2023 - 2024 LEGISLATURE
January 26, 2024 - Introduced by Senator Testin, cosponsored by Representatives
Moses, Allen, O'Connor and Schmidt. Referred to Committee on Universities
and Revenue.
SB970,1,5 1An Act to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30
2(3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2)
3(de), 71.07 (11), 71.28 (11), 71.47 (11), 71.748 and 73.03 (78) of the statutes;
4relating to: creating a digital interactive media tax credit, granting
5rule-making authority, and making an appropriation.
Analysis by the Legislative Reference Bureau
This bill creates a refundable digital interactive media income and franchise
tax credit. The credit is equal to the sum of the following 1) 30 percent of the salary
or wages paid by a claimant to employees residing in this state for producing digital
interactive media or entertainment; and 2) 30 percent of the eligible expenditures.
Under the bill, “digital interactive media or entertainment” is generally a product or
platform intended for commercial use that uses text, sound, fixed images, animated
images, video, or three-dimensional geometry and that uses a system in which users
are able to input information or data in response to the information or data provided
through the system. “Digital interactive media or entertainment” does not include
largely static Internet sites, social media, and gambling products or services. The
bill also defines “eligible expenditures” as expenditures related to creating digital
interactive media or entertainment, such as testing, source code development, and
leases of facilities and equipment. The credit under the bill is refundable, which
means that if the credit exceeds the claimant's tax liability, the claimant will receive
the difference as a refund check.

To claim the credit for a taxable year, a person must file an application with the
Department of Revenue and receive a certificate of eligibility for the credit. To grant
a certificate, DOR must determine that the applicant will have at least $25,000 in
eligible expenditures in the taxable year, and DOR, or an auditor certified by DOR,
must conduct an audit of the applicant. The bill requires auditors to comply with
various requirements in conducting the audits, including using sampling methods
adopted by DOR and verifying each expenditure covered by the audit. Applicants
must reimburse DOR for its costs related to the audits. DOR must also certify as
eligible to conduct those audits certified public accountants who submit an
application and satisfy various requirements under the bill. Every two years, DOR
must submit a report to the governor and standing committees of the legislature
related to taxation that includes the number of applications approved for the credit,
the amount of credits claimed, the number of people employed in the state in the
industries eligible for the credit, the economic impact of the credit, and the
community impact of the industries eligible for the credit.
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:
SB970,1 1Section 1. 20.835 (2) (de) of the statutes is created to read:
SB970,2,32 20.835 (2) (de) Digital interactive media credit. A sum sufficient to make the
3payments under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
SB970,2 4Section 2. 71.05 (6) (a) 15. of the statutes is amended to read:
SB970,2,105 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
6(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j),
7(5k), (5r), (5rm), (6n), and (10), and (11) and not passed through by a partnership,
8limited liability company, or tax-option corporation that has added that amount to
9the partnership's, company's, or tax-option corporation's income under s. 71.21 (4)
10or 71.34 (1k) (g).
SB970,3 11Section 3. 71.07 (11) of the statutes is created to read:
SB970,2,1312 71.07 (11) Digital interactive media credit. (a) Definitions. In this
11. “Claimant” means a person who engages in qualified activities, owns a
2copyright in digital interactive media or entertainment or has contracted directly
3with the copyright owner or a person acting on behalf of the copyright owner, has a
4viable plan for the commercial distribution of the digital interactive media or
5entertainment, as determined by the department, and files a claim under this
SB970,3,97 2. “Digital interactive media or entertainment” means a product or platform
8intended for commercial production, use, or distribution, that has primarily an
9entertainment purpose, and that satisfies all of the following:
SB970,3,1110 a. Contains at least 2 of the following types of data: text, sound, fixed images,
11animated images, video, or 3-dimensional geometry.
SB970,3,1412 b. Uses discrete values that are ordinarily symbolized numerically to represent
13information for input, processing, transmission, and storage, including information
14input, processed, transmitted, and stored via the Internet.
SB970,3,1815 c. Uses a system for inputting, processing, transmitting, or storing information
16or data in which users of the system are able to respond to the system by inputting,
17processing, transmitting, or storing information or data in response to the
18information or data provided to them through the system.
SB970,3,2219 d. Uses communication tools to store, transmit, distribute, and deliver
20information and data, including distributed networks such as the Internet and
21physical media such as compact discs, CD-ROM, DVD, and other removable storage
22drives or devices.
SB970,3,2423 3. “Digital interactive media or entertainment” does not include any of the
1a. Software designed and developed primarily for the internal or operational
2purposes of an entity.
SB970,4,63 b. Largely static Internet sites designed primarily to provide information about
4a person, business, company, or firm, including Internet sites that are primarily
5social media, user generated videos, podcasting, interactive advertising, or
SB970,4,87 c. Products or services regulated under chs. 562 to 569 or any software or
8application primarily involving gambling or wagering.
SB970,4,99 d. Software or applications that contain content in violation of s. 944.21.
SB970,4,1210 4. “Eligible expenditures” means expenditures in this state directly related to
11qualified activities and that have economic substance and a business purpose,
12including all of the following:
SB970,4,1613 a. Testing software, source code development, patches, updates, sprites,
143-dimensional models, engine development and other back-end programming
15activities, performance and motion capture, audio production, tool development,
16original scoring, and level design.
SB970,4,1717 b. Photography, sound synchronization, lighting, and related services.
SB970,4,1918 c. Information technology support, data analysis, and activities related to a
19community of users of digital interactive media or entertainment.
SB970,4,2020 d. Leases of facilities and equipment.
SB970,4,2121 e. Prepackaged audio files, video files, photographic files, or libraries.
SB970,4,2222 f. Licenses to use prerecorded audio files, video files, or photographic files.
SB970,4,2423 g. Development associated with producing audio files and video files used in
24the production of end products of digital interactive media or entertainment.
1h. Accountants and lawyers whose work is directly related to qualified
2activities and who are licensed or otherwise authorized to practice in this state.
SB970,5,33 5. “Eligible expenditures” does not include any of the following:
SB970,5,44 a. Expenditures related to marketing, promotion, or distribution.
SB970,5,65 b. Administrative, payroll, or management services that are not directly
6related to management of qualified activities.
SB970,5,77 c. Any expenditure that is later reimbursed by the state.
SB970,5,88 d. Costs related to the transfer of tax credits.
SB970,5,109 e. Amounts that are paid to persons as a result of their participation in profits
10from a digital interactive media or entertainment production.
SB970,5,1111 f. Any reimbursement required under s. 71.748 (2).
SB970,5,1212 g. Interest expenses for loans.
SB970,5,1413 h. Any expenditure incurred solely to increase the amount of the credit under
14this subsection and that involves self-dealing or the claimant inflating prices.
SB970,5,1615 i. Costs incurred for food or entertainment expenses not involved in qualified
SB970,5,1817 6. “Qualified activities” means creating digital interactive media or
18entertainment, including updates, subsequent editions, new seasons, and sequels.