SB696: Bill Text

LRB-4167/1

JK&MPG:cjs:rs

2013 - 2014 LEGISLATURE

2013 Senate BILL 696

March 26, 2014 - Introduced by Senator Farrow, cosponsored by Representative Tauchen. Referred to Committee on Government Operations, Public Works, and Telecommunications.

SB696,1,10 An Act to renumber and amend 71.07 (5b) (b) 1., 71.28 (5b) (b) 1., 71.47 (5b) (b) 1. and 76.638 (2); to amend 71.07 (5b) (b) 2., 71.07 (5d) (b) 2., 71.28 (5b) (b) 2., 71.47 (5b) (b) 2., 238.15 (1) (f) 1. b., 238.15 (1) (f) 1. c., 238.15 (1) (f) 2., 238.15 (1) (g), 238.15 (2) and 238.15 (3) (e); and to create 71.07 (5b) (b) 1. b., 71.07 (5d) (b) 3., 71.28 (5b) (b) 1. b., 71.28 (5bm), 71.30 (3) (bp), 71.47 (5b) (b) 1. b., 71.47 (5bm), 71.49 (1) (bp), 76.638 (2) (b), 76.639 and 238.155 of the statutes; relating to: increasing the claim amounts and altering various eligibility criteria under the angel and early stage seed investment credits, authorizing the transfer of angel investment tax credits, and creating a tax credit for purchases made from qualified new business ventures.

Analysis by the Legislative Reference Bureau

This bill makes a number of changes to the early stage seed investment tax credit and the angel investment tax credit program, including the following:

1. Under current law, a taxpayer may claim an early stage seed investment tax credit equal to 25 percent of the taxpayer's investment paid to a fund manager that the fund manager invests in a qualified new business venture, as certified by the Wisconsin Economic Development Corporation (WEDC). Also, under current law, a taxpayer may claim an angel investment tax credit equal to 25 percent of the taxpayer's bona fide angel investment in a qualified new business venture. Under the bill, with regard to the first $1,000,000 invested by the taxpayer, a taxpayer may claim an early stage seed investment credit or an angel investment credit equal to 40 percent of the taxpayer's investment and, with regard to any amount invested after that first $1,000,000, the taxpayer may claim a credit equal to 25 percent of the taxpayer's investment.

2. Under current law, WEDC may certify a business as a qualified new business venture if, among other eligibility criteria, the business is not primarily engaged in real estate development, insurance, banking, lending, lobbying, political consulting, professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants, wholesale or retail trade, leisure, hospitality, transportation, or, with one exception, construction. Under the bill a business is eligible for certification as a qualified new business venture if, in addition to the other eligibility criteria established under current law, the business is not primarily engaged in lobbying or political consulting.

3. Under current law, a person awarded an early stage seed investment tax credit may sell or otherwise transfer the credit to another Wisconsin taxpayer, but a person awarded the angel investment tax credit may not transfer that credit to another person. Under the bill, a person awarded the angel investment tax credit may sell or otherwise transfer the credit to another Wisconsin taxpayer.

4. Under current law, in determining whether to certify an investment fund manager for purposes of the early stage seed investment tax credit, WEDC is required to consider, among other factors, the expected level of investment in the investment fund to be managed by the investment fund manager. The bill prohibits WEDC from considering that factor.

The bill also creates a tax credit equal to 25 percent of the sales price of goods and services that the taxpayer purchases from a qualified new business venture, as certified by WEDC. The maximum amount that a taxpayer may claim as a credit for such purchases in a taxable year is $125,000. Only corporations and insurers may claim the credit. If the amount of the credit exceeds the taxpayer's tax liability, the taxpayer does not receive a refund, but, instead, may claim the amount of any unused credit in subsequent taxable years.

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:

SB696,1 Section 1. 71.07 (5b) (b) 1. of the statutes is renumbered 71.07 (5b) (b) 1. a. and amended to read:

SB696,3,7 71.07 (5b) (b) 1. a. For taxable years beginning after December 31, 2004, and before January 1, 2014, subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats., and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under ss. 71.02 and 71.08, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats.

SB696,2 Section 2. 71.07 (5b) (b) 1. b. of the statutes is created to read:

SB696,3,17 71.07 (5b) (b) 1. b. For taxable years beginning after December 31, 2013, subject to the limitations provided under this subsection and s. 238.15, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under ss. 71.02 and 71.08, up to the amount of those taxes, with regard to the first $1,000,000 invested by the claimant, 40 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) and, with regard to any amount invested by the claimant in excess of that first $1,000,000, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1).

SB696,3 Section 3. 71.07 (5b) (b) 2. of the statutes is amended to read:

SB696,4,2 71.07 (5b) (b) 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 and 40 percent limitation limitations under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB696,4 Section 4. 71.07 (5d) (b) 2. of the statutes is amended to read:

SB696,4,8 71.07 (5d) (b) 2. For taxable years beginning after December 31, 2007, and before January 1, 2014, for the taxable year certified by the department of commerce or the Wisconsin Economic Development Corporation, an amount equal to 25 percent of the claimant's bona fide angel investment made directly in a qualified new business venture.

SB696,5 Section 5. 71.07 (5d) (b) 3. of the statutes is created to read:

SB696,4,16 71.07 (5d) (b) 3. For taxable years beginning after December 31, 2013, for the taxable year certified by the Wisconsin Economic Development Corporation, with regard to the first $1,000,000 invested by the claimant, an amount equal to 40 percent of the claimant's bona fide angel investment made directly in a qualified new business venture and, with regard to any amount invested by the claimant in excess of that first $1,000,000, an amount equal to 25 percent of the claimant's bona fide angel investment made directly in a qualified new business venture.

SB696,6 Section 6. 71.28 (5b) (b) 1. of the statutes is renumbered 71.28 (5b) (b) 1. a. and amended to read:

SB696,4,25 71.28 (5b) (b) 1. a. For taxable years beginning after December 31, 2004, and before January 1, 2014, subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats., and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats.

SB696,7 Section 7. 71.28 (5b) (b) 1. b. of the statutes is created to read:

SB696,5,10 71.28 (5b) (b) 1. b. For taxable years beginning after December 31, 2013, subject to the limitations provided under this subsection and s. 238.15, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, with regard to the first $1,000,000 invested by the claimant, 40 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) and, with regard to any amount invested by the claimant in excess of that first $1,000,000, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1).

SB696,8 Section 8. 71.28 (5b) (b) 2. of the statutes is amended to read:

SB696,5,20 71.28 (5b) (b) 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 and 40 percent limitation limitations under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB696,9 Section 9. 71.28 (5bm) of the statutes is created to read:

SB696,5,22 71.28 (5bm) Qualified purchases credit. (a) Definitions. In this subsection:

SB696,5,23 1. "Claimant" means a person who files a claim under this subsection.

SB696,5,25 2. "Qualified new business venture" means a business that is certified under s. 238.15 (1).

SB696,6,1 3. "Sales price" has the meaning given in s. 77.51 (15b).

SB696,6,2 4. "Tangible personal property" has the meaning given in s. 77.51 (20).

SB696,6,8 (b) Filing claims. For taxable years beginning after December 31, 2013, and 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, as certified under s. 238.155, equal to 25 percent of the sales price of the tangible personal property, goods under s. 77.52 (1) (d), and services that the claimant purchased from a qualified new business venture in the taxable year.

SB696,6,10 (c) Limitations. 1. The maximum amount that a claimant may claim under this subsection for a taxable year is $125,000.

SB696,6,12 2. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification under s. 238.155.

SB696,6,18 3. The credits under this subsection may not be claimed by a partnership, except a publicly traded partnership treated as a corporation under s. 71.22 (1k), limited liability company, except a limited liability company treated as a corporation under s. 71.22 (1k), or tax-option corporation or by partners, including partners of a publicly traded partnership, members of a limited liability company or shareholders of a tax-option corporation.

SB696,6,20 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB696,10 Section 10. 71.30 (3) (bp) of the statutes is created to read:

SB696,6,22 71.30 (3) (bp) Qualified purchases credit under s. 71.28 (5bm).

SB696,11 Section 11. 71.47 (5b) (b) 1. of the statutes is renumbered 71.47 (5b) (b) 1. a. and amended to read:

SB696,7,7 71.47 (5b) (b) 1. a. For taxable years beginning after December 31, 2004, and before January 1, 2014, subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats., and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats.

SB696,12 Section 12. 71.47 (5b) (b) 1. b. of the statutes is created to read:

SB696,7,17 71.47 (5b) (b) 1. b. For taxable years beginning after December 31, 2013, subject to the limitations provided under this subsection and s. 238.15, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, with regard to the first $1,000,000 invested by the claimant, 40 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) and, with regard to any amount invested by the claimant in excess of that first $1,000,000, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1).

SB696,13 Section 13. 71.47 (5b) (b) 2. of the statutes is amended to read:

SB696,8,2 71.47 (5b) (b) 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 and 40 percent limitation limitations under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB696,14 Section 14. 71.47 (5bm) of the statutes is created to read:

SB696,8,4 71.47 (5bm) Qualified purchases credit. (a) Definitions. In this subsection:

SB696,8,5 1. "Claimant" means a person who files a claim under this subsection.

SB696,8,7 2. "Qualified new business venture" means a business that is certified under s. 238.15 (1).

SB696,8,8 3. "Sales price" has the meaning given in s. 77.51 (15b).

SB696,8,9 4. "Tangible personal property" has the meaning given in s. 77.51 (20).

SB696,8,15 (b) Filing claims. For taxable years beginning after December 31, 2013, and 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, as certified under s. 238.155, equal to 25 percent of the sales price of the tangible personal property, goods under s. 77.52 (1) (d), and services that the claimant purchased from a qualified new business venture in the taxable year.

SB696,8,17 (c) Limitations. 1. The maximum amount that a claimant may claim under this subsection for a taxable year is $125,000.

SB696,8,19 2. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification under s. 238.155.

SB696,8,25 3. The credits under this subsection may not be claimed by a partnership, except a publicly traded partnership treated as a corporation under s. 71.22 (1k), limited liability company, except a limited liability company treated as a corporation under s. 71.22 (1k), or tax-option corporation or by partners, including partners of a publicly traded partnership, members of a limited liability company or shareholders of a tax-option corporation.

SB696,9,2 (d) Administration. 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.

SB696,15 Section 15. 71.49 (1) (bp) of the statutes is created to read:

SB696,9,4 71.49 (1) (bp) Qualified purchases credit under s. 71.47 (5bm).

SB696,16 Section 16. 76.638 (2) of the statutes is renumbered 76.638 (2) (a) and amended to read:

SB696,9,12 76.638 (2) (a) Filing claims. For taxable years beginning after December 31, 2008, and before January 1, 2014, subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats., an insurer may claim as a credit against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67, 25 percent of the insurer's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 or s. 560.205 (1), 2009 stats.

SB696,17 Section 17. 76.638 (2) (b) of the statutes is created to read:

SB696,9,21 76.638 (2) (b) For taxable years beginning after December 31, 2013, subject to the limitations provided under this subsection and s. 238.15, an insurer may claim as a credit against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67, with regard to the first $1,000,000 invested by the insurer, 40 percent of the insurer's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 and, with regard to any amount invested by the insurer in excess of that first $1,000,000, 25 percent of the insurer's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15.

SB696,18 Section 18. 76.639 of the statutes is created to read:

SB696,9,23 76.639 Qualified purchases credit. (1) Definitions. In this section:

SB696,9,25 (a) "Qualified new business venture" means a business that is certified under s. 238.15 (1).

SB696,10,1 (b) "Sales price" has the meaning given in s. 77.51 (15b).

SB696,10,2 (c) "Tangible personal property" has the meaning given in s. 77.51 (20).

SB696,10,8 (2) Filing claims. For taxable years beginning after December 31, 2013, and subject to the limitations provided in this section, an insurer may claim as a credit against the fees imposed under s. 76.60, 76.63, 76.65, 76.66, or 76.67, an amount, as certified under s. 238.155, equal to 25 percent of the sales price of the tangible personal property, goods under s. 77.52 (1) (d), and services that the insurer purchased from a qualified new business venture in the taxable year.

SB696,10,10 (3) Limitations. 1. The maximum amount that an insurer may claim under this section for a taxable year is $125,000.

SB696,10,12 2. No credit may be allowed under this section unless the insurer includes with the insurer's return a copy of the insurer's certification under s. 238.155.

SB696,10,18 (4) 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.