is based.

SB556,9,12 5. A transferee shall have only such rights to claim the credit amounts that were available to the transferor at the time of the transfer. To the extent that the transferor was not eligible to claim the credit at the time of the transfer, the department of revenue shall disallow the credit amount claimed by the transferee or recapture the credit amount from the transferee and the transferee shall have no recourse against the department of revenue or the department of commerce.

SB556,9,17 6. Any consideration paid for a transfer of credit amounts under subd. 1. shall not be deducted from income, and any consideration received from the transfer shall not be included as income. The transferor may not subtract any amount of credit previously added back to income under s. 71.05 (6) (a) 15., 71.26 (2) (a), 71.45 (2) (a) 10., or 77.92 (4).

SB556,9,22 (f) Reports. Annually, no later than April 1, the department of revenue shall, in consultation with the department of commerce, submit to the joint committee on finance a report assessing the use of the credit under this subsection, including the provisions allowing a claimant to transfer such credits to another person. The report shall contain all of the following information, subject to s. 71.78:

SB556,9,25 1. The number of persons who obtained the credit in the previous fiscal year without transferring such credit, regardless of whether the person was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,10,4 2. The number of persons who received the credit in the previous fiscal year that was transferred from another person, regardless of when the credits were originally obtained by the transferor and regardless of whether the transferee was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,10,6 3. The total amount of the credit that was claimed as an offset against the tax liability of persons described in subd. 1. in the previous fiscal year.

SB556,10,8 4. The total amount of credit that was claimed as an offset against the tax liability of persons described in subd. 2. in the previous fiscal year.

SB556,10,11 5. A description of any material noncompliance identified by the department of revenue or the department of commerce regarding the claiming of the credit by persons described in subd. 1. and 2.

SB556, s. 6 Section 6. 71.28 (5h) (e) and (f) of the statutes are created to read:

SB556,10,16 71.28 (5h) (e) Transfer of credits. 1. Any person who is eligible to claim a credit under this subsection, as approved by the department of commerce, may, instead of claiming the credit, transfer the credit amount, in whole or in part, to another person who is subject to the taxes imposed under s. 71.02, 71.23, or 71.43.

SB556,10,19 2. A person who transfers credit amounts under subd. 1. may make no more than 3 such transfers in any calendar year, but a single transfer may involve one or more transferees.

SB556,11,16 3. A person who intends to transfer credit amounts under subd. 1. shall submit to the department of revenue an application that provides the transferor's tax credit balance under this subsection before and after the requested transfer, all tax identification numbers for the transferor and the transferee, the intended date of the transfer, the amount transferred, and any other information required by the department. The intended transferee of such credits shall submit to the department of revenue an application that provides any information required by the department. The person requesting to transfer the credits and the requesting transferee shall each pay to the department of revenue a fee in an amount equal to 1 percent of the credit amounts requested to be transferred or $500, whichever is less. The person requesting to transfer the credits shall pay to the department of commerce a fee in an amount equal to 2 percent of the credit amounts requested to be transferred or $5,000, whichever is less. The department of revenue shall certify the transfer before the transfer takes place. The department of revenue shall not issue a certification to either party if either the transferor or transferee has not met all Wisconsin tax return filing, withholding, and payment obligations. The transferor and transferee shall, at the time that each of them file a Wisconsin income or franchise tax return for the taxable year in which the transfer takes place, attach a copy of the certification to the return and submit a copy of the certification to the department of commerce. The transferee shall attach a copy of the certification to its Wisconsin income or franchise tax return for each taxable year in which the transferee claims the credit transferred pursuant to this subdivision.

SB556,11,20 4. The transfer of any credit amount under subd. 1. does not extend the time in which the credit may be claimed and the carry-forward period for any credit amount that is transferred begins with the first taxable year in which the transferor is eligible to receive the credit on which the transfer is based.

SB556,12,2 5. A transferee shall have only such rights to claim the credit amounts that were available to the transferor at the time of the transfer. To the extent that the transferor was not eligible to claim the credit at the time of the transfer, the department of revenue shall disallow the credit amount claimed by the transferee or recapture the credit amount from the transferee and the transferee shall have no recourse against the department of revenue or the department of commerce.

SB556,12,7 6. Any consideration paid for a transfer of credit amounts under subd. 1. shall not be deducted from income, and any consideration received from the transfer shall not be included as income. The transferor may not subtract any amount of credit previously added back to income under s. 71.05 (6) (a) 15., 71.26 (2) (a), 71.45 (2) (a) 10., or 77.92 (4).

SB556,12,12 (f) Reports. Annually, no later than April 1, the department of revenue shall, in consultation with the department of commerce, submit to the joint committee on finance a report assessing the use of the credit under this subsection, including the provisions allowing a claimant to transfer such credits to another person. The report shall contain all of the following information, subject to s. 71.78:

SB556,12,15 1. The number of persons who obtained the credit in the previous fiscal year without transferring such credit, regardless of whether the person was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,12,19 2. The number of persons who received the credit in the previous fiscal year that was transferred from another person, regardless of when the credits were originally obtained by the transferor and regardless of whether the transferee was able to claim the credit as an offset against Wisconsin income or franchise taxes.

SB556,12,21 3. The total amount of the credit that was claimed as an offset against the tax liability of persons described in subd. 1. in the previous fiscal year.

SB556,12,23 4. The total amount of credit that was claimed as an offset against the tax liability of persons described in subd. 2. in the previous fiscal year.

SB556,13,3 5. A description of any material noncompliance identified by the department of revenue or the department of commerce regarding the claiming of the credit by persons described in subds. 1. and 2.

SB556, s. 7 Section 7. 71.47 (5f) (b) 1. of the statutes is amended to read:

SB556,13,8 71.47 (5f) (b) 1. An amount equal to 25 percent of the salary or wages paid by the claimant to the claimant's employees in the taxable year for services rendered in this state to produce an accredited production and, subject to s. 560.206 (5), paid to employees who were residents of this state at the time that they were paid.