11.04.15 |
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Wisconsin Enacts Business Development Credit, Sunsets Other Credits

Fall Colors Wisconsin Shillouette

Wisconsin Act 55 (“Act 55”).1 The new budget contains numerous tax provisions which will impact many tax credits and incentives.  Some of the key changes are outlined below.

Business Development Credit Created by Act 55

Act 55 creates a new refundable credit called the Business Development Credit, which will be administered by the Wisconsin Economic Development Corporation (WEDC).2 The new credit is equal to the sum of the following:

  • Up to 10 percent of the wages paid by the claimant to an eligible employee.3
  • An additional amount of up to 5 percent of the wages paid by the claimant to the eligible employee, if the employee is employed in an economically distressed area.4
  • Up to 50 percent of the amount of approved training costs incurred by the claimant for an eligible employee, as approved by the WEDC.5
  • Up to 3 percent of any personal property investment and up to 5 percent of any real property investment in an eligible capital investment project, as determined by the WEDC. 6
  • A percentage of wages (as determined by the WEDC) paid by the claimant to an eligible employee, if the employee’s position involving the performance of corporate headquarters functions was created or retained as part of a location or retention of a corporate headquarters in Wisconsin.7

A claimant must be certified by and enter into a contract with WEDC in order to be eligible for the Business Development Credit. 8 A certification may remain valid for up to 10 years.9

The Business Development Credit becomes available for tax years beginning on or after January 1, 2016.10 The WEDC may allocate up to $17 million in tax benefits in 2016 and up to $22 million per year thereafter for this credit.11

Credits Repealed by Act 55

Act 55 repeals the following credits:

  • The Economic Development Tax Credit and the Jobs Tax Credit are repealed effective for tax years beginning on or after January 1, 2016. If, however, a taxpayer entered into a contract or letter of intent with WEDC prior to December 31, 2015 for the allocation of funds pursuant to one of these credits, tax benefits will remain available for the duration of the contract.12,13
  • The Job Creation Deduction is repealed effective for tax years beginning on or after January 1, 2015.14
  • Several obsolete Development Zone Credits, including the DZ Investment Credit and the DZ Jobs Credit, were repealed effective July 14, 2015.15

Credits Amended by the Act 55

  • The Research Credit was amended for tax years after December 31, 2014 to increase the credit percentage rates for the available alternative calculation methods.16
  • Modifications were made to the Manufacturing and Agriculture Credit, including revised definitions of direct and indirect costs, and a clarification of when a manufacturer is eligible for the credit, for tax years beginning on January 1, 2013. For 2015 tax years, the credit rate is reduced from 5.526% to 5.025 percent.17
  • For the Development Zone credits not repealed, Act 55 clarifies that in the case of a pass-through entity, the amount of credit will be determined by the pass-through entity’s economic activity, and not that of its shareholders, partners, or members. The pass-through entity must compute the amount of credit available to each shareholder, partner, or member based on their respective ownership interests in the entity and provide such information to its shareholders, partners, or members.18

Learn More about ADP SmartCompliance® Tax Credits

Learn more about how the ADP SmartCompliance® Tax Credits module can help businesses maximize the capture of tax credits and incentives for which they are eligible.

 


The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal, or tax advice.  The information and services ADP provides should not be deemed a substitute for the advice of any such professional.  Such information is by nature subject to revision and may not be the most current information available.

12015 Wisconsin Act 55  http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto; See also Wisconsin Department of Revenue Tax Bulletin: New Tax Laws – https://www.revenue.wi.gov/ise/wtb/189.pdf

2 2015 Wisconsin Act 55 – Section 2183: Page 362, adding Wisconsin Statute Section 71.07(3y) and Section 238.308. Also, Wisconsin Department of Revenue Tax Bulletin: Business Development Credit Created (pgs. 12-13) – https://www.revenue.wi.gov/ise/wtb/189.pdf

3 Wisconsin Statute 71.07(3y)(b)1.

4 Wisconsin Statute 71.07(3y)(b)2.

5 Wisconsin Statute 71.07(3y)(b)3; Wisconsin Statute 238.308(4)(a)3.

6 Wisconsin Statute 71.07(3y)(b)4; Wisconsin Statute 238.308(4)(a)4.

7 Wisconsin Statute 71.07(3y)(b)5; Wisconsin Statute 238.308(4)(a)5.

8 Wisconsin Statute 71.07(3y)(a)1; Wisconsin Statute 238.308(2).

9 Wisconsin Statute 238.308(2)(b).

10 Wisconsin Statute 71.07(3y)(b).

11 Wisconsin Statute 238.308(4)(b).

122015 Wisconsin Act 55, Section 4006 (Page 552) adds Wisconsin Statute 238.03(4), which addresses sunset provisions. http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

132015 Wisconsin Act 55, Section 3996 (Page 551) adds Wisconsin Statute 238.16(6), which addresses sunset provisions. http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

142015 Wisconsin Act 55, Section 2366d (Page 397) amends Wisconsin Statute 71.45(1) (c)  http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

152015 Wisconsin Act 55, Sections 2256 through 2270 (Page 384) repeal the following Wisconsin Statutes: Section 71.28(1dd), Section 71.28(1de), Section 71.28(1di), Section 71.28(1dj), Section 71.28(1dL), and Section 71.28(1ds). http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

162015 Wisconsin Act 55, Section 2433 (Pages 398-400) amends Wisconsin Statute Section 71.47(4)  http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

172015 Wisconsin Act 55, Sections 2331 through 2333d (Page 388) amend Wisconsin Statute Section 71.28(5n)

182015 Wisconsin Act 55, Section 2285 (Page 385) adds Wisconsin Statute Section 71.28 (1dx) (e)2. http://docs.legis.wisconsin.gov/raw/path/Publisher/WSL/FrontPage/Special/100%20-%20Act%2055%20-%20Executive%20Budget%20with%20Partial%20Veto

 


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