LRB-3854/1
JK:sac:rs
2013 - 2014 LEGISLATURE
February 13, 2014 - Introduced by Representatives Kuglitsch, Kahl, Knodl, Ripp
and A. Ott. Referred to Committee on Jobs, Economy and Mining.
AB761,1,2
1An Act to create 238.15 (3) (dm) of the statutes;
relating to: the allocation of
2unused early stage seed investment credits.
Analysis by the Legislative Reference Bureau
Under this bill, the Wisconsin Economic Development Corporation (WEDC)
may allocate at least 25 percent, but no more than 50 percent, of the unallocated early
stage seed investment tax credits to certified investment fund managers so that the
fund managers may allocate the credits to persons who make investments in certified
businesses for which early stage seed investment credits may be claimed. A fund
manager who receives the unallocated credits must allocate the entire amount to
investors and no investor may claim the credits unless the total amount committed
for investment equals or exceeds 100 percent of the amount of the credits allocated
to the fund manager. Under the bill, the fund manager must pay 50 percent of all
distributions from the investments as a return of capital, or a return on capital, to
the state, less the amount of certain fees and costs.
Under the bill, a fund manager who receives unallocated early stage seed
investment credits must report to WEDC the subsequent allocation of those credits
no later than 10 days after the fund manager allocates the credits to investors.
WEDC then submits the report to the joint committee on finance. The fund manager
must also submit an annual report to WEDC that contains the name of each business
receiving an investment and the investment amount, the number of jobs created or
retained by the business, and any other information required by WEDC. WEDC also
submits that report to the joint committee on finance.
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:
AB761,1
1Section
1. 238.15 (3) (dm) of the statutes is created to read:
AB761,2,182
238.15
(3) (dm)
Reallocation. 1. Beginning in 2014, and in each year
3thereafter, the corporation may allocate at least 25 percent, but no more than 50
4percent, of the unallocated credits under ss. 71.07 (5b), 71.28 (5b), 71.47 (5b), and
576.638 to investment fund managers certified under sub. (2) so that the fund
6managers may allocate the credits to persons who make investments in businesses
7certified under sub. (1) and for which credits may be claimed under s. 71.07 (5b),
871.28 (5b), 71.47 (5b), or 76.638. A certified investment fund manager wishing to
9receive unallocated credits under this paragraph shall apply for the credits in the
10manner provided by the corporation. A fund manager who receives unallocated
11credits under this subdivision shall allocate the entire amount to investors and no
12investor may claim such credits unless the total amount committed for investment
13by the investors and the fund equals or exceeds 100 percent of the amount of the
14credits allocated to the fund manager. The corporation shall certify the amount of
15matching capital that is invested in order to meet this requirement and that capital
16shall not be subject to the distribution provided in subd. 3. The corporation shall not
17consider the reinvestment of any proceeds of a prior investment under this
18subdivision as matching capital.
AB761,3,219
2. For purposes of this paragraph, a fund manager shall make investments in
20businesses certified under sub. (1) no later than 3 years after the date on which the
21fund manager allocates credits received under subd. 1. The fund manager shall keep
1the investments invested in one or more businesses certified under sub. (1) for 5
2years.
AB761,3,53
3. With regard to the investments made as provided under this paragraph, the
4fund manager shall pay 50 percent of all distributions as a return of capital, or a
5return on capital, to the state, less the following amounts:
AB761,3,76
a. Management fees not exceeding 2 percent a year on the amount of capital
7invested in businesses certified under sub. (1).
AB761,3,98
b. Reasonable costs and expenses for professional services, including legal and
9accounting services, related to forming and operating the fund.
AB761,3,1110
c. Tax distributions to equity owners related to any projected increase in federal
11or state taxes.
AB761,3,1312
d. An amount equal to a matching capital contribution, plus 5 percent of that
13amount.
AB761,3,2014
4. A fund manager who receives credits under subd. 1. shall retain the services
15of an independent 3rd party to evaluate the effectiveness of the reallocation of credits
16as provided under this paragraph and to ensure that funds are timely disbursed, that
17investments are made in businesses certified under sub. (1), and that profits are
18reported and disbursed under subd. 3. Annually, the independent 3rd party shall
19submit its evaluation to the fund manager and to the corporation and the corporation
20shall submit the evaluation to the joint committee on finance.
AB761,3,2421
5. If a fund manager or investor fails to comply with the requirements under
22subd. 2., the corporation shall rescind the allocation of credits to the fund manager
23and recapture the amount of any such credits claimed by the investor, in the manner
24determined by the corporation.
AB761,4,2
16. The corporation may allocate credits as provided under subd. 1. only if all
2of the following apply:
AB761,4,43
a. The corporation notifies the joint committee on finance in writing of its
4proposed allocation.
AB761,4,105
b. The cochairpersons of the joint committee on finance either fail to notify the
6corporation, within 14 working days after the date of the corporation's notification
7under subd. 6. a., that the committee has scheduled a meeting for the purpose of
8reviewing the proposed allocation or the cochairpersons of the joint committee on
9finance notify the corporation that the committee has approved the proposed
10allocation.
AB761,4,1311
7. The corporation shall notify the department of revenue of all credits
12allocated to fund managers under this paragraph and the fund managers shall notify
13the corporation and the department of all such credits allocated to investors.
AB761,4,2314
8. A fund manager who receives credits under subd. 1 shall report the allocation
15of credits to the corporation no later than 10 days after the allocation. The
16corporation shall provide the report to the joint committee on finance. On or before
17January 31 of each year, beginning in 2015, a fund manager who allocates credits
18received under subd. 1. shall submit an annual report to the corporation, prepared
19by an independent certified public accounting firm, containing the name of each
20business receiving an investment and the investment amount, the number of jobs
21created or retained by the business, and any other information required by the
22corporation. The corporation shall provide the annual report to the joint committee
23on finance as soon as possible after the corporation receives the report.
