SB74: Bill Text

2007 - 2008 LEGISLATURE

2007 Senate BILL 74

February 27, 2007 - Introduced by Senators Kanavas, Darling, S. Fitzgerald, Kedzie, Leibham and Roessler, cosponsored by Representatives Kleefisch, Hahn, Van Roy, Pridemore and Gunderson. Referred to Committee on Economic Development, Job Creation, Family Prosperity and Housing.

SB74,1,5 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 (5j), 71.10 (4) (gwd), 71.28 (5j), 71.30 (3) (eor), 71.47 (5j), 71.49 (1) (eor) and 560.207 of the statutes; relating to: creating an income and franchise tax credit for eligible innovation projects and project facilities.

Analysis by the Legislative Reference Bureau

Under this bill, a person may claim an income and franchise tax credit that is equal to 75 percent of the costs that the person paid in the taxable year related to creating and operating a project facility or to creating and maintaining an eligible innovation project. The amount that a claimant may claim in any taxable year may not exceed $500,000, and the total amount of all claims in each year may not exceed $10,000,000. Under the bill, a project facility is any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the Department of Commerce. The bill defines an eligible innovation project as any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

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:

SB74, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB74,2,6 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), (3w), (5b), (5d), and (5e), (5f), and (5h), and (5j) 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).

SB74, s. 2 Section 2. 71.07 (5j) of the statutes is created to read:

SB74,2,9 71.07 (5j) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB74,2,10 1. "Blighted area" has the meaning given in s. 66.1331 (3) (a).

SB74,2,12 2. "Brownfield" means an industrial or commercial facility the expansion or redevelopment of which is complicated by environmental contamination.

SB74,2,14 3. "Claimant" means a person who is certified to receive tax credits under s. 560.207 and who files a claim under this subsection.

SB74,2,17 4. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB74,2,21 5. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB74,3,5 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.207, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of the tax, an amount that is equal to the following costs paid by the claimant in the taxable year:

SB74,3,10 1. Except as provided in subd. 3., 75 percent of the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, or improving a project facility or eligible innovation project and 75 percent of the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB74,3,13 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB74,3,14 b. Site clearance and preparation.

SB74,3,15 c. Architectural, engineering, or legal services.

SB74,3,16 d. Marketing products.

SB74,3,19 2. The costs of equipping a project facility and the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB74,3,20 a. Research and development.

SB74,3,21 b. Computer software or hardware.

SB74,3,22 c. Product testing and other quality control activities.

SB74,3,23 d. Perfecting products.

SB74,3,24 e. Creating and protecting intellectual property.

SB74,4,4 3. If the project facility or eligible innovation project is a brownfield or located in a blighted area, and if the brownfield or blighted area is not otherwise being remediated with moneys received from the state, 100 percent of the costs described in subd. 1.

SB74,4,6 (c) Limitations. 1. The maximum amount of the credit that a claimant may claim under this subsection in a taxable year is $500,000.

SB74,4,8 2. The maximum amount of the credits that may be awarded under this subsection and ss. 71.28 (5j) and 71.47 (5j) in each year is $10,000,000.

SB74,4,16 3. 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 amounts 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.

SB74,4,18 (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.

SB74, s. 3 Section 3. 71.10 (4) (gwd) of the statutes is created to read:

SB74,4,20 71.10 (4) (gwd) Innovation projects and facilities credit under s. 71.07 (5j).

SB74, s. 4 Section 4. 71.21 (4) of the statutes is amended to read:

SB74,4,24 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), (3w), (5b), (5e), (5f), (5g), and (5h), and (5j) and passed through to partners shall be added to the partnership's income.

SB74, s. 5 Section 5. 71.26 (2) (a) of the statutes is amended to read:

SB74,5,18 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), (3w), (5b), (5e), (5f), (5g), and (5h), and (5j) 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).

SB74, s. 6 Section 6. 71.28 (5j) of the statutes is created to read:

SB74,5,21 71.28 (5j) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB74,5,22 1. "Blighted area" has the meaning given in s. 66.1331 (3) (a).

SB74,5,24 2. "Brownfield" means an industrial or commercial facility the expansion or redevelopment of which is complicated by environmental contamination.

SB74,6,2 3. "Claimant" means a person who is certified to receive tax credits under s. 560.206 and who files a claim under this subsection.

SB74,6,5 4. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB74,6,9 5. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB74,6,14 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.207, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of the tax, an amount that is equal to the following costs paid by the claimant in the taxable year:

SB74,6,19 1. Except as provided in subd. 3., 75 percent of the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, or improving a project facility or eligible innovation project and 75 percent of the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB74,6,22 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB74,6,23 b. Site clearance and preparation.

SB74,6,24 c. Architectural, engineering, or legal services.

SB74,6,25 d. Marketing products.

SB74,7,3 2. The costs of equipping a project facility and the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB74,7,4 a. Research and development.

SB74,7,5 b. Computer software or hardware.

SB74,7,6 c. Product testing and other quality control activities.

SB74,7,7 d. Perfecting products.

SB74,7,8 e. Creating and protecting intellectual property.

SB74,7,12 3. If the project facility or eligible innovation project is a brownfield or located in a blighted area, and if the brownfield or blighted area is not otherwise being remediated with moneys received from the state, 100 percent of the costs described in subd. 1.

SB74,7,14 (c) Limitations. 1. The maximum amount of the credit that a claimant may claim under this subsection in a taxable year is $500,000.

SB74,7,16 2. The maximum amount of the credits that may be awarded under this subsection and ss. 71.07 (5j) and 71.47 (5j) in each year is $10,000,000.

SB74,7,24 3. 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 amounts 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.

SB74,8,2 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB74, s. 7 Section 7. 71.30 (3) (eor) of the statutes is created to read:

SB74,8,4 71.30 (3) (eor) Innovation projects and facilities credit under s. 71.28 (5j).

SB74, s. 8 Section 8. 71.34 (1) (g) of the statutes is amended to read:

SB74,8,9 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), (3w), (5b), (5e), (5f), (5g), and (5h) , and (5j) and passed through to shareholders.

SB74, s. 9 Section 9. 71.45 (2) (a) 10. of the statutes is amended to read:

SB74,8,16 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3n), (3w), (5b), (5e), (5f), (5g), and (5h), and (5j) 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).

SB74, s. 10 Section 10. 71.47 (5j) of the statutes is created to read:

SB74,8,19 71.47 (5j) Innovation projects and facilities credit. (a) Definitions. In this subsection:

SB74,8,20 1. "Blighted area" has the meaning given in s. 66.1331 (3) (a).

SB74,8,22 2. "Brownfield" means an industrial or commercial facility the expansion or redevelopment of which is complicated by environmental contamination.

SB74,8,24 3. "Claimant" means a person who is certified to receive tax credits under s. 560.206 and who files a claim under this subsection.

SB74,9,3 4. "Eligible innovation project" means any real property, tangible personal property, or intangible property related to a new product or process that is based on new technology or the creative application of existing technology.

SB74,9,7 5. "Project facility" means any facility located in this state that is operated for the purpose of creating and maintaining an eligible innovation project, if the operation of the facility is likely to create new jobs, or preserve existing jobs, in this state, as determined by the department of commerce.

SB74,9,12 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.207, for taxable years beginning after December 31, 2006, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of the tax, an amount that is equal to the following costs paid by the claimant in the taxable year:

SB74,9,17 1. Except as provided in subd. 3., 75 percent of the costs of acquiring, constructing, reconstructing, rehabilitating, renovating, enlarging, or improving a project facility or eligible innovation project and 75 percent of the costs of all of the following related to creating and operating a project facility or to creating and maintaining an eligible innovation project:

SB74,9,20 a. Designs, plans, specifications, surveys, studies, estimates, and any similar services or items that are necessary or incidental to determining the feasibility or practicality of a project facility or eligible innovation project.

SB74,9,21 b. Site clearance and preparation.

SB74,9,22 c. Architectural, engineering, or legal services.