Amendment ASA2-AB538

LRBs0264/1

JK/MES/RJM:jd:jf

2003 - 2004 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 2, TO 2003 ASSEMBLY BILL 538

November 11, 2003 - Offered by Committee on Economic Development.

AB538-ASA2,1,4 An Act to amend 71.05 (6) (a) 15. and 71.08 (1) (intro.); and to create 71.07 (5d), 71.10 (4) (gx) and 560.03 (25) and (26) of the statutes; relating to: creating a qualified new business venture tax credit, facilitating the development of certain investor networks, and granting rule-making authority.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB538-ASA2, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

AB538-ASA2,1,10 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), and (3s), and (5d) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).

AB538-ASA2, s. 2 Section 2. 71.07 (5d) of the statutes is created to read:

AB538-ASA2,2,2 71.07 (5d) Qualified new business venture credit. (a) Definitions. In this subsection:

AB538-ASA2,2,5 1. "Bona fide angel investment" means a purchase of an equity interest, or any other expenditure, as determined by rule by the department, that is made by any of the following:

AB538-ASA2,2,7 a. An individual who reviews new businesses or proposed new businesses for potential investment of the individual's money.

AB538-ASA2,2,8 b. A network of individuals who satisfy subd. 1.

AB538-ASA2,2,9 2. "Claimant" means an individual who files a claim under this subsection.

AB538-ASA2,2,11 3. "Qualified new business venture" means a business that is certified under s. 560.03 (26).

AB538-ASA2,2,16 (b) Filing claims. Subject to the limitations provided in this subsection and in s. 560.03 (26), a claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08, up to the amount of those taxes, an amount equal to 40 percent of the claimant's bona fide angel investment made directly in a qualified new business venture in the taxable year.

AB538-ASA2,2,18 (c) Limitations. 1. The maximum amount of the credits that may be claimed under this subsection for all taxable years combined is $30,000,000.

AB538-ASA2,2,21 2. The maximum amount of a claimant's investment that may be used as the basis for a credit under this subsection is $500,000 for each investment made directly in a business certified under s. 560.03 (26).

AB538-ASA2,3,6 3. For a claimant who is a nonresident or part-year resident of this state and who is a single person or a married person filing a separate return, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the individual's Wisconsin adjusted gross income and the denominator of which is the individual's federal adjusted gross income. If a claimant is married and files a joint return, and if the claimant or the claimant's spouse, or both, are nonresidents or part-year residents of this state, multiply the credit for which the claimant is eligible under par. (b) by a fraction, the numerator of which is the couple's joint Wisconsin adjusted gross income and the denominator of which is the couple's joint federal adjusted gross income.

AB538-ASA2,3,10 (d) Administration. 1. If an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than one year, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.

AB538-ASA2,3,12 2. 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.

AB538-ASA2,3,14 3. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB538-ASA2, s. 3 Section 3. 71.08 (1) (intro.) of the statutes is amended to read:

AB538-ASA2,3,24 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3s), (5d), (6), (6s), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m) and (3) and subchs. VIII and IX and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

AB538-ASA2, s. 4 Section 4. 71.10 (4) (gx) of the statutes is created to read:

AB538-ASA2,4,1 71.10 (4) (gx) Qualified new business venture credit under s. 71.07 (5d).

AB538-ASA2, s. 5 Section 5. 560.03 (25) and (26) of the statutes are created to read:

AB538-ASA2,4,6 560.03 (25) In cooperation with the department of financial institutions and the board of regents of the University of Wisconsin System, provide education and other support to facilitate the development networks of bona fide angel investors, as defined in s. 71.07 (5d) (a) 1.

AB538-ASA2,4,23 (26) (a) Certify businesses as qualified new business ventures for purposes of s. 71.07 (5d). The department shall promulgate rules for the administration of this subsection. The rules shall require a business desiring certification to submit an application to the department in each taxable year for which the business desires certification. The department shall maintain a list of businesses certified under this subsection and shall permit public access to the list through the department's Internet website. The department shall notify the department of revenue of every business certified under this subsection and the date on which any such business is decertified. Annually, no later than September 15, the department of commerce shall submit a report to the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2), listing the total amount of tax credits claimed under s. 71.07 (5d) per taxable year, the name of each business in which investments qualifying for such tax credits were made, the amount of such tax credits, the amount of such investments, and any other information the department considers reasonable to include. Unless otherwise provided under the rules of the department of commerce, a business may be certified under this subsection, and may maintain such certification, only if the business satisfies all of the following conditions:

AB538-ASA2,4,24 1. It has its headquarters in this state.

AB538-ASA2,5,2 2. At least 51 percent of the employees employed by the business are employed in this state.

AB538-ASA2,5,5 3. Its average annual net income, if any, for each of the 2 taxable years immediately preceding the taxable year to which the certification applies does not exceed $5,000,000.

AB538-ASA2,5,7 4. It's net worth, in any, in the taxable year to which the certification applies does not exceed $10,000,000.

AB538-ASA2,5,10 5. It is engaged in, or has committed to engage in, manufacturing, agriculture, or processing or assembling products and conducting research and development or developing a new product or business process.

AB538-ASA2,5,14 6. It is not 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 construction.

AB538-ASA2,5,15 7. It has less than 100 employees.

AB538-ASA2,5,16 8. It has been in operation in this state for not more than 7 consecutive years.

AB538-ASA2,5,18 9. It has not received more than $1,000,000 in investments that have qualified for tax credits under s. 71.07 (5d).

AB538-ASA2,5,24 (b) In consultation with the department of revenue, promulgate rules to limit the aggregate amount of tax credits under s. 71.07 (5d) that may be claimed for investments in businesses certified under par. (a) at $5,000,000 per taxable year. The rules may not permit the department of commerce or the department of revenue to assign a dollar amount of investments qualifying for the tax credits under s. 71.07 (5d) that a particular business may subsequently raise.

AB538-ASA2, s. 6 Section 6 . Nonstatutory provisions.

AB538-ASA2,6,1 (1) Rules.

AB538-ASA2,6,5 (a) The department of commerce shall submit in proposed form the rules required under section 560.03 (26) of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 6th month beginning after the effective date of this paragraph.

AB538-ASA2,6,9 (b) The department of revenue shall submit in proposed form the rules required under section 71.07 (5d) (a) 1. of the statutes, as created by this act, to the legislative council staff under section 227.15 (1) of the statutes no later than the first day of the 6th month beginning after the effective date of this paragraph.

AB538-ASA2, s. 7 Section 7. Initial applicability.

AB538-ASA2,6,13 (1) Qualified new business venture credit. The treatment of sections 71.05 (6) (a) 15., 71.07 (5d), 71.08 (1) (intro.), and 71.10 (4) (gx) of the statutes first applies to taxable years beginning on January 1, 2006.

AB538-ASA2, s. 8 Section 8. Effective dates. This act takes effect on July 1, 2004, except as follows:

AB538-ASA2,6,16 (1) Rules. Section 6 (1) of this act takes effect on the day after publication.

AB538-ASA2,6,17 (End)