Wisconsin Legislature: 361,19

71.47 (3w) Rural enterprise development zone jobs credit. (a) Definitions. In this subsection:

1. "Base year" means the taxable year beginning during the calendar year prior to the calendar year in which the rural enterprise development zone in which the claimant is located takes effect.

2. "Claimant" means a person who is certified to claim tax benefits under s. 560.799 (5) and who files a claim under this subsection.

3. "Full-time employee" means an individual who is employed in a regular, nonseasonal job and who, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays.

4. " Rural enterprise development zone" means a zone designated under s. 560.799.

5. "State payroll" means the amount of payroll apportioned to this state, as determined under s. 71.45 (3) (b).

6. "Zone payroll" means the amount of state payroll that is attributable to compensation paid to individuals for services that are performed in a rural enterprise development zone. "Zone payroll" does not include the amount of compensation paid to any individual that exceeds $100,000.

(b) Filing claims; payroll. Subject to the limitations provided in this subsection and s. 560.799, a claimant may claim as a credit against the tax imposed under s. 71.43 an amount calculated as follows:

1. Determine the amount that is the lesser of:

a. The claimant's zone payroll in the taxable year, minus the claimant's zone payroll in the base year.

b. The claimant's state payroll in the taxable year, minus the claimant's state payroll in the base year.

2. Subtract the number of full-time employees that the claimant employed in the area that comprises the rural enterprise development zone in the base year from the number of full-time employees that the claimant employed in the rural enterprise development zone in the taxable year.

3. Multiply the amount determined under subd. 2., but not an amount less than zero, by $30,000.

4. Subtract the amount determined under subd. 3. from the amount determined under subd. 1.

5. Multiply the amount determined under subd. 4. by 7 percent.

(bm) Filing supplemental claims. In addition to the credit under par. (b) and subject to the limitations provided in this subsection and s. 560.799, a claimant may claim as a credit against the tax imposed under s. 71.43 an amount equal to all of the following:

1. The amount of the property taxes that the claimant paid in the taxable year for the claimant's personal property that is located in a rural enterprise development zone and used in a business that is certified to claim tax benefits under s. 560.799 (5).

2. The amount of taxes imposed under subch. III of ch. 77 that the claimant paid in the taxable year on the purchase of tangible personal property and taxable services that are used or consumed primarily in a rural enterprise development zone and used in a business that is certified to claim tax benefits under s. 560.799 (5).

3. If all of the claimant's payroll is zone payroll and all of the claimant's business-related property is located in a rural enterprise development zone, the amount obtained by multiplying 20 percent of the sum of the claimant's zone payroll in the taxable year and the adjusted basis of the claimant's property at the time that the property is first placed in service in the rural enterprise development zone by 7.9 percent.

4. The amount the claimant paid in the taxable year to upgrade or improve the skills of any of the claimant's full-time employees, to train any of the claimant's full-time employees on the use of new technologies, or to train any full-time employee whose employment with the claimant represents the employee's first full-time job. This subdivision does not apply to employees who do not work in a rural enterprise development zone.

(c) Limitations. 1. If the allowable amount of the claim under this subsection exceeds the taxes otherwise due on the claimant's income under s. 71.43, the amount of the claim that is not used to offset those taxes shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation under s. 20.835 (2) (cm).

2. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on their payment of amounts described under pars. (b) and (bm). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members of limited liability companies, and shareholders of tax-option corporations may claim the credit in proportion to their ownership interests.

3. No credit may be allowed under this subsection unless the claimant includes with the claimant's return a copy of the claimant's certification for tax benefits under s. 560.799 (5).

4. No claimant may claim a credit under this subsection if the basis for which the credit is claimed is also the basis for which another credit is claimed under this subchapter.

(d) Administration. Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

361,17 Section 17. 71.49 (1) (f) of the statutes is amended to read:

71.49 (1) (f) The total of farmers' drought property tax credit under s. 71.47 (1fd), farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.47 (2m), rural enterprise development zone jobs credit under s. 71.47 (3w), and estimated tax payments under s. 71.48.

361,18 Section 18. 77.92 (4) of the statutes is amended to read:

77.92 (4) "Net business income," with respect to a partnership, means taxable income as calculated under section 703 of the Internal Revenue Code; plus the items of income and gain under section 702 of the Internal Revenue Code, including taxable state and municipal bond interest and excluding nontaxable interest income or dividend income from federal government obligations; minus the items of loss and deduction under section 702 of the Internal Revenue Code, except items that are not deductible under s. 71.21; plus guaranteed payments to partners under section 707 (c) of the Internal Revenue Code; plus the credits claimed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3s), (3n), (3t), (3w), and (5b); and plus or minus, as appropriate, transitional adjustments, depreciation differences, and basis differences under s. 71.05 (13), (15), (16), (17), and (19); but excluding income, gain, loss, and deductions from farming. "Net business income," with respect to a natural person, estate, or trust, means profit from a trade or business for federal income tax purposes and includes net income derived as an employee as defined in section 3121 (d) (3) of the Internal Revenue Code.

361,19 Section 19. 560.799 of the statutes is created to read:

560.799 Rural enterprise development zone. (1) Definitions. In this section:

(a) "Local governing body" has the meaning given in s. 560.70 (4).

(b) "Local governmental unit" means a city, village, town, or county.

(bm) "Personnel" means all of the following:

1. A business' employees in a rural economic development zone.

2. Individuals who provide services to a business as independent contractors in this state.

(c) "Tax benefits" means the income and franchise tax credits under ss. 71.07 (3c), (3e), and (3w), 71.28 (3w), and 71.47 (3w).

(2) Application; development plan. (a) The local governing body of a local governmental unit may apply to the department for designation of an area as a rural enterprise development zone, if the proposed zone includes land within the boundaries of the local governmental unit applying for designation. An application shall include a development plan under par. (b).

(b) A development plan shall include all of the following:

1. A map of the proposed zone that shows the physical boundaries of the proposed zone, the size of the zone in acres, and the present uses and condition of land and structures in the proposed zone.

2. Evidence of support in the proposed zone for the proposed designation, including support from local government, the public, and business groups.

3. A description of the applicant's or applicants' goals for, and proposed methods for achieving, increased economic opportunity and expansion, infrastructure improvements, reduced regulatory burdens, and increased job training opportunities in the proposed zone.

4. A description of current social, economic, and demographic characteristics of the proposed zone and of the anticipated improvements in health, human services, and employment that would result from designation as a rural enterprise development zone.

5. A description of anticipated economic and other activity in the proposed zone, including industrial uses, commercial or retail uses, and residential uses.

6. A proposal as to the time period in which the designation would remain in effect.

(3) Designation of rural enterprise development zones; criteria. (a) The department may , upon application, designate not more than 10 rural enterprise development zones. The department may designate an area as a rural enterprise development zone if all of the following apply:

1. The area does not exceed 5,000 acres.

2. The area does not include any part of a city of the first class or a city with a population greater than 200,000.

(b) In determining whether to grant an application to designate an area under par. (a), the department shall consider all of the following:

1. Indicators of the area's economic need, which may include data regarding household income, average wages, the condition of property, housing values, population decline, job losses, infrastructure and energy support, and the rate of business development .

2. Indicators of the likelihood of success in achieving the goals under sub. (2) (b) 3. , which may include the strength and viability of the development plan; the level of creativity and innovation reflected in the development plan; the strength of support for the proposal in the proposed zone; the existing resources available to the area; the effect of designation on other initiatives and programs to promote economic and community development in the area, including regional initiatives and programs; the extent to which an applicant proposes to ease regulatory burdens; the extent to which the development plan links job creation and job training ; and the extent to which the development plan focuses on creating high-paying jobs.

(c) The department shall, to the extent possible, give preference to applications in which the areas proposed for designation have the lowest population densities and have, according to the indicators under par. (b) 1., the greatest economic need.

(4) Time limits; reporting. (a) A designation under sub. (3) may remain in effect for no more than 12 years.

(b) If the department designates an area as a rural enterprise development zone under sub. (3), the governing body of the local governmental unit that applied for designation shall, during the time that the designation is in effect, annually submit a report to the department, in a form and at a time prescribed by the department, describing the local governmental unit's progress in meeting the goals contained in the development plan under sub. (2) (b) 3., and any additional information required by the department.

(5) Certification. The department may certify for tax benefits any of the following:

(a) A business that begins operations in a rural enterprise development zone.

(b) A business that relocates to a rural enterprise development zone from outside this state, if the business offers compensation and benefits to its employees working in the zone for the same type of work that are at least as favorable as those offered to its employees working outside the zone, as determined by the department.

(c) A business that expands operations in a rural enterprise development zone or that relocates to a rural enterprise development zone from another location in this state , but only if any of the following apply:

1. The business will increase its personnel by at least 10 percent and all of the following apply:

a. The business enters into an agreement with the department to claim tax benefits only for years during which the business maintains the increased level of personnel.

b. The business offers compensation and benefits for the same type of work to its employees working in the rural enterprise development zone that are at least as favorable as those offered to its employees working in this state but outside the zone, as determined by the department.

2. The business makes a capital investment in property located in the rural enterprise development zone and all of the following apply:

a. The value of the capital investment is equal to at least 10 percent of the business' gross revenues in the preceding tax year attributable to business activities in this state.

b. The business enters into an agreement with the department to claim tax benefits only for years during which the business maintains the capital investment.

c. The business offers compensation and benefits for the same type of work to its employees working in the zone that are at least as favorable as those offered to its employees working in this state but outside the zone, as determined by the department.

(6) Other duties. (a) The department of commerce shall notify the department of revenue when the department of commerce certifies a business to receive tax benefits.

(b) The department shall revoke a certification under sub. (5) if the business does any of the following:

1. Supplies false or misleading information to obtain tax benefits.

2. Leaves the rural enterprise development zone to conduct substantially the same business outside of the rural enterprise development zone.

3. Ceases operations in the rural enterprise development zone and does not renew operation of the business or a similar business in the rural enterprise development zone within 12 months.

(d) The department may require a business to repay any tax benefits the business claims for a year in which the business failed to maintain employment or capital investment levels required by an agreement under sub. (5) (c).

361,20 Section 20. Initial applicability.

(1) Individual income tax, capital gains tax credits. The treatment of section 71.07 (3c) and (3e) of the statutes first applies to taxable years beginning on July 1, 2007 .

(2) Corporate income and franchise tax credits. The treatment of sections 71.07 (3w), 71.28 (3w), and 71.47 (3w) of the statutes first applies to taxable years beginning on July 1, 2007 .