Amendment SSA1-SB461

LRBs0281/1

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2009 - 2010 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO 2009 SENATE BILL 461

February 11, 2010 - Offered by Senator Coggs.

SB461-SSA1,1,6 An Act to amend 71.08 (1) (intro.); and to create 71.07 (5n), 71.10 (4) (fm), 71.28 (5n), 71.30 (3) (dn), 71.47 (5n), 71.49 (1) (dn), 76.639 and 560.2065 of the statutes; relating to: an income and franchise tax credit for a qualified equity investment in a qualified community development entity, providing an exemption from emergency rule procedures, and requiring the exercise of rule-making authority.

Analysis by the Legislative Reference Bureau

Under federal law, the New Markets Tax Credit Program permits federal taxpayers to receive a credit against federal income taxes for making qualified equity investments in qualified community development entities (QCDE). Federal law defines a QCDE as an entity with the primary mission of serving or providing investment capital for low-income communities or low-income persons that has been certified by the secretary of the Internal Revenue Service. Federal law defines a qualified equity investment as an investment funded by the QCDE for the purpose of making loans to or investments in certain businesses located in low-income communities identified under the federal law.

This bill authorizes the Department of Commerce (Commerce) to certify a qualified equity investment in a QCDE. The bill also authorizers Commerce to certify a person who has invested in a certified qualified equity investment to receive a credit against state income and franchise taxes and against license fees paid by insurers. Commerce may certify up to $10,000,000 in tax credits in any fiscal year. The credit may be claimed for seven consecutive taxable years beginning with the taxable year in which the taxpayer makes a qualified equity investment. The amount of the credit that a taxpayer may claim is equal to the amount of the taxpayer's investment multiplied by the following percentages:

1. For the first taxable year, zero percent.

2. For the next six taxable years, 3 percent.

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:

SB461-SSA1, s. 1 Section 1. 71.07 (5n) of the statutes is created to read:

SB461-SSA1,2,3 71.07 (5n) New markets credit. (a) Definition. In this subsection, "claimant" means a person who files a claim under this subsection.

SB461-SSA1,2,8 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.2065, for investments made after December 31, 2010, a claimant may claim as a credit against the taxes imposed under ss. 71.02 and 71.08, up to the amount of the taxes, the amount of the claimant's qualified equity investment, as certified under s. 560.2065 (2), multiplied by the following percentage:

SB461-SSA1,2,10 1. For the taxable year that corresponds to the first credit allowance date, as defined under 26 USC 45D (a) (3), zero percent.

SB461-SSA1,2,13 2. For the taxable years that correspond to the 6 credit allowance dates, as defined under 26 USC 45D (a) (3), following the credit allowance date described in subd. 1., 3 percent.

SB461-SSA1,3,16 (c) Limitations. 1. A partnership, limited liability company, or tax-option corporation may not claim the credit under this subsection. The partners of a partnership, members of a limited liability company, or shareholders in a tax-option corporation may claim the credit under this subsection based on eligible costs incurred by the partnership, company, or tax-option corporation. The partnership, limited liability company, or tax-option corporation shall calculate the amount of the credit which may be claimed by each partner, member, or shareholder and shall provide that information to the partner, member, or shareholder. For shareholders of a tax-option corporation, the credit may be allocated in proportion to the ownership interest of each shareholder. Credits computed by a partnership or limited liability company may be claimed in proportion to the ownership interests of the partners or members or allocated to partners or members as provided in a written agreement among the partners or members that is entered into no later than the last day of the taxable year of the partnership or limited liability company, for which the credit is claimed. Any partner or member who claims the credit as provided under this paragraph shall attach a copy of the agreement, if applicable, to the tax return on which the credit is claimed. A person claiming the credit as provided under this paragraph is solely responsible for any tax liability arising from a dispute with the department of revenue related to claiming the credit.

SB461-SSA1,3,23 2. Any claimant who transfers an interest in a partnership, limited liability company, or tax-option corporation after the first credit allowance date, as defined under 26 USC 45D (b), but before the final credit allowance date for the credit allowed under this subsection shall be entitled to claim the credit for the remaining credit allowance dates by filing with the claimant's return a written agreement between the claimant and the transferee of the interest that specifies that the claimant, not the transferee, is the person entitled to claim the credit.

SB461-SSA1,4,3 3. The Wisconsin adjusted basis of any investment for which a credit is claimed under par. (b) shall be reduced by the amount of the credit that is offset against Wisconsin income taxes.

SB461-SSA1,4,5 4. The limitation under section 469 (a) (1) (B) of the Internal Revenue Code does not apply to the credit under this subsection.

SB461-SSA1,4,7 5. A claimant may claim the credit under this subsection regardless of whether the claimant claims a credit under 26 USC 45D.

SB461-SSA1,4,9 (d) Administration. 1. 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.

SB461-SSA1,4,14 2. The department of revenue may promulgate rules regarding the recapture of tax credits claimed under this subsection, consistent with 26 USC 45D (g). If a claimant's federal tax credit under 26 USC 45D is subject to recapture under 26 USC 45D (g), the claimant's tax credit under this subsection is subject to recapture at the same time and in the same manner as the claimant's federal tax credit.

SB461-SSA1,4,17 3. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.2065 (2) (b).

SB461-SSA1, s. 2 Section 2. 71.08 (1) (intro.) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

SB461-SSA1,5,4 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust, or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2dy), (3m), (3n), (3p), (3q), (3r), (3s), (3t), (3w), (5b), (5d), (5e), (5f), (5h), (5i), (5j), (5n), (6), (6e), (8r), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.57 to 71.61, and 71.613 and subch. VIII and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

SB461-SSA1, s. 3 Section 3. 71.10 (4) (fm) of the statutes is created to read:

SB461-SSA1,5,6 71.10 (4) (fm) New markets credit under s. 71.07 (5n).

SB461-SSA1, s. 4 Section 4. 71.28 (5n) of the statutes is created to read:

SB461-SSA1,5,9 71.28 (5n) New markets credit. (a) Definition. In this subsection, "claimant" means a person who files a claim under this subsection.

SB461-SSA1,5,14 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.2065, for investments made after December 31, 2010, a claimant may claim as a credit against the taxes imposed under s. 71.23, up to the amount of the taxes, the amount of the claimant's qualified equity investment, as certified under s. 560.2065 (2), multiplied by the following percentage:

SB461-SSA1,5,16 1. For the taxable year that corresponds to the first credit allowance date, as defined under 26 USC 45D (a) (3), zero percent.

SB461-SSA1,5,19 2. For the taxable years that correspond to the 6 credit allowance dates, as defined under 26 USC 45D (a) (3), following the credit allowance date described in subd. 1., 3 percent.

SB461-SSA1,6,13 (c) Limitations. 1. A partnership, limited liability company, or tax-option corporation may not claim the credit under this subsection. The partners of a partnership, members of a limited liability company, or shareholders in a tax-option corporation may claim the credit under this subsection based on eligible costs incurred by the partnership, company, or tax-option corporation. The partnership, limited liability company, or tax-option corporation shall calculate the amount of the credit which may be claimed by each partner, member, or shareholder and shall provide that information to the partner, member, or shareholder. For shareholders of a tax-option corporation, the credit may be allocated in proportion to the ownership interest of each shareholder. Credits computed by a partnership or limited liability company may be claimed in proportion to the ownership interests of the partners or members or allocated to partners or members as provided in a written agreement among the partners or members that is entered into no later than the last day of the taxable year of the partnership or limited liability company, for which the credit is claimed. Any partner or member who claims the credit as provided under this paragraph shall attach a copy of the agreement, if applicable, to the tax return on which the credit is claimed. A person claiming the credit as provided under this paragraph is solely responsible for any tax liability arising from a dispute with the department of revenue related to claiming the credit.

SB461-SSA1,6,20 2. Any claimant who transfers an interest in a partnership, limited liability company, or tax-option corporation after the first credit allowance date, as defined under 26 USC 45D (b), but before the final credit allowance date for the credit allowed under this subsection shall be entitled to claim the credit for the remaining credit allowance dates by filing with the claimant's return a written agreement between the claimant and the transferee of the interest that specifies that the claimant, not the transferee, is the person entitled to claim the credit.

SB461-SSA1,6,23 3. The Wisconsin adjusted basis of any investment for which a credit is claimed under par. (b) shall be reduced by the amount of the credit that is offset against Wisconsin income taxes.

SB461-SSA1,6,25 4. The limitation under section 469 (a) (1) (B) of the Internal Revenue Code does not apply to the credit under this subsection.

SB461-SSA1,7,2 5. A claimant may claim the credit under this subsection regardless of whether the claimant claims a credit under 26 USC 45D.

SB461-SSA1,7,4 (d) Administration. 1. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB461-SSA1,7,9 2. The department of revenue may promulgate rules regarding the recapture of tax credits claimed under this subsection, consistent with 26 USC 45D (g). If a claimant's federal tax credit under 26 USC 45D is subject to recapture under 26 USC 45D (g), the claimant's tax credit under this subsection is subject to recapture at the same time and in the same manner as the claimant's federal tax credit.

SB461-SSA1,7,12 3. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.2065 (2) (b).

SB461-SSA1, s. 5 Section 5. 71.30 (3) (dn) of the statutes is created to read:

SB461-SSA1,7,14 71.30 (3) (dn) New markets credit under s. 71.28 (5n).

SB461-SSA1, s. 6 Section 6. 71.47 (5n) of the statutes is created to read:

SB461-SSA1,7,17 71.47 (5n) New markets credit. (a) Definition. In this subsection, "claimant" means a person who files a claim under this subsection.

SB461-SSA1,7,22 (b) Filing claims. Subject to the limitations provided under this subsection and s. 560.2065, for investments made after December 31, 2010, a claimant may claim as a credit against the taxes imposed under s. 71.43, up to the amount of the taxes, the amount of the claimant's qualified equity investment, as certified under s. 560.2065 (2), multiplied by the following percentage:

SB461-SSA1,7,24 1. For the taxable year that corresponds to the first credit allowance date, as defined under 26 USC 45D (a) (3), zero percent.

SB461-SSA1,8,3 2. For the taxable years that correspond to the 6 credit allowance dates, as defined under 26 USC 45D (a) (3), following the credit allowance date described in subd. 1., 3 percent.

SB461-SSA1,8,22 (c) Limitations. 1. A partnership, limited liability company, or tax-option corporation may not claim the credit under this subsection. The partners of a partnership, members of a limited liability company, or shareholders in a tax-option corporation may claim the credit under this subsection based on eligible costs incurred by the partnership, company, or tax-option corporation. The partnership, limited liability company, or tax-option corporation shall calculate the amount of the credit which may be claimed by each partner, member, or shareholder and shall provide that information to the partner, member, or shareholder. For shareholders of a tax-option corporation, the credit may be allocated in proportion to the ownership interest of each shareholder. Credits computed by a partnership or limited liability company may be claimed in proportion to the ownership interests of the partners or members or allocated to partners or members as provided in a written agreement among the partners or members that is entered into no later than the last day of the taxable year of the partnership or limited liability company, for which the credit is claimed. Any partner or member who claims the credit as provided under this paragraph shall attach a copy of the agreement, if applicable, to the tax return on which the credit is claimed. A person claiming the credit as provided under this paragraph is solely responsible for any tax liability arising from a dispute with the department of revenue related to claiming the credit.

SB461-SSA1,9,4 2. Any claimant who transfers an interest in a partnership, limited liability company, or tax-option corporation after the first credit allowance date, as defined under 26 USC 45D (b), but before the final credit allowance date for the credit allowed under this subsection shall be entitled to claim the credit for the remaining credit allowance dates by filing with the claimant's return a written agreement between the claimant and the transferee of the interest that specifies that the claimant, not the transferee, is the person entitled to claim the credit.

SB461-SSA1,9,7 3. The Wisconsin adjusted basis of any investment for which a credit is claimed under par. (b) shall be reduced by the amount of the credit that is offset against Wisconsin income taxes.

SB461-SSA1,9,9 4. A claimant may claim the credit under this subsection regardless of whether the claimant claims a credit under 26 USC 45D.

SB461-SSA1,9,11 (d) Administration. 1. 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.

SB461-SSA1,9,16 2. The department of revenue may promulgate rules regarding the recapture of tax credits claimed under this subsection, consistent with 26 USC 45D (g). If a claimant's federal tax credit under 26 USC 45D is subject to recapture under 26 USC 45D (g), the claimant's tax credit under this subsection is subject to recapture at the same time and in the same manner as the claimant's federal tax credit.

SB461-SSA1,9,19 3. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.2065 (2) (b).

SB461-SSA1, s. 7 Section 7. 71.49 (1) (dn) of the statutes is created to read:

SB461-SSA1,9,21 71.49 (1) (dn) New markets credit under s. 71.47 (5n).

SB461-SSA1, s. 8 Section 8. 76.639 of the statutes is created to read:

SB461-SSA1,9,26 76.639 New markets credit. (1) Filing claims. Subject to the limitations provided under this section and s. 560.2065, for investments made after December 31, 2010, an insurer may claim as a credit against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67 the amount of the insurer's qualified equity investment, as certified under s. 560.2065 (2), multiplied by the following percentage:

SB461-SSA1,10,4 (a) For the taxable year that corresponds to the first credit allowance date, as defined under 26 USC 45D (a) (3), zero percent.

SB461-SSA1,10,7 (b) For the taxable years that correspond to the 6 credit allowance dates, as defined under 26 USC 45D (a) (3), following the credit allowance date described in subd. 1., 3 percent.

SB461-SSA1,10,9 (2) Limitations. (a) An insurer may claim the credit under this section regardless of whether the insurer claims a credit under 26 USC 45D.

SB461-SSA1,10,14 (b) The department of revenue may promulgate rules regarding the recapture of credits claimed under this section, consistent with 26 USC 45D (g). If a claimant's federal tax credit under 26 USC 45D is subject to recapture under 26 USC 45D (g), the claimant's tax credit under this section is subject to recapture at the same time and in the same manner as the claimant's federal tax credit.

SB461-SSA1,10,17 (c) No credit may be allowed under this section unless the claimant includes with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.2065 (2) (b).

SB461-SSA1,10,23 (3) Carry-forward. If the credit under sub. (2) is not entirely offset against the fees under s. 76.60, 76.63, 76.65, 76.66, or 76.67 otherwise due, the unused balance may be carried forward and credited against those fees for the following 15 years to the extent that it is not offset by those fees otherwise due in all the years between the year in which the expense was made and the year in which the carry-forward credit is claimed.

SB461-SSA1, s. 9 Section 9. 560.2065 of the statutes is created to read:

SB461-SSA1,11,2 560.2065 Certification of qualified equity investments. (1) Definitions. In this section:

SB461-SSA1,11,4 (a) "Credit allowance date" means a credit allowance date as defined under 26 USC 45D (a) (3).

SB461-SSA1,11,6 (b) "Qualified active low-income community business" means a qualified active low-income community business as defined in 26 USC 45D (d) 2.

SB461-SSA1,11,8 (c) "Qualified community development entity" means a qualified community development entity as defined under 26 USC 45D (c).

SB461-SSA1,11,10 (d) "Qualified equity investment" means a qualified equity investment as defined under 26 USC 45D (b).

SB461-SSA1,11,11 (2) Certification. The department may do all of the following:

SB461-SSA1,11,13 (a) Certify a qualified equity investment under this paragraph if all of the following apply:

SB461-SSA1,11,15 1. The proposed qualified equity investment will be funded by a qualified community development entity whose service area includes the state.

SB461-SSA1,11,18 2. The qualified community development entity identified in subd. 1. applies to the department on a form provided by the department and includes with the application evidence satisfactory to the department that all of the following apply:

SB461-SSA1,11,21 a. Subject to the limit under sub. (4) (a), proceeds from the proposed qualified equity investment will be invested in or loaned to a qualified active low-income community business located in this state.