LRB-5530/1
JK:kjf
2019 - 2020 LEGISLATURE
February 20, 2020 - Introduced by Senator Smith, cosponsored by Representatives
Shankland, VanderMeer, Allen, Fields, Kolste, L. Myers, Ohnstad,
Sinicki, Spreitzer, Subeck, Vruwink and Zamarripa. Referred to Committee
on Agriculture, Revenue and Financial Institutions.
SB825,1,5 1An Act to amend 71.05 (6) (a) 15., 71.21 (4) (a), 71.26 (2) (a) 4., 71.34 (1k) (g),
271.45 (2) (a) 10. and 76.67 (2); and to create 71.07 (5p), 71.10 (4) (cs), 71.28 (5p),
371.30 (3) (dr), 71.47 (5p), 71.49 (1) (dr) and 76.634 of the statutes; relating to:
4an income and franchise tax credit for investments in a community
5development financial institution.
Analysis by the Legislative Reference Bureau
Under this bill, a person who makes a qualified investment in a registered
community development financial institution (CDFI) may receive a credit against
state income and franchise taxes, for taxable years beginning after December 31,
2018, and before January 1, 2021, and against license fees paid by insurers. The bill
defines a CDFI as an entity that is organized under the laws of this state and has
been certified by the Community Development Financial Institutions Fund
established under federal law (fund) as meeting certain eligibility requirements.
The bill defines a “qualified investment" as a loan or deposit that has a value of at
least $10,000, pays no interest to the person making the loan or deposit, and is made
for a minimum of 60 months. The CDFI retains complete control of the loan or
deposit for the duration of the investment period.
A person may claim 10 percent of the person's qualified investment, if the
investment is at least $10,000, but not more than $150,000, or 12 percent of the
person's qualified investment, if the investment is more than $150,000, but not more
than $500,000. If the person withdraws the qualified investment from the CDFI

before the end of the investment period and does not reinvest the qualified
investment in another CDFI, the person must repay a portion of the credit amounts
that the person received by adding the portion to the person's tax or fee liability in
a subsequent year. However, the portion that the person must repay depends on
when the person withdraws the investment during the investment period. The
portion that the person must repay decreases the longer the person holds the
investment during the investment period.
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:
SB825,1 1Section 1 . 71.05 (6) (a) 15. of the statutes is amended to read:
SB825,2,82 71.05 (6) (a) 15. Except as provided under s. 71.07 (3p) (c) 5., the amount of the
3credits computed under s. 71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r),
4(3rm), (3rn), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5f), (5h), (5i), (5j), (5k), (5p),
5(5r), (5rm), (6n), (8r), and (10) and not passed through by a partnership, limited
6liability company, or tax-option corporation that has added that amount to the
7partnership's, company's, or tax-option corporation's income under s. 71.21 (4) or
871.34 (1k) (g).
SB825,2 9Section 2. 71.07 (5p) of the statutes is created to read:
SB825,2,1110 71.07 (5p) Steve Hilgenberg community development credit. (a) Definitions.
11In this subsection:
SB825,2,1212 1. “Claimant" means a person who files a claim under this subsection.
SB825,2,1413 2. “Community development financial institution" means an entity that
14satisfies all of the following:
SB825,2,1715a. The entity is certified by the fund under 12 CFR 1805.201 as meeting the
16eligibility requirements for a community development financial institution under 12
17CFR 1805.200
and 1805.201 (b).
SB825,3,1
1b. The entity is organized under the laws of this state.
SB825,3,22 c. The entity uses qualified investments for projects that are based in this state.
SB825,3,43 3. “Fund" means the Community Development Financial Institutions Fund
4established under 12 USC 4703 (a).
SB825,3,75 4. a. Subject to subd. 4. b., “qualified investment" means a deposit or loan that
6pays no interest to the person who made the deposit or loan if the deposit or loan has
7a value of at least $10,000 and is made for a period of at least 60 months.
SB825,3,148 b. A community development financial institution that receives an investment
9described under subd. 4. a. shall have complete control over the entire investment
10amount, including any interest earned on the investment, for the duration of the
11investment period, but the investment may be subject to any additional terms and
12conditions of the investment agreement between the community development
13financial institution and the investor that are not inconsistent with the
14requirements of this section.
SB825,3,2215 (b) Filing claims. For taxable years beginning after December 31, 2018, and
16before January 1, 2021, a claimant may claim as a credit against the tax imposed
17under s. 71.02, up to the amount of the tax, for the taxable year in which the
18investment is made, an amount equal to 10 percent of the claimant's qualified
19investment in a community development financial institution, if the investment is
20at least $10,000, but not more than $150,000, or 12 percent of the claimant's qualified
21investment in a community development financial institution, if the investment is
22more than $150,000, but not more than $500,000.
SB825,4,523 (c) Limitations. 1. Partnerships, limited liability companies, and tax-option
24corporations may not claim the credit under this subsection, but the eligibility for,
25and the amount of, the credit are based on their payment of amounts under par. (b).

1A partnership, limited liability company, or tax-option corporation shall compute
2the amount of credit that each of its partners, members, or shareholders may claim
3and shall provide that information to each of them. Partners, members of limited
4liability companies, and shareholders of tax-option corporations may claim the
5credit in proportion to their ownership interests.
SB825,4,146 2. A person who makes an investment in a community development financial
7institution in a taxable year, withdraws the investment in that taxable year, and
8immediately reinvests the proceeds into another community development financial
9institution may claim only one credit under this subsection for that taxable year,
10based on the lesser of all such investments in that taxable year. Investments in a
11community development financial institution made before the effective date of this
12subdivision .... [LRB inserts date], may not be withdrawn prior to the end of their
13contractual term and reinvested in a community development financial institution
14in order to claim a credit under this subsection.
SB825,4,2115 3. A claimant who withdraws a qualified investment from a community
16development financial institution prior to the first day of the 61st month after the
17qualified investment was made and who does not immediately reinvest the proceeds
18of the qualified investment as a qualified investment in another community
19development financial institution shall add to the claimant's liability for taxes
20imposed under s. 71.02 one of the following percentages of the amount of the credits
21received under this subsection:
SB825,4,2322 a. If the withdrawal occurs during the first year after the date on which the
23claimant made the qualified investment, 100 percent.
SB825,4,2524 b. If the withdrawal occurs during the 2nd year after the date on which the
25claimant made the qualified investment, 75 percent.
SB825,5,2
1c. If the withdrawal occurs during the 3rd year after the date on which the
2claimant made the qualified investment, 50 percent.
SB825,5,43 d. If the withdrawal occurs during the 4th year after the date on which the
4claimant made the qualified investment, 25 percent.
SB825,5,65 e. If the withdrawal occurs during the 5th year after the date on which the
6claimant made the qualified investment, 10 percent.
SB825,5,87 (d) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
8s. 71.28 (4), applies to the credit under this subsection.
SB825,3 9Section 3. 71.10 (4) (cs) of the statutes is created to read:
SB825,5,1110 71.10 (4) (cs) Steve Hilgenberg community development credit under s. 71.07
11(5p).
SB825,4 12Section 4 . 71.21 (4) (a) of the statutes is amended to read:
SB825,5,1613 71.21 (4) (a) The amount of the credits computed by a partnership under s.
1471.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s), (3t), (3w),
15(3wm), (3y), (4k), (4n), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5p), (5r), (5rm), (6n), (8r),
16and (10) and passed through to partners shall be added to the partnership's income.
SB825,5 17Section 5 . 71.26 (2) (a) 4. of the statutes is amended to read:
SB825,5,2318 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
19(1dx), (1dy), (3g), (3h), (3n), (3p), (3q), (3r), (3rm), (3rn), (3t), (3w), (3wm), (3y), (5e),
20(5f), (5g), (5h), (5i), (5j), (5k), (5p), (5r), (5rm), (6n), (8r), (9s), and (10) and not passed
21through by a partnership, limited liability company, or tax-option corporation that
22has added that amount to the partnership's, limited liability company's, or
23tax-option corporation's income under s. 71.21 (4) or 71.34 (1k) (g).
SB825,6 24Section 6. 71.28 (5p) of the statutes is created to read:
SB825,6,2
171.28 (5p) Steve Hilgenberg community development credit. (a) Definitions.
2In this subsection:
SB825,6,33 1. “Claimant" means a person who files a claim under this subsection.
SB825,6,54 2. “Community development financial institution" means an entity that
5satisfies all of the following:
SB825,6,86a. The entity is certified by the fund under 12 CFR 1805.201 as meeting the
7eligibility requirements for a community development financial institution under 12
8CFR 1805.200
and 1805.201 (b).
SB825,6,99 b. The entity is organized under the laws of this state.
SB825,6,1010 c. The entity uses qualified investments for projects that are based in this state.
SB825,6,1211 3. “Fund" means the Community Development Financial Institutions Fund
12established under 12 USC 4703 (a).
SB825,6,1513 4. a. Subject to subd. 4. b., “qualified investment" means a deposit or loan that
14pays no interest to the person who made the deposit or loan if the deposit or loan has
15a value of at least $10,000 and is made for a period of at least 60 months.
SB825,6,2216 b. A community development financial institution that receives an investment
17described under subd. 4. a. shall have complete control over the entire investment
18amount, including any interest earned on the investment, for the duration of the
19investment period, but the investment may be subject to any additional terms and
20conditions of the investment agreement between the community development
21financial institution and the investor that are not inconsistent with the
22requirements of this section.
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