SB139: Bill Text

This bill creates an income and franchise tax credit for certain expenses related to nanotechnology. Under the bill, generally, a person may claim a credit that is equal to the amount of state sales and use taxes the person paid in the taxable year on the purchase of machines, equipment, and certain other tangible personal property that are used by a nanotechnology business in this state for research, development, and manufacturing. In addition, a person may claim as a credit the amount of any payments to a public or private institution of higher education, or to a consortium of such institutions, for research, equipment, or the use of research facilities, or other qualified expenses as determined by the Department of Commerce (Commerce), that are directly related to nanotechnology. The bill defines "nanotechnology" as the science and technology that enables a person to understand, measure, manipulate, and manufacture materials at the atomic, molecular, and supermolecular levels. A "nanotechnology business" is a business that is primarily engaged in applying nanotechnologies to create new applications or processes, or modify existing applications or processes, in order to make useful processes and products related to health care, energy, food production, manufacturing, biotechnology, information technology, or the environment. A person who wishes to claim the credit must first apply to Commerce.

Under the bill, if a person claims a credit in an amount that exceeds the person's income and franchise tax liability, the person does not receive a tax refund for the excess amount, but, instead, may carry forward the amount of any unused credit to the ten subsequent taxable years. The maximum amount of the credits that taxpayers may claim in any state fiscal year is $2,500,000, as allocated by Commerce.

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:

SB139, s. 1 Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:

SB139,2,6 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), (3n), (3s), (3t), (3w), (5b), (5d), and (5e), (5f), and (5h), and (5i) 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).

SB139, s. 2 Section 2. 71.07 (5i) of the statutes is created to read:

SB139,2,8 71.07 (5i) Nanotechnology credit. (a) Definitions. In this subsection:

SB139,2,9 1. "Claimant" means a person who files a claim under this subsection.

SB139,2,12 2. "Consortium" means 2 or more public institutions of higher education that are conducting substantially similar qualified research or working on components of the same qualified research.

SB139,2,13 3. "Manufacturing" has the meaning given in s. 77.54 (6m).

SB139,3,3 4. "Nanotechnology" means the science and technology that enables a person to understand, measure, manipulate, and manufacture materials at the atomic, molecular, and supermolecular levels.

SB139,3,9 5. "Nanotechnology business" means a business, as certified by the department of commerce in the manner prescribed by the department of commerce, that is primarily engaged in applying nanotechnologies to create new applications or processes, or modify existing applications or processes, in order to make useful processes and products related to health care, energy, food production, manufacturing, biotechnology, information technology, or the environment.

SB139,3,15 6. "Qualified research" means qualified research as defined under section 41 (d) (1) of the Internal Revenue Code, except that research conducted by a public or private institution of higher education or a consortium, or a combination thereof, is "qualified research" if the research is intended to be useful in developing a new or improved product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the Internal Revenue Code.

SB139,3,17 7. "Used exclusively" means used to the exclusion of all other uses except for use not exceeding 5 percent of total use.

SB139,3,21 (b) Filing claims. Subject to the limitations provided in this subsection and s. 560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim as a credit against the taxes imposed under s. 71.02 or 71.08, up to the amount of the taxes, any of the following amounts that the claimant paid in the taxable year:

SB139,4,2 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly by the claimant in the claimant's nanotechnology business for qualified research and manufacturing, if the research and manufacturing occurs in this state.

SB139,4,6 2. Payments to a public or private institution of higher education, or to a consortium, for research, equipment, or the use of research facilities, or other qualified expenses as determined by the department of commerce, that are directly related to nanotechnology.

SB139,4,9 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the following that are used by the claimant's nanotechnology business for research and development that occurs in this state:

SB139,4,10 a. Advanced computing devices, including computer hardware and software.

SB139,4,11 b. Data communications.

SB139,4,12 c. Information technology.

SB139,4,14 d. Laboratory materials used exclusively for nanotechnology research and development.

SB139,4,17 (c) Limitations. 1. The maximum amount of the credits that may be allocated to all claimants under this subsection and ss. 71.28 (5i) and 71.47 (5i) in each fiscal year is $2,500,000, as determined by the department of commerce under s. 560.207.

SB139,4,20 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a copy of the claimant's certification for and allocation of credits under s. 560.207.

SB139,5,3 3. 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 amounts 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.

SB139,5,5 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB139,5,11 2. If a credit computed under this subsection is not entirely offset against Wisconsin income or franchise taxes otherwise due, the unused balance may be carried forward and credited against Wisconsin income or franchise taxes otherwise due for the following 10 taxable years to the extent not offset by these taxes otherwise due in all intervening years between the year in which the expense was incurred and the year in which the carry-forward credit is claimed.

SB139, s. 3 Section 3. 71.08 (1) (intro.) of the statutes is amended to read:

SB139,5,22 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), (5f), (5i), (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:

SB139, s. 4 Section 4. 71.10 (4) (gab) of the statutes is created to read:

SB139,5,24 71.10 (4) (gab) Nanotechnology credit under s. 71.07 (5i).

SB139, s. 5 Section 5. 71.21 (4) of the statutes is amended to read:

SB139,6,3 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), (3w), (5b), (5e), (5f), (5g), and (5h), and (5i) and passed through to partners shall be added to the partnership's income.

SB139, s. 6 Section 6. 71.26 (2) (a) of the statutes is amended to read:

SB139,6,22 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) 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), (3w), (5b), (5e), (5f), (5g), and (5h), and (5i) 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).

SB139, s. 7 Section 7. 71.28 (5i) of the statutes is created to read:

SB139,6,24 71.28 (5i) Nanotechnology credit. (a) Definitions. In this subsection:

SB139,6,25 1. "Claimant" means a person who files a claim under this subsection.

SB139,7,3 2. "Consortium" means 2 or more public institutions of higher education that are conducting substantially similar qualified research or working on components of the same qualified research.

SB139,7,4 3. "Manufacturing" has the meaning given in s. 77.54 (6m).

SB139,7,7 4. "Nanotechnology" means the science and technology that enables a person to understand, measure, manipulate, and manufacture materials at the atomic, molecular, and supermolecular levels.

SB139,7,13 5. "Nanotechnology business" means a business, as certified by the department of commerce in the manner prescribed by the department of commerce, that is primarily engaged in applying nanotechnologies to create new applications or processes, or modify existing applications or processes, in order to make useful processes and products related to health care, energy, food production, manufacturing, biotechnology, information technology, or the environment.

SB139,7,19 6. "Qualified research" means qualified research as defined under section 41 (d) (1) of the Internal Revenue Code, except that research conducted by a public or private institution of higher education or a consortium, or a combination thereof, is "qualified research" if the research is intended to be useful in developing a new or improved product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the Internal Revenue Code.

SB139,7,21 7. "Used exclusively" means used to the exclusion of all other uses except for use not exceeding 5 percent of total use.

SB139,7,25 (b) Filing claims. Subject to the limitations provided in this subsection and s. 560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim as a credit against the taxes imposed under s. 71.23, up to the amount of the taxes, any of the following amounts that the claimant paid in the taxable year:

SB139,8,5 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly by the claimant in the claimant's nanotechnology business for qualified research and manufacturing, if the research and manufacturing occurs in this state.

SB139,8,9 2. Payments to a public or private institution of higher education, or to a consortium, for research, equipment, or the use of research facilities, or other qualified expenses as determined by the department of commerce, that are directly related to nanotechnology.

SB139,8,12 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the following that are used by the claimant's nanotechnology business for research and development that occurs in this state:

SB139,8,13 a. Advanced computing devices, including computer hardware and software.

SB139,8,14 b. Data communications.

SB139,8,15 c. Information technology.

SB139,8,17 d. Laboratory materials used exclusively for nanotechnology research and development.

SB139,8,20 (c) Limitations. 1. The maximum amount of the credits that may be allocated to all claimants under this subsection and ss. 71.07 (5i) and 71.47 (5i) in each fiscal year is $2,500,000, as determined by the department of commerce under s. 560.207.

SB139,8,23 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a copy of the claimant's certification for and allocation of credits under s. 560.207.

SB139,9,6 3. 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 amounts 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.

SB139,9,8 (d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB139,9,14 2. If a credit computed under this subsection is not entirely offset against Wisconsin income or franchise taxes otherwise due, the unused balance may be carried forward and credited against Wisconsin income or franchise taxes otherwise due for the following 10 taxable years to the extent not offset by these taxes otherwise due in all intervening years between the year in which the expense was incurred and the year in which the carry-forward credit is claimed.

SB139, s. 8 Section 8. 71.30 (3) (dq) of the statutes is created to read:

SB139,9,16 71.30 (3) (dq) Nanotechnology credit under s. 71.28 (5i).

SB139, s. 9 Section 9. 71.34 (1) (g) of the statutes is amended to read:

SB139,9,21 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), (3w), (5b), (5e), (5f), (5g), and (5h) , and (5i) and passed through to shareholders.

SB139, s. 10 Section 10. 71.45 (2) (a) 10. of the statutes is amended to read:

SB139,9,25 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dd) to (1dx), (3n), (3w), (5b), (5e), (5f), (5g), and (5h), and (5i) 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).

SB139, s. 11 Section 11. 71.47 (5i) of the statutes is created to read:

SB139,10,5 71.47 (5i) Nanotechnology credit. (a) Definitions. In this subsection:

SB139,10,6 1. "Claimant" means a person who files a claim under this subsection.

SB139,10,9 2. "Consortium" means 2 or more public institutions of higher education that are conducting substantially similar qualified research or working on components of the same qualified research.

SB139,10,10 3. "Manufacturing" has the meaning given in s. 77.54 (6m).

SB139,10,13 4. "Nanotechnology" means the science and technology that enables a person to understand, measure, manipulate, and manufacture materials at the atomic, molecular, and supermolecular levels.

SB139,10,19 5. "Nanotechnology business" means a business, as certified by the department of commerce in the manner prescribed by the department of commerce, that is primarily engaged in applying nanotechnologies to create new applications or processes, or modify existing applications or processes, in order to make useful processes and products related to health care, energy, food production, manufacturing, biotechnology, information technology, or the environment.

SB139,10,25 6. "Qualified research" means qualified research as defined under section 41 (d) (1) of the Internal Revenue Code, except that research conducted by a public or private institution of higher education or a consortium, or a combination thereof, is "qualified research" if the research is intended to be useful in developing a new or improved product or service and the research satisfies section 41 (d) (1) (B) (i) and (C) of the Internal Revenue Code.

SB139,11,2 7. "Used exclusively" means used to the exclusion of all other uses except for use not exceeding 5 percent of total use.

SB139,11,6 (b) Filing claims. Subject to the limitations provided in this subsection and s. 560.207, for taxable years beginning on or after July 1, 2008, a claimant may claim as a credit against the taxes imposed under s. 71.43, up to the amount of the taxes, any of the following amounts that the claimant paid in the taxable year:

SB139,11,11 1. The taxes imposed under subch. III of ch. 77 on the purchase of machines and processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly by the claimant in the claimant's nanotechnology business for qualified research and manufacturing, if the research and manufacturing occurs in this state.

SB139,11,15 2. Payments to a public or private institution of higher education, or to a consortium, for research, equipment, or the use of research facilities, or other qualified expenses as determined by the department of commerce, that are directly related to nanotechnology.

SB139,11,18 3. The taxes imposed under subch. III of ch. 77 on the purchase of any of the following that are used by the claimant's nanotechnology business for research and development that occurs in this state:

SB139,11,19 a. Advanced computing devices, including computer hardware and software.

SB139,11,20 b. Data communications.

SB139,11,21 c. Information technology.

SB139,11,23 d. Laboratory materials used exclusively for nanotechnology research and development.

SB139,12,3 (c) Limitations. 1. The maximum amount of the credits that may be allocated to all claimants under this subsection and ss. 71.07 (5i) and 71.28 (5i) in each fiscal year is $2,500,000, as determined by the department of commerce under s. 560.207.

SB139,12,6 2. No credit may be allowed under this subsection unless the claimant submits with the claimant's return a copy of the claimant's certification for and allocation of credits under s. 560.207.

SB139,12,14 3. 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 amounts 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.

SB139,12,16 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB139,12,22 2. If a credit computed under this subsection is not entirely offset against Wisconsin income or franchise taxes otherwise due, the unused balance may be carried forward and credited against Wisconsin income or franchise taxes otherwise due for the following 10 taxable years to the extent not offset by these taxes otherwise due in all intervening years between the year in which the expense was incurred and the year in which the carry-forward credit is claimed.

SB139, s. 12 Section 12. 71.49 (1) (dq) of the statutes is created to read:

SB139,12,24 71.49 (1) (dq) Nanotechnology credit under s. 71.47 (5i).