LRB-4391/1
JK&MES:jld:rs
2009 - 2010 LEGISLATURE
April 7, 2010 - Introduced by Representatives Davis, Vos, Brooks, Huebsch,
Lothian, Newcomer and
Spanbauer, cosponsored by Senators Darling and
Schultz. Referred to Joint Committee on Finance.
AB941,1,8
1An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a) 4., 71.34 (1k) (g), 71.45
2(2) (a) 10. and 77.92 (4); and
to create 71.07 (5n), 71.07 (8m), 71.10 (4) (cs), 71.10
3(4) (ct), 71.28 (5n), 71.30 (3) (dq), 71.47 (5n) and 71.49 (1) (dq) of the statutes;
4relating to: creating an income and franchise tax credit for businesses that
5contribute to a scholarship-granting organization or to an educational
6improvement organization and a nonrefundable individual income tax credit
7for education expenses paid for dependents who attend elementary and
8secondary schools.
Analysis by the Legislative Reference Bureau
This bill creates an income and franchise tax credit for businesses that
contribute to a scholarship-granting organization or to an educational improvement
organization. The amount of the credit is equal to 75 percent of the contribution, but
the amount of the credit may not exceed $200,000 in any taxable year. The total
amount of the credit that all businesses may claim in any taxable year is $12,000,000.
Under the bill, a scholarship-granting organization is a nonprofit entity that
contributes at least 80 percent of its annual receipts to scholarship programs for
pupils in grades kindergarten to 12 at private or public schools in this state. Under
the bill, an educational improvement organization is a nonprofit entity that
contributes at least 80 percent of its annual receipts as grants to public schools for
innovative educational programs.
This bill also creates a nonrefundable individual income tax credit for amounts
spent by a claimant, for the claimant's dependent child, on eligible education
expenses at public schools, private schools, or charter schools for grades
kindergarten to 12. Because the credit is nonrefundable, no refund is paid if the
amount of the credit exceeds the taxpayer's tax liability.
Under the bill, education expenses include amounts that are spent for tuition,
books, and other educational materials or supplies that are purchased by a claimant
in the year to which the claim relates and that are related to the pupil's curricular
activities and attendance at an eligible institution.
The maximum credit that may be claimed under the bill is $2,500 per year if
the claimant files as a single individual, head of household, or married person filing
separately. The maximum credit that may be claimed under the bill is $5,000 per
year if the claimant is a married person filing a joint return. The amount of credit
that may be claimed by a nonresident or part-year resident of this state is modified
based on the ratio of the claimant's Wisconsin adjusted gross income (AGI) to his or
her federal AGI.
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:
AB941,2,83
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
4(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3s),
5(3t), (3w), (5e), (5f), (5h), (5i), (5j), (5k),
(5n), and (8r) and not passed through by a
6partnership, limited liability company, or tax-option corporation that has added that
7amount to the partnership's, company's, or tax-option corporation's income under s.
871.21 (4) or 71.34 (1k) (g).
AB941, s. 2
9Section
2. 71.07 (5n) of the statutes is created to read:
AB941,2,1110
71.07
(5n) Educational improvement credit. (a)
Definitions. In this
11subsection:
AB941,3,3
11. "Claimant" means a sole proprietor, a partner, a member of a limited liability
2company, or a shareholder of a tax-option corporation who files a claim under this
3subsection.
AB941,3,44
2. "Contribution" means a donation of cash, personal property, or services.
AB941,3,65
3. "Dependent" means a dependent as defined in section
152 of the Internal
6Revenue Code.
AB941,3,117
4. "Educational improvement organization" means an entity described in
8section
501 (c) (3) of the Internal Revenue Code that is exempt from federal income
9tax under section
501 (a) of the Internal Revenue Code and that spends at least 80
10percent of its annual receipts as grants to public schools for innovative educational
11programs.
AB941,3,1212
5. "Eligible pupil" means any pupil to whom all of the following apply:
AB941,3,1313
a. The pupil has not attained the age of 21 or been graduated from high school.
AB941,3,1714
b. At the time the pupil first receives a scholarship from a scholarship-granting
15organization, he or she is a member of a household whose total annual household
16income during the year before the receipt of the scholarship does not exceed an
17amount equal to $40,000 plus $10,000 for each dependent.
AB941,3,2018
6. "Household" means an individual and his or her spouse and dependents who
19all have the same principal abode for more than 6 months during the year to which
20a claim under this subsection relates.
AB941,3,2221
7. "Household income" means all income received by all members of a
22household.
AB941,3,2523
8. "Innovative educational program" means an advanced academic or similar
24program that is not part of the regular academic program of a public school in this
25state, but that enhances the curriculum or academic program of the public school.
AB941,4,1
19. "Private school" has the meaning given in s. 115.001 (3r).
AB941,4,32
10. "Qualified school" means any public, private, or other school or program
3that provides elementary or secondary education, including kindergarten.
AB941,4,74
11. "Scholarship-granting organization" means an entity described in section
5501 (c) (3) of the Internal Revenue Code that is exempt from federal income tax under
6section
501 (a) of the Internal Revenue Code and that contributes at least 80 percent
7of its annual receipts to scholarship programs.
AB941,4,98
12. "Scholarship program" means a program to provide tuition for eligible
9students to attend a qualified school in this state.
AB941,4,1410
(b)
Filing claims. Subject to the limitations provided in this subsection, a
11claimant may claim as a credit against the tax imposed under s. 71.02, up to the
12amount of those taxes, an amount that is equal to 75 percent of any contribution
13made by the claimant during the taxable year to an educational improvement
14organization or to a scholarship-granting organization.
AB941,4,1615
(c)
Limitations. 1. The amount of a credit that a claimant may receive under
16this subsection may not exceed $200,000 in a taxable year.
AB941,4,1817
2. The maximum amount of the credits that all claimants may receive under
18this subsection and ss. 71.28 (5n) and 71.47 (5n) in a taxable year is $12,000,000.
AB941,4,2119
3. The total amount of all credits awarded under this subsection and ss. 71.28
20(5n) and 71.47 (5n) for contributions to scholarship-granting organizations shall not
21exceed $30,000,000 for all taxable years.
AB941,4,2422
4. The total amount of all credits awarded under this subsection and ss. 71.28
23(5n) and 71.47 (5n) for contributions to educational improvement organizations shall
24not exceed $20,000,000 for all taxable years.
AB941,5,5
15. No claimant may claim a credit under this subsection unless the claimant
2first files an application for the credit with the department, in the manner prescribed
3by the department. The department shall allocate the credits claimed under this
4subsection and ss. 71.28 (5n) and 71.47 (5n) in the order in which the applications
5for such credits are received.
AB941,5,96
6. For purposes of determining the amount of any credit claimed under this
7subsection, the value of a contribution is equal to the net cost of the claimant's
8donation of cash or personal property or to the proportionate share of any wage paid
9by the claimant that is directly related to donating a service.
AB941,5,1710
7. Partnerships, limited liability companies, and tax-option corporations may
11not claim the credit under this subsection, but the eligibility for, and the amount of,
12the credit are based on their payment of amounts under par. (b). A partnership,
13limited liability company, or tax-option corporation shall compute the amount of
14credit that each of its partners, members, or shareholders may claim and shall
15provide that information to each of them. Partners, members of limited liability
16companies, and shareholders of tax-option corporations may claim the credit in
17proportion to their ownership interests.
AB941,5,1918
(d)
Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
19s. 71.28 (4), applies to the credit under this subsection.
AB941, s. 3
20Section
3. 71.07 (8m) of the statutes is created to read:
AB941,5,2121
71.07
(8m) Education expenses credit. (a)
Definitions. In this subsection:
AB941,5,2322
1. "Claimant" means an individual who claims a pupil as a dependent under
23section
151 (c) of the Internal Revenue Code, on his or her tax return.
AB941,6,224
2. "Education supplies" means tuition, books, and other educational materials
25or supplies that are purchased by a claimant in the year to which the claim relates
1and that are related to the pupil's curricular activities and attendance at an eligible
2institution.
AB941,6,53
3. "Eligible institution" means a private school, as defined in s. 115.001 (3r), or
4a charter school, as defined in s. 115.001 (1), that meets all of the criteria under s.
5118.165 (1) or a public school.
AB941,6,86
4. "Pupil" means an individual who is enrolled in kindergarten or grades one
7to 12 at an eligible institution and who is a dependent of the claimant under section
8151 (c) of the Internal Revenue Code.
AB941,6,129
(b)
Filing claims. Subject to the limitations provided in this subsection, a
10claimant may claim as a credit against the tax imposed under s. 71.02, up to the
11amount of those taxes, an amount equal to any amount paid for education supplies
12in the year to which the claim relates.
AB941,6,1513
(c)
Limitations. 1. Subject to subd. 4., the maximum credit that may be claimed
14under this subsection by a claimant who files as a single individual or head of
15household is $2,500 in each year to which the claim relates.
AB941,6,1816
2. Subject to subd. 4., the maximum credit that may be claimed under this
17subsection by claimants who are a married couple and file a joint return is a total of
18$5,000 in each year to which the claim relates.
AB941,6,2119
3. Subject to subd. 4., the maximum credit that may be claimed by each spouse
20of a married couple that files separately is 50 percent of the amount specified in subd.
212.
AB941,7,422
4. If a part-year resident or a nonresident of this state files a claim under this
23subsection, the maximum credit amount in subd. 1., 2., or 3. shall be multiplied by
24a fraction, the numerator of which is the individual's and his or her spouse's
25Wisconsin adjusted gross income and the denominator of which is the individual's
1and his or her spouse's federal adjusted gross income. In this subdivision, for
2married persons filing separately "adjusted gross income" means the separate
3adjusted gross income of each spouse, and for married persons filing jointly "adjusted
4gross income" means the total adjusted gross income of both spouses.
AB941,7,65
5. No credit may be allowed under this subsection unless it is claimed within
6the time period under s. 71.75 (2).
AB941,7,97
6. No credit may be allowed under this subsection for a taxable year covering
8a period of less than 12 months, except for a taxable year closed by reason of the death
9of the taxpayer.
AB941,7,1410
(d)
Administration. The department may enforce the credit under this
11subsection and may take any action, conduct any proceeding, and proceed as it is
12authorized in respect to taxes under this chapter. The income tax provisions in this
13chapter relating to assessments, refunds, appeals, collection, interest, and penalties
14apply to the credit under this subsection.
AB941, s. 4
15Section
4. 71.10 (4) (cs) of the statutes is created to read:
AB941,7,1616
71.10
(4) (cs) Education expenses credit under s. 71.07 (8m).