AB641: Bill Text

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) 25 percent of the tuition paid by a business for an individual to attend school, if the individual is enrolled in a course of instruction and is eligible for a grant from the Federal Pell Grant Program; and 2) 30 percent of the tuition paid by a business for an individual to attend school, if the individual is enrolled in a course of instruction that relates to a projected worker shortage in this state and is eligible for a grant from the Federal Pell Grant Program. The taxpayer claims the total amount of the tuition paid for the individual for the taxable year in which the individual graduates from the course of instruction. 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.

Under current law, an individual may claim an income tax credit in each taxable year for two years, beginning with the taxable year certified by the Department of Commerce (Commerce), in an amount equal to 12.5 percent of the individual's bona fide angel investment in a new business venture. The total amount of all bona fide angel investment credits that may be claimed in a calendar year beginning after 2007 but before 2011 is $5,500,000 and the total amount that may be claimed in any calendar year beginning after 2010 is $18,000,000. Under the bill, the total amount of all bona fide angel investment credits that may be claimed in 2010 is $6,500,000, and the total amount that may be claimed in a calendar year beginning after 2010 is $20,000,000.

Under current law, a taxpayer may claim an early stage seed investment tax credit for 25 percent of the amount that the taxpayer pays to a fund manager that the fund manager invests with certain businesses that are certified by Commerce to receive investments. The total amount of all early stage seed investment credits that may be claimed in a calendar year beginning after 2007 but before 2011 is $6,000,000 and the total amount that may be claimed in any calendar year beginning after 2010 is $18,500,000. Under the bill, the total amount of all early stage seed investment credits that may be claimed in 2010 is $8,000,000, and the total amount that may be claimed in any calendar year beginning after 2010 is $20,500,000

The bill directs the Board of Regents of the University of Wisconsin (UW) System to award to the WiSys Technology Foundation, Inc. (foundation), grants for the Wisconsin Small Company Advancement program to provide intellectual property management services to UW System two-year and four-year schools, other than the UW-Madison and the UW-Milwaukee. Each grant must be for $250,000, but the Board of Regents may award a grant only if the foundation shows that it has secured matching funds for the program from sources other than the state. The bill provides for a maximum number of eight grants.

The bill appropriates $125,000 annually to the Board of Regents of the UW System to support a business plan competition program existing on the effective date of bill at two-year and four-year schools, except for the UW-Madison, that makes entrepreneurial expertise available to students and that has ties to campus-based business plan contests and national organizations that foster student entrepreneurism. The bill also appropriates $400,000 during the 2009-11 fiscal biennium to the Board of Regents to develop an emerging technology center at the UW-La Crosse. The bill prohibits the Board of Regents from spending moneys under either appropriation unless it receives matching funds from private contributions.

Beginning in the 2010-11 school year, the bill requires the Technical College System Board (system board) to award at least $1,500,000 annually to technical college district boards for advanced manufacturing skills training. Under current law, the system board must award at least $1,000,000 annually for such training, with the same priority. The bill authorizes Commerce to award grants in the 2009-11 fiscal biennium to businesses for outsourcing work to rural municipalities in this state. Grants under the bill are funded by repayments of grants and loans under a number of economic development programs. Under the bill, Commerce must require grantees to obtain funding from sources other than the state in an amount at least equal to the amount of the grant. The total amount of grants awarded under the bill may not exceed $500,000.

Under current law, Commerce assists in maintaining a high-technology business development corporation, for promoting and supporting the creation, development, and retention of science-based and technology-based businesses in the state.

The bill requires Commerce to award to the corporation an annual grant of $100,000 for employing a grant writer to assist businesses to apply for certain federal small business grants, beginning in fiscal year 2010-11. The bill also requires Commerce to award the corporation a one-time grant of $100,000 in fiscal year 2010-11 for an economic modeling database for use by regional economic development entities. The bill increases a current appropriation of general purpose revenue to Commerce by $200,000 in fiscal year 2010-11 to fund the grants.

The Wisconsin Development Fund (development fund) is a biennial appropriation of general purpose revenues to Commerce. Currently, the development fund provides moneys for grants to Center for Advanced Technology and Innovation; for technology commercialization grants and loans; for grants and loans to support capital financing, worker training, entrepreneurial development, and other economic development projects; and for reimbursements under the Wisconsin trade project program.

The bill increases the appropriation by $3,000,000 for the 2009-11 fiscal biennium. The bill also requires Commerce to award grants from the development fund in fiscal year 2010-11 to businesses for converting existing unutilized or underutilized manufacturing facilities to the production of renewable energy or the manufacturing of equipment used in the production of renewable energy. The total amount of grants awarded may not exceed $2,000,000.

This bill also establishes a technology transfer grant and loan program in Commerce. Under the program, Commerce may award a grant or loan of up to $100,000 to a research institution to pay for research and development activities that will result in the creation or retention of jobs in this state or that will improve the competitive position of a business in this state by improving the innovativeness of the business. The bill defines a "research institution" as any of the following located in this state: an accredited college; university; school of medicine, dentistry, veterinary medicine, medicine and public health, public health, or health professionals; a center for health sciences; or a hospital in which research is conducted. Grants and loans under the program are funded from existing economic development programs, including the Forward Innovation Fund and the development fund.

The bill directs Commerce to establish a pilot program of making loans of not more than $25,000 at nominal interest rates for the creation of new businesses. Under the bill, Commerce must designate two areas of the state, one urban and one rural, that are affected by high unemployment and must make the loans only to residents of the areas. Commerce must partner with federal, state, regional, and local economic development entities to provide business training for applicants and borrowers. The bill appropriates $500,000 to Commerce in fiscal 2010-11 for the loans. Commerce may not make loans under the program after July 31, 2013.

Current law requires Commerce to award a $70,000 grant to Pleasant Prairie Technology Incubator Center no later than July 31, 2011. The bill requires Commerce to award the grant no later than 30 days after the effective date of the bill.

In addition, the bill increases funding for Commerce by $75,000 in fiscal 2010-11 in order to fund a position for Commerce's Regulatory Ombudsman Center.

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:

AB641, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

AB641, s. 2 Section 2. 20.143 (1) (c) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,5,12 20.143 (1) (c) Wisconsin development fund; grants, loans, reimbursements, and assistance. Biennially, the amounts in the schedule for grants under s. 560.145; for grants and loans under s. ss. 560.275 (2) and 560.276 and under subch. V of ch. 560; for reimbursements under s. 560.167; for the costs specified in s. 560.607; for loans under s. 560.203 and the loan under 1999 Wisconsin Act 9, section 9110 (4); and for the grants under 1995 Wisconsin Act 27, section 9116 (7gg), 1995 Wisconsin Act 119, section 2 (1), 1997 Wisconsin Act 27, section 9110 (6g), 2003 Wisconsin Act 33, section 9109 (1d) and (2q), 2007 Wisconsin Act 20, section 9108 (4u), (6c), (7c), (7f), (8c), (8i), (9i), and (10q), 2009 Wisconsin Act 2, section 9110 (2) and (3), and 2009 Wisconsin Act 28, section 9110 (17q).

AB641, s. 3 Section 3. 20.143 (1) (d) of the statutes is amended to read:

AB641,5,16 20.143 (1) (d) High-technology business development corporation. The amounts in the schedule for the grants specified in s. 560.27 (1) (b) and (c) and (3), and for the grant under 2009 Wisconsin Act .... (this act), section 36 (2 ).

AB641, s. 4 Section 4. 20.143 (1) (fi) of the statutes, as created by 2009 Wisconsin Act 28, is amended to read:

AB641,6,3 20.143 (1) (fi) Forward innovation fund; grants and loans. Biennially, the amounts in the schedule for grants and loans under s. 560.276 and under subch. II of ch. 560.

AB641, s. 5 Section 5. 20.143 (1) (ie) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,6,19 20.143 (1) (ie) Wisconsin development fund, repayments. All moneys received in repayment of grants or loans under s. 560.085 (4) (b), 1985 stats., s. 560.10, 2005 stats., s. 560.147, 2005 stats., s. 560.16, 1995 stats., s. 560.165, 1993 stats., s. 560.275 (2), s. 560.62, 2005 stats., s. 560.63, 2005 stats., s. 560.66, 2005 stats., ss. 560.145, 560.157, and 560.45, subch. V of ch. 560, 1989 Wisconsin Act 336, section 3015 (1m), 1989 Wisconsin Act 336, section 3015 (2m), 1989 Wisconsin Act 336, section 3015 (3gx), 1997 Wisconsin Act 27, section 9110 (7f), 1997 Wisconsin Act 310, section 2 (2d), 1999 Wisconsin Act 9, section 9110 (4), and 2007 Wisconsin Act 20, section 9108 (5x), not appropriated under par. (gv) to be used for grants and loans under s. ss. 560.275 (2), s. 560.276, and 560.45 , and subch. V of ch. 560, for the loan under 1999 Wisconsin Act 9, section 9110 (4), for the grant under 2001 Wisconsin Act 16, section 9110 (7g), for the grants under 2003 Wisconsin Act 33, section 9109 (1d) and (2q), for grants under 2009 Wisconsin Act .... (this act), section 36 (1 ), for the study under 2009 Wisconsin Act 28, section 9110 (15u), and for reimbursements under s. 560.167.

AB641, s. 6 Section 6. 20.143 (1) (ig) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,7,2 20.143 (1) (ig) Gaming economic development and diversification; repayments. Biennially, the amounts in the schedule for grants and loans under s. 560.138, for grants under s. 2009 Wisconsin Act .... (this act), section 36 (1), and under ss. 560.276 and 560.45, and for the study under 2009 Wisconsin Act 28, section 9110 (15u). All moneys received in repayment of loans under ss. 560.137 (2), 2005 stats., and 560.138 shall be credited to this appropriation account.

AB641, s. 7 Section 7. 20.143 (1) (im) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,7,10 20.143 (1) (im) Minority business projects; repayments. All moneys received on or before June 30, 2009, in repayment of grants or loans under s. 560.82 (1m) (b), 2007 stats., and s. 560.82 (1m) (c), 2007 stats., and loans under 1997 Wisconsin Act 9, section 3, to be used for grants and loans under s. 560.45 and subch. II of ch. 560, for grants under 2009 Wisconsin Act .... (this act), section 36 (1 ), and for the study under 2009 Wisconsin Act 28, section 9110 (15u).

AB641, s. 8 Section 8. 20.143 (1) (io) of the statutes, as created by 2009 Wisconsin Act 28, is amended to read:

AB641,7,17 20.143 (1) (io) Grant and loan repayments; forward innovation fund. All moneys received in repayment of grants or loans under subch. II of ch. 560, grants or loans under s. 560.82 (1m) (b) and (c), 2007 stats., and loans under 1997 Wisconsin Act 9, section 3, to be used for grants and loans under s. 560.276 and under subch. II of ch. 560.

AB641, s. 9 Section 9. 20.143 (1) (ir) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,7,23 20.143 (1) (ir) Rural economic development loan repayments. All moneys received in repayment of loans under s. 560.17, to be used for grants and loans under ss. 560.17 and 560.45, for grants under 2009 Wisconsin Act .... (this act), section 36 (1), and for the study under 2009 Wisconsin Act 28, section 9110 (15u).

AB641, s. 10 Section 10. 20.143 (1) (kj) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,8,9 20.143 (1) (kj) Gaming economic development and diversification; grants and loans. Biennially, the amounts in the schedule for grants and loans under s. ss. 560.138 and 560.276, for the grants under s. 560.139 (1) (a), and for the grants under 2001 Wisconsin Act 16, section 9110 (2k), (11pk), and (11zx), and 2009 Wisconsin Act 28, section 9110 (16i). All moneys transferred from the appropriation account under s. 20.505 (8) (hm) 6j. shall be credited to this appropriation account. Notwithstanding s. 20.001 (3) (b), the unencumbered balance on June 30 of each odd-numbered year shall revert to the appropriation account under s. 20.505 (8) (hm).

AB641, s. 11 Section 11. 20.285 (1) (cd) of the statutes is created to read:

AB641,8,13 20.285 (1) (cd) WiSys Technology Foundation grants. A sum sufficient not to exceed $2,000,000 for grants to the WiSys Technology Foundation, Inc., under s. 36.25 (52) (b).

AB641, s. 12 Section 12. 20.285 (1) (eb) of the statutes is created to read:

AB641,8,16 20.285 (1) (eb) Business plan competition. The amounts in the schedule to support a business plan competition program under s. 36.25 (53).

AB641, s. 13 Section 13. 20.285 (1) (eg) of the statutes is created to read:

AB641,8,20 20.285 (1) (eg) Emerging technology center. Biennially, the amounts in the schedule to develop a business plan for an emerging technology center under s. 36.25 (54).

AB641, s. 14 Section 14. 20.285 (1) (eg) of the statutes, as created by 2009 Wisconsin Act .... (this act), is repealed.

AB641, s. 15 Section 15. 36.25 (52) of the statutes is created to read:

AB641,8,25 36.25 (52) WiSys Technology Foundation grants. (a) In this subsection, "foundation" means the WiSys Technology Foundation, Inc.

AB641,9,8 (b) From the appropriation under s. 20.285 (1) (cd), the board shall award grants to the foundation for the Wisconsin Small Company Advancement program to provide intellectual property management services to the extension and all institutions and college campuses other than the University of Wisconsin-Madison and the University of Wisconsin-Milwaukee. The amount of each grant shall be $250,000. The board may not award a grant unless the foundation shows to the satisfaction of the board that the foundation has secured matching funds for the program from sources other than the state that are equal to the amount of the grant.

AB641,9,11 (c) The board shall submit progress reports to the legislature, in the manner provided under s. 13.172 (2), at least annually until the program funded by the grants under par. (b) is terminated.

AB641, s. 16 Section 16. 36.25 (53) of the statutes is created to read:

AB641,9,20 36.25 (53) Business plan competition. The board shall use the moneys appropriated under s. 20.285 (1) (eb) to support a business plan competition program existing on the effective date of this subsection .... [LRB inserts date], at institutions and college campuses other than the University of Wisconsin-Madison that makes entrepreneurial expertise available to students and that has ties to campus-based business plan contests and national organizations that foster student entrepreneurism. The board may use the moneys only if the board receives matching funds for the same purpose from private contributions.

AB641, s. 17 Section 17. 36.25 (54) of the statutes is created to read:

AB641,9,25 36.25 (54) Emerging technology center. The board shall use the moneys appropriated under s. 20.285 (1) (eg) to develop an emerging technology center at the University of Wisconsin-La Crosse. The board may use the moneys only if the board receives matching funds for the same purpose from private contributions.

AB641, s. 18 Section 18. 36.25 (54) of the statutes, as created by 2009 Wisconsin Act .... (this act), is repealed.

AB641, s. 19 Section 19. 38.41 (3) (d) of the statutes, as created by 2009 Wisconsin Act 2, is amended to read:

AB641,10,8 38.41 (3) (d) Beginning in the 2008-09 school year, the board shall award at least $1,000,000 annually under sub. (1) for training in advanced manufacturing skills, with priority given to welding and beginning in the 2010-11 school year, the board shall award at least $1,500,000 annually under sub. (1) for such training.

AB641, s. 20 Section 20. 71.05 (6) (a) 15. of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,10,16 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3s), (3t), (3w), (5e), (5f), (5h), (5i), (5j), (5k), (5r), and (8r) 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 (1k) (g).

AB641, s. 21 Section 21. 71.07 (5r) of the statutes is created to read:

AB641,10,19 71.07 (5r) Postsecondary education credit. (a) Definitions. In this subsection:

AB641,10,22 1. "Claimant" means a sole proprietor, a partner, a member of a limited liability company, or a shareholder of a tax-option corporation who files a claim under this subsection.

AB641,10,23 2. "Course of instruction" has the meaning given in s. 38.50 (1) (c).

AB641,10,24 3. "Family member" has the meaning given in s. 157.061 (7).

AB641,11,3 4. "Managing employee" means an individual who wholly or partially exercises operational or managerial control over, or who directly or indirectly conducts, the operation of the claimant's business.

AB641,11,5 5. "Paid or incurred" includes any amount paid by the claimant to reimburse an individual for the tuition that the individual paid or incurred.

AB641,11,6 6. "Qualified postsecondary institution" means all of the following:

AB641,11,9 a. A University of Wisconsin System institution, a technical college system institution, or a regionally accredited 4-year nonprofit college or university having its regional headquarters and principal place of business in this state.

AB641,11,11 b. A school approved under s. 38.50, if the delivery of education occurs in this state.

AB641,11,14 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 an amount equal to the following:

AB641,11,18 1. Twenty-five percent of the tuition that the claimant paid or incurred for an individual to participate in an education program of a qualified postsecondary institution, if the individual was enrolled in a course of instruction and eligible for a grant from the Federal Pell Grant Program.

AB641,11,24 2. Thirty percent of the tuition that the claimant paid or incurred for an individual to participate in an education program of a qualified postsecondary institution, if the individual was enrolled in a course of instruction that relates to a projected worker shortage in this state, as determined by the local workforce development boards established under 29 USC 2832, and if the individual was eligible for a grant from the Federal Pell Grant Program.

AB641,12,3 (c) Limitations. 1. No credit may be allowed under par. (b) unless the claimant certifies to the department of revenue that the claimant will not be reimbursed for any amount of tuition for which the claimant claims a credit under par. (b).

AB641,12,6 2. A claimant may not claim the credit under par. (b) for any tuition amounts that the individual described under par. (b) excluded under s. 71.05 (6) (b) 28. or under section 127 of the Internal Revenue Code.

AB641,12,9 3. A claimant may not claim the credit under par. (b) for any tuition amounts that the claimant paid or incurred for a family member of the claimant or for a family member of a managing employee unless all of the following apply:

AB641,12,13 a. The family member was employed an average of at least 20 hours per week as an employee of the claimant, or the claimant's business, during the one-year period prior to commencing participation in the education program in connection with which the claimant claims a credit under par. (b).

AB641,12,15 b. The family member is enrolled in a course of instruction that is substantially related to the claimant's business.

AB641,12,17 3m. A claimant may not claim the credit under par. (b) for any tuition amounts that the claimant paid or incurred for an individual who is not a resident of this state.

AB641,12,21 4. The claimant shall claim the credit for the taxable year in which the individual graduates from a course of instruction in an amount equal to the total amount the claimant paid or incurred under par. (b) for all taxable years in which the claimant paid or incurred such amounts related to that individual.

AB641,13,4 5. 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 tuition 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.

AB641,13,6 (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.

AB641, s. 22 Section 22. 71.10 (4) (cd) of the statutes is created to read:

AB641,13,8 71.10 (4) (cd) Postsecondary education credit under s. 71.07 (5r).

AB641, s. 23 Section 23. 71.21 (4) of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,13,14 71.21 (4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3s), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r), and (8r) and passed through to partners shall be added to the partnership's income.

AB641, s. 24 Section 24. 71.26 (2) (a) 4. of the statutes, as affected by 2009 Wisconsin Act 28, is amended to read:

AB641,13,22 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (1dy), (3g), (3h), (3n), (3p), (3q), (3r), (3t), (3w), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r), and (8r) 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 (1k) (g).

AB641, s. 25 Section 25. 71.28 (5r) of the statutes is created to read:

AB641,13,25 71.28 (5r) Postsecondary education credit. (a) Definitions. In this subsection:

AB641,14,1 1. "Claimant" means a corporation that files a claim under this subsection.