LRB-4685/1
JK&TKK:cjs:jf
2009 - 2010 LEGISLATURE
April 16, 2010 - Introduced by Senators Lassa, Taylor and Schultz, cosponsored
by Representatives Hilgenberg, Garthwaite, Molepske Jr., Fields, Zigmunt,
Berceau, Vruwink, Brooks, Barca, Sinicki, Pasch, Richards, Schneider,
Clark and Pope-Roberts. Referred to Committee on Economic Development.
SB692,1,5
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., 76.67 (2) and 77.92 (4); and
to create 71.07 (5p), 71.10 (4) (ce), 71.28
3(5p), 71.30 (3) (ce), 71.47 (5p), 71.49 (1) (ce), 76.634 and 560.295 of the statutes;
4relating to: an income and franchise tax credit for investments in a community
5development financial institution and granting rule-making authority.
Analysis by the Legislative Reference Bureau
Under this bill, the Department of Commerce (Commerce) may certify a person
who makes a qualified investment in a registered community development financial
institution (CDFI) to receive a credit against state income and franchise taxes and
against license fees paid by insurers. The bill defines a CDFI as an entity that is
organized under the laws of this state and has been certified by the Community
Development Financial Institutions Fund established under federal law (fund) as
meeting certain eligibility requirements. The bill permits Commerce to register a
CDFI that applies to Commerce and complies with annual reporting requirements.
The bill defines a "qualified investment" as a loan or deposit that pays no interest of
at least $10,000 that is made for a minimum of 60 months and over which the CDFI
retains complete control for the duration of the investment period.
Commerce may revoke the registration of a CDFI that fails to comply with
annual reporting requirements or that no longer meets the eligibility requirement
for certification by the fund. Commerce may certify up to $500,000 in tax credits in
any calendar year.
A person certified to receive tax credits may claim, in two consecutive years, five
percent of the person's qualified investment, if the investment is at least $10,000, but
not more than $150,000, or six percent of the person's qualified investment, if the
investment is more than $150,000, but not more than $500,000. If the person
withdraws the qualified investment from the CDFI before the end of the investment
period and does not reinvest the qualified investment in another CDFI, the person
must repay a portion of the credit amounts that the person received by adding the
portion to the person's tax or fee liability in a subsequent year. However, the portion
that the person must repay depends on when the person withdraws the investment
during the investment period. The portion that the person must repay decreases the
longer the person holds the investment during the investment period.
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:
SB692,2,83
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),
(5p), 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).
SB692, s. 2
9Section
2. 71.07 (5p) of the statutes is created to read:
SB692,2,1210
71.07
(5p) Community development financial institution credit. (a)
11Definition. In this subsection, "claimant" means a person who files a claim under this
12subsection.
SB692,3,613
(b)
Filing claims. Subject to the limitations provided under this subsection and
14the requirements under s. 560.295, a claimant may claim as a credit against the tax
15imposed under s. 71.02, up to the amount of the tax, in each taxable year for 2
1consecutive years, beginning with the taxable year in which the investment is made,
2an amount equal to 5 percent of the claimant's qualified investment in a community
3development financial institution, if the investment is at least $10,000, but not more
4than $150,000, or 6 percent of the claimant's qualified investment in a community
5development financial institution, if the investment is more than $150,000, but not
6more than $500,000.
SB692,3,147
(c)
Limitations. Partnerships, limited liability companies, and tax-option
8corporations may not claim the credit under this subsection, but the eligibility for,
9and the amount of, the credit are based on their payment of amounts under par. (b).
10A partnership, limited liability company, or tax-option corporation shall compute
11the amount of credit that each of its partners, members, or shareholders may claim
12and shall provide that information to each of them. Partners, members of limited
13liability companies, and shareholders of tax-option corporations may claim the
14credit in proportion to their ownership interests.
SB692,3,1615
(d)
Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
16s. 71.28 (4), applies to the credit under this subsection.
SB692, s. 3
17Section
3. 71.10 (4) (ce) of the statutes is created to read:
SB692,3,1918
71.10
(4) (ce) Community development financial institution credit under s.
1971.07 (5p).
SB692,3,2522
71.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
23(2dj), (2dL), (2dm), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3s), (3t), (3w),
24(5e), (5f), (5g), (5h), (5i), (5j), (5k),
(5p), and (8r) and passed through to partners shall
25be added to the partnership's income.
SB692,4,83
71.26
(2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dd),
4(1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (1dy), (3g), (3h), (3n), (3p), (3q), (3r), (3t),
5(3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k),
(5p), 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, limited liability company's, or tax-option corporation's
8income under s. 71.21 (4) or 71.34 (1k) (g).
SB692, s. 6
9Section
6. 71.28 (5p) of the statutes is created to read:
SB692,4,1210
71.28
(5p) Community development financial institution credit. (a)
11Definition. In this subsection, "claimant" means a person who files a claim under this
12subsection.
SB692,4,2113
(b)
Filing claims. Subject to the limitations provided under this subsection and
14the requirements under s. 560.295, a claimant may claim as a credit against the tax
15imposed under s. 71.23, up to the amount of the tax, in each taxable year for 2
16consecutive years, beginning with the taxable year in which the investment is made,
17an amount equal to 5 percent of the claimant's qualified investment in a community
18development financial institution, if the investment is at least $10,000, but not more
19than $150,000, or 6 percent of the claimant's qualified investment in a community
20development financial institution, if the investment is more than $150,000, but not
21more than $500,000.
SB692,5,422
(c)
Limitations. Partnerships, limited liability companies, and tax-option
23corporations may not claim the credit under this subsection, but the eligibility for,
24and the amount of, the credit are based on their payment of amounts under par. (b).
25A partnership, limited liability company, or tax-option corporation shall compute
1the amount of credit that each of its partners, members, or shareholders may claim
2and shall provide that information to each of them. Partners, members of limited
3liability companies, and shareholders of tax-option corporations may claim the
4credit in proportion to their ownership interests.
SB692,5,65
(d)
Administration. Subsection (4) (e) to (h), as it applies to the credit under
6sub. (4), applies to the credit under this subsection.
SB692, s. 7
7Section
7. 71.30 (3) (ce) of the statutes is created to read:
SB692,5,98
71.30
(3) (ce) Community development financial institution credit under s.
971.28 (5p).
SB692,5,1512
71.34
(1k) (g) An addition shall be made for credits computed by a tax-option
13corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (1dy),
14(3), (3g), (3h), (3n), (3p), (3q), (3r), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k),
(5p), 15and (8r) and passed through to shareholders.
SB692,5,2418
71.45
(2) (a) 10. By adding to federal taxable income the amount of credit
19computed under s. 71.47 (1dd) to (1dy), (3g), (3h), (3n), (3p), (3q), (3r), (3w), (5e), (5f),
20(5g), (5h), (5i), (5j), (5k),
(5p), and (8r) and not passed through by a partnership,
21limited liability company, or tax-option corporation that has added that amount to
22the partnership's, limited liability company's, or tax-option corporation's income
23under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47
24(1), (3), (3t), (4), (4m), and (5).
SB692, s. 10
25Section
10. 71.47 (5p) of the statutes is created to read:
SB692,6,3
171.47
(5p) Community development financial institution credit. (a)
2Definition. In this subsection, "claimant" means a person who files a claim under this
3subsection.
SB692,6,124
(b)
Filing claims. Subject to the limitations provided under this subsection and
5the requirements under s. 560.295, a claimant may claim as a credit against the tax
6imposed under s. 71.43, up to the amount of the tax, in each taxable year for 2
7consecutive years, beginning with the taxable year in which the investment is made,
8an amount equal to 5 percent of the claimant's qualified investment in a community
9development financial institution, if the investment is at least $10,000, but not more
10than $150,000, or 6 percent of the claimant's qualified investment in a community
11development financial institution, if the investment is more than $150,000, but not
12more than $500,000.
SB692,6,2013
(c)
Limitations. Partnerships, limited liability companies, and tax-option
14corporations may not claim the credit under this subsection, but the eligibility for,
15and the amount of, the credit are based on their payment of amounts under par. (b).
16A partnership, limited liability company, or tax-option corporation shall compute
17the amount of credit that each of its partners, members, or shareholders may claim
18and shall provide that information to each of them. Partners, members of limited
19liability companies, and shareholders of tax-option corporations may claim the
20credit in proportion to their ownership interests.
SB692,6,2221
(d)
Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
22s. 71.28 (4), applies to the credit under this subsection.
SB692, s. 11
23Section
11. 71.49 (1) (ce) of the statutes is created to read:
SB692,6,2524
71.49
(1) (ce) Community development financial institution credit under s.
2571.47 (5p).
SB692, s. 12
1Section
12. 76.634 of the statutes is created to read:
SB692,7,11
276.634 Community development financial institution credit. (1) Filing
3claims. Subject to the limitations provided under this subsection and the
4requirements under s. 560.295, an insurer may claim as a credit against the fees due
5under s. 76.60, 76.63, 76.65, 76.66, or 76.67 in each taxable year for 2 consecutive
6years, beginning with the taxable year in which the investment is made, an amount
7equal to 5 percent of the insurer's qualified investment in a community development
8financial institution, if the investment is at least $10,000, but not more than
9$150,000, or 6 percent of the insurer's qualified investment in a community
10development financial institution, if the investment is more than $150,000, but not
11more than $500,000.
SB692,7,17
12(2) Carry-forward. If the credit under sub. (1) is not entirely offset against the
13fees under s. 76.60, 76.63, 76.65, 76.66, or 76.67 otherwise due, the unused balance
14may be carried forward and credited against those fees for the following 15 years to
15the extent that it is not offset by those fees otherwise due in all the years between
16the year in which the expense was made and the year in which the carry-forward
17credit is claimed.
SB692,7,20
18(3) Limitations. No credit may be allowed under this section unless the insurer
19includes with the insurer's annual return under s. 76.64 a copy of the insurer's
20certification for tax benefits under s. 560.295 (5) (b).
SB692,8,723
76.67
(2) If any domestic insurer is licensed to transact insurance business in
24another state, this state may not require similar insurers domiciled in that other
25state to pay taxes greater in the aggregate than the aggregate amount of taxes that
1a domestic insurer is required to pay to that other state for the same year less the
2credits under ss.
76.634, 76.635, 76.636, 76.637, 76.638, and 76.655, except that the
3amount imposed shall not be less than the total of the amounts due under ss. 76.65
4(2) and 601.93 and, if the insurer is subject to s. 76.60, 0.375% of its gross premiums,
5as calculated under s. 76.62, less offsets allowed under s. 646.51 (7) or under ss.
676.634, 76.635, 76.636, 76.637, 76.638, and 76.655 against that total, and except that
7the amount imposed shall not be less than the amount due under s. 601.93.
SB692,8,2510
77.92
(4) "Net business income," with respect to a partnership, means taxable
11income as calculated under section
703 of the Internal Revenue Code; plus the items
12of income and gain under section
702 of the Internal Revenue Code, including taxable
13state and municipal bond interest and excluding nontaxable interest income or
14dividend income from federal government obligations; minus the items of loss and
15deduction under section
702 of the Internal Revenue Code, except items that are not
16deductible under s. 71.21; plus guaranteed payments to partners under section
707 17(c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de),
18(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3s),
19(3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k),
(5p), and (8r); and plus or minus, as
20appropriate, transitional adjustments, depreciation differences, and basis
21differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain,
22loss, and deductions from farming. "Net business income," with respect to a natural
23person, estate, or trust, means profit from a trade or business for federal income tax
24purposes and includes net income derived as an employee as defined in section
3121 25(d) (3) of the Internal Revenue Code.
SB692, s. 15
1Section
15. 560.295 of the statutes is created to read:
SB692,9,3
2560.295 Certification of investments in community development
3financial institutions. (1) Definitions. In this section:
SB692,9,54
(a) "Community development financial institution" means an entity that
5satisfies all of the following:
SB692,9,861. The entity is certified by the fund under
12 CFR 1805.201 as meeting the
7eligibility requirements for a community development financial institution under
12
8CFR 1805.200 and
1805.201 (b).
SB692,9,99
2. The entity is organized under the laws of this state.
SB692,9,1110
3. The entity uses qualified investments for which a person may be certified for
11tax credits under sub. (2) (a) for projects that are based in this state.
SB692,9,1312
(b) "Fund" means the Community Development Financial Institutions Fund
13established under
12 USC 4703 (a).
SB692,9,1614
(c) 1. Subject to subd. 2., "qualified investment" means a deposit or loan that
15pays no interest to the person who made the deposit or loan, if the deposit or loan has
16a value of at least $10,000 and is made for a period of at least 60 months.
SB692,9,2317
2. A community development financial institution that receives an investment
18described under subd. 1. shall have complete control over the entire investment
19amount, including any interest earned on the investment, for the duration of the
20investment period, but the investment may be subject to any additional terms and
21conditions of the investment agreement between the community development
22financial institution and the investor which are not inconsistent with the
23requirements of this section.
SB692,9,25
24(2) Certification; registration and reporting required. (a) Subject to the
25limits under sub. (4), the department may certify a person under this section to claim
1tax credits under s. 71.07 (5p), 71.28 (5p), 71.47 (5p), or 76.634 if the person applies
2to the department on a form prepared by the department and submits evidence
3satisfactory to the department that the person has made a qualified investment in
4a community development financial institution that is registered under par. (b).
SB692,10,115
(b) 1. The department may register a community development financial
6institution if the community development financial institution applies to the
7department on a form prepared by the department. The department may revoke the
8registration of a community development financial institution if the entity no longer
9meets the eligibility requirements for certification as a community development
10financial institution by the fund or fails to comply with the requirements of this
11paragraph.
SB692,10,1712
2. A community development financial institution registered under this section
13shall annually, within 90 days after the last day of the preceding calendar year,
14submit a report containing financial statements of the community development
15financial institution, prepared according to generally accepted accounting principles
16and including all of the following information for the preceding calendar year, to the
17department:
SB692,10,1918
a. The material events certification form required by the U.S. department of
19the treasury.
SB692,10,2220
b. Certification, in the form and manner prescribed by the department, that the
21community development financial institution satisfies the criteria under sub. (1) (a)
221. to 3.
SB692,10,2323
c. Any other information the department considers relevant.
SB692,11,3
1(3) Eligibility. (a) Except as provided in par. (b), a person certified under sub.
2(2) (a) is eligible to claim tax credits under s. 71.07 (5p), 71.28 (5p), 71.47 (5p), or
376.634.
SB692,11,114
(b) 1. A person certified under sub. (2) (a) who withdraws a qualified investment
5from a community development financial institution prior to the date of withdrawal
6specified in the written notice provided to the person under sub. (5) (b) and who does
7not immediately reinvest the proceeds of the qualified investment as a qualified
8investment in another community development financial institution shall add to the
9person's liability for taxes imposed under s. 71.02, 71.23, or 71.43, or fees imposed
10under s.76.60, 76.63, 76.65, 76.66, or 76.67, one of the following percentages of the
11amount of the credits received under s. 71.07 (5p), 71.28 (5p), 71.47 (5p), or 76.634: