Analysis by the Legislative Reference Bureau
Under current law, the department of commerce (department) is authorized to
certify investments (certified capital investments) made by investors (certified
investors) in companies that have been certified by the department (certified capital
companies). A certified capital company in which a certified capital investment is
made must then invest the certified capital investment, according to a specified
schedule, in a business in this state that fulfills certain requirements, including
having no more than 100 employees and a net worth of no more than $5,000,000
(qualified businesses). The investment in the qualified business must satisfy certain
requirements, and the qualified business must agree to comply with certain
requirements as a condition of the investment.
If a certified investor is a certain type of insurer, including a life insurer or an
out-of-state insurer doing a fire or marine insurance business or a casualty or surety
business, the certified investor may claim a tax credit for the certified capital

investment against license fees that are based on gross premiums and that are owed
to the state instead of income or franchise taxes. The credit must be claimed over a
ten-year period, with 10% of the investment used to offset the license fee that is due
each year.
This bill makes various changes to the certified capital company program.
Current law allows the department to certify no more than $10,000,000 in certified
capital investments per certified investor and no more than $50,000,000 in total
certified capital investments. This bill authorizes the department to certify another
$100,000,000 in certified capital investments and to certify, in certified capital
investments per certified investor, up to the greater of $10,000,000 or 15% of the total
certified investments that the department may certify over and above the original
$50,000,000 that the department was authorized to certify.
Currently, at least 75% of the employees of a qualified business must be
employed in this state. The bill provides that, alternatively, at least 75% of the total
payroll of the qualified business must be paid to employees who are employed in this
state.
Currently, a qualified business must have an average annual net income, after
federal income taxes and excluding any carry-over losses, of not more than
$2,000,000. The bill provides that a qualified business that is a partnership, limited
liability company, or tax option corporation shall calculate its net annual income
based on the net annual income, after federal income taxes and excluding any
carry-over losses, of its partners, members, or shareholders that is related to the
economic activity of the partnership, limited liability company, or tax option
corporation.
Currently, a certified capital company must have its financial statements
annually audited by a certified public accountant to ensure compliance with the
statutory requirements. The bill allows the financial statements to be annually
reviewed by a certified public accountant to ensure compliance, without the necessity
of an actual audit.
The bill also provides that, if a qualified business violates any condition that it
agreed to as a condition of a qualified investment, the qualified investment will be
valued at one-half of the actual amount invested. This provision affects whether the
certified capital company that made the qualified investment is in compliance with
requirements to make a specified level of qualified investments, which in turn affects
whether the qualified investor that made the certified capital investment in the
certified capital company is entitled to the tax credit that applies to a certified
investor that is a life insurer or an out-of-state insurer doing a fire or marine
insurance business or a casualty or surety business.
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:
AB579, s. 1
1Section 1. 560.32 (2) (b) of the statutes is renumbered 560.32 (2) (b) 1. and
2amended to read:
AB579,3,63 560.32 (2) (b) 1. The Prior to the effective date of this subdivision .... [revisor
4inserts date], the
department may certify an investment under this subsection only
5if, after the certification, the department will not have certified a total of more than
6$50,000,000 in investments under this subsection.
AB579, s. 2 7Section 2. 560.32 (2) (b) 2. of the statutes is created to read:
AB579,3,108 560.32 (2) (b) 2. The department may, beginning on the effective date of this
9subdivision .... [revisor inserts date], certify up to $100,000,000 in investments under
10this subsection, excluding any investments certified under subd. 1.
AB579, s. 3 11Section 3. 560.32 (2) (c) of the statutes is renumbered 560.32 (2) (c) 1.
AB579, s. 4 12Section 4. 560.32 (2) (c) 2. of the statutes is created to read:
AB579,3,1713 560.32 (2) (c) 2. The department may not certify an investment under par. (b)
142. if, after the certification, the investor, together with all affiliates of the investor,
15would have in certified capital investments under par. (b) 2. more than the greater
16of $10,000,000 or 15% of the total amount of investments that the department may
17certify under par. (b) 2.
AB579, s. 5 18Section 5. 560.33 (1) (b) of the statutes is renumbered 560.33 (1) (b) (intro.)
19and amended to read:
AB579,3,2120 560.33 (1) (b) (intro.) The business has no more than 100 employees, at and any
21of the following applies:
AB579,3,22 221. At least 75% of whom those employees are employed in this state.
AB579, s. 6 23Section 6. 560.33 (1) (b) 2. of the statutes is created to read:
AB579,3,2524 560.33 (1) (b) 2. At least 75% of the total payroll of the business is paid to
25employees who are employed in this state.
AB579, s. 7
1Section 7. 560.33 (1) (c) of the statutes is amended to read:
AB579,4,102 560.33 (1) (c) During its 2 most recent fiscal years, the business had, together
3with all of its consolidated affiliates, an average annual net income, after federal
4income taxes and excluding any carry-over losses, of not more than $2,000,000, as
5determined in accordance with generally accepted accounting principles. For
6purposes of this paragraph, a partnership, limited liability company, or tax-option
7corporation shall calculate its net annual income based on the net annual income,
8after federal income taxes and excluding any carry-over losses, of its partners,
9members, or shareholders that is related to the economic activity of the partnership,
10limited liability company, or tax-option corporation.
AB579, s. 8 11Section 8. 560.34 (1) (d) of the statutes is renumbered 560.34 (1) (d) (intro.)
12and amended to read:
AB579,4,1513 560.34 (1) (d) (intro.) As a condition of the investment, the qualified business
14agrees, as long as the certified capital corporation continues to hold the investment,
15to maintain do any of the following:
AB579,4,16 161. Maintain at least 75% of its employees in this state.
AB579, s. 9 17Section 9. 560.34 (1) (d) 2. of the statutes is created to read:
AB579,4,1918 560.34 (1) (d) 2. Pay at least 75% of its total payroll to employees who are
19employed in this state.
AB579, s. 10 20Section 10. 560.35 (1m) of the statutes is renumbered 560.35 (1m) (a).
AB579, s. 11 21Section 11. 560.35 (1m) (b) of the statutes is created to read:
AB579,5,222 560.35 (1m) (b) If a qualified business violates an agreement made under s.
23560.34 (1) (b) to (e), for purposes of the requirements under subs. (2) (b) and (c) and
24(3) and ss. 560.34 (1m) (a), 560.36 (3), and 560.37 (2), (3), and (3m) (a) 2. and the
25certified capital company tax credit, the certified capital company's qualified

1investments with respect to that qualified business shall be valued at one-half of the
2actual amount invested by the certified capital company.
AB579, s. 12 3Section 12. 560.35 (3) of the statutes is amended to read:
AB579,5,164 560.35 (3) Financial statements. Within 90 days of the end of the certified
5capital company's fiscal year, the certified capital company shall provide to the
6department a copy of its annual audited financial statements, including together
7with
the opinion of an independent certified public accountant who has audited or
8otherwise reviewed the financial statements
. The audit or other review shall
9address the methods of operation and conduct of the business of the certified capital
10company to determine whether the certified capital company is complying with this
11subchapter and the rules promulgated under this subchapter, including whether
12certified capital has been invested in the manner required under s. 560.34. The
13financial statements provided under this subsection shall be segregated by
14investment pool and shall be separately audited or otherwise reviewed on that basis
15to allow the department to determine whether the certified capital company is in
16compliance with s. 560.34 (1m).
AB579,5,1717 (End)
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