Amendment SSA3-SB483

LRBs0675/1

JK&CTS:all:pg

2005 - 2006 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 3, TO 2005 SENATE BILL 483

March 31, 2006 - Offered by Joint Committee on Finance.

SB483-SSA3,1,6 An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2) (a) 10. and 77.92 (4); to repeal and recreate 71.08 (1) (intro.) and 71.08 (1) (intro.); and to create 71.07 (5e), 71.10 (4) (gy), 71.28 (5e), 71.30 (3) (es), 71.47 (5e), 71.49 (1) (es), 77.51 (6m) and 77.54 (48) of the statutes; relating to: an income and franchise tax credit and a sales and use tax exemption for Internet equipment used in the broadband market.

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

SB483-SSA3, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB483-SSA3,1,12 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), (5b), and (5d), and (5e) 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).

SB483-SSA3, s. 2 Section 2. 71.07 (5e) of the statutes is created to read:

SB483-SSA3,2,2 71.07 (5e) Internet equipment credit. (a) Definitions. In this subsection:

SB483-SSA3,2,3 1. "Claimant" means a person who files a claim under this subsection.

SB483-SSA3,2,6 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

SB483-SSA3,2,13 (b) Filing claims. Subject to the limitations provided in this subsection and subject to 2005 Wisconsin Act .... (this act), section 17 , beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), a claimant may claim as a credit against the taxes imposed under ss. 71.02 and 71.08, up to the amount of those taxes, in each taxable year for 2 years, the amount certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

SB483-SSA3,2,15 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

SB483-SSA3,2,24 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 use of sales and use tax exemptions certified by the department of commerce as described under par. (b). 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.

SB483-SSA3,3,3 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.28 (5e), 71.47 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

SB483-SSA3,3,5 (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.

SB483-SSA3, s. 3 Section 3 . 71.08 (1) (intro.) of the statutes, as affected by 2005 Wisconsin Acts 25 and 177, is repealed and recreated to read:

SB483-SSA3,3,16 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), (3n), (3s), (3t), (5b), (5d), (5e), (6), (6e), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), and (3t) 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:

SB483-SSA3, s. 4 Section 4 . 71.08 (1) (intro.) of the statutes, as affected by 2005 Wisconsin Acts 25, 177 and .... (Assembly Bill 208), is repealed and recreated to read:

SB483-SSA3,4,3 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), (3c), (3e), (3m), (3n), (3s), (3t), (3w), (5b), (5d), (5e), (6), (6e), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), (3t), and (3w), and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), (3t), and (3w), 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:

SB483-SSA3, s. 5 Section 5. 71.10 (4) (gy) of the statutes is created to read:

SB483-SSA3,4,5 71.10 (4) (gy) Internet equipment credit under s. 71.07 (5e).

SB483-SSA3, s. 6 Section 6. 71.21 (4) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

SB483-SSA3,4,10 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b), (5e), and (5g) and passed through to partners shall be added to the partnership's income.

SB483-SSA3, s. 7 Section 7. 71.26 (2) (a) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

SB483-SSA3,5,5 71.26 (2) (a) Corporations in general. The "net income" of a corporation means the gross income as computed under the Internal Revenue Code as modified under sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c) 7., the amount of the credit under s. 71.28 (3) that the taxpayer added to income under this paragraph at the time that the taxpayer first claimed the credit plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3g), (3n), (3t), (5b), (5e), and (5g) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or other disposition of assets the gain from which would be wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and minus deductions, as computed under the Internal Revenue Code as modified under sub. (3), plus or minus, as appropriate, an amount equal to the difference between the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or otherwise disposed of in a taxable transaction during the taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).

SB483-SSA3, s. 8 Section 8. 71.28 (5e) of the statutes is created to read:

SB483-SSA3,5,7 71.28 (5e) Internet equipment credit. (a) Definitions. In this subsection:

SB483-SSA3,5,8 1. "Claimant" means a person who files a claim under this subsection.

SB483-SSA3,5,11 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

SB483-SSA3,5,18 (b) Filing claims. Subject to the limitations provided in this subsection and subject to 2005 Wisconsin Act .... (this act), section 17 , beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), a claimant may claim as a credit against the taxes imposed under s. 71.23, up to the amount of those taxes, in each taxable year for 2 years, the amount certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

SB483-SSA3,5,20 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

SB483-SSA3,6,4 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 use of sales and use tax exemptions certified by the department of commerce as described under par. (b). 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.

SB483-SSA3,6,7 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.07 (5e), 71.47 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

SB483-SSA3,6,9 (d) Administration. Subsection (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB483-SSA3, s. 9 Section 9. 71.30 (3) (es) of the statutes is created to read:

SB483-SSA3,6,11 71.30 (3) (es) Internet equipment credit under s. 71.28 (5e).

SB483-SSA3, s. 10 Section 10. 71.34 (1) (g) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

SB483-SSA3,6,16 71.34 (1) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g), (3n), (3t), (5b), (5e), and (5g) and passed through to shareholders.

SB483-SSA3, s. 11 Section 11. 71.45 (2) (a) 10. of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

SB483-SSA3,6,24 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3n), (5b), (5e), and (5g) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership's, limited liability company's, or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under s. 71.47 (1), (3), (3t), (4), and (5).

SB483-SSA3, s. 12 Section 12. 71.47 (5e) of the statutes is created to read:

SB483-SSA3,7,1 71.47 (5e) Internet equipment credit. (a) Definitions. In this subsection:

SB483-SSA3,7,2 1. "Claimant" means a person who files a claim under this subsection.

SB483-SSA3,7,5 2. "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

SB483-SSA3,7,12 (b) Filing claims. Subject to the limitations provided in this subsection and subject to 2005 Wisconsin Act .... (this act), section 17 , beginning in the first taxable year following the taxable year in which the claimant claims an exemption under s. 77.54 (48), a claimant may claim as a credit against the taxes imposed under s. 71.43, up to the amount of those taxes, in each taxable year for 2 years, the amount certified by the department of commerce that the claimant claimed as an exemption under s. 77.54 (48).

SB483-SSA3,7,14 (c) Limitations. 1. No credit may be allowed under this subsection unless the claimant satisfies the requirements under s. 77.54 (48).

SB483-SSA3,7,23 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 use of sales and use tax exemptions certified by the department of commerce as described under par. (b). 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.

SB483-SSA3,8,3 3. The total amount of the credits and exemptions that may be claimed by all claimants under this subsection and ss. 71.07 (5e), 71.28 (5e), and 77.54 (48) is $7,500,000, as determined by the department of commerce.

SB483-SSA3,8,5 (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.

SB483-SSA3, s. 13 Section 13. 71.49 (1) (es) of the statutes is created to read:

SB483-SSA3,8,7 71.49 (1) (es) Internet equipment credit under s. 71.47 (5e).

SB483-SSA3, s. 14 Section 14. 77.51 (6m) of the statutes is created to read:

SB483-SSA3,8,11 77.51 (6m) For purposes of s. 77.54 (48), "Internet equipment used in the broadband market" means equipment that is capable of transmitting data packets or Internet signals at speeds of at least 200 kilobits per second in either direction.

SB483-SSA3, s. 15 Section 15. 77.54 (48) of the statutes is created to read:

SB483-SSA3,8,19 77.54 (48) (a) Subject to 2005 Wisconsin Act .... (this act), section 17 , the gross receipts from the sale of and the storage, use, or other consumption of Internet equipment used in the broadband market, if the purchaser certifies to the department of commerce, in the manner prescribed by the department of commerce, that the purchaser will, within 24 months after the effective date of this paragraph .... [revisor inserts date], make an investment that is reasonably calculated to increase broadband Internet availability in this state.

SB483-SSA3,8,25 (b) Every person who is required to make the investment under par. (a) shall, within 60 days after the end of the year in which the investment is made, file a report with the department of commerce that provides a detailed description of the investment, including the amount invested. The department of commerce shall provide copies of the report to the department of administration, the department of revenue, and the public service commission.

SB483-SSA3, s. 16 Section 16. 77.92 (4) of the statutes, as affected by 2005 Wisconsin Act 74, is amended to read:

SB483-SSA3,9,17 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), (5b), (5e), and (5g); 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.

SB483-SSA3, s. 17 Section 17 . Nonstatutory provisions.

SB483-SSA3,9,19 (1) Internet equipment credit and exemption program.

SB483-SSA3,9,23 (a) Not later than 30 days after the effective date of this subsection, the department of commerce shall implement a program for certifying businesses as eligible for tax credits and exemptions under sections 71.07 (5e), 71.28 (5e), 71.47 (5e), and 77.54 (48) of the statutes.

SB483-SSA3,9,25 (b) If the department of commerce certifies a business as eligible under paragraph (a), the department shall determine the maximum amount of tax credits and exemptions that the business may claim, subject to paragraph (c). The amount of the tax credits allocated to each business for each year in which the business may claim credits shall equal the amount of the exemptions allocated to the business. The department of commerce may not allocate tax credits and exemptions to a business unless the allocation of tax credits and exemptions to the business is likely to increase the availability of broadband Internet service in areas of this state that are not served by a broadband Internet service provider or are served by not more than one broadband Internet service provider, as determined by the department. The total amount of exemptions from the taxes imposed under subchapter III of chapter 77 of the statutes and tax credits allocated to all eligible businesses may not exceed $7,500,000. The department of commerce shall complete the certifications and determinations under this paragraph and paragraph (a ) not later than the first day of the 7th month after the effective date of this subsection.

SB483-SSA3,11,3 (c) Not later than 10 days after the department of commerce completes the certifications and determinations under paragraphs (a ) and (b), the department of commerce shall submit to the joint committee on finance a report identifying the businesses certified under this subsection and the maximum amount of tax credits and exemptions each business may claim. If the cochairpersons of the committee do not notify the department of commerce within 14 working days after the department of commerce submits the report that the committee has scheduled a meeting to review the department of commerce's certifications and determinations, the department of commerce shall notify the department of revenue of the department of commerce's certifications and determination. If, within 14 working days after the department of commerce submits the report, the cochairpersons of the committee notify the department of commerce that the committee has scheduled a meeting to review the proposal, the department of commerce may not notify the department of revenue of the department of commerce's certifications and determinations unless one of the following is true:

SB483-SSA3,11,5 1. The committee approves the department of commerce's certifications and determinations.