2001 - 2002 LEGISLATURE
April 18, 2001 - Introduced by Senators M. Meyer, Burke, George, Plache,
Harsdorf, Moore, Welch, Wirch, Roessler, Huelsman, Schultz and Darling,
cosponsored by Representatives
Jensen, Wasserman, Plouff, Stone, Plale,
Miller, Berceau, Ziegelbauer, Freese, Ainsworth, Urban, D. Meyer, Riley,
Hahn, Kreibich, Schooff, Johnsrud, F. Lasee, Jeskewitz, Petrowski, Seratti,
Walker, Kaufert, Wieckert, Montgomery, Suder, Olsen, Ladwig, Wade,
Musser, Rhoades, Duff, Kestell, Starzyk, Loeffelholz, Krawczyk,
Townsend, Ott, Vrakas, Leibham, Owens, McCormick, Sykora, Ward,
Gunderson, Pettis, Hundertmark, Huebsch and Albers. Referred to
Committee on Universities, Housing, and Government Operations.
SB147,1,4
1An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2)
2(a) 10. and 77.92 (4); and
to create 71.07 (5r), 71.10 (4) (cd), 71.28 (5r), 71.30
3(3) (dm), 71.47 (5r) and 71.49 (1) (dm) of the statutes;
relating to: an education
4tax credit for businesses.
Analysis by the Legislative Reference Bureau
This bill creates an income tax and franchise tax credit for businesses that pay
tuition for an individual to attend a university, college, or technical college. Sole
proprietorships, corporations, and insurers may claim the credit. Partnerships,
limited liability companies, and tax-option corporations compute the credit but pass
it on to the partners, members, and shareholders in proportion to their ownership
interests. The credit is an amount equal to: 1) Fifty percent of the tuition paid by
a business for an individual to attend school in a taxable year, if the individual is
enrolled in a degree-granting program; and 2) Seventy-five percent of the tuition
paid by a business for an individual to attend school in a taxable year, if the
individual is enrolled in a degree-granting program and if the individual's taxable
income is not more than 185% of the federal poverty line. If the credit claimed by a
business exceeds the business's tax liability, the state will not issue a refund check,
but the business may carry forward any remaining credit to subsequent taxable
years.
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:
SB147, s. 1
1Section
1. 71.05 (6) (a) 15. of the statutes is amended to read:
SB147,2,62
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dr), (2ds), (2dx)
and, (3s)
, and (5r) and not passed through by a
4partnership, limited liability company
, or tax-option corporation that has added that
5amount to the partnership's, company's
, or tax-option corporation's income under s.
671.21 (4) or 71.34 (1) (g).
SB147, s. 2
7Section
2. 71.07 (5r) of the statutes is created to read:
SB147,2,88
71.07
(5r) E
ducation credit. (a) In this subsection:
SB147,2,119
1. "Claimant" means a sole proprietor, a partner, a member of a limited liability
10company, or a shareholder of a tax-option corporation who files a claim under this
11subsection.
SB147,2,1312
2. "Degree-granting program" means an educational program for which an
13associate, a bachelor's, or a graduate degree is awarded upon successful completion.
SB147,2,1414
3. "Family member" has the meaning given in s. 157.061 (7).
SB147,2,1715
4. "Managing employee" means an individual who wholly or partially exercises
16operational or managerial control over, or who directly or indirectly conducts, the
17operation of the claimant's business.
SB147,2,1818
5. "Poverty line" has the meaning given under s. 49.001 (5).
SB147,2,1919
6. "Qualified postsecondary institution" means all of the following:
SB147,3,3
1a. A University of Wisconsin System institution, a technical college system
2institution, or a regionally accredited 4-year nonprofit college or university having
3its regional headquarters and principal place of business in this state.
SB147,3,54
b. A school approved under s. 45.54, if the school has a physical presence, and
5the delivery of education occurs, in this state.
SB147,3,76
(b) Subject to the limitations provided in this subsection, a claimant may claim
7as a credit against the tax imposed under s. 71.02 an amount equal to the following:
SB147,3,118
1. Fifty percent of the tuition that the claimant paid or incurred during the
9taxable year for an individual to participate in an education program of a qualified
10postsecondary institution, if the individual was enrolled in a degree-granting
11program.
SB147,3,1712
2. Seventy-five percent of the tuition that the claimant paid or incurred during
13the taxable year for an individual to participate in an education program of a
14qualified postsecondary institution, if the individual was enrolled in a
15degree-granting program and if the individual's taxable income in the year prior to
16commencing participation in the education program in connection with which a
17credit is claimed is not more than 185% of the poverty line.
SB147,3,2018
(c) A claimant may not claim the credit under par. (b) for any tuition amounts
19that the claimant excluded under s. 71.05 (6) (b) 28. or under section
127 of the
20Internal Revenue Code.
SB147,3,2321
(cm) A claimant may not claim the credit under par. (b) for any tuition amounts
22that the claimant paid or incurred for a family member of the claimant or for a family
23member of a managing employee unless all of the following apply:
SB147,4,224
1. The family member was employed an average of at least 20 hours a week as
25an employee of the claimant, or the claimant's business, during the one-year period
1prior to commencing participation in the education program in connection with
2which the claimant claims a credit under par. (b).
SB147,4,43
2. The family member is enrolled in a degree-granting program that is
4substantially related to the claimant's business.
SB147,4,65
3. The family member is making satisfactory progress towards completing the
6degree-granting program under subd. 2.
SB147,4,87
(d) The carry-over provisions of s. 71.28 (4) (e) and (f), as they apply to the credit
8under s. 71.28 (4), apply to the credit under this subsection.
SB147,4,169
(e) Partnerships, limited liability companies, and tax-option corporations may
10not claim the credit under this subsection, but the eligibility for, and the amount of,
11the credit are based on their payment of tuition under par. (b). A partnership, limited
12liability company, or tax-option corporation shall compute the amount of credit that
13each of its partners, members, or shareholders may claim and shall provide that
14information to each of them. Partners, members of limited liability companies, and
15shareholders of tax-option corporations may claim the credit in proportion to their
16ownership interest.
SB147,4,1817
(f) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4),
18applies to the credit under this subsection.
SB147, s. 3
19Section
3. 71.10 (4) (cd) of the statutes is created to read:
SB147,4,2020
71.10
(4) (cd) The education credit under s. 71.07 (5r).
SB147, s. 4
21Section
4. 71.21 (4) of the statutes is amended to read:
SB147,4,2422
71.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
23(2dj), (2dL), (2ds), (2dx)
and, (3s)
, and (5r) and passed through to partners shall be
24added to the partnership's income.
SB147, s. 5
25Section
5. 71.26 (2) (a) of the statutes is amended to read:
SB147,5,15
171.26
(2) (a)
Corporations in general. The "net income" of a corporation means
2the gross income as computed under the internal revenue code as modified under
3sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
4computed under s. 71.28 (1) and (3) to (5) plus the amount of the credit computed
5under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds)
and
, (1dx)
, and (5r) and not passed
6through by a partnership, limited liability company
, or tax-option corporation that
7has added that amount to the partnership's, limited liability company's
, or
8tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) plus the amount
9of losses from the sale or other disposition of assets the gain from which would be
10wholly exempt income, as defined in sub. (3) (L), if the assets were sold or otherwise
11disposed of at a gain and minus deductions, as computed under the internal revenue
12code as modified under sub. (3), plus or minus, as appropriate, an amount equal to
13the difference between the federal basis and Wisconsin basis of any asset sold,
14exchanged, abandoned
, or otherwise disposed of in a taxable transaction during the
15taxable year, except as provided in par. (b) and s. 71.45 (2) and (5).
SB147, s. 6
16Section
6. 71.28 (5r) of the statutes is created to read:
SB147,5,1717
71.28
(5r) Education credit. (a) In this subsection:
SB147,5,1818
1. "Claimant" means a corporation that files a claim under this subsection.
SB147,5,2019
2. "Degree-granting program" means an education program for which an
20associate, a bachelor's, or a graduate degree is awarded upon successful completion.
SB147,5,2121
3. "Family member" has the meaning given in s. 157.061 (7).
SB147,5,2422
4. "Managing employee" means an individual who wholly or partially exercises
23operational or managerial control over, or who directly or indirectly conducts, the
24operation of the claimant's business.
SB147,5,2525
5. "Poverty line" has the meaning given under s. 49.001 (5).
SB147,6,1
16. "Qualified postsecondary institution" means all of the following:
SB147,6,42
a. A University of Wisconsin System institution, a technical college system
3institution, or a regionally accredited 4-year nonprofit college or university having
4its regional headquarters and principal place of business in this state.
SB147,6,65
b. A school approved under s. 45.54, if the school has a physical presence, and
6the delivery of education occurs, in this state.
SB147,6,87
(b) Subject to the limitations provided in this subsection, a claimant may claim
8as a credit against the tax imposed under s. 71.23 an amount equal to the following:
SB147,6,129
1. Fifty percent of the tuition that the claimant paid or incurred during the
10taxable year for an individual to participate in an education program of a qualified
11postsecondary institution, if the individual was enrolled in a degree-granting
12program.
SB147,6,1813
2. Seventy-five percent of the tuition that the claimant paid or incurred during
14the taxable year for an individual to participate in an education program of a
15qualified postsecondary institution, if the individual was enrolled in a
16degree-granting program and if the individual's taxable income in the year prior to
17commencing participation in the education program in connection with which a
18credit is claimed is not more than 185% of the poverty line.
SB147,6,2019
(c) A claimant may not claim the credit under par. (b) for any tuition amounts
20that the claimant has excluded under section
127 of the Internal Revenue Code.
SB147,6,2321
(cm) A claimant may not claim the credit under par. (b) for any tuition amounts
22that the claimant paid or incurred for a family member of a managing employee
23unless all of the following apply:
SB147,7,224
1. The family member was employed an average of at least 20 hours a week as
25an employee of the claimant, or the claimant's business, during the one-year period
1prior to commencing participation in the education program in connection with
2which the claimant claims a credit under par. (b).
SB147,7,43
2. The family member is enrolled in a degree-granting program that is
4substantially related to the claimant's business.
SB147,7,65
3. The family member is making satisfactory progress towards completing the
6degree-granting program under subd. 2.
SB147,7,87
(d) The carry-over provisions of sub. (4) (e) and (f), as they apply to the credit
8under sub. (4), apply to the credit under this subsection.
SB147,7,169
(e) Partnerships, limited liability companies, and tax-option corporations may
10not claim the credit under this subsection, but the eligibility for, and the amount of,
11the credit are based on their payment of tuition under par. (b). A partnership, limited
12liability company, or tax-option corporation shall compute the amount of credit that
13each of its partners, members, or shareholders may claim and shall provide that
14information to each of them. Partners, members of limited liability companies, and
15shareholders of tax-option corporations may claim the credit in proportion to their
16ownership interest.
SB147,7,1817
(f) Subsection (4) (g) and (h), as it applies to the credit under sub. (4), applies
18to the credit under this subsection.
SB147, s. 7
19Section
7. 71.30 (3) (dm) of the statutes is created to read:
SB147,7,2020
71.30
(3) (dm) The education credit under s. 71.28 (5r).
SB147, s. 8
21Section
8. 71.34 (1) (g) of the statutes is amended to read:
SB147,7,2422
71.34
(1) (g) An addition shall be made for credits computed by a tax-option
23corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx)
and, (3)
, and
24(5r) and passed through to shareholders.
SB147, s. 9
25Section
9. 71.45 (2) (a) 10. of the statutes is amended to read:
SB147,8,6
171.45
(2) (a) 10. By adding to federal taxable income the amount of credit
2computed under s. 71.47 (1dd) to (1dx)
and (5r) and not passed through by a
3partnership, limited liability company
, or tax-option corporation that has added that
4amount to the partnership's, limited liability company's
, or tax-option corporation's
5income under s. 71.21 (4) or 71.34 (1) (g) and the amount of credit computed under
6s. 71.47 (1), (3), (4)
, and (5).
SB147, s. 10
7Section
10. 71.47 (5r) of the statutes is created to read:
SB147,8,88
71.47
(5r) E
ducation credit. (a) In this subsection:
SB147,8,99
1. "Claimant" means a corporation that files a claim under this subsection.
SB147,8,1110
2. "Degree-granting program" means an educational program for which an
11associate, a bachelor's, or a graduate degree is awarded upon successful completion.
SB147,8,1212
3. "Family member" has the meaning given in s. 157.061 (7).
SB147,8,1513
4. "Managing employee" means an individual who wholly or partially exercises
14operational or managerial control over, or who directly or indirectly conducts, the
15operation of the claimant's business.
SB147,8,1616
5. "Poverty line" has the meaning given under s. 49.001 (5).
SB147,8,1717
6. "Qualified postsecondary institution" means all of the following:
SB147,8,2018
a. A University of Wisconsin System institution, a technical college system
19institution, or a regionally accredited 4-year nonprofit college or university having
20its regional headquarters and principal place of business in this state.
SB147,8,2221
b. A school approved under s. 45.54, if the school has a physical presence, and
22the delivery of education occurs, in this state.
SB147,8,2423
(b) Subject to the limitations provided in this subsection, a claimant may claim
24as a credit against the tax imposed under s. 71.43 an amount equal to the following:
SB147,9,4
11. Fifty percent of the tuition that the claimant paid or incurred during the
2taxable year for an individual to participate in an education program of a qualified
3postsecondary institution, if the individual was enrolled in a degree-granting
4program.
SB147,9,105
2. Seventy-five percent of the tuition that the claimant paid or incurred during
6the taxable year for an individual to participate in an education program of a
7qualified postsecondary institution, if the individual was enrolled in a
8degree-granting program and if the individual's taxable income in the year prior to
9commencing participation in the education program in connection with which a
10credit is claimed is not more than 185% of the poverty line.
SB147,9,1211
(c) A claimant may not claim the credit under par. (b) for any tuition amounts
12that the claimant excluded under section
127 of the Internal Revenue Code.
SB147,9,1513
(cm) A claimant may not claim the credit under par. (b) for any tuition amounts
14that the claimant paid or incurred for a family member of a managing employee
15unless all of the following apply:
SB147,9,1916
1. The family member was employed an average of at least 20 hours a week as
17an employee of the claimant, or the claimant's business, during the one-year period
18prior to commencing participation in the education program in connection with
19which the claimant claims a credit under par. (b).
SB147,9,2120
2. The family member is enrolled in a degree-granting program that is
21substantially related to the claimant's business.