LRB-4074/1
FFK&JK:jld:jf
2011 - 2012 LEGISLATURE
February 21, 2012 - Introduced by Representatives Kuglitsch, Klenke and
Tauchen, cosponsored by Senators Leibham and Darling. Referred to
Committee on Jobs, Economy and Small Business.
AB601,1,4 1An Act to repeal 71.07 (5d) (c) 1.; to amend 73.03 (63), 238.15 (1) (intro.), 238.15
2(1) (h), 238.15 (1) (j), 238.15 (1) (km) and 238.15 (3) (d) (intro.); and to create
3238.15 (1) (m) of the statutes; relating to: the angel investment and early stage
4seed investment tax credit programs.
Analysis by the Legislative Reference Bureau
Under current law, the angel investment tax credit program allows a taxpayer
to claim a tax credit that equals 25 percent of a bona fide angel investment made
directly in a qualified new business venture (QNBV) for the tax year. Current law
provides that a QNBV is a business that is certified by the Wisconsin Economic
Development Corporation (WEDC). Under current law, WEDC may certify a
business as a QNBV if the business meets certain conditions, including being
headquartered in this state, employing at least 51 percent of its employees in this
state, and having less than 100 employees. Under this bill, in addition to the existing
certification conditions, to be certified as a QNBV a business must agree to stay in
this state for at least three years following the receipt of a bona fide angel investment
and must agree to pay a penalty to WEDC if the business relocates outside of this
state within three years of receiving a bona fide angel investment. Additionally, the
bill provides that certain conditions that a business must satisfy to be certified as a
QNBV, such as having less than 100 employees and not having operated in Wisconsin
for more than ten consecutive years, apply only to initial certifications.
Under current law, a person who claims a tax credit for an early stage seed or
angel investment must hold the investment for at least three years. If the person

does not hold the investment for at least three years, the person must pay to the
Department of Revenue (DOR) the amount of the credit that the person received
related to the investment. Under this bill, a person that holds such an investment
for less than three years does not have to repay the tax credit to DOR, if the person's
investment becomes worthless, as determined by WEDC, or if a bona fide liquidity
event occurs, as determined by WEDC.
Under current law, the maximum amount of angel investment credits that may
be claimed by all claimants for all taxable years combined is $47,500,000. The bill
eliminates this limitation.
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:
AB601, s. 1 1Section 1. 71.07 (5d) (c) 1. of the statutes is repealed.
AB601, s. 2 2Section 2. 73.03 (63) of the statutes, as affected by 2011 Wisconsin Act 32, is
3amended to read:
AB601,2,124 73.03 (63) Notwithstanding the amount limitations specified under s. 71.07
5(5d) (c) 1. and
s. 238.15 (3) (d) or s. 560.205 (3) (d), 2009 stats., in consultation with
6the department of commerce or the Wisconsin Economic Development Corporation,
7to carry forward to subsequent taxable years unclaimed credit amounts of the early
8stage seed investment credits under ss. 71.07 (5b), 71.28 (5b), 71.47 (5b), and 76.638
9and the angel investment credit under s. 71.07 (5d). Annually, no later than July 1,
10the department of commerce or the Wisconsin Economic Development Corporation
11shall submit to the department of revenue its recommendations for the carry forward
12of credit amounts as provided under this subsection.
AB601, s. 3 13Section 3. 238.15 (1) (intro.) of the statutes, as affected by 2011 Wisconsin Act
1432
, is amended to read:
AB601,3,715 238.15 (1) Angel investment tax credits. (intro.) The corporation shall
16implement a program to certify businesses for purposes of s. 71.07 (5d). A business

1desiring certification shall submit an application to the corporation in each taxable
2year for which the business desires certification. The business shall specify in its
3application the investment amount it wishes to raise and the corporation may certify
4the business and determine the amount that qualifies for purposes of s. 71.07 (5d).
5 A business may be certified under this subsection, and may maintain such
6certification,
The corporation may certify or recertify a business for purposes of s.
771.07 (5d)
only if the business satisfies all of the following conditions:
AB601, s. 4 8Section 4. 238.15 (1) (h) of the statutes, as affected by 2011 Wisconsin Act 32,
9is amended to read:
AB601,3,1110 238.15 (1) (h) It At the time it is initially certified under this subsection, it has
11less than 100 employees.
AB601, s. 5 12Section 5. 238.15 (1) (j) of the statutes, as affected by 2011 Wisconsin Act 32,
13is amended to read:
AB601,3,1514 238.15 (1) (j) It At the time it is initially certified under this subsection, it has
15been in operation in this state for not more than 10 consecutive years.
AB601, s. 6 16Section 6. 238.15 (1) (km) of the statutes, as affected by 2011 Wisconsin Act
1732
, is amended to read:
AB601,3,2018 238.15 (1) (km) It has not received aggregate private equity investment in cash
19of more than $10,000,000 prior to being before it is initially certified under this
20subsection.
AB601, s. 7 21Section 7. 238.15 (1) (m) of the statutes is created to read:
AB601,4,322 238.15 (1) (m) 1. It agrees that it will not relocate outside of this state during
23the 3 years after it receives an investment for which a person may claim a tax credit
24under s. 71.07 (5d) and agrees to pay the corporation a penalty, in an amount
25determined under subd. 2., if the business relocates outside of this state during that

13-year period. For the purposes of this paragraph, a business relocates outside of
2this state when the business locates more than 51 percent of any of the following
3outside of this state:
AB601,4,44 a. The business's employees.
AB601,4,55 b. The business's total payroll.
AB601,4,76 c. The activities of the business's headquarters, as determined by the
7corporation.
AB601,4,88 2. The amount of a penalty payment under subd. 1. is any of the following:
AB601,4,109 a. If the relocation occurs less than 12 months after the investment, 100 percent
10of the tax credit that was claimed under s. 71.07 (5d) as the result of the investment.
AB601,4,1311 b. If the relocation occurs 12 months or more after the investment but less than
1224 months after the investment, 80 percent of the tax credit that was claimed under
13s. 71.07 (5d) as the result of the investment.
AB601,4,1614 c. If the relocation occurs occurs 24 months or more after the investment but
15less than 36 months after the investment, 60 percent of the tax credit that was
16claimed under s. 71.07 (5d) as the result of the investment.
AB601, s. 8 17Section 8. 238.15 (3) (d) (intro.) of the statutes, as affected by 2011 Wisconsin
18Act 32
, is amended to read:
AB601,5,2419 238.15 (3) (d) Rules. (intro.) The corporation, in consultation with the
20department of revenue, shall adopt rules to administer this section. The rules shall
21further define "bona fide angel investment" for purposes of s. 71.07 (5d) (a) 1. The
22rules shall limit the aggregate amount of tax credits under s. 71.07 (5d) that may be
23claimed for investments in businesses certified under sub. (1) at $3,000,000 per
24calendar year for calendar years beginning after December 31, 2004, and before
25January 1, 2008, $5,500,000 per calendar year for calendar years beginning after

1December 31, 2007, and before January 1, 2010, $6,500,000 for calendar year 2010,
2and $20,000,000 per calendar year for calendar years beginning after December 31,
32010, plus, for taxable years beginning after December 31, 2010, an additional
4$250,000 for tax credits that may be claimed for investments in nanotechnology
5businesses certified under sub. (1). The rules shall also limit the aggregate amount
6of the tax credits under ss. 71.07 (5b), 71.28 (5b), 71.47 (5b), and 76.638 that may be
7claimed for investments paid to fund managers certified under sub. (2) at $3,500,000
8per calendar year for calendar years beginning after December 31, 2004, and before
9January 1, 2008, $6,000,000 per calendar year for calendar years beginning after
10December 31, 2007, and before January 1, 2010, $8,000,000 for calendar year 2010,
11and $20,500,000 per calendar year for calendar years beginning after December 31,
122010, plus, for taxable years beginning after December 31, 2010, an additional
13$250,000 for tax credits that may be claimed for investments in nanotechnology
14businesses certified under sub. (1). The rules shall also provide that, for calendar
15years beginning after December 31, 2007, no a person may receive who receives a
16credit under ss. 71.07 (5b) and (5d), 71.28 (5b), 71.47 (5b), or 76.638 unless the
17person's
must keep the investment is kept in a certified business, or with a certified
18fund manager, for no less than 3 years, unless the person's investment becomes
19worthless, as determined by the corporation, during the 3-year period or the person
20has kept the investment for no less than 12 months and a bona fide liquidity event,
21as determined by the corporation, occurs during the 3-year period
. The rules shall
22permit the corporation to reallocate credits under this section that are unused in any
23calendar year to a person eligible for tax benefits, as defined under s. 238.16 (1) (d),
24if all of the following apply:
AB601,5,2525 (End)
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