SB264: Bill Text

LRB-2707/1

JK:cjs:rs

2003 - 2004 LEGISLATURE

2003 Senate BILL 264

September 29, 2003 - Introduced by Senators Plale, Roessler, Lassa, M. Meyer and Schultz, cosponsored by Representatives Jeskewitz, Albers, Balow, Boyle, Gunderson, Hahn, Hines, Sinicki, Staskunas, Taylor and Wasserman. Referred to Committee on Homeland Security, Veterans and Military Affairs and Government Reform.

SB264,1,5 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); and to create 71.07 (5d), 71.10 (4) (cp), 71.28 (5d), 71.30 (3) (dm), 71.47 (5d) and 71.49 (1) (dm) of the statutes; relating to: an income and franchise tax credit for a business to construct, equip, operate, or provide a day care center for the children of employees.

Analysis by the Legislative Reference Bureau

This bill creates an income tax and franchise tax credit for a business to construct, equip, operate, or provide a day care center for the children of its employees during work hours. A business may claim as a credit any of the following amounts, but not exceeding $50,000 a year: 1) 50% of the amount the business paid to construct and equip a day care center that the business owns and operates; 2) 50% of the amount the business paid to operate its own day care center; and 3) if the business does not construct its own day care center, 50% of the amount the business paid to a day care center to provide day care to the children of its employees. The total amount of all such credits, for all businesses, will not exceed $1,500,000 a year.

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. If a business claims a credit that exceeds its 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:

SB264, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB264,2,6 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).

SB264, s. 2 Section 2. 71.07 (5d) of the statutes is created to read:

SB264,2,8 71.07 (5d) Day care center credit. (a) In this subsection:

SB264,2,9 1. "Claimant" means a person who files a claim under this subsection.

SB264,2,11 2. "Equipment" means equipment that is depreciable property for income tax or franchise tax purposes.

SB264,2,13 (b) A claimant may claim as a credit against the tax imposed under s. 71.02 any of the following:

SB264,2,17 1. An amount equal to 50% of the amount paid by the claimant during the taxable year to construct, and to purchase equipment for the use at, a licensed day care center under s. 48.65 that is owned and operated by the claimant to care for the children of the claimant's employees during the employees' working hours.

SB264,3,2 2. An amount that is equal to the amount paid by the claimant to operate the claimant's day care center, as described under subd. 1., for the taxable year; minus any amount paid by an employee of the claimant to reimburse the claimant for any amount paid by the claimant under this subdivision; multiplied by 50%. A claimant may claim and be allocated a credit under this subdivision regardless of whether the claimant has claimed or been allocated a credit under subd. 1.

SB264,3,8 3. An amount that is equal to the amount paid by the claimant during the taxable year to a licensed day care center under s. 48.65, other than a day care center as described under subd. 1., to provide care for the children of the claimant's employees during the employees' working hours; minus any amount paid by an employee of the claimant to reimburse the claimant for any amount paid by the claimant under this subdivision; multiplied by 50%.

SB264,3,12 (c) Except as provided in par. (dm), the amount of the credit under this subsection shall not exceed $50,000 in a taxable year for each claimant and the total amount of the credit for all claimants under this subsection and ss. 71.28 (5d) and 71.47 (5d) shall not exceed $1,500,000 in a state fiscal year.

SB264,3,21 (d) 1. No credit may be allowed under this subsection unless the claimant files annually an application with the department of revenue on or before March 1 and includes with that application a statement from the department of health and family services that verifies that the day care center under par. (b) is licensed under s. 48.65. A claimant may apply for and be allocated a credit under this subsection before the claimant pays expenses under par. (b), except that, if the claimant does not pay the expenses in the taxable year related to the credit, the claimant shall not receive the credit and the department of revenue may allocate the amount of the credit to another claimant.

SB264,4,3 2. After March 1, the department shall allocate randomly the credits under this subsection and ss. 71.28 (5d) and 71.47 (5d). After the department has allocated the credits, the department shall compile a waiting list of claimants who were not allocated credits and shall allocate randomly any unused credits to the claimants on the waiting list. No credit may be allowed under this subsection after the department has awarded the total amount of the credit for all claimants under par. (c).

SB264,4,9 (dm) Claimants who jointly construct, equip, or operate a licensed day care center may jointly claim the credit as provided under this subsection, if the claimants file a joint application under par. (d) 1. Claimants who file a joint application and who are allocated a credit under par. (b) may apportion the amount of the credit among the joint claimants in any manner that the joint claimants choose. The total amount of the credit for the joint claimants shall not exceed $50,000 in a taxable year.

SB264,4,11 (e) Section 71.28 (4) (e), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB264,4,17 (f) If a credit computed under this subsection is not entirely offset against income or franchise taxes otherwise due, the unused balance may be carried forward and credited against income or franchise taxes otherwise due for the following 5 taxable years to the extent not offset by those taxes otherwise due in all intervening years between the year in which the expense was paid and the year in which the carry-forward credit is claimed.

SB264,4,25 (g) 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 payment of expenses 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 interest.

SB264,5,2 (h) Section 71.28 (4) (g) and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB264,5,8 (i) Except as provided under par. (j), if the operation of a day care center under par. (b) 1. ceases within 5 years after the date on which the construction of the day care center is completed, a claimant who receives credits under par. (b) 1. and 2. for the construction and operation of such a day care center shall add to the claimant's liability for taxes imposed under s. 71.02 an amount equal to the total amount of the credits received under par. (b) 1. and 2. multiplied by the following percentage:

SB264,5,10 1. If the operation of the day care center ceases during the first year after the date on which the construction of the day care center is completed, 100%.

SB264,5,12 2. If the operation of the day care center ceases during the 2nd year after the date on which the construction of the day care center is completed, 80%.

SB264,5,14 3. If the operation of the day care center ceases during the 3rd year after the date on which the construction of the day care center is completed, 60%.

SB264,5,16 4. If the operation of the day care center ceases during the 4th year after the date on which the construction of the day care center is completed, 40%.

SB264,5,18 5. If the operation of the day care center ceases during the 5th year after the date on which the construction of the day care center is completed, 20%.

SB264,5,25 (j) Paragraph (i) does not apply to a claimant whose business ceases operation within 5 years after the date on which the construction of the claimant's day care center is completed; or whose day care center ceases operation for not more than 30 consecutive days in a taxable year; or who presents evidence to the department of revenue that the majority of the claimant's employees with children who are eligible to enroll in the claimant's day care center do not want to enroll their children in the claimant's day care center.

SB264, s. 3 Section 3. 71.10 (4) (cp) of the statutes is created to read:

SB264,6,2 71.10 (4) (cp) The day care center credit under s. 71.07 (5d).

SB264, s. 4 Section 4. 71.21 (4) of the statutes is amended to read:

SB264,6,6 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), and (3s) , and (5d) and passed through to partners shall be added to the partnership's income.

SB264, s. 5 Section 5. 71.26 (2) (a) of the statutes is amended to read:

SB264,6,22 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) plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), and (3g), 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, 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).

SB264, s. 6 Section 6. 71.28 (5d) of the statutes is created to read:

SB264,6,24 71.28 (5d) Day care center credit. (a) In this subsection:

SB264,6,25 1. "Claimant" means a person who files a claim under this subsection.

SB264,7,2 2. "Equipment" means equipment that is depreciable property for income tax or franchise tax purposes.

SB264,7,4 (b) A claimant may claim as a credit against the tax imposed under s. 71.23 any of the following:

SB264,7,8 1. An amount equal to 50% of the amount paid by the claimant during the taxable year to construct, and to purchase equipment for the use at, a licensed day care center under s. 48.65 that is owned and operated by the claimant to care for the children of the claimant's employees during the employees' working hours.

SB264,7,14 2. An amount that is equal to the amount paid by the claimant to operate the claimant's day care center, as described under subd. 1., for the taxable year; minus any amount paid by an employee of the claimant to reimburse the claimant for any amount paid by the claimant under this subdivision; multiplied by 50%. A claimant may claim and be allocated a credit under this subdivision regardless of whether the claimant has claimed or been allocated a credit under subd. 1.

SB264,7,20 3. An amount that is equal to the amount paid by the claimant during the taxable year to a licensed day care center under s. 48.65, other than a day care center as described under subd. 1., to provide care for the children of the claimant's employees during the employees' working hours; minus any amount paid by an employee of the claimant to reimburse the claimant for any amount paid by the claimant under this subdivision; multiplied by 50%.