LRB-2101/2
JK:kjf:rs
2011 - 2012 LEGISLATURE
March 15, 2012 - Introduced by Representatives Endsley, Petryk, Spanbauer and
Thiesfeldt, cosponsored by Senators Zipperer and Schultz. Referred to
Committee on Jobs, Economy and Small Business.
AB732,1,11
1An Act to repeal 71.28 (4) (ab) 2., 71.28 (5) (ab) 2., 71.365 (3), 71.47 (4) (ab) 2.
2and 71.47 (5) (ab) 2.;
to renumber and amend 71.28 (4) (i) and 71.47 (4) (i);
3to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a) 4., 71.28 (4) (ab) 3., 71.28 (4)
4(ad) 1., 71.28 (4) (ad) 2., 71.28 (4) (af), 71.28 (4m) (c), 71.28 (5) (ab) 3., 71.28 (5)
5(ad) 1., 71.28 (5) (ad) 2., 71.34 (1k) (g), 71.45 (2) (a) 10., 71.47 (4) (ab) 3., 71.47
6(4) (ad) 1., 71.47 (4) (ad) 2., 71.47 (4) (af), 71.47 (4m) (c), 71.47 (5) (ab) 3., 71.47
7(5) (ad) 1., 71.47 (5) (ad) 2. and 77.92 (4); and
to create 71.07 (5a), 71.10 (4) (ds),
871.28 (4) (ad) 2m., 71.28 (4) (i) 2., 71.28 (5) (ad) 2m., 71.28 (5) (c), 71.47 (4) (ad)
92m., 71.47 (4) (i) 2., 71.47 (5) (ad) 2m. and 71.47 (5) (c) of the statutes;
relating
10to: research and research facilities tax credits related to internal combustion
11engines.
Analysis by the Legislative Reference Bureau
Under current law, a corporation may claim income and franchise tax credits
based on its qualified research expenses. A corporation may claim 5 percent of its
increase in qualified research expenses over a base year, except that a corporation
may claim 10 percent of the increase in qualified research expenses over the base
year for qualified research expenses related to designing internal combustion
engines for vehicles or designing and manufacturing certain energy efficient
equipment. A corporation may also claim 5 percent of the amount it paid in the
taxable year to construct and equip new facilities or expand existing facilities used
in this state for qualified research, except that a corporation may claim 10 percent
of such amounts if the research is related to designing internal combustion engines
for vehicles or designing and manufacturing certain energy efficient equipment.
Under current law, partnerships, limited liability companies, tax-option
corporations, partners of a partnership, members of a limited liability company, and
shareholders of a tax-option corporation may not claim the credits.
Under this bill, a taxpayer may claim an income and franchise tax credit equal
to 15 percent of the taxpayer's qualified research expenses paid in the taxable year
that are directly or indirectly related to designing internal combustion engines for
vehicles and an amount equal to 15 percent of the amount paid in the taxable year
to construct and equip new facilities or expand existing facilities used in this state
for qualified research directly or indirectly related to designing internal combustion
engines for vehicles. Under the bill, partnerships, limited liability companies, and
tax-option corporations may not claim the credit, but may compute the credit based
on amounts paid by the entity and pass the credit on to the partners, members, or
shareholders who may claim the credit.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
For further information see the state and local 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:
AB732,2,83
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
4(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r),
5(3rm), (3rn), (3s), (3t), (3w),
(5a), (5e), (5f), (5h), (5i), (5j), (5k), (5n), (5r), (5rm), and
6(8r) and not passed through by a partnership, limited liability company, or
7tax-option corporation that has added that amount to the partnership's, company's,
8or tax-option corporation's income under s. 71.21 (4) or 71.34 (1k) (g).
AB732, s. 2
1Section
2. 71.07 (5a) of the statutes is created to read:
AB732,3,32
71.07
(5a) Research and research facilities credit. (a)
Definitions. In this
3subsection:
AB732,3,44
1. "Claimant" means any of the following who file a claim under this subsection:
AB732,3,55
a. A partner of a partnership.
AB732,3,66
b. A member of a limited liability company.
AB732,3,77
c. A member of a tax-option corporation.
AB732,3,88
2. "Frame" includes:
AB732,3,99
a. Every part of a motorcycle, except the tires.
AB732,3,1110
b. In the case of a truck, the control system and the fuel and drive train,
11excluding any comfort features located in the cab or the tires.
AB732,3,1412
c. In the case of a generator, the control modules, fuel train, fuel scrubbing
13process, fuel mixers, generator, heat exchangers, exhaust train, and similar
14components.
AB732,3,2015
3. "Vehicle" means any vehicle or frame, including parts, accessories, and
16component technologies, in which or on which an engine is mounted for use in mobile
17or stationary applications. "Vehicle" includes any truck, tractor, motorcycle,
18snowmobile, all-terrain vehicle, boat, personal watercraft, generator, construction
19equipment, mechanical drive for a stationary engine, lawn and garden maintenance
20equipment, automobile, van, sports utility vehicle, motor home, bus, or aircraft.
AB732,3,2321
(b)
Filing claims. Subject to the limitations provided in this subsection, for
22taxable years beginning after December 31, 2011, a claimant may claim as a credit
23against the taxes imposed under s. 71.02 any of the following:
AB732,4,1224
1. An amount equal to 15 percent of qualified research expenses, as defined in
25section
41 of the Internal Revenue Code, that the claimant's partnership, limited
1liability company, or tax-option corporation paid during the taxable year, except that
2"qualified research expenses" includes only expenses paid by the entity for research
3directly or indirectly related to designing internal combustion engines for vehicles,
4including expenses related to designing vehicles that are powered by such engines
5and improving production processes for such engines and vehicles, incurred for
6research conducted in this state for the taxable year, except that the entity may elect
7the alternative computation under section
41 (c) (4) of the Internal Revenue Code
8and that election applies until the department permits its revocation, except as
9provided in s. 71.28 (4) (af), and except that "qualified research expenses" does not
10include compensation used in computing the credit under s. 71.28 (1dj) and (1dx).
11Section
41 (h) of the Internal Revenue Code does not apply to the credit under this
12subdivision.
AB732,4,2313
2. An amount equal to 15 percent of the amount paid or incurred by the
14claimant's partnership, limited liability company, or tax-option corporation during
15the taxable year to construct and equip new facilities or expand existing facilities
16used in this state for qualified research, as defined in section
41 of the Internal
17Revenue Code, except that "qualified research expenses" includes only expenses paid
18or incurred by the claimant for research directly or indirectly related to designing
19internal combustion engines for vehicles, including expenses related to designing
20vehicles that are powered by such engines and improving production processes for
21such engines and vehicles. Eligible amounts include only amounts paid or incurred
22for tangible, depreciable property but do not include amounts paid or incurred for
23replacement property.
AB732,5,724
(c)
Limitations. Partnerships, limited liability companies, and tax-option
25corporations may not claim the credit under this subsection, but the eligibility for,
1and the amount of, the credit are based on their payment of amounts under par. (b).
2A partnership, limited liability company, or tax-option corporation shall compute
3the amount of credit that each of its partners, members, or shareholders may claim
4and shall provide that information to each of them. Partners, members of limited
5liability companies, and shareholders of tax-option corporations may claim the
6credit in proportion to their allocation of the deductions of the qualified research
7expenses used to determine the credit.
AB732,5,98
(d)
Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
9s. 71.28 (4), applies to the credit under this subsection.
AB732, s. 3
10Section
3. 71.10 (4) (ds) of the statutes is created to read:
AB732,5,1111
71.10
(4) (ds) Research and research facilities credit under s. 71.07 (5a).
AB732,5,1714
71.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
15(2dj), (2dL), (2dm), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s),
16(3t), (3w),
(5a), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5n), (5r), (5rm), and (8r) and passed
17through to partners shall be added to the partnership's income.
AB732,6,220
71.26
(2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dd),
21(1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (1dy), (3g), (3h), (3n), (3p), (3q), (3r),
22(3rm), (3rn), (3t), (3w),
(4) (ad) 2m., (5) (ad) 2m., (5e), (5f), (5g), (5h), (5i), (5j), (5k),
23(5n), (5r), (5rm), (8r), and (9s) and not passed through by a partnership, limited
24liability company, or tax-option corporation that has added that amount to the
1partnership's, limited liability company's, or tax-option corporation's income under
2s. 71.21 (4) or 71.34 (1k) (g).
AB732, s. 6
3Section
6. 71.28 (4) (ab) 2. of the statutes is repealed.
AB732, s. 7
4Section
7. 71.28 (4) (ab) 3. of the statutes is amended to read:
AB732,6,115
71.28
(4) (ab) 3. "Vehicle" means any vehicle or frame, including parts,
6accessories, and component technologies, in which or on which an engine is mounted
7for use in mobile or stationary applications. "Vehicle" includes any truck, tractor,
8motorcycle, snowmobile, all-terrain vehicle, boat, personal watercraft, generator,
9construction equipment,
mechanical drive for a stationary engine, lawn and garden
10maintenance equipment, automobile, van, sports utility vehicle, motor home, bus, or
11aircraft.
AB732, s. 8
12Section
8. 71.28 (4) (ad) 1. of the statutes is amended to read:
AB732,7,213
71.28
(4) (ad) 1. Except as provided in subds. 2.
, 2m., and 3., any corporation
14may credit against taxes otherwise due under this chapter an amount equal to 5
15percent of the amount obtained by subtracting from the corporation's qualified
16research expenses, as defined in section
41 of the Internal Revenue Code, except that
17"qualified research expenses" includes only expenses incurred by the claimant,
18incurred for research conducted in this state for the taxable year, except that a
19taxpayer may elect the alternative computation under section
41 (c) (4) of the
20Internal Revenue Code and that election applies until the department permits its
21revocation, except as provided in par. (af), and except that "qualified research
22expenses" does not include compensation used in computing the credit under subs.
23(1dj) and (1dx), the corporation's base amount, as defined in section
41 (c) of the
24Internal Revenue Code, except that gross receipts used in calculating the base
25amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9)
1(b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk). Section
41 (h) of the
2Internal Revenue Code does not apply to the credit under this paragraph.
AB732, s. 9
3Section
9. 71.28 (4) (ad) 2. of the statutes is amended to read:
AB732,7,214
71.28
(4) (ad) 2. For taxable years beginning after June 30, 2007,
and before
5January 1, 2012, any corporation may credit against taxes otherwise due under this
6chapter an amount equal to 10 percent of the amount obtained by subtracting from
7the corporation's qualified research expenses, as defined in section
41 of the Internal
8Revenue Code, except that "qualified research expenses" includes only expenses
9incurred by the claimant for research related to designing internal combustion
10engines for vehicles, including expenses related to designing vehicles that are
11powered by such engines and improving production processes for such engines and
12vehicles, incurred for research conducted in this state for the taxable year, except
13that a taxpayer may elect the alternative computation under section
41 (c) (4) of the
14Internal Revenue Code and that election applies until the department permits its
15revocation, except as provided in par. (af), and except that "qualified research
16expenses" does not include compensation used in computing the credit under subs.
17(1dj) and (1dx), the corporation's base amount, as defined in section
41 (c) of the
18Internal Revenue Code, except that gross receipts used in calculating the base
19amount means gross receipts from sales attributable to Wisconsin under s. 71.25 (9)
20(b) 1. and 2., (df) 1. and 2., (dh) 1., 2., and 3., (dj), and (dk). Section
41 (h) of the
21Internal Revenue Code does not apply to the credit under this paragraph.
AB732, s. 10
22Section
10. 71.28 (4) (ad) 2m. of the statutes is created to read:
AB732,8,1223
71.28
(4) (ad) 2m. For taxable years beginning after December 31, 2011, any
24corporation may claim as a credit against taxes otherwise due under s. 71.23 an
25amount equal to 15 percent of the corporation's qualified research expenses, as
1defined in section
41 of the Internal Revenue Code, that the corporation paid during
2the taxable year, except that "qualified research expenses" includes only expenses
3paid by the claimant for research directly or indirectly related to designing internal
4combustion engines for vehicles, including expenses related to designing vehicles
5that are powered by such engines and improving production processes for such
6engines and vehicles, incurred for research conducted in this state for the taxable
7year, except that a taxpayer may elect the alternative computation under section
41 8(c) (4) of the Internal Revenue Code and that election applies until the department
9permits its revocation, except as provided in par. (af), and except that "qualified
10research expenses" does not include compensation used in computing the credit
11under subs. (1dj) and (1dx). Section
41 (h) of the Internal Revenue Code does not
12apply to the credit under this paragraph.
AB732, s. 11
13Section
11. 71.28 (4) (af) of the statutes is amended to read:
AB732,8,1814
71.28
(4) (af)
Computation. If in any taxable year a corporation claims a credit
15under par. (ad) 1., 2.,
2m., or 3., or any combination of those credits, the corporation
16may use a different computation method to calculate each of the credits and may
17choose to change the computation method once for each credit without the
18department's approval.
AB732, s. 12
19Section
12. 71.28 (4) (i) of the statutes is renumbered 71.28 (4) (i) 1. and
20amended to read:
