LRB-3801/1
JK:kjf:rs
2005 - 2006 LEGISLATURE
January 13, 2006 - Introduced by Representatives Albers, Musser, Townsend,
Hahn, Montgomery, Kerkman and Suder, cosponsored by Senators Stepp,
Grothman and Kedzie. Referred to Committee on Ways and Means.
AB913,1,5
1An Act to amend 71.05 (6) (a) 15., 71.21 (4), 71.26 (2) (a), 71.34 (1) (g), 71.45 (2)
2(a) 10. and 77.92 (4); and
to create 71.07 (5e), 71.10 (4) (gxb), 71.28 (5e), 71.30
3(3) (epb), 71.47 (5e) and 71.49 (1) (epb) of the statutes;
relating to: an income
4and franchise tax credit for the sales and use tax paid on construction
5materials, labor, and services that are sold under a lump sum contract.
Analysis by the Legislative Reference Bureau
This bill creates an income and franchise tax credit for the sales and use taxes
that a claimant paid on certain construction materials and services. The credit is
equal to the sales and use taxes paid any amount charged as a part of a lump sum
contract for tangible personal property or taxable services that are sold as part of the
contract, if the total of all such amounts is less than 10 percent of the total amount
of the contract and regardless of whether the amounts charged for labor and services
are separately set forth from the amount received for the tangible personal property.
Under the bill, a lump sum contract is a contract to perform real property
construction activities and for which the contractor quotes the charge for labor,
services of subcontractors, and materials as one price, including a contract for which
the contractor subsequently itemizes the charges for labor, services of
subcontractors, and materials as part of a schedule of values or similar document.
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:
AB913, s. 1
1Section
1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB913,2,62
71.05
(6) (a) 15. The amount of the credits computed under s. 71.07 (2dd), (2de),
3(2di), (2dj), (2dL), (2dm), (2dr), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b),
and (5d)
, (5e),
4and (5g) and not passed through by a partnership, limited liability company, or
5tax-option corporation that has added that amount to the partnership's, company's,
6or tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g).
AB913, s. 2
7Section
2. 71.07 (5e) of the statutes is created to read:
AB913,2,88
71.07
(5e) Lump sum contract credit. (a)
Definitions. In this subsection:
AB913,2,99
1. "Claimant" means a contractor who files a claim under this subsection.
AB913,2,1010
2. "Contractor" has the meaning given in s. 77.51 (2).
AB913,2,1511
3. "Lump sum contract" means a contract to perform real property construction
12activities and for which the contractor quotes the charge for labor, services of
13subcontractors, and materials as one price, including a contract for which the
14contractor itemizes the charges for labor, services of subcontractors, and materials
15as part of a schedule of values or similar document.
AB913,2,1616
4. "Real property construction activities" has the meaning given in s. 77.51 (2).
AB913,2,1717
5. "Subcontractors" has the meaning given in s. 77.51 (2).
AB913,3,318
(b)
Filing claims. Subject to the limitations provided in this subsection, a
19claimant may claim as a credit against the taxes imposed under s. 71.02, up to the
20amount of those taxes, an amount that is equal to the taxes imposed under ss. 77.52
21and 77.53 that the claimant paid on amounts charged as part of a lump sum contract
1for tangible personal property or taxable services that are sold as part of the lump
2sum contract, if the total of all such amounts charged is less than 10 percent of the
3total amount of the lump sum contract.
AB913,3,114
(c)
Limitations. Partnerships, limited liability companies, and tax-option
5corporations may not claim the credit under this subsection, but the eligibility for,
6and the amount of, the credit are based on their payment of amounts described under
7par. (b). A partnership, limited liability company, or tax-option corporation shall
8compute the amount of credit that each of its partners, members, or shareholders
9may claim and shall provide that information to each of them. Partners, members
10of limited liability companies, and shareholders of tax-option corporations may
11claim the credit in proportion to their ownership interests.
AB913,3,1312
(d)
Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
13s. 71.28 (4), applies to the credit under this subsection.
AB913, s. 3
14Section
3. 71.10 (4) (gxb) of the statutes is created to read:
AB913,3,1515
71.10
(4) (gxb) Lump sum contract credit under s. 71.07 (5e).
AB913,3,2018
71.21
(4) Credits computed by a partnership under s. 71.07 (2dd), (2de), (2di),
19(2dj), (2dL), (2dm), (2ds), (2dx), (3g), (3n), (3s), (3t), (5b)
, (5e), and (5g) and passed
20through to partners shall be added to the partnership's income.
AB913,4,1523
71.26
(2) (a)
Corporations in general. The "net income" of a corporation means
24the gross income as computed under the Internal Revenue Code as modified under
25sub. (3) minus the amount of recapture under s. 71.28 (1di) plus the amount of credit
1computed under s. 71.28 (1), (3), (4), and (5) minus, as provided under s. 71.28 (3) (c)
27., the amount of the credit under s. 71.28 (3) that the taxpayer added to income
3under this paragraph at the time that the taxpayer first claimed the credit plus the
4amount of the credit computed under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm),
5(1ds), (1dx), (3g), (3n), (3t), (5b)
, (5e), and (5g) and not passed through by a
6partnership, limited liability company, or tax-option corporation that has added that
7amount to the partnership's, limited liability company's, or tax-option corporation's
8income under s. 71.21 (4) or 71.34 (1) (g) plus the amount of losses from the sale or
9other disposition of assets the gain from which would be wholly exempt income, as
10defined in sub. (3) (L), if the assets were sold or otherwise disposed of at a gain and
11minus deductions, as computed under the Internal Revenue Code as modified under
12sub. (3), plus or minus, as appropriate, an amount equal to the difference between
13the federal basis and Wisconsin basis of any asset sold, exchanged, abandoned, or
14otherwise disposed of in a taxable transaction during the taxable year, except as
15provided in par. (b) and s. 71.45 (2) and (5).
AB913, s. 6
16Section
6. 71.28 (5e) of the statutes is created to read:
AB913,4,1717
71.28
(5e) Lump sum contract credit. (a)
Definitions. In this subsection:
AB913,4,1818
1. "Claimant" means a contractor who files a claim under this subsection.
AB913,4,1919
2. "Contractor" has the meaning given in s. 77.51 (2).
AB913,4,2420
3. "Lump sum contract" means a contract to perform real property construction
21activities and for which the contractor quotes the charge for labor, services of
22subcontractors, and materials as one price, including a contract for which the
23contractor itemizes the charges for labor, services of subcontractors, and materials
24as part of a schedule of values or similar document.
AB913,4,2525
4. "Real property construction activities" has the meaning given in s. 77.51 (2).
AB913,5,1
15. "Subcontractors" has the meaning given in s. 77.51 (2).
AB913,5,82
(b)
Filing claims. Subject to the limitations provided in this subsection, a
3claimant may claim as a credit against the taxes imposed under s. 71.23, up to the
4amount of those taxes, an amount that is equal to the taxes imposed under ss. 77.52
5and 77.53 that the claimant paid on amounts charged as part of a lump sum contract
6for tangible personal property or taxable services that are sold as part of the lump
7sum contract, if the total of all such amounts charged is less than 10 percent of the
8total amount of the lump sum contract.
AB913,5,169
(c)
Limitations. Partnerships, limited liability companies, and tax-option
10corporations may not claim the credit under this subsection, but the eligibility for,
11and the amount of, the credit are based on their payment of amounts described under
12par. (b). A partnership, limited liability company, or tax-option corporation shall
13compute the amount of credit that each of its partners, members, or shareholders
14may claim and shall provide that information to each of them. Partners, members
15of limited liability companies, and shareholders of tax-option corporations may
16claim the credit in proportion to their ownership interests.
AB913,5,1817
(d)
Administration. Subsection (4) (e) to (h), as it applies to the credit under
18sub. (4), applies to the credit under this subsection.
AB913, s. 7
19Section
7. 71.30 (3) (epb) of the statutes is created to read:
AB913,5,2020
71.30
(3) (epb) Lump sum contract credit under s. 71.28 (5e).
AB913,5,2523
71.34
(1) (g) An addition shall be made for credits computed by a tax-option
24corporation under s. 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1dm), (1ds), (1dx), (3), (3g),
25(3n), (3t), (5b)
, (5e), and (5g) and passed through to shareholders.
AB913,6,83
71.45
(2) (a) 10. By adding to federal taxable income the amount of credit
4computed under s. 71.47 (1dd) to (1dx), (3n), (5b)
, (5e), and (5g) and not passed
5through by a partnership, limited liability company, or tax-option corporation that
6has added that amount to the partnership's, limited liability company's, or
7tax-option corporation's income under s. 71.21 (4) or 71.34 (1) (g) and the amount of
8credit computed under s. 71.47 (1), (3), (3t), (4), and (5).
AB913, s. 10
9Section
10. 71.47 (5e) of the statutes is created to read:
AB913,6,1010
71.47
(5e) Lump sum contract credit. (a)
Definitions. In this subsection:
AB913,6,1111
1. "Claimant" means a contractor who files a claim under this subsection.
AB913,6,1212
2. "Contractor" has the meaning given in s. 77.51 (2).
AB913,6,1713
3. "Lump sum contract" means a contract to perform real property construction
14activities and for which the contractor quotes the charge for labor, services of
15subcontractors, and materials as one price, including a contract for which the
16contractor itemizes the charges for labor, services of subcontractors, and materials
17as part of a schedule of values or similar document.
