SB260: Bill Text

Analysis by the Legislative Reference Bureau

Under current law, a taxpayer may claim early stage seed and angel investment income and franchise tax credits for the taxpayer's investments in qualified new businesses. If the credit amounts exceed the taxpayer's tax liability, the taxpayer does not receive a refund, but, instead, may apply the amount of the unused credits to subsequent taxable years. Under this bill, if the credit amounts exceed the taxpayer's tax liability, the taxpayer receives a refund. The bill also transfers the administration of the early stage seed and angel investment credits from the Wisconsin Economic Development Corporation to the Department of Administration.

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:

SB260,1 Section 1. 20.835 (2) (ba) of the statutes is created to read:

SB260,2,6 20.835 (2) (ba) Early stage seed and angel investment credits. A sum sufficient to make the payments under ss. 71.07 (5b) (d) 4. and (5d) (d) 5., 71.28 (5b) (d) 4., and 71.47 (5b) (d) 4.

SB260,2 Section 2. 71.07 (3q) (c) of the statutes is amended to read:

SB260,2,12 71.07 (3q) (c) 3. The maximum amount of credits that may be awarded under this subsection and ss. 71.28 (3q) and 71.47 (3q) for the period beginning on January 1, 2010, and ending on June 30, 2013, is $14,500,000, not including the amount of any credits reallocated under s. 238.15 (3) (d) or s. 560.205 (3) (d), 2009 stats. 16.296 (3) (d).

SB260,3 Section 3. 71.07 (5b) (a) 2. of the statutes is amended to read:

SB260,2,15 71.07 (5b) (a) 2. "Fund manager" means an investment fund manager certified under s. 238.15 (2) or s. 560.205 (2), 2009 stats. 16.296 (2).

SB260,4 Section 4. 71.07 (5b) (b) of the statutes is amended to read:

SB260,3,8 71.07 (5b) (b) Filing claims. 1. For taxable years beginning after December 31, 2004, subject Subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats. 16.296, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under ss. 71.02 and 71.08, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats. 16.296 (1).

SB260,3,17 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 percent limitation under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation administration the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB260,5 Section 5. 71.07 (5b) (d) 1. of the statutes is amended to read:

SB260,3,21 71.07 (5b) (d) 1. Section For taxable years beginning before January 1, 2014, s. 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB260,6 Section 6. 71.07 (5b) (d) 1m. of the statutes is created to read:

SB260,3,25 71.07 (5b) (d) 1m. For taxable years beginning after December 31, 2013, s. 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.

SB260,7 Section 7. 71.07 (5b) (d) 3. of the statutes is amended to read:

SB260,4,7 71.07 (5b) (d) 3. Except as provided under s. 238.15 (3) (d) (intro.) 16.296 (3) (d) (intro.), for investments made after December 31, 2007, if an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than 3 years, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.

SB260,8 Section 8. 71.07 (5b) (d) 4. of the statutes is created to read:

SB260,4,14 71.07 (5b) (d) 4. For taxable years beginning after December 31, 2013, if the allowable amount of the claim under par. (b) exceeds the tax otherwise due under s. 71.02 or 71.08, the amount of the claim not used to offset the tax due shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation account under s. 20.835 (2) (ba).

SB260,9 Section 9. 71.07 (5d) (a) 1. (intro.) of the statutes is amended to read:

SB260,4,18 71.07 (5d) (a) 1. (intro.) "Bona fide angel investment" means a purchase of an equity interest, or any other expenditure, as determined by rule under s. 238.15 or s. 560.205, 2009 stats. 16.296, that is made by any of the following:

SB260,10 Section 10. 71.07 (5d) (a) 2m. of the statutes is amended to read:

SB260,4,23 71.07 (5d) (a) 2m. "Person" means a partnership or limited liability company that is a nonoperating entity, as determined by the department of commerce or the Wisconsin Economic Development Corporation administration, a natural person, or fiduciary.

SB260,11 Section 11. 71.07 (5d) (a) 3. of the statutes is amended to read:

SB260,5,2 71.07 (5d) (a) 3. "Qualified new business venture" means a business that is certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats. 16.296 (1).

SB260,12 Section 12. 71.07 (5d) (b) (intro.) of the statutes is amended to read:

SB260,5,7 71.07 (5d) (b) (intro.) Filing claims. Subject to the limitations provided in this subsection and in s. 238.15 or s. 560.205, 2009 stats. 16.296, a claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08, up to the amount of those taxes, the following:

SB260,13 Section 13. 71.07 (5d) (b) 2. of the statutes is amended to read:

SB260,5,13 71.07 (5d) (b) 2. For taxable years beginning after December 31, 2007, and before January 1, 2014, for the taxable year certified by the department of commerce or the Wisconsin Economic Development Corporation, an amount equal to 25 percent of the claimant's bona fide angel investment made directly in a qualified new business venture.

SB260,14 Section 14. 71.07 (5d) (b) 3. of the statutes is created to read:

SB260,5,18 71.07 (5d) (b) 3. For taxable years beginning after December 31, 2013, for the taxable year certified by the department of administration, an amount equal to 25 percent of the claimant's bona fide angel investment made directly in a qualified new business venture.

SB260,15 Section 15. 71.07 (5d) (c) 2. of the statutes is amended to read:

SB260,5,23 71.07 (5d) (c) 2. For taxable years beginning before January 1, 2008, the maximum amount of a claimant's investment that may be used as the basis for a credit under this subsection is $2,000,000 for each investment made directly in a business certified under s. 238.15 (1), 2011 stats. or s. 560.205 (1), 2009 stats.

SB260,16 Section 16. 71.07 (5d) (d) 1. of the statutes is amended to read:

SB260,6,6 71.07 (5d) (d) 1. Except as provided under s. 238.15 (3) (d) (intro.) 16.296 (3) (d) (intro.), for investments made after December 31, 2007, if an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than 3 years, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.

SB260,17 Section 17. 71.07 (5d) (d) 2. of the statutes is amended to read:

SB260,6,10 71.07 (5d) (d) 2. Section For taxable years beginning before January 1, 2014, s. 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB260,18 Section 18. 71.07 (5d) (d) 2m. of the statutes is created to read:

SB260,6,14 71.07 (5d) (d) 2m. For taxable years beginning after December 31, 2013, s. 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.

SB260,19 Section 19. 71.07 (5d) (d) 5. of the statutes is created to read:

SB260,6,21 71.07 (5d) (d) 5. For taxable years beginning after December 31, 2013, if the allowable amount of the claim under par. (b) exceeds the tax otherwise due under s. 71.02 or 71.08, the amount of the claim not used to offset the tax due shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation account under s. 20.835 (2) (ba).

SB260,20 Section 20. 71.10 (4) (gwb) of the statutes is amended to read:

SB260,6,24 71.10 (4) (gwb) Early stage seed investment credit under s. 71.07 (5b), except as provided under par. (i).

SB260,21 Section 21. 71.10 (4) (gx) of the statutes is amended to read:

SB260,7,2 71.10 (4) (gx) Angel investment credit under s. 71.07 (5d), except as provided under par. (i).

SB260,22 Section 22. 71.10 (4) (i) of the statutes is amended to read:

SB260,7,17 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and beyond under s. 71.613, homestead credit under subch. VIII, farmland tax relief credit under s. 71.07 (3m), dairy manufacturing facility investment credit under s. 71.07 (3p), jobs tax credit under s. 71.07 (3q), meat processing facility investment credit under s. 71.07 (3r), woody biomass harvesting and processing credit under s. 71.07 (3rm), food processing plant and food warehouse investment credit under s. 71.07 (3rn), early stage seed investment credit under s. 71.07 (5b) (d) 4., angel investment credit under s. 71.07 (5d) (d) 5., film production services credit under s. 71.07 (5f), film production company investment credit under s. 71.07 (5h), veterans and surviving spouses property tax credit under s. 71.07 (6e), enterprise zone jobs credit under s. 71.07 (3w), beginning farmer and farm asset owner tax credit under s. 71.07 (8r), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

SB260,23 Section 23. 71.28 (3q) (c) 3. of the statutes is amended to read:

SB260,7,23 71.28 (3q) (c) 3. The maximum amount of credits that may be awarded under this subsection and ss. 71.07 (3q) and 71.47 (3q) for the period beginning on January 1, 2010, and ending on June 30, 2013, is $14,500,000, not including the amount of any credits reallocated under s. 238.15 (3) (d) or s. 560.205 (3) (d), 2009 stats. 16.296 (3) (d).

SB260,24 Section 24. 71.28 (5b) (a) 2. of the statutes is amended to read:

SB260,8,2 71.28 (5b) (a) 2. "Fund manager" means an investment fund manager certified under s. 238.15 (2) or s. 560.205 (2), 2009 stats. 16.296 (2).

SB260,25 Section 25. 71.28 (5b) (b) of the statutes is amended to read:

SB260,8,10 71.28 (5b) (b) Filing claims. 1. For taxable years beginning after December 31, 2004, subject Subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats. 16.296, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats. 16.296 (1).

SB260,8,19 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 percent limitation under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation administration the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB260,26 Section 26. 71.28 (5b) (d) 1. of the statutes is amended to read:

SB260,8,23 71.28 (5b) (d) 1. Subsection For taxable years beginning before January 1, 2014, sub. (4) (e) to (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB260,27 Section 27. 71.28 (5b) (d) 1m. of the statutes is created to read:

SB260,9,3 71.28 (5b) (d) 1m. For taxable years beginning after December 31, 2013, sub. (4) (e), (g), and (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB260,28 Section 28. 71.28 (5b) (d) 3. of the statutes is amended to read:

SB260,9,10 71.28 (5b) (d) 3. Except as provided under s. 238.15 (3) (d) (intro.) 16.296 (3) (d) (intro.), for investments made after December 31, 2007, if an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than 3 years, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.

SB260,29 Section 29. 71.28 (5b) (d) 4. of the statutes is created to read:

SB260,9,17 71.28 (5b) (d) 4. For taxable years beginning after December 31, 2013, if the allowable amount of the claim under par. (b) exceeds the tax otherwise due under s. 71.23, the amount of the claim not used to offset the tax due shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation account under s. 20.835 (2) (ba).

SB260,30 Section 30. 71.30 (3) (eop) of the statutes is amended to read:

SB260,9,20 71.30 (3) (eop) Early stage seed investment credit under s. 71.28 (5b), except as provided under par. (f).

SB260,31 Section 31. 71.30 (3) (f) of the statutes is amended to read:

SB260,9,25 71.30 (3) (f) The total of farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.28 (2m), dairy manufacturing facility investment credit under s. 71.28 (3p), jobs credit under s. 71.28 (3q), meat processing facility investment credit under s. 71.28 (3r), woody biomass harvesting and processing credit under s. 71.28 (3rm), food processing plant and food warehouse investment credit under s. 71.28 (3rn), enterprise zone jobs credit under s. 71.28 (3w), early stage seed investment credit under s. 71.28 (5b) (d) 4., film production services credit under s. 71.28 (5f), film production company investment credit under s. 71.28 (5h), beginning farmer and farm asset owner tax credit under s. 71.28 (8r), and estimated tax payments under s. 71.29.

SB260,32 Section 32. 71.47 (3q) (c) 3. of the statutes is amended to read:

SB260,10,12 71.47 (3q) (c) 3. The maximum amount of credits that may be awarded under this subsection and ss. 71.07 (3q) and 71.28 (3q) for the period beginning on January 1, 2010, and ending on June 30, 2013, is $14,500,000, not including the amount of any credits reallocated under s. 238.15 (3) (d) or s. 560.205 (3) (d), 2009 stats. 16.296 (3) (d).

SB260,33 Section 33. 71.47 (5b) (a) 2. of the statutes is amended to read:

SB260,10,15 71.47 (5b) (a) 2. "Fund manager" means an investment fund manager certified under s. 238.15 (2) or s. 560.205 (2), 2009 stats. 16.296 (2).

SB260,34 Section 34. 71.47 (5b) (b) of the statutes is amended to read:

SB260,10,23 71.47 (5b) (b) Filing claims. 1. For taxable years beginning after December 31, 2004, subject Subject to the limitations provided under this subsection and s. 238.15 or s. 560.205, 2009 stats. 16.296, and except as provided in subd. 2., a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of those taxes, 25 percent of the claimant's investment paid to a fund manager that the fund manager invests in a business certified under s. 238.15 (1) or s. 560.205 (1), 2009 stats 16.296 (1).

SB260,11,7 2. In the case of a partnership, limited liability company, or tax-option corporation, the computation of the 25 percent limitation under subd. 1. shall be determined at the entity level rather than the claimant level and may be allocated among the claimants who make investments in the manner set forth in the entity's organizational documents. The entity shall provide to the department of revenue and to the department of commerce or the Wisconsin Economic Development Corporation administration the names and tax identification numbers of the claimants, the amounts of the credits allocated to the claimants, and the computation of the allocations.

SB260,35 Section 35. 71.47 (5b) (d) 1. of the statutes is amended to read:

SB260,11,11 71.47 (5b) (d) 1. Section For taxable years beginning before January 1, 2014, s. 71.28 (4) (e) to (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB260,36 Section 36. 71.47 (5b) (d) 1m. of the statutes is created to read:

SB260,11,15 71.47 (5b) (d) 1m. For taxable years beginning after December 31, 2013, s. 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.

SB260,37 Section 37. 71.47 (5b) (d) 3. of the statutes is amended to read:

SB260,11,22 71.47 (5b) (d) 3. Except as provided under s. 238.15 (3) (d) (intro.) 16.296 (3) (d) (intro.), for investments made after December 31, 2007, if an investment for which a claimant claims a credit under par. (b) is held by the claimant for less than 3 years, the claimant shall pay to the department, in the manner prescribed by the department, the amount of the credit that the claimant received related to the investment.

SB260,38 Section 38. 71.47 (5b) (d) 4. of the statutes is created to read:

SB260,12,4 71.47 (5b) (d) 4. For taxable years beginning after December 31, 2013, if the allowable amount of the claim under par. (b) exceeds the tax otherwise due under s. 71.43, the amount of the claim not used to offset the tax due shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation account under s. 20.835 (2) (ba).

SB260,39 Section 39. 71.49 (1) (eop) of the statutes is amended to read:

SB260,12,7 71.49 (1) (eop) Early stage seed investment credit under s. 71.47 (5b), except as provided under par. (f).

SB260,40 Section 40. 71.49 (1) (f) of the statutes is amended to read:

SB260,12,18 71.49 (1) (f) The total of farmland preservation credit under subch. IX, farmland tax relief credit under s. 71.47 (2m), dairy manufacturing facility investment credit under s. 71.47 (3p), jobs credit under s. 71.47 (3q), meat processing facility investment credit under s. 71.47 (3r), woody biomass harvesting and processing credit under s. 71.47 (3rm), food processing plant and food warehouse investment credit under s. 71.47 (3rn), enterprise zone jobs credit under s. 71.47 (3w), early stage seed investment credit under s. 71.47 (5b) (d) 4., film production services credit under s. 71.47 (5f), film production company investment credit under s. 71.47 (5h), beginning farmer and farm asset owner tax credit under s. 71.47 (8r), and estimated tax payments under s. 71.48.

SB260,41 Section 41. 73.03 (63) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read: