Amendment ASA1-AB208

LRBs0060/1

JK/MES/CTS:wlj:rs

2005 - 2006 LEGISLATURE

ASSEMBLY SUBSTITUTE AMENDMENT 1, TO 2005 ASSEMBLY BILL 208

April 5, 2005 - Offered by Joint Committee on Finance.

AB208-ASA1,1,8 An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.), 71.10 (4) (i), 71.21 (4), 71.26 (2) (a), 71.30 (3) (f), 71.34 (1) (g), 71.45 (2) (a) 10., 71.49 (1) (f) and 77.92 (4); and to create 20.835 (2) (cm), 20.835 (2) (em), 20.835 (2) (eo), 71.07 (3c), 71.07 (3e), 71.07 (3w), 71.28 (3w), 71.47 (3w) and 560.799 of the statutes; relating to: creating rural enterprise development zones and providing tax incentives to qualified businesses in the zones, creating refundable individual income tax credits for income and capital gains derived from the zones, making appropriations, and providing a penalty.

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

AB208-ASA1, s. 1 Section 1. 20.835 (2) (cm) of the statutes is created to read:

AB208-ASA1,1,11 20.835 (2) (cm) Rural enterprise development zone jobs credit. A sum sufficient to make the payments under ss. 71.07 (3w) (c) 1., 71.28 (3w) (c) 1., 71.47 (3w) (c) 1.

AB208-ASA1, s. 2 Section 2. 20.835 (2) (em) of the statutes is created to read:

AB208-ASA1,2,2 20.835 (2) (em) Rural enterprise development income credit. A sum sufficient to pay the claims approved under s. 71.07 (3c).

AB208-ASA1, s. 3 Section 3. 20.835 (2) (eo) of the statutes is created to read:

AB208-ASA1,2,5 20.835 (2) (eo) Rural enterprise development capital gains credit. A sum sufficient to pay the claims approved under s. 71.07 (3e).

AB208-ASA1, s. 4 Section 4. 71.05 (6) (a) 15. of the statutes is amended to read:

AB208-ASA1,2,11 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), (3n), (3s), (3t), (3w), (5b), 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).

AB208-ASA1, s. 5 Section 5. 71.07 (3c) of the statutes is created to read:

AB208-ASA1,2,14 71.07 (3c) Rural enterprise development income credit. (a) Definitions. In this subsection:

AB208-ASA1,2,17 1. "Claimant" means an individual who is certified to claim tax benefits under s. 560.799 (5) and who owns or operates a trade or business in a rural enterprise development zone.

AB208-ASA1,2,19 2. "Rural enterprise development zone" has the meaning given in s. 71.07 (3w) (a) 4.

AB208-ASA1,3,3 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08 an amount obtained by multiplying 20 percent of the net income that the individual derives from the operation of his or her trade or business in a rural enterprise development zone by 6.5 percent. If the allowable amount of the claim exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (em).

AB208-ASA1,3,5 (c) Limitations. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB208-ASA1,3,15 2. 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.

AB208-ASA1,3,17 (d) Administration. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB208-ASA1, s. 6 Section 6. 71.07 (3e) of the statutes is created to read:

AB208-ASA1,3,20 71.07 (3e) Rural enterprise development capital gains credit. (a) Definitions. In this subsection:

AB208-ASA1,3,22 1. "Claimant" means an individual who is certified to claim tax benefits under s. 560.799 (5) and who files a claim under this subsection.

AB208-ASA1,3,25 2. "Property gain" means the gain derived from the sale or exchange of property, other than real property, that is used in a rural enterprise development zone by a certified business under s. 560.799 (5).

AB208-ASA1,4,3 3. "Real property gain" means the gain derived from the sale or exchange of real property that is located in a rural enterprise development zone and used by a certified business under s. 560.799 (5).

AB208-ASA1,4,5 4. "Rural enterprise development zone" has the meaning given in s. 71.07 (3w) (a) 4.

AB208-ASA1,4,8 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08 all of the following:

AB208-ASA1,4,10 1. An amount obtained by multiplying the amount of property gain that is not excluded under s. 71.05 (6) (b) 9. and 25. by 6.5 percent.

AB208-ASA1,4,12 2. An amount obtained by multiplying the amount of real property gain that is not excluded under s. 71.05 (6) (b) 9. and 25. by 6.5 percent.

AB208-ASA1,4,17 (bm) Payment. If the allowable amount of the claim under par. (b) exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (eo).

AB208-ASA1,4,19 (c) Limitations. 1. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB208-ASA1,4,25 2. If the claimant held the property to which the claim relates during a period when the rural enterprise development zone was not designated, the gain subject to the credit under par. (b) must be multiplied by a fraction, the numerator of which is the number of days the claimant held the property during the period the zone designation was in effect and the denominator of which is the total number of days the claimant held the property.

AB208-ASA1,5,12 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), or the credit for which the claimant is eligible under par. (b) as modified by subd. 2., if applicable, 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), or the credit for which the claimant is eligible under par. (b) as modified by subd. 2., if applicable, 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.

AB208-ASA1,5,14 (d) Administration. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB208-ASA1, s. 7 Section 7. 71.07 (3w) of the statutes is created to read:

AB208-ASA1,5,17 71.07 (3w) Rural enterprise development zone jobs credit. (a) Definitions. In this subsection:

AB208-ASA1,5,20 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.

AB208-ASA1,5,22 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.

AB208-ASA1,5,25 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.

AB208-ASA1,6,2 4. "Rural enterprise development zone" means a zone designated under s. 560.799.

AB208-ASA1,6,4 5. "State payroll" means the amount of payroll apportioned to this state, as determined under s. 71.04 (6).

AB208-ASA1,6,8 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.

AB208-ASA1,6,11 (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. 71.02 or 71.08 an amount calculated as follows:

AB208-ASA1,6,12 1. Determine the amount that is the lesser of:

AB208-ASA1,6,14 a. The claimant's zone payroll in the taxable year, minus the claimant's zone payroll in the base year.

AB208-ASA1,6,16 b. The claimant's state payroll in the taxable year, minus the claimant's state payroll in the base year.

AB208-ASA1,6,20 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.

AB208-ASA1,6,22 3. Multiply the amount determined under subd. 2., but not an amount less than zero, by $30,000.