AB294: Bill Text

Note: This Section creates a penalty for nonqualified withdrawals from a lifelong learning account through an addition to an individual's taxable income. The penalty does not apply to persons 70 years of age or older.

AB294, s. 3 Section 3. 71.05 (6) (a) 26. of the statutes is created to read:

AB294,3,5 71.05 (6) (a) 26. For taxable years beginning after December 31, 2009, the amount withdrawn by an individual who is 70 years of age or older at the time of the withdrawal, from a lifelong learning account and not used for qualified education expenses under s. 106.115 (2) (e) or (3) (b).

Note: This Section includes nonqualified lifelong learning account withdrawals by an individual 70 years of age or older in the individual's taxable income.

AB294, s. 4 Section 4. 71.05 (6) (b) 47. of the statutes is created to read:

AB294,3,10 71.05 (6) (b) 47. For taxable years beginning after December 31, 2009, for a participating employee, as defined in s. 106.115 (1) (e), the amount contributed during the taxable year by or on behalf of an individual to a lifelong learning account established under s. 106.115.

Note: This Section subtracts employee and employer lifelong learning account contributions from an individual's federal adjusted gross income (AGI).

AB294, s. 5 Section 5. 71.05 (6) (b) 48. of the statutes is created to read:

AB294,3,16 71.05 (6) (b) 48. For taxable years beginning after December 31, 2009, any increase in value of a lifelong learning account established under s. 106.115, except that the subtraction under this subdivision may not be claimed by any individual who makes a withdrawal for a purpose other than for qualified education expenses under s. 106.115 (2) (e) or (3) (b).

Note: This Section subtracts from federal AGI any gain generated from a lifelong learning account if the withdrawal is used for qualified education expenses.

AB294, s. 6 Section 6. 71.05 (6) (b) 49. of the statutes is created to read:

AB294,4,3 71.05 (6) (b) 49. For taxable years beginning after December 31, 2009, for a participating employer, as defined in s. 106.115 (1) (f), the amount contributed by a participating employer to a lifelong learning account pursuant to a lifelong learning account plan approved under s. 106.115 (2), to the extent not otherwise subtracted in the computation of the employer's taxable income.

Note: This Section subtracts an employer's lifelong learning account contributions made on behalf of the employer's employees from the employer's Wisconsin taxable income.

AB294, s. 7 Section 7. 71.07 (6s) of the statutes is created to read:

AB294,4,7 71.07 (6s) Lifelong learning account credit. (a) Definition. In this subsection, "claimant" means a participating employer, as defined in s. 106.115 (1) (f), who is not an individual.

AB294,4,12 (b) Filing claims. For taxable years beginning after December 31, 2009, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, an amount equal to 50 percent of the claimant's lifelong learning account contributions under s. 106.115 (2) (d) paid in the taxable year.

AB294,4,14 (c) Limitations. 1. No credit may be claimed on contributions in excess of $1,000 per employee.

AB294,4,16 2. The amount claimed by a claimant under par. (b) for a taxable year may not exceed $50,000.

AB294,5,2 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.

AB294,5,5 4. No credit may be claimed under a plan in which employer matching contributions are less than 25 percent of the amount contributed annually by participating employees.

AB294,5,7 (d) Administration. The provisions of s. 71.28 (4) (e) to (h), as they apply to the credit under s. 71.28 (4), apply to the credit under this subsection.

Note: This Section creates a nonrefundable employer credit for employer contributions to lifelong learning accounts. The Section grants a credit equal to 50 percent of the employer's first $1,000 contributed per employee. Employers must make matching contributions of at least 25 percent in order to claim the credit. The Section places a $50,000 yearly aggregate limit on the credit available to an employer. The credit may be carried forward and credited against taxes due for the following 15 years.

AB294, s. 8 Section 8. 71.10 (4) (cs) of the statutes is created to read:

AB294,5,9 71.10 (4) (cs) Lifelong learning account credit under s. 71.07 (6s).

AB294, s. 9 Section 9. 71.21 (4) of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

AB294,5,15 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3r), (3s), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and (6s) and passed through to partners shall be added to the partnership's income.

AB294, s. 10 Section 10. 71.26 (2) (a) 4. of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

AB294,6,2 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (1dy), (3g), (3h), (3n), (3p), (3r), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and (6s) 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 (1k) (g).

AB294, s. 11 Section 11. 71.26 (2) (a) 10. of the statutes is created to read:

AB294,6,8 71.26 (2) (a) 10. For taxable years beginning after December 31, 2009, for a participating employer, as defined in s. 106.115 (1) (f), minus the amount contributed by a participating employer to a lifelong learning account pursuant to a lifelong learning account plan approved under s. 106.115 (2), to the extent not otherwise subtracted in the computation of the employer's net income.

Note: This Section subtracts an employer's lifelong learning account contributions made on behalf of the employer's employees from the employer's net income.

AB294, s. 12 Section 12. 71.28 (6s) of the statutes is created to read:

AB294,6,12 71.28 (6s) Lifelong learning account credit. (a) Definition. In this subsection, "claimant" means a participating employer, as defined in s. 106.115 (1) (f).

AB294,6,17 (b) Filing claims. For taxable years beginning after December 31, 2009, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, an amount equal to 50 percent of the claimant's lifelong learning account contributions under s. 106.115 (2) (d) paid in the taxable year.

AB294,6,19 (c) Limitations. 1. No credit may be claimed on contributions in excess of $1,000 per employee.

AB294,6,21 2. The amount claimed by a claimant under par. (b) for a taxable year may not exceed $50,000.

AB294,7,6 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.

AB294,7,9 4. No credit may be claimed under a plan in which employer matching contributions are less than 25 percent of the amount contributed annually by participating employees.

AB294,7,11 (d) Administration. The provisions of sub. (4) (e) to (h), as they apply to the credit under sub. (4), apply to the credit under this subsection.

Note: This Section creates a nonrefundable employer credit for employer contributions to lifelong learning accounts. The Section grants a credit equal to 50 percent of the employer's first $1,000 contributed per employee. Employers must make matching contributions of at least 25 percent in order to claim the credit. The Section places a $50,000 yearly aggregate limit on the credit available to an employer. The credit may be carried forward and credited against taxes due for the following 15 years.

AB294, s. 13 Section 13. 71.30 (3) (dn) of the statutes is created to read:

AB294,7,13 71.30 (3) (dn) Lifelong learning account credit under s. 71.28 (6s).

AB294, s. 14 Section 14. 71.34 (1k) (g) of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

AB294,7,19 71.34 (1k) (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), (1dy), (3), (3g), (3h), (3n), (3p), (3r), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and (6s) and passed through to shareholders.

AB294, s. 15 Section 15. 71.45 (2) (a) 10. of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

AB294,8,7 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dy), (3h), (3n), (3p), (3r), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k), and (6s) 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 (1k) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4), and (5).

AB294, s. 16 Section 16. 71.45 (2) (a) 19. of the statutes is created to read:

AB294,8,14 71.45 (2) (a) 19. For taxable years beginning after December 31, 2009, for a participating employer, as defined in s. 106.115 (1) (f), by subtracting from federal taxable income the amount contributed by a participating employer to a lifelong learning account pursuant to a lifelong learning account plan approved under s. 106.115 (2), to the extent not otherwise subtracted in the computation of the employer's net income.

Note: This Section subtracts an employer's lifelong learning account contributions made on behalf of the employer's employees from the employer's net income.

AB294, s. 17 Section 17. 71.47 (6s) of the statutes is created to read:

AB294,8,18 71.47 (6s) Lifelong learning account credit. (a) Definition. In this subsection, "claimant" means a participating employer, as defined in s. 106.115 (1) (f).

AB294,8,23 (b) Filing claims. For taxable years beginning after December 31, 2009, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, an amount equal to 50 percent of the claimant's lifelong learning account contributions under s. 106.115 (2) (d) paid in the taxable year.

AB294,9,2 (c) Limitations. 1. No credit may be claimed on contributions in excess of $1,000 per employee.

AB294,9,4 2. The amount claimed by a claimant under par. (b) for a taxable year may not exceed $50,000.

AB294,9,12 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.

AB294,9,15 4. No credit may be claimed under a plan in which employer matching contributions are less than 25 percent of the amount contributed annually by participating employees.

AB294,9,17 (d) Administration. The provisions of s. 71.28 (4) (e) to (h), as they apply to the credit under s. 71.28 (4), apply to the credit under this subsection.

Note: This Section creates a nonrefundable employer credit for employer contributions to lifelong learning accounts. The Section grants a credit equal to 50 percent of the employer's first $1,000 contributed per employee. Employers must make matching contributions of at least 25 percent in order to claim the credit. The Section places a $50,000 yearly aggregate limit on the credit available to an employer. The credit may be carried forward and credited against taxes due for the following 15 years.

AB294, s. 18 Section 18. 71.49 (1) (dn) of the statutes is created to read:

AB294,9,19 71.49 (1) (dn) Lifelong learning account credit under s. 71.47 (6s).

AB294, s. 19 Section 19. 77.92 (4) of the statutes, as affected by 2009 Wisconsin Act 2, is amended to read:

AB294,10,16 77.92 (4) "Net business income," with respect to a partnership, means taxable income as calculated under section 703 of the Internal Revenue Code; plus the items of income and gain under section 702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section 702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section 707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3r), (3s), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), and (5k) , and (6s); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain, loss, and deductions from farming. "Net business income," with respect to a natural person, estate, or trust, means profit from a trade or business for federal income tax purposes and includes net income derived as an employee as defined in section 3121 (d) (3) of the Internal Revenue Code.

AB294, s. 20 Section 20. 106.115 of the statutes is created to read:

AB294,10,18 106.115 Lifelong learning accounts program. (1) In this section:

AB294,10,20 (a) "Account" means a lifelong learning account that is approved by the department under sub. (3).

AB294,10,22 (b) "Eligible employee" means an employee who is eligible to participate in a participating employer's plan.

AB294,10,25 (c) "Full-time employee" means an employee who is employed by a participating employer to work at least 2,080 hours per year, including paid leave and holidays, and whose principal place of employment is in this state.

AB294,11,3 (d) "Part-time employee" means an employee who is employed by a participating employer to work less than 2,080 hours per year, including paid leave and holidays, and whose principal place of employment is in this state.

AB294,11,5 (e) "Participating employee" means an eligible employee who participates in a lifelong learning accounts program under this section.

AB294,11,7 (f) "Participating employer" means an employer that participates in a lifelong learning accounts program under this section.

AB294,11,9 (g) "Plan" means a lifelong learning account plan that is approved by the department under sub. (2).

AB294,11,17 (h) "Qualified education expenses" means expenses for tuition and fees, books, equipment, and tools or supplies that may be retained by a participating employee relating to a course of instruction provided by a postsecondary educational institution that is accredited to the satisfaction of the department and moneys transferred from a participating employee's account to the participating employee's account established under the plan of another participating employer. "Qualified education expenses" does not include expenses for meals, lodging, transportation, or any course or other instruction involving sports, games, or hobbies.

AB294,11,18 (2) The department shall approve a plan that satisfies all of the following:

AB294,11,19 (a) Is in writing.

AB294,11,22 (b) Covers at least all full-time employees of the participating employer and, if the participating employer elects to cover part-time employees under the plan, all part-time employees.

AB294,11,23 (c) Provides for voluntary participation by eligible employees.

AB294,12,11 (d) 1. Establishes an account for each participating employee to which the participating employee makes contributions for the payment of qualified education expenses and the participating employer may make matching contributions for the payment of those expenses. A participating employer that makes matching contributions under this subdivision shall base those contributions on a percentage of a participating employee's annual contribution and shall apply the same percentage to each participating employee. The combined contributions of the participating employee and participating employer may not exceed $5,000 annually. A participating employee or participating employer may not make contributions to an account that has a balance of more than $25,000. A participating employee who has multiple accounts may not contribute to any account if the aggregate balance of all accounts is more than $25,000. The account shall be owned by the participating employee.

AB294,12,14 2. a. In this subdivision, "consumer price index" means the average of the consumer price index for all urban consumers, U.S. city average, as determined by the bureau of labor statistics of the U.S. department of labor.

AB294,12,25 b. Except as provided in this subd. 2. b., beginning on July 1, 2011, and on each July 1 after that, the department shall adjust the annual contribution and aggregate balance limits under subd. 1. by calculating the percentage difference between the consumer price index for the 12-month period ending on December 31 of the preceding year and the consumer price index for the 12-month period ending on December 31 of the year before the preceding year and adjusting those limits by that percentage difference. The department shall publish the adjusted limits calculated under this subd. 2. b. in the Wisconsin Administrative Register. This subd. 2. b. does not apply if the consumer price index for the 12-month period ending on December 31 of the preceding year did not increase over the consumer price index for the 12-month period ending on December 31 of the year before the preceding year.

AB294,13,3 (e) Except as provided in sub. (5), provides that the account shall be used to pay qualified education expenses incurred by a participating employee for education selected at the sole discretion of the participating employee.

AB294,13,5 (f) Provides procedures for the dissemination of information about the plan, including the federal and state income tax consequences of the plan.

AB294,13,6 (3) The department shall approve an account that satisfies all of the following:

AB294,13,7 (a) Is established and administered in accordance with a plan.

AB294,13,10 (b) Except as provided in sub. (5), is used to pay qualified education expenses incurred by a participating employee for education selected at the sole discretion of the participating employee.

AB294,13,12 (c) Is held by a trustee or fiduciary, including the state treasurer, as approved by the department.

AB294,13,14 (4) A participating employer shall provide information to the department that the department determines is necessary to approve a plan or account.

AB294,13,18 (5) A participating employee may withdraw the participating employee's contribution to the account at any time for any purpose. If an amount is withdrawn for a purpose other than to pay qualified education expenses under sub. (2) (e) or (3) (b), the account shall incur a penalty under s. 71.05 (6) (a) 25.

AB294,13,21 (6) The department shall establish a program to provide information to participating employers and eligible employees about the lifelong learning accounts program established under this section.

AB294,13,23 (7) The department shall promulgate rules establishing a procedure for the approval of plans under sub. (2) and accounts under sub. (3).